Stock Market Commentary


Stock Report for August 7th

Posted: August 7th, 2013 at 11:20 pm

All three major U.S. indexes closed down during today’s session for the third straight day as profit taking and fear of stimulus tapering has been evident. The Dow Jones Industrial Average dropped by nearly 100 points before regaining some of its early session losses to close at 15,470.67, down 48.07 points. The S&P 500 and the NASDAQ also regained some of its early morning losses to both close down by about 1/3%. The S&P 500 should find support at 1,650 levels, with any break through this level we could see a much more dramatic pullback than what’s expected.

With two Fed Presidents scheduled to speak today we knew that once again that the day’s trading would be largely focused on the stimulus program. Philadelphia Fed President Charles Plosser ended up cancelling his speech while Cleveland Fed President Sandra Pianalto reiterated what most of the Fed members have been saying for the past month. Pianalto failed to give any time frame, but did say she would be ready to scale back the bond-buying program if the labor market continues to improve.

On the economic front we saw the number of mortgage applications increase by 0.7% after having fallen in four of the past five weeks. With increasing interest rates worries have emerged that higher costs could take some of the strength out of the housing market’s recovery. Fixed 30-year mortgage rates rose again last week to average 4.61 percent, and have now risen over 1% since early May 2013.

U.S. consumer debit numbers for June was also reported today coming in at a less than expected $13.8 billion raising the total to $2.8 trillion. Non-revolving credit, which includes loans for cars and college tuition, rose by $16.5 billion. Revolving facilities, which mostly measure credit card use, declined by $2.7 billion, the most since June 2012.

Tesla continued its unbelievable year after reporting a surprising second-quarter operating profit causing the stock trade above $152.00 a share in after-market trading. Analysts had expected the company to report a loss excluding items of 17 cents a share on $383 million in revenue. These numbers were easily beat coming in at a profit of 5 cents on revenue of $405 million. The carmaker said it had increased its rate of production 25 percent to 500 cars a week and that it had surpassed its expected sales of 4,500 vehicles for the second quarter by 650.

As we begin to come to the end of second quarter earnings season we will see 248 companies releasing their earnings tomorrow. Of the 248, 138 have seen an increase in insider ownership with the likes Chiquita Brands International Inc, Coeur d’Alene Mines Corporation, Allscripts Healthcare Solutions, Inc., and NVIDIA Corporation seeing very strong growth in insider ownership over the past 6 months. On the opposite side of the spectrum we will see 75 companies have seen a drop in insider ownership over the past 6- months including Beam Inc, AMC Networks Inc, Plug Power Inc, and Monster Beverage Corporation.

Stock Report for August 1st

Posted: August 1st, 2013 at 11:19 pm

Economic numbers for the week have been coming in beating expectations and this has given the U.S. markets the added boost to push through to new all time highs. The S&P 500 traded above the 1,700 level for the first time after gaining 1.25% to finish the session at 1,706.87 after setting a new intraday high of 1,707.85. The Dow Jones Industrial Average climbed by 128.48 points, or 0.83 percent, to finish at 15,628.02. The NASDAQ, which has had the best week of the major indexes, added another 49.37 points to close the session at 3,675.74. Following today’s upbeat action the Dow and S&P 500 have climbed more than 19 percent, while the NASDAQ has surged an impressive 21 percent for the year to date.

These positive rallies have been driven by the success of a seemingly improving economy and with the FED confirming that they will continue their bond purchasing program, good news is no longer bad news. Weekly jobless claims fell to a 5.5 year low according to the Labor Department. Also being reported was that the number of planned layoffs at U.S. firms declined although modestly in July, with employers announcing 37,701 cuts last month, down 4.2 percent from June. The reports came ahead of Friday’s widely-watched government job report. Analysts polled by Reuters expect to see a gain of 184,000 in July, after a 195,000 uptick in the previous month. New orders surged, according to the Institute for Supply Management raising the pace of growth to its highest levels since June 2011. The one negative note today was that construction spending declined in June marking its biggest decline since January.

