Wall Street Wrap

Wall Street Wrap – Amazon and the Dollar Trade Up, Market Drops

By Robert Perrego, at 4:56 pm on October 26th, 2009

Amazon.com Inc. (NSDQ: AMZN) continued its earnings driven momentum higher today adding another 5.2% to the 27% it gained Friday, after announcing earnings Thursday after the market close.  Jim Cramer of ‘Mad Money’ fame stated today that Amazon is the “low cost producer on the web” and is now beating Wal-Mart Stores, Inc. (NYSE: WMT) at that game.  Most people view Amazon as an Internet retailer, but what sets Amazon apart is their technological edge.  Amazon is one of the dominant forces behind the development of cloud computing, a cutting edge area of Internet development, and when you have Ph.D.s on staff trying to figure out how to sell books and iPods better, you have an advantage.

Amazon closed up $6.15 (+5.19%, $124.64) while the rest of the market had a rough slide lower.  The market traded as much as 100 points higher off the open this morning, but at 11:08 a.m., a large block of shares were traded in the PowerShares Dollar Bull ETF (NYSE: UUP) which reversed the dollar ETF from being down 5 cents ($22.38) and after this the dollar traded up as high as $22.60, a 1% intra-day move before closing at $22.58 (+0.66%, +$0.15).  At 11:08 a.m. the Dow Jones peaked at the high of the day (10,070) and reversed to the day’s low (9,849) dropping 221 points intra-day.  The Dow closed down 104.22 points (-1.04%, 9,867.96) while the S&P dropped 12.65 points (-1.17%, 1,066.95).  The Nasdaq showed relative strength on the backs of Amazon and Microsoft, losing only 6.88 points (-0.39%, 1,746.75).

Finance led the sector race lower dropping 1.50% with the multi-line insurers getting clobbered.  Genworth Financial (NYSE: GNW) dropped 7.93% (-$0.84, $9.56) and American International Group (NYSE: AIG) dropped 6.81% (-$2.65, $36.25).  The energy sector was the second biggest loser dropping 1.47% with National Oilwell Varco (NYSE: NOV)dropping 5.43% (-$2.55, $44.34).

Gold, oil, commodities, commodity based stocks and the stock market as a whole dropped on this dollar strength.  The UUP traded 6.85 million shares today, second only to the 6.98 million it traded on September 22, 2008.  The UUP closed right up against the down trend line that has been the defining trend line in the dollar since its second peak of a double top on March 9, 2009.  Remember the significance of that day?  That was the market bottom for the major indexes – Dow 6,547, S&P 500 676, Nasdaq 100 1,044.

New York Spot Gold lost $16.60 an ounce (-1.57%, $1,038.20, 4:06 p.m.) and Nymex crude dropped $1.82 a barrel (-2.26%, $78.55, 4 p.m.)

How far the dollar can run will be in part influenced by this week’s record sale of $123 billion in Treasury Notes.  Also, the Fed is expected to end its $300 billion debt buyback program by the end of the week.  This completion of the debt repurchase plan and the planned sale of a large amount of debt, caused the 10-year to drop and interest rates rose to their highest level in two months.  The higher the rate paid by treasuries, the more the dollar is worth, relative to the rates other currencies earn.

The market seems to be liking the weak dollar, as since the UUP peaked on March 9th it dropped 16.6% to its low close last Thursday while the Dow rose 54% during this same time period.  If the dollar continues upwards from here, weakness in stocks would be the result if the recent ‘Dollar up, Dow down’ relationship continues.

Economic reports due out this week:

  • Tuesday: 10 a.m. Consumer Confidence (54 expected)
  • Wednesday: Durable Goods Orders 8:30 a.m. (1.5%) and New Home Sales 10 a.m. (440K),
  • Thursday: 8:30 a.m. GDP (3.0%) and Jobless Claims (525K)
  • Friday: 8:30 a.m. Personal Income and Outlays (0.0%, -0.5%) and Employment Cost Index (0.5%), at 9:45 a.m. Chicago PMI (48.5) and at 9:55 a.m. Consumer Sentiment (70.0).

