The market is lower in early trade after a 4-day bounce last week that resulted in solid weekly gains for the major indexes.
The big news has come on the M&A front this morning. First, Microsoft (MSFT) said it will invested $300 million into Barnes & Noble (BKS) to form a strategic partnership aimed at accelerating the transition to e-reading. BKS stock is up a whopping 62% on the news, aided by short-covering.
Also, Gen-Probe (GPRO) reported solid earnings but also said it will be acquired by HOLX for $82.75, which is roughly a 20% premium to Friday's closing price.
In economic news, the Chicago PMI was disappointing at 56.2 vs. a reading of 60 that was expected. Personal spending for March was also below expectations at +0.3% vs. +0.5% consensus. Friday will bring the monthly jobs report, and I just saw that Goldman is estimating the economy added 125k jobs in April.
Asian markets were mostly higher overnight, while Europe is lower this morning on confirmation that Spain is officially in recession. But is that really a surprise?
Earnings reactions have been mostly to the downside from what I've noticed today. Examples of stocks falling on earnings reports this morning include: ABV, HUM, SOHU, and NYX to name a few.
The dollar is roughly flat vs. the euro, but commodities are mostly lower today. Oil prices are lower near $104.40 and gold prices have eased back to $1657.
The 10-year yield is drifting lower to 1.91%; and the VIX is +6% higher so far near the 17.35 level.
Trading comment: I read an interesting article asking whether traders were preparing for the same summer selloff pattern that the markets experienced in 2010 and 2011. While the fundamental backdrop seems similar (slowing economic data, unsettling news out of Europe) we don't have the same shocks like the flash crash or the earthquake. Also, bond yields are already lower at current levels than they were before both summer rallies the last couple of years. Additionally, corporate profit growth has been strong so valuations are cheaper than they have been as well. There were the arguments that were made for any pullback to be more mild in nature. But I would argue that we simply don't know, and that once a selloff picks up steam, its usually investor fear that drives prices lower than most investors were looking for. So we are trimming some equity exposure ahead of time just to try to position ourselves better ahead of summer.
30 Nisan 2012 Pazartesi
27 Nisan 2012 Cuma
Is The Market Whistling Past A Greek Redux?
The markets are slightly higher in early trading on the heels of more than 100 earnings reports that have come out last night and this morning, some mixed economic data, and another downgrade of Spain.
So far there doesn't seem to be much reaction to the S&P downgrade of Spanish debt to BBB+ from A, and a negative outlook. Is the market whistling past a Greek redux?
In economic news, advance Q1 GDP estimates for the U.S. show the economy grew +2.2%. This is below the 2.5% that had been expected, but in light of the slowdown in many other countries looks pretty good by comparison.
Also, the final reading on Univ. of Mich. consumer sentiment for April improved to 76.4 from the prior reading of 75.7. So the mood among consumers remains upbeat, and that hopefully bodes well for the economy near-term, considering nearly 70% of our GDP is driven by consumer spending.
Asian markets were mostly lower overnight. The dollar is a bit lower today, giving a small boost to the CRB Commodity Index. Oil prices are down slightly around $104.40. And gold prices are higher near $1665.
There were tons of earnings reports in the last 24 hrs, but here are a few notable movers:
Stocks rising on earnings:
Trading comment: There have been more stocks falling on earnings reports than rising today, at least from what I have seen. The indexes are still comfortably above their 50-day support, so investors are in buying mode. But many leading growth stocks have more work to do in terms of consolidating their recent gains and building new bases from which they launch new rallies. I would be somewhat surprised if the market went right back to new highs at this juncture. Something tells me we are more likely to be in a trading range in the near-term.
KAM Advisors has long positions in SPG, SBUX, PG
So far there doesn't seem to be much reaction to the S&P downgrade of Spanish debt to BBB+ from A, and a negative outlook. Is the market whistling past a Greek redux?
In economic news, advance Q1 GDP estimates for the U.S. show the economy grew +2.2%. This is below the 2.5% that had been expected, but in light of the slowdown in many other countries looks pretty good by comparison.
Also, the final reading on Univ. of Mich. consumer sentiment for April improved to 76.4 from the prior reading of 75.7. So the mood among consumers remains upbeat, and that hopefully bodes well for the economy near-term, considering nearly 70% of our GDP is driven by consumer spending.
Asian markets were mostly lower overnight. The dollar is a bit lower today, giving a small boost to the CRB Commodity Index. Oil prices are down slightly around $104.40. And gold prices are higher near $1665.