It’s very hard to gauge the markets at these levels and although a pullback seems more than likely, continued positive economic and earnings numbers may keep this rally alive. So far, three-quarters of the S&P 500 companies have reported results, with 67 percent of firms topping earnings expectations and 55 percent beating revenue estimates. If all remaining companies report earnings in line with estimates, earnings will be up 4.2 percent from last year’s second quarter.

The big news tomorrow on top of the government jobs report will be surrounding PC maker Dell. After delaying its shareholder vote on an an offer from CEO and founder Michael Dell to buy the company, shareholders will convene once again on Friday. Unless it’s postponed again, Friday’s vote may prove crucial in determining the future of the struggling company. Its founder and private equity firm Silver Lake want to buy and take the company private, arguing that a painful restructuring can best be performed away from Wall Street’s scrutiny. In an attempt to stop the buyout Carl Icahn, who owns nearly 9% of the company filed a lawsuit today against Dells CEO and Board of Members. Icahn, who has urged fellow shareholders to reject Chief Executive Officer Michael Dell’s and Silver Lake’s offer to buy and take the company private, included a list of demands in his lawsuit, such as that the CEO and his affiliates be prevented from voting any shares bought after Feb. 5.

Tomorrow we will see 45 companies releasing their earnings which is considerably less than what we have seen on average this week. Of the 45, 32 have seen an increase in insider ownership with the likes of Alpha Natural Resources, Cowen Group, Chevron Corp, and Pinnacle West Capital seeing very strong growth in insider ownership over the past 6 months. On the opposite side of the spectrum we will see 9 companies have seen a significant drop in insider ownership over the past 6- months including Immunogen Inc, Viacom Inc, and The Washington Post. Happy Trading!

Stock Report for July 22nd

Posted: July 23rd, 2013 at 6:44 pm

Although many believe criminal charges are in order, Steven Cohen founder of SAC Capital Advisors, has not been able to avoid accusations and will now be forced to deal with civil claims. The SEC announced late Friday afternoon that Cohen is subject to civil claims after he failed to “reasonably supervise” two senior people at SAC Capital who have been accused of engaging in criminal insider trading.

“Both portfolio managers provided information to Cohen indicating that they may have had access to inside information to support their trading,” the SEC said in a statement. “In each case, Cohen received highly suspicious information that should have caused any reasonable hedge fund manager in Cohen’s position to take prompt action to determine whether employees under his supervision were engaged in unlawful conduct and to prevent violations of the federal securities laws. Cohen failed to take reasonable steps to investigate and prevent such violations. ”

As one of the top 150 richest people on Earth and with the strong beliefs by many at SAC Capital that there is very little to build a case on it should be very interesting to see what happens moving forward.

Trading ranges on all major indexes have really tightened over the past few trading sessions but have managed to continue higher. The Dow Jones Industrial Average traded in a very narrow range of only 60 ending the day up a dismal 1.81 points to close at 15,545.55. Microsoft was the big winner on the Dow today trading up by nearly 2% closing at its day high. After suffering a significant sell off on Friday following a miss in earnings expectations. Clearly supported by its 200 day moving average shares have since bounced from its lows and Friday and closed fairly positively today.

The S&P 500 continued its rally which now sits at four days, adding 3.44 to close at 1,695.53, posting a record closing high. The S&P 500 is on pace for its best monthly gain since October 2011. And the Nasdaq advanced 12.77 points to finish at 3,600.39.

Gold has been on quite the terror after hitting as low as 1180.64 on June 28/2013 hitting its highest levels in almost a year after a 3% rally today. Once gold broke above $1,300 an ounce we say a rush of buying by funds and short covering by futures traders. Silver also jumped by 6%. During tomorrows Trading Room tune in for a review on these precious metals to get the inside look from expectations by John and Strath. Happy Trading!