Earnings due Tuesday (b = before the market opens, a = after market close):

ACE 1.97 a, AKS 0.00 b, ACL 1.45 a, APOL 1.04 a, AVY 0.57 b, BIDU 1.78 b, BP 1.03 b, CP 0.76 b, CRS -0.23 b, CE 0.43 b, CX 0.14 a, CHE 0.88 a, CPO 0.63 b, CTS 0.07 a, DAI -0.40 b, DV 0.65, DWA 0.16 a, ETFC -0.09 a, ECL 0.60 b, FE 1.03, FTI 0.63 a, FPL 1.43 b, BEN 1.32 b, HRS 0.77 a, IACI 0.13 b, JCI 0.50, LLL 1.85 b, LCAV -0.30 b, MEE 0.17 a, MCK 1.01 a, NSC 0.79 a, NTRI 0.24 a, ORB 0.10 a, PCAR 0.02 b, PDLI 0.26, PLT 0.31 a, RYN 0.41 b, SAH 0.24 b, TXT -0.03 b, X -2.87, VLO -0.33 b, V 0.72 b, WAT 0.77, WYNN 0.15 b

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

News

Wall Street Wrap – The Market closes at its Highest Level of 2009

By Robert Perrego, at 5:12 pm on September 22nd, 2009

All three major market indexes closed at their highs of 2009 today as the march upwards from the March lows continues.  The Dow added 51.01 points to close at 9829.87, the S&P 500 rose 7.00 points to close at 1071.66 and the Nasdaq 100 gained 2.51 points to finish at 1734.09.  The largest percentage gainer in the Dow was Caterpillar Inc. (NYSE: CAT) which rose $1.88 or 3.58% to $54.34.  Dow 10,000 looms on the horizon and many times, when you trade this close to a ‘big round number’ like this, it is like a magnet drawing the market.

Once again energy led the sector race up 2.30% as Smith International Inc. (NYSE: SII) gained $1.64 or 5.82% to $29.79.  The finance sector took second place gaining 1.65% with Citigroup up 22 cents or 4.96% to $4.65.

The dollar gapped lower on the open and closed at a new low for the year causing the commodities and commodity stocks to rise today.  New York Spot Gold was up over $15 in the pre-market, trading as high as $1,020.70 an ounce today and was last seen at $1,014.50 up $11.50 an ounce at 4:33 p.m.

The drop in the dollar pushed oil up as well making its stay below $70 a barrel short lived.  Oil gained $1.84 or 2.64% and was trading $71.55 a barrel at 4:12 p.m.

This will be a busy week in government as the G-20 prepares to meet in Pittsburgh on Thursday and Friday, the Federal Reserve Open Market Committee started a two day meeting yesterday and will announce their interest rate decision tomorrow at 2:15 p.m., and a showdown on health care looms in Washington D.C.

The drama continued in American International Group (NYSE: AIG) as reports yesterday of some type of favorable change in terms regarding bailout funds with the U.S. government might be in the works.  Yesterday the stock shot up over $8 and this morning the stock gapped higher on the open and was continuing its run.  At 3:00 p.m. a rumor circulated around the trading desks that AIG was planning a secondary offering and over the next hour the stock dropped $5.  This drama driven stock must be a day-traders favorite as it has been very volatile ever since the reverse 1 for 20 split back on July 7th.  That is of course if you are on the right side of this volatility.

As one person here at RakedIn was heard to say; “I’m not touching that stock, that thing’s crazy”.

Tags: , , , , , , , , , , , , , , , , , , ,

News

Wall Street Wrap – DELL, AIG and E-Trade make Moves on a Slow Day

By Robert Perrego, at 4:50 pm on September 21st, 2009

As detailed in last Friday’s RakedInSights “Wall Street Wrap,” E-Trade Financial Corp. (NSDQ: ETFC) has been in play with everything from debt for equity swaps, canceled insider selling, debt upgrades and stock upgrades.  Today, on a light volume down day for the market, E-Trade traded up as high as $2.04 or +10.9% and closed at $1.99 on over three times its average daily volume.  E-Trade is in play, and so was American International Group Inc. (NYSE: AIG) on a story that the lawmaker that chairs the Government Reform Committee might make it easier for the insurer to repay its federal obligations.

AIG recently fired up from the low 30’s to the mid 50’s in a matter of days (see past RakedInsights for more details) on a massive short squeeze.  Well, newsflash, this all could be happening again.  As the first squeeze ripped AIG higher on positive company news that caught the short sellers napping, the stock simply traded up too high and I would not be surprised if the shorts got back in sensing a profit opportunity.  This latest news, as AIG is into the government for some $129 billion or so, sounds like a very real positive catalyst for the stock that should send any remaining shorts running for cover.   AIG closed up $8.49 or +21.27% at $48.40.

DELL Inc. (NSDQ: DELL) offered $30 a share cash for Perot Systems Corporation (NYSE: PER), which is a 68% premium to Friday’s closing price.  It seems DELL could be following International Business Machines (NYSE: IBM) and Hewlett Packard (NYSE: HPQ) out of the pure computer hardware business.  Just as HP bought Electronic Data Systems, ironically another company started by Ross Perot, DELL’s acquisition of Perot Systems will diversify their revenue streams, bringing the one time pure personal computer play into the information technology services and business solutions space.

The more predictable and contracted multi-year revenue streams from IT services and business solutions can give a company a higher P/E, and thus a higher stock price, as this stabilization of revenues translates into less risk for the stockholder.