There were tons of earnings reports in the last 24 hrs, but here are a few notable movers:
Stocks rising on earnings:
- AMZN, SPG, NWL, AEM
- DECK, WDC, SBUX, PG, HMSY, KLAC, MDRX
Trading comment: There have been more stocks falling on earnings reports than rising today, at least from what I have seen. The indexes are still comfortably above their 50-day support, so investors are in buying mode. But many leading growth stocks have more work to do in terms of consolidating their recent gains and building new bases from which they launch new rallies. I would be somewhat surprised if the market went right back to new highs at this juncture. Something tells me we are more likely to be in a trading range in the near-term.
KAM Advisors has long positions in SPG, SBUX, PG
26 Nisan 2012 Perşembe
Fewer Upside Surprises In Today's Earnings Reports
The market is flattish in early trading as scores of earnings reports continue to flood in. Looking over today's report, there seems to be fewer upside surprises and more stocks that are trading down on in-line earnings reports. Here's a few examples:
Stocks rising on earnings:
Asian markets were mixed overnight, while Europe is mostly lower this morning. The dollar is lower vs. the euro and that is helping boost commodities. Oil prices are higher to $104.70 and gold prices have finally made a push above $1650 (currently $1657).
The 10-year yield again got rebuffed at the 2.0% level and is lower to 1.95%. And the VIX is fractionally higher to 16.95 after moving back below its 50-day yesterday.
Trading comment: The major indexes are holding above their respective 50-day support lines. This has the potential to put the bulls back in the driver's seat. Yesterday's rally came on rising volume, so that's a start. For those who follow the IBD-style market trend, we need to see a follow-thru rally on rising volume over the next week or so to confirm yesterday's rally attempt. We also need to see many of these growth stocks that have been rolling over start to find support and attempt to build new bases. Today SCSS is rolling over below its 50-day.
KAM Advisors has long positions in NUAN, SCSS, STMP, VAR, XOM
Stocks rising on earnings:
- NUAN, SWI, EQIX, STMP, VIVO, REGN, MWW
- VAR, AKAM, LVS, DOW, DB, UPS, XOM, LSTR, NUS
Asian markets were mixed overnight, while Europe is mostly lower this morning. The dollar is lower vs. the euro and that is helping boost commodities. Oil prices are higher to $104.70 and gold prices have finally made a push above $1650 (currently $1657).
The 10-year yield again got rebuffed at the 2.0% level and is lower to 1.95%. And the VIX is fractionally higher to 16.95 after moving back below its 50-day yesterday.
Trading comment: The major indexes are holding above their respective 50-day support lines. This has the potential to put the bulls back in the driver's seat. Yesterday's rally came on rising volume, so that's a start. For those who follow the IBD-style market trend, we need to see a follow-thru rally on rising volume over the next week or so to confirm yesterday's rally attempt. We also need to see many of these growth stocks that have been rolling over start to find support and attempt to build new bases. Today SCSS is rolling over below its 50-day.
KAM Advisors has long positions in NUAN, SCSS, STMP, VAR, XOM
25 Nisan 2012 Çarşamba
Earnings Trump Economic Data In Early Trade
The markets are nicely higher in early trading on the heels of some better than exepcted earnings reports. There was a disappointing economic report this morning in the form of durable goods, which fell -4.2% in March. But investors are giving the data a pass and focusing on earnings.
The big earnings report last night was of course Apple (AAPL). In case you missed it, AAPL blew out the numbers by more than $2. It also sold 5 million more iPhones than the analysts were forecasting, and gross margins also posted significant upside.
I had been saying coming into the report that the recent action in AAPL seemed to me to be reflecting dramatically lowered expectations for the earnings report. So I felt the stock was poised to bounce on the report, even if they only posted a mild beat. But the stock has ramped on the earnings announcement, up by more than $50 (or 10%) back above the $610 level.
Stocks rising on earnings reports:
The 10-year yield is getting another small bounce, but is still bumping its head at the 2.00% level, which has been resistance all year, despite a few brief spikes above those levels.
And the VIX is down 4% to 17.36.
Trading comment: The market is up a lot in early trading, but it remains to be seen if the strength can last into the close. We also have the FOMC announcement today, and I think many are looking for the Fed to provide some hints about QE3. I don't think the Fed is going to go there right now. My guess is that they remain on point with what they have been saying recently. I think they will reiterate holding rates low into 2014, and again say that they see inflationary pressures as temporary.
KAM Advisors has long positions in AAPL
The big earnings report last night was of course Apple (AAPL). In case you missed it, AAPL blew out the numbers by more than $2. It also sold 5 million more iPhones than the analysts were forecasting, and gross margins also posted significant upside.
I had been saying coming into the report that the recent action in AAPL seemed to me to be reflecting dramatically lowered expectations for the earnings report. So I felt the stock was poised to bounce on the report, even if they only posted a mild beat. But the stock has ramped on the earnings announcement, up by more than $50 (or 10%) back above the $610 level.
Stocks rising on earnings reports:
- S, MOS, BA, HOG, GNC, PNRA, FTNT, AMGN, NSC
- ABB, CAT, GD, BIDU
The 10-year yield is getting another small bounce, but is still bumping its head at the 2.00% level, which has been resistance all year, despite a few brief spikes above those levels.
And the VIX is down 4% to 17.36.
Trading comment: The market is up a lot in early trading, but it remains to be seen if the strength can last into the close. We also have the FOMC announcement today, and I think many are looking for the Fed to provide some hints about QE3. I don't think the Fed is going to go there right now. My guess is that they remain on point with what they have been saying recently. I think they will reiterate holding rates low into 2014, and again say that they see inflationary pressures as temporary.
KAM Advisors has long positions in AAPL
24 Nisan 2012 Salı
B-WAVE BOTTOM
Over the last several days volatility in the gold market has collapsed forming what is known as a coil.
I think the Fed announcement tomorrow will probably break gold out of this holding pattern. But contrary to popular belief about 70% of the time the initial move out of a coil ends up being a false move that is reversed by a more powerful and durable move in the opposite direction.
In this case if gold breaks lower out of the coil it is late enough in the intermediate cycle that the move would be unlikely to last more than a few days before forming what would presumably be an intermediate cycle and B-Wave bottom.
I suspect many gold bugs are going to get knocked out of their position if this scenario plays out tomorrow. However if this does turn out to be a B-Wave bottom like I think it will, the next couple of days are going to be the single best buying opportunity for the rest of this secular bull market.
That doesn't mean that gold will reverse and head straight up immediately. I expect we will probably see a volatile consolidation with several tests of the all-time highs above $1900 but no breakout for the rest of the summer.
Traders are going to be looking for the next trend once the stock market bottoms. I doubt that tech stocks are going to resume the leading role that they've enjoyed since last October. More likely liquidity will find its way into a beaten up sector.
Like I always say, liquidity will eventually flow into undervalued assets. There is no sector as undervalued and as unloved as the mining stocks right now.
Sentiment in this sector has reached levels of pessimism capable of generating triple digit returns over the next couple of years, and I wouldn't even be surprised to see a 25 - 50% gain during the next intermediate cycle alone.
I think the next momentum move is about to begin in the sector most overlooked and least expected by investors, the mining stocks.
I think the Fed announcement tomorrow will probably break gold out of this holding pattern. But contrary to popular belief about 70% of the time the initial move out of a coil ends up being a false move that is reversed by a more powerful and durable move in the opposite direction.
In this case if gold breaks lower out of the coil it is late enough in the intermediate cycle that the move would be unlikely to last more than a few days before forming what would presumably be an intermediate cycle and B-Wave bottom.
I suspect many gold bugs are going to get knocked out of their position if this scenario plays out tomorrow. However if this does turn out to be a B-Wave bottom like I think it will, the next couple of days are going to be the single best buying opportunity for the rest of this secular bull market.
That doesn't mean that gold will reverse and head straight up immediately. I expect we will probably see a volatile consolidation with several tests of the all-time highs above $1900 but no breakout for the rest of the summer.
Traders are going to be looking for the next trend once the stock market bottoms. I doubt that tech stocks are going to resume the leading role that they've enjoyed since last October. More likely liquidity will find its way into a beaten up sector.
Like I always say, liquidity will eventually flow into undervalued assets. There is no sector as undervalued and as unloved as the mining stocks right now.
Sentiment in this sector has reached levels of pessimism capable of generating triple digit returns over the next couple of years, and I wouldn't even be surprised to see a 25 - 50% gain during the next intermediate cycle alone.
I think the next momentum move is about to begin in the sector most overlooked and least expected by investors, the mining stocks.
Stocks Attempt To Bounce In Early Trade
I think after yesterday's selloff I would prefer to see stocks open weak this morning and then rally into the close. Stocks have opened strong, and if they can't maintain these early gains into the close it will not inspire much confidence.
Speaking of confidence, the April Consumer Confidence index eased to 69.2 from 70.2 the prior month, but the index is still at a fairly high level.
Housing data was mixed. New home sales improved in March, but the Case-Shiller index fell -3.5% in February after falling -3.8% the prior month.
There has been a flurry of earnings reports out last night and this morning. Reactions have been mixed. I don't see any huge gainers on earnings, and the one big disappointment I see is Netflix (NFLX).