Stock Report For July 15th

Posted: July 15th, 2013 at 8:20 pm

For the third straight session, both the S&P 500 and the Dow Jones Industrial Average closed at new all time highs after a fairly unexciting day of trading Monday. The Dow Jones Industrial Average ended modestly higher at 15,484.26 and is now within 60 points from its all-time high of 15,542.40 hit on May 22. The 8th consecutive session the S&P 500 and the Nasdaq closed higher, with both just narrowly squeaking out gains.

On the economic front, retail sales rose just 0.4 percent in June, missing expectations of a gain of 0.8 percent. It was still the third straight month of gains in sales and followed a revised 0.5 percent rise in May. In the manufacturing sector growth showed expectations accelerating to 9.46 in July from 7.84 in June, beating expectations of 5. Later this week, Federal Reserve chairman Ben Bernanke is expected to be on Capitol Hill for his annual testimony on the economy. With his every word being scrutinized, expect all eyes to be on his address to get more information on expectations for the coming year. Last week Bernanke said that current fed policy would remain accommodative even if the unemployment rate hit the targeted 6.5%.

Citigroup climbed nearly 2% after announcing better than expected earnings for the second quarter beating analyst expectation by 7 cents. This will be one of the most important weeks of the year as we will see many of the business world’s giants releasing their earnings results. This week we will see Goldman Sachs, Bank of America, Morgan Stanley, Google, Microsoft, Intel, IBM and Yahoo and AutoNation all releasing their earnings which should help give a good idea about the true strength of the economy. You will not want to miss tomorrow night’s Trading Room where John and Strath will break down their earnings plays for the upcoming week as we anticipate many fortunes made and lost during the week. Be sure to have the best help to get on the right side of the trade by getting involved in the live call and asking questions. Happy trading!

Stock Report for July 11th

Posted: July 11th, 2013 at 5:19 pm

Nice rally on the S&P 500 today as we smashed through the potential double top and are heading straight for 1,687.18 as the next target. Twiggs Money flow has also managed to stay positive above the 0.00 level creating some healthy inbound money flow.

The question however is will the Fed ‘money party’ reflect in a similar way on the balance sheets of the underpinning companies ,represented by the indexes, as earnings season begins.

An interesting pattern to note however is that as the index continues on with enjoying its new found highs the CBOE Volatity index (VIX) is working its way back to an interesting trend line. A wise man once said to ‘be fearful when people are greedy’. As we fall towards this trend line are we in safe waters? or perhaps as we approaching a dangerous complacency trend line.

Either way our approach will be to hunt for the nasty surprises to the down side. The strategy for next week will be to hunt for weak companies that have rallied into resistance and look for extremely cheap put options that expire on Friday and play a speculative punt that will likely either expire worthless….or!…if the company drops…. could make some potentially lucrative returns.

Stock Report for July 9th

Posted: July 9th, 2013 at 11:18 am

JPMorgan Chase has been in a solid uptrend channel since mid November 2012, have risen from below $40.00 to its current levels of 54.50. Wells Fargo has traded in a similar uptrend channel since November 2012, and hit its high of 2013 at 43.08 early today, both companies release their earnings this week which will be highly anticipated. The big news in the banking sector today was generated by FDIC which will propose a new leverage rule on big banks. Stricter than the international banking regulations known as Basel III, the new proposal sees to require big banks to have common equity equal to at least 5% of their assets. The leverage rule is intended to ensure that banks have enough capital to weather a severe downturn, like the one in 2008. Banks have argued that the leverage rules will cut into their lending by limiting the amount they can borrow to fund loans. Once the proposed rule is approved it will be put out for comment which could lead to further adjustments to the final ruling.

The Dow Jones Industrial Average closed the day in positive territory marking its fourth consecutive session of gains, ending today’s session up 75.65 points, to finish at 15,300.34. The index is now approaching its all-time record close of 15,409.39. After breaking its resistance at 1,624 last week, the S&P 500 has continued to push ahead breaking above the 1,650 level, ending the session at 1,652.32. The S&P 500 however did form a double top at this closing level which is a bearish formation, should it breakout of these levels in the early hours of trading we will likely see the S&P trade near all-time highs before the end of the week.

