The early morning market action is being driven by news out of Europe and a double-dose of Jobs.
First of all, my condolences to the Steve Jobs family. What a great innovator of our time. The death of the savior of Apple has Wall Street mourning and the stock off slightly. We own shares of $AAPL for clients and will continue to hold as I feel the departure of Jobs earlier this year has already priced in his absence.
The other jobs moving the markets is the weekly jobless claims that came in better than expected. This gave stocks a small boost pre-market and could be good news heading into tomorrow's very important monthly employment report.
Europe again at the top of the headlines. The rumors of the EU coming together to restabilize the banks was a positive, but the lack of a rate cut by the ECB was negative. The two stories coupled with the Jobs' headlines have the market little changed from last night.
It will be interesting today to see if the recent rally can continue. My first thought is that another big move higher could be in the works if the news out of Europe related to their banks is positive. On the other hand I am leaning towards one more big down draft in the overall market in the next couple of weeks.
Buckle Up!
Market expert and TV personality Matt McCall blogs about what is really moving the markets. He will emphasize Exchange-Traded Funds (ETFs) and individual stocks throughout the trading day.
Thursday, October 6, 2011
Wednesday, October 5, 2011
The Close Depends on Europe
The market continued its late-day rally this morning and after a lunch hour sell-off is back near the highs of the session. Today's early morning rally was sparked by more positive news/rumors out of Europe as well as better than expected economic numbers.
The ISM Services number and the ADP Job report both came in with readings above estimates. The fading of the rally at lunch can be attributed to investors selling into the rally as well as new rumors out of Europe that Greece is still a high-risk default candidate.
As important as the economic numbers are for the stock market in the long-term, the daily movements will continue to rely on the European situation. In the next 2.5 hours look for the market to take its cues from Europe and if there is no breaking news, stocks should end with sizable gains.
Top performing sector ETFs today:
The ISM Services number and the ADP Job report both came in with readings above estimates. The fading of the rally at lunch can be attributed to investors selling into the rally as well as new rumors out of Europe that Greece is still a high-risk default candidate.
As important as the economic numbers are for the stock market in the long-term, the daily movements will continue to rely on the European situation. In the next 2.5 hours look for the market to take its cues from Europe and if there is no breaking news, stocks should end with sizable gains.
Top performing sector ETFs today:
- SPDR Materials ETF ($XLB)
- SPDR Technology ETF ($XLK)
- SPDR Industrial ETF ($XLI)
- Marathon Petroleum Corp ($MPC)
- Tesoro ($TSO)
- Juniper Networks ($JNPR)
Tuesday, October 4, 2011
Market Recap - Now What?
With less than an hour left in trading the Dow was down 250 points and it appeared the closing well was going to mark a new 13-month low for stocks. But just as a new low would not have surprised me, either did the 45-minute rally to end the session. The nearly 400-point rally (yes that is a "4") enough to turn an ugly chart into a setup for a potential dead cat bounce into the end of the week.
The rally was fueled by yet more rumors out of Europe that the EU is discussing recapitalizing the banks. The SPDR Financial ETF ($XLF) closed up 4% after being down as much as 3% when it was trading at a 2-year low. Morgan Stanley ($MS) led the way with a gain of 12%.
Other risk sectors such as the Materials ($XLB) up 3.8% and Consumer Discretionary ($XLY) up 3.2% benefited from the news. The Utilities ($XLU) lagged with a loss of 0.4%, but still are within 5% of closing at a new 3-year high. The rotation out of utilities into the beat down sectors was not a big surprise.
The big question - what to do now??
I will continue to sit on my hands for another day or so and analyze the action based on the news/rumors. Because of the large amount of short sellers and bears in the market if the news remains positive overnight you can expect the rally to continue tomorrow. On the other hand if the news turns out to be nothing new, the selling should resume.
So basically I am keeping the same strategy that include fine-tuning out WatchList of stocks/ETFs so when it is time to buy we are ready to pounce.
The rally was fueled by yet more rumors out of Europe that the EU is discussing recapitalizing the banks. The SPDR Financial ETF ($XLF) closed up 4% after being down as much as 3% when it was trading at a 2-year low. Morgan Stanley ($MS) led the way with a gain of 12%.
Other risk sectors such as the Materials ($XLB) up 3.8% and Consumer Discretionary ($XLY) up 3.2% benefited from the news. The Utilities ($XLU) lagged with a loss of 0.4%, but still are within 5% of closing at a new 3-year high. The rotation out of utilities into the beat down sectors was not a big surprise.
The big question - what to do now??
I will continue to sit on my hands for another day or so and analyze the action based on the news/rumors. Because of the large amount of short sellers and bears in the market if the news remains positive overnight you can expect the rally to continue tomorrow. On the other hand if the news turns out to be nothing new, the selling should resume.
So basically I am keeping the same strategy that include fine-tuning out WatchList of stocks/ETFs so when it is time to buy we are ready to pounce.
Bear Market = Buying Opportunity
The S&P 500 moved into Bear Market territory today officially by dropping 20% from its high set in late April. Even though the move is great for headlines it is not a significant moment for me. Whether the index is down 18% or 25%, either way it hurts.
At one point this morning the S&P 500 was down another 25 point before rallying back to move into the green during the lunch hour. It was another crazy day for stocks and we still have 3.5 hours remaining. It is truly anyone's guess as to where the market closes, but I will guarantee that there will be some wild swings before the closing bell rings.
So a buying opportunity? Yes it may sound crazy to use the word buy on the same day the market goes into a bear market. But then again I was never conventional and when has conventional made money in the stock market??
Here are a few stocks/ETFs that have been hammered and are now becoming hard to not buy at such discount prices.
(BUT AS I ALWAYS SAY, STOCKS ARE CHEAP - BUT THEY CAN GET CHEAPER!!)
SPDR High Yield Bond ETF (JNK) - Yep, a corporate bond ETF makes this list. JNK yields 9% and has been absolutely hammered recently. Down 8% in the last three weeks as investors fear the bonds in the ETF will default. As long as they make their interest payments we are all good. And with a large basket of bonds in the ETF the company-specific risk is removed. **Disclosure: PFG does own JNK for clients.
Applied Materials (AMAT) - The semi equipment company broke support yesterday at $10, but attempting to regain it today. With a 3.1% dividend and a PEG ratio down to 0.87. A value, income, and potentially growth play all in one.
Arcelor Mittal (MT) - The steel company broke to the lowest level in 7 years and is now trying to build a base at the $15 area. With a dividend of 4% and a PEG of 0.29 the stock is a screaming value buy. BUT, it was a value at $20. So be careful when considering this aggressive stock.
At one point this morning the S&P 500 was down another 25 point before rallying back to move into the green during the lunch hour. It was another crazy day for stocks and we still have 3.5 hours remaining. It is truly anyone's guess as to where the market closes, but I will guarantee that there will be some wild swings before the closing bell rings.
So a buying opportunity? Yes it may sound crazy to use the word buy on the same day the market goes into a bear market. But then again I was never conventional and when has conventional made money in the stock market??
Here are a few stocks/ETFs that have been hammered and are now becoming hard to not buy at such discount prices.
(BUT AS I ALWAYS SAY, STOCKS ARE CHEAP - BUT THEY CAN GET CHEAPER!!)
SPDR High Yield Bond ETF (JNK) - Yep, a corporate bond ETF makes this list. JNK yields 9% and has been absolutely hammered recently. Down 8% in the last three weeks as investors fear the bonds in the ETF will default. As long as they make their interest payments we are all good. And with a large basket of bonds in the ETF the company-specific risk is removed. **Disclosure: PFG does own JNK for clients.
Applied Materials (AMAT) - The semi equipment company broke support yesterday at $10, but attempting to regain it today. With a 3.1% dividend and a PEG ratio down to 0.87. A value, income, and potentially growth play all in one.
Arcelor Mittal (MT) - The steel company broke to the lowest level in 7 years and is now trying to build a base at the $15 area. With a dividend of 4% and a PEG of 0.29 the stock is a screaming value buy. BUT, it was a value at $20. So be careful when considering this aggressive stock.
Monday, October 3, 2011
BNN Appearance Monday Morning
Below is a link to my Monday Morning Market Update with Canada's BNN (Business News Network).
http://watch.bnn.ca/business-day/october-2011/business-day-october-3-2011/#clip542881
http://watch.bnn.ca/business-day/october-2011/business-day-october-3-2011/#clip542881
SP500 Chart with Support Level
The S&P 500 is once again testing the support level, which is the bottom of the current trading range. The lower green line (support) is at 1120 and that represents where the index closed on 8/8/11. A close below 1120 would be a negative technical signal for the near-term movement of the index.As always, you must wait for close for confirmation. The index broke down below the line in the past, only to rally the next few days. Today's action in the next 5 hours will be crucial for the remainder of the week's action.
Early Rebound on ISM Number
After opening lower and at one point logging a 1% loss, the US indices turned things around after the 10am release of the ISM Manufacturing number, which came in better than expected.
The reading of 51.6 beat expectations and was better than the 50.6 number in August. The surprising number sent stock higher initially, but of course the buying waned within the next 20 minutes.
The report showed activity in the manufacturing sector expanded for the 26th consecutive month (reading above 50) and the overall economy grew for the 28th consecutive month.
This may not be enough to turn around the market, but in combination with a better than expected Construction Spending number it could be enough to hold the market up from any big selling to begin the new week and quarter.
BIGGEST GAINERS on the S&P 500 at 10:25 --
The reading of 51.6 beat expectations and was better than the 50.6 number in August. The surprising number sent stock higher initially, but of course the buying waned within the next 20 minutes.
The report showed activity in the manufacturing sector expanded for the 26th consecutive month (reading above 50) and the overall economy grew for the 28th consecutive month.
This may not be enough to turn around the market, but in combination with a better than expected Construction Spending number it could be enough to hold the market up from any big selling to begin the new week and quarter.
BIGGEST GAINERS on the S&P 500 at 10:25 --
- Yahoo (YHOO)
- Netflix (NFLX)
- Zions Bancorp (ZION)
- Newmont Mining (NEM)
- CF Industries (CF)
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