Stocks rising on earnings reports:
The dollar is lower vs. the euro today, and that is helping the CRB commodity index gain 0.4%. Oil prices are higher to $103.75 while gold prices have risen to $1646. Gold hasnt' been able to get above that $1650 level in awhile.
The 10-year yield is getting a small bounce to 1.96%. And the VIX is down 2% to 18.56 after spiking to the 20 level yesterday before reversing lower.
Trading comment: All eyes will be on Apple (AAPL) tonight. The stock is down again today on weak activation numbers out of T-mobile. I feel like the big pullback from recent highs has lowered expectations sufficiently going into the earnings report that AAPL should trade okay following the report. If the stock had continued to run ahead of the earnings report, I would be much more worried about a plunge on any disappointing numbers. But at current levels I feel there is at least a little bit of a margin on safety in the stock given that it remains very cheap on a P/E and PEG basis.
KAM Advisors has long positions in AAPL, MMM, and UTX; short NFLX
Speaking of confidence, the April Consumer Confidence index eased to 69.2 from 70.2 the prior month, but the index is still at a fairly high level.
Housing data was mixed. New home sales improved in March, but the Case-Shiller index fell -3.5% in February after falling -3.8% the prior month.
There has been a flurry of earnings reports out last night and this morning. Reactions have been mixed. I don't see any huge gainers on earnings, and the one big disappointment I see is Netflix (NFLX).
Stocks rising on earnings reports:
- MMM, T, UTX, KSU, ITW, TROW, PH, BHI
- NFLX, SYMC, COH, BIG, RSH, APD, ARMH
The dollar is lower vs. the euro today, and that is helping the CRB commodity index gain 0.4%. Oil prices are higher to $103.75 while gold prices have risen to $1646. Gold hasnt' been able to get above that $1650 level in awhile.
The 10-year yield is getting a small bounce to 1.96%. And the VIX is down 2% to 18.56 after spiking to the 20 level yesterday before reversing lower.
Trading comment: All eyes will be on Apple (AAPL) tonight. The stock is down again today on weak activation numbers out of T-mobile. I feel like the big pullback from recent highs has lowered expectations sufficiently going into the earnings report that AAPL should trade okay following the report. If the stock had continued to run ahead of the earnings report, I would be much more worried about a plunge on any disappointing numbers. But at current levels I feel there is at least a little bit of a margin on safety in the stock given that it remains very cheap on a P/E and PEG basis.
KAM Advisors has long positions in AAPL, MMM, and UTX; short NFLX
23 Nisan 2012 Pazartesi
Monday Morning Musings
Markets are down sharply this morning on continued concerns about Europe as well as sluggish economic data from China.
Asian markets were lower overnight after HSBC said China's manufacturing PMI for April rose slightly to 49.1 from 48.3 last month. But the reading is still below the 50 level that marks the difference between expansion and contraction in the economy.
Europe's markets are also down a lot this morning amid news that budget talks in the Netherlands fell apart. This combined with potential shakeup in France's political makeup has investors worried about how the eurozone will hold it together to tackle their fiscal issues. Additionally, PMI readings out of France and Germany were disappointing.
The flight-to-safety trade is on this morning, although it is not including gold. The dollar is higher vs. the euro, and that is hurting commodities. Gold prices are lower to $1630 and oil prices are down below $102. Silver and copper prices are lower as well.
The 10-year yield is plunging as investors pile into Treasuries. The yield is down to 1.91%. And the VIX is surging near 15% to the 20 level.
In earnings news, stocks are showing mixed reactions to earnings reports.
Stocks rising on earnings reports:
KAM Advisors has long positions in CHKP
Asian markets were lower overnight after HSBC said China's manufacturing PMI for April rose slightly to 49.1 from 48.3 last month. But the reading is still below the 50 level that marks the difference between expansion and contraction in the economy.
Europe's markets are also down a lot this morning amid news that budget talks in the Netherlands fell apart. This combined with potential shakeup in France's political makeup has investors worried about how the eurozone will hold it together to tackle their fiscal issues. Additionally, PMI readings out of France and Germany were disappointing.
The flight-to-safety trade is on this morning, although it is not including gold. The dollar is higher vs. the euro, and that is hurting commodities. Gold prices are lower to $1630 and oil prices are down below $102. Silver and copper prices are lower as well.
The 10-year yield is plunging as investors pile into Treasuries. The yield is down to 1.91%. And the VIX is surging near 15% to the 20 level.
In earnings news, stocks are showing mixed reactions to earnings reports.
Stocks rising on earnings reports:
- EAT, BEAV, STI
- COP, CHL, K, CHKP
KAM Advisors has long positions in CHKP
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