It does however seem likely that we could actually see a 20 point pullback on the index. After only eking out a gain following a tough day in technology stocks yesterday the NASDAQ had a more impressive session today, closing at its highest levels since October 2000. The Russell 2000 once again finished at a fresh all-time high after closing above 1,000 for the first time last Friday. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, slid near 14.

Tomorrow we will see 17 companies releasing their earnings report for the second quarter with the likes of Fastenal Company, PriceSmart Inc, and Yum Brands as part of the group. Following a record first quarter earnings for the S&P 500, with over 70% of companies beating their estimates by an average of 5.7%. Expectations for the second quarter have once again been reduced so earnings beats seem likely once again. However what will be interesting will to be watching revenue numbers to look for growth, as numbers in the first quarter seemed fairly disappointing.

After investors seemed to ignore the high consumer inflation numbers from China, it may not be as easy for them to ignore the countries trade data numbers for the month of June. Chinese exports for the month of June fell 3.1 percent from a year earlier, the first decline since January 2012 and sharply lower than a Reuters forecast of a 4 percent rise. Meanwhile, imports came in 0.7 percent lower, well-off from expectations for an 8 percent gain. We will see if there is a rollover of these disappointing numbers into the US markets tomorrow.

Stock Report for June 13th

Posted: June 14th, 2013 at 12:52 am

While the Dow Jones needs 72.05 points and the S&P 500 needs 7.03 points to finish in the green for the week both indexes did their best to make it possible today. Ending a streak of 3 consecutive losses the Dow Jones Industrial Average surged 180.85 points, or 1.21 percent, to finish at 15,176.08, after climbing by more than 200 points during Thursday’s session. The S&P 500 jumped 23.84 points, or 1.48 percent, to close at 1,636.36. The NASDAQ rallied 44.94 points, or 1.32 percent, to end at 3,445.37.

It seems that US markets are now less focused on what’s happening in Japan and more concerned with their own backyard as investors shrugged off another steep selloff in the Japanese market. Thursday’s positive run started when weekly jobless claims came in at 12,000 to a seasonally adjusted 334,000 last week, according to the Labor Department, falling near the lowest level in nearly five years. And retail sales climbed 0.6 percent in May, according to the Commerce Department, topping expectations for a gain of 0.4 percent. Retail sales account for about 30 percent of consumer spending. Things continued to look up after the Wall Street Journal reported that the Fed was nowhere close to raising short term interest rates.

Shares in Apple saw a bit of a gain after rumors started swirling that they would indeed look at what Samsung and other competitors have been doing and will be launching iPhones with bigger screens and a variety of colors. I for one would be a huge fan of this as I truly love my Samsung Note 2, which gives me the ability to have so much more control over my phone with such a large user friendly screen. While Apple declined to comment shares of Apple climbed slightly to finish the session off at nearly $436.00.

Video Replay of our CEO making a 80%+ 2 day 80% trade last week

Posted: June 12th, 2013 at 7:20 am

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Another Tasty Trade Today! 7% in less than 3 minutes

Posted: June 5th, 2013 at 5:08 pm

Saw this setup this morning before i jumped in the shower. S&P was at the bottom of its short term Open Range for the day and made for a quick In and out trade a quick day trade using options. Open Range trading is a technique we teach in advanced trading and an excellent tool for any income/career traders.

I love the smell of profits in the morning!

Posted: June 4th, 2013 at 4:18 pm

Why trade? Well… .I took a speculative trade on Freddie Mac on Thursday at $1.73 based on a very specific reversal pattern I look for. After holding the position from Thursday through the weekend I woke Monday morning to watch the shares jump to $2.41 and $2.47 respectively where I exited my position in two separate orders. Moral of the story? Well…with a highly probable rule based trade the 30 minutes of work I put into finding and executing the trade paid for awonderful relaxing weekend and my flight there and back on the sea plane.