The very large 68% premium bid could be that high as DELL was making sure no one else was going to come in and bid on Perot.  DELL did not want to take the chance of another company entering a bidding war, possibly taking their new strategic direction away from them.  Hit ‘em fast and hard.  DELL closed at $16.01 (-4.07%) and  Perot Systems closed up $11.65 at $29.56 (+65.04%).

The Dow dropped 41.34 points today (-0.42%, 9778.86) and we had a split market with the Nasdaq closing positive (+6.34, +0.36%, 1731.58) on the DELL buy out.  The S&P 500 lost 3.64 points (-0.34%, 1064.66).

The energy sector led the way lower losing 1.01% with finance losing 0.88% and the industrials down 0.73%.  Consumer non-cyclicals were up 0.28%.

Gold opened down double digits as the dollar opened strong today.  New York Spot Gold traded as low as $995.20 an ounce before trading up on mid-day dollar weakness, and was last seen trading at $1,003.10 an ounce (4:20 p.m.).  Oil dropped 3.24% or $2.33 a barrel on the dollar strength, trading at $69.61 a barrel at 4:29 p.m.

Tomorrow we get ICSC-Goldman Store Sales and Redbook reports before the open.  There is a Federal Reserve Open Market Committee meeting on Wednesday and their interest rate decision is expected at 2:15 p.m.  Interest rates are expected to remain unchanged.

Tags: , , , , , , , , , , , , , , , , , , , , ,

News

Wall Street Wrap – $1000 Game On in Gold, Trading 6-Month Highs

By Robert Perrego, at 4:29 pm on September 3rd, 2009

There’s Gold in Them There Hills!  In 2009 gold has traded up to this $1,000 level three times; on February 20th, June 2nd and today the shiny yellow metal ticked $999.50.  While the two previous assaults on four-digit gold did not break through the $1,000 level, looking at the gold chart shows a mountain range with three peaks, and if you go back to March 17, of 2008, you see five distinct peaks where gold trading failed up in this range.

There are many fundamental factors that affect the price of gold, as well as seasonal buying patterns and everything from the value of the dollar to population growth.  The talking heads have been debating these various factors on TV for days now, but I found one article that if it is true – gold has a long, long way up to go.  Mineweb is reporting that China’s Central Television, the main state owned television company, is broadcasting programs to the Chinese people about how easy it is to invest in gold and silver.  Did I say a long, long way up to go, or did I say a long, long, long, long …

Just like with stocks over the past years – associating China with a story gets you supercharged and ‘China + Gold’ could be an extremely powerful pairing.

A technical look at the daily chart of the SPDR Gold ETF (NYSE: GLD) shows a continuation pennant pattern that targets $126, which is equal to about $1250 gold.  Looking at the monthly chart shows a loosely defined inverted head and shoulders bullish bottom targeting approximately the same level of $1250 an ounce.  That means a 25% gain is being signaled by the charts – that is of course if you believe in technical analysis.

Faced with a market that many analysts believe ‘has got ahead of itself’, and the possibility of a pull back, where else are you going to find a 25% return?  To put this in perspective, the Dow would have to trade to 11,658 to gain 25% from here, and I daresay not many people expect that soon with an unemployment rate that will be announced tomorrow and could be as high as 9.7%.

Jobless Claims reported today showed little change in the trend with this week’s level of 570,000 right near the 4-week moving average of 571,250.  The expected consensus was 562,000 claims, and this would have been below the moving average and showed that the unemployment situation was easing, if only marginally.  With last week’s reported number of 570,000 being equal to this week, what we have is a rising stock market and the claims of ‘green shoots’ everywhere, but no confirmation where it just may count the most – in the jobs market.

Tomorrow we will get the Employment Situation Report and the headline number with an expected increase to 9.6% for the unemployment rate.  Currently we are officially at 9.4% unemployment with the range for tomorrow being 9.4-9.7%.

The Dow closed up 63.94 points (+0.68%, 9344.61) with a late day rally accounting for just about all of the days gains.  The S&P 500 broke 1,000 today by adding 8.49 points (+0.85%, 1003.24) and the Nasdaq 100 gained 11.70 points (+0.73%, 1605.98).

The extremely volatile zombie financial stocks that have been trader favorites over the past few weeks are starting to settle down.  These stocks would be the ‘left-for-dead’ trio of The Federal National Mortgage Association (NYSE: FNM), the Federal Home Loan Mortgage Group (NYSE: FRE)  and American International Group (NYSE: AIG) – or as we have all got to affectionately know them as Fannie, Freddie and Ahhhhg! or AIG.  While the volume in these stocks is still well above normal, their intra-day movement has been less the last few days, thus the potential for fast turn-around trading profits has also been lessened.  Take away the lure of fast money and you will start to see less traders getting active in these names.

Except for the last hour or so, we pretty much hugged flat line trading but the late day move propelled the consumer cyclical sector to first place today at +1.85%.  Also strong were the financial and industrial sectors up 1.4% and 1.32%.

Treasury Auctions Announced Today:  Total Next Week = $128 Billion

3-Month Bills   $29 Billion  Auction Date: September 9th

6-Month Bills   $29 Billion  Auction Date: September 8th

3-Year Notes    $38 Billion  Auction Date: September 8th

10-Year Notes  $20 Billion  Auction Date: September 9th

30-Year Bonds  $12 Billion  Auction Date: September 10th

Tags: , , , , , , , , , , , , , , , , ,

News

Market Wrap – Dell and Intel looking good, Dow gains 75 points on the Week

By Robert Perrego, at 5:02 pm on August 28th, 2009

Today the Dow and S&P 500 finished lower while the Nasdaq 100 added 2.27 points.  The relative performance by the Nasdaq was the result of good news out of the hardware space by Dell (NSDQ: DELL), which beat top and bottom line numbers after the close yesterday.

Dell beat the top line revenue number by $200 million ($12.8 billion vs. $12.6) and beat the bottom line earnings number by 5 cents ($0.28 vs. $0.23).  CEO Michael Dell stated that Dell expects strong performance in 2010 helped by a replacement cycle sparked by the release of Windows 7 by Microsoft (NSDQ: MSFT), which is due in October.  DELL gained $0.27 on the day (+1.76%, $15.93).

Intel (NSDQ: INTC) raised their third quarter expected revenues by $500 million saying chip sales were looking up.  Combining this news with the Dell release, a case can be made that the tech sector could be gaining new life and coming out of this recession.  Intel gained $0.78 today (+4.00%, $20.25).

On the week, the Nasdaq 100 was mostly unchanged gaining just over 5 points (+0.3%, 1643.24).  The Dow rose 75 points this week (+0.7%, 9580.63) and the S&P 500 was up 2.8 points (+0.3%, 1028.93).  The week was characterized by low volume and a zig-zagging market with many reversals.  Over the past 5 years the month of August has had the following returns for the Dow; +1.4%, +1.1%, +1.7%, -1.5% and +0.3% with the average being a gain of 0.6%.  With the Dow up 0.7% for the month thus far, it looks like we are right on track to keep with the August trend – a gain with low volume.

Gold gained $6.70 and finishes the week at $955 an ounce.  Looking at the weekly chart of the SPDR Gold Trust (NYSE: GLD), shows that gold has closed out the week no lower than $93.00 in the past 6 weeks, and today’s close at $93.87 is the highest weekly close for the GLD in 12 weeks.  Oil gained 25 cents on the day and traded just below $70 as its low for the week while trading $75 for the weekly high.  Today’s close at $72.76 leaves oil right in the middle of its weekly range.

American International Group (NYSE: AIG) went vertical again, trading up 5 points in the pre-market with the stock spiking to the day high of $55.80 within two minutes of the open.  Yesterday, AIG closed at $47.85, so adding $7.95 within two minutes while trading five million shares may qualify as a blow off top (commonly associated with peaks in a stock).  The trading frenzy settled a bit after the first hour of trading, as the stock proceeded to form a rough symmetrical triangle intra-day, otherwise known as a spring or a coil.  This formation is most commonly a continuation pattern, but can also signal a reversal if the stock breaks down below the lower uptrend line forming the triangle.

A second signal a stock is breaking down out of a triangle is when it trades lower than the previous definable bottom forming the triangle.  AIG broke through this level of $53.80 at 11:25 a.m. and the stock promptly dropped like a stone, trading all the way down to $45.55 in 53 minutes (12:18 p.m.)  To put into perspective how crazy this volatility is, this one move in 53 minutes is more than 99% of stocks move on any given day.  AIG rebounded of its lows and closed at $50.20 (+4.9%, $2.39).

With this being one of the ‘doldrums of summer’ trading weeks for the markets, the traders that are not on vacation and gunned up for action, seem to have adopted Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE), Citigroup Inc. (NYSE: C) and AIG as their ‘roll the dice and let’s have some fun’ stocks.  This is kind of like a group of teenagers hanging out on the street corner trying to see what kind of trouble they can get into to stave off boredom.  If you are playing any of these stocks make sure you are nimble, make sure you are quick because Market Jack can take away this candlestick in the blink of an eye.

The major headlines for the week included; the U.S. is $2 trillion more in the hole, signs the housing market might be bottoming out, Ben Bernanke keeps his job but loses his identity, trading in AIG goes crazy, Alan Stanford engages in blood rituals and the Boeing Dreamliner 787 may FINALLY fly.

Have a greet weekend.

Tags: , , , , , , , , , , , , , , , , , , ,

« Older Entries
Newer Entries »