Wall Street Wrap

Market Strong on ISM Number

By Robert Perrego, at 5:37 pm on February 1st, 2010

The Dow Jones Industrial Average has lost 6.1% over the past two trading weeks and closed out last Friday right on a support level.  Futures were up in the pre-market and a favorable report from the ISM Manufacturing Index (58.4 vs. 55.0 expected) at 10 a.m. powered the market higher as the DJIA climbed 118.20 points (+1.17%, 10,185.53).  Apple Inc. (NSDQ: AAPL) gained $2.67 (+1.38%, $194.73) after a two day slide at the end of last week that sliced $15.82 (7.61%) off its stock price.  It seems that the sellers in the tech space were busy hitting Amazon.com (NSDQ: AMZN), as the recent dust-up with Macmillan brought the sellers out in force.  The largest online retailers stock was down $11.59 at its low but rebounded to close down only $6.54 (-5.21%, $118.87)

The S&P 500 rose 15.32 points (+1.43%, 1,089.19) and the Nasdaq 100 gained 19.68 points (+1.13%, 1,760.72)

Commodities were strong as the dollar sold off.  What we have most likely been seeing over the last couple of weeks is the unwinding of the dollar carry trade.  The very low short term interest rates in the U.S. right now has made shorting the dollar and using those funds to buy stocks and commodities a very popular, and profitable trade since March 9th of 2009. As the dollar strengthened on gradually improving economic conditions domestically, the shorts started to get squeezed, bought their short positions in and then had to sell some stocks.  As the dollar has reached a short term peak and the technical picture points to it selling off for now, these same ‘carry trade cowboys’ may be once again shorting the dollar and buying into the stock market.

New York spot gold ripped higher by $24.60 an ounce (+2.28%, $1,104.80, 4:40 p.m.) as the dollar declined, optimism rose about the global economy and on comments by St. Louis Federal Reserve President James Bullard that deflation was no longer a risk for the U.S. economy.  Eliminating the possibly of deflation makes the probabilities of the economy experience inflation increase, and many economists have said that keeping the current near zero interest rates this low for long could even result in hyper-inflationary conditions in the next few years.  This is not lost on the investing public as all one has to do to see an example of the belief that gold is an inflationary fighting vehicle, is to turn on any financial television station and count the number of advertisements about buying or selling gold you see per hour.

Inflation expectations also increased as President Obama unveiled the 2011 budget with a whopping $1.56 trillion deficit.  Last week Obama was promising a spending freeze in 2011 during his State of the Union speech and this week we have the biggest spending budget in history and a record projected budget deficit.  There oughta be a law!  Actually I think there is one, but they passed another one exempting all the politicians in Washington D.C. from the first one.

Black gold had an even stronger day than yellow gold as Nymex crude gained $1.97 a barrel (+2.70%, $74.86, 4:35 p.m.) on optimism about the world economy, dollar weakness and cold weather in the United States.  The Market Vectors Steel ETF (NYSE: SLX) rose 6.01% (+$3.28, $57.79) after getting sold off for almost 20% over the last three trading days.  Sugar ticked a 29 year high ($30.40) on the Intercontinental Exchange, the iPath Dow Jones-UBS Copper ETF (NYSE: JJC) was up 2.10% (+$0.87, $42.38), the Market vectors Coal ETF (NYSE: KOL) gained 3.22% (+$1.06, $33.91) and the United States Natural Gas Fund (NYSE: UNG) was up 5.26%, (+$0.49, $9.80)

Tomorrow we get the number for Motor Vehicle Sales (8.37 M expected), the ICSC-Goldman Store Sales at 7:45 a.m., the Redbook at 8:55 a.m. and the Pending Home Sales Index at 10 a.m.  Treasury Secretary Timothy Geithner testifies before the Senate Finance Committee on the fiscal year 2011 budget at 10 a.m. and at the same time Paul Volcker testifies on regulations to limit high-risk bank activities before the Senate Banking Committee.

Selected earnings estimates for Tuesday, February 2, 2010:

A quick scan will show you that we have a decent number of oil companies that are all reporting tomorrow – BP, MRO, SU, TSO and TDW.

ACE 1.93 after the close, AFL 1.15 atc, ADS 1.63, AMB 0.31 before market open, AXE 0.52 bmo, ADM 0.72 bmo, ADP 0.58 bmo, BEAV 0.31 bmo, BP 1.51 bmo, CMI 0.76, DHI -0.14, bmo, EMR 0.42 bmo, ETR 1.55, IRF -0.08 atc, JDSU 0.09 atc, LXK 0.63 bmo, MRO 0.51, MEE 0.27 atc, MET 0.95 atc, NWS atc, PBG 0.43 bmo, PRGO 0.66 bmo, SU 0.36 bmo, TