Archive for April, 2010
Goldman Sachs Weighs On Financial Sector. Big Economic Releases Next Week.
Yesterday, the market rebounded sharply and much of the losses from earlier in the week were erased. Strong earnings and likely aid for Greece fueled the rally. Initial jobless claims came in at 448,000 yesterday morning. During the last four weeks, this number has been disappointing and the four-week moving average is moving higher. Next week, the ADP employment index (Wednesday), initial claims and the Unemployment Report (Friday) will be scrutinized. Analysts have been calling for job growth and they want confirmation that last month’s number (160,000 new jobs) was not a fluke. The government is still hiring census workers and …
Greek Aid Is On The Way. Market Discounts Credit Risk and Focuses On Earnings!
As a fisherman, I know that “the bite” is best just before a major storm. I can see the clouds brewing and I respect the warning signs, but they don’t prevent me from “wetting a line”. I closely monitor the conditions and I don’t chase across the lake to my favorite spot. I stay close to shore so that I can quickly reach safety. This is how I currently view the market. The trend is strong and stocks are moving higher. We are in the final stages of this rally and the headwinds are blowing. I want to participate in the …
S&P Downgrades Spain’s Debt. The Euro Credit Crisis Will Grow!
Yesterday, the market declined on renewed European credit concerns. Greek two-year interest rates spiked to 19% even though the EU and IMF have agreed to provide $60 billion in aid. Unfortunately, Greek citizens aren’t grasping the gravity of the situation. Today, Greek Air Force pilots called in sick. They along with many others are protesting austerity programs. Without massive reform, the country will simply burn through the cash. Credit concerns have spread to Portugal and Spain and those yields are pricing in risk. Yesterday, Portugal’s debt rating was lowered and this morning, Standard & Poor’s lowered Spain’s debt rating. This will …
Now Portugal and Spain Have Joined The Party. It’s Not Just Greece Anymore!
For the last two months I have advised subscribers to trade the rally in a very passive manner. “Take a limited number of positions and keep your size small so that you can exit quickly”. Today’s price action demonstrates why this approach was emphasized. The market kept grinding higher on better than expected news. Even though great results were priced into stocks, the results were better than expected. With over a third of the S&P 500 companies behind us, more than 70% of the firms have beaten top line growth projections and over 80% have exceeded net income estimates. The temptation …
Strong News From Cyclical Stocks Helps The Market Tread Water!
Strong earnings continue to fuel this market. Almost 30% of the S&P 500 companies have reported earnings and 70% of them have beat top line estimates. Over 80% of the companies have exceeded profit estimates. Stocks were priced for great news, but the results have been even better than expected. In October and January, stocks sold off after the earnings were announced. That temptation is still there and traders have attempted to “sell the news”. However, the numbers have been so strong that buyers are scooping up shares before the decline can even get started. This morning, Caterpillar and Whirlpool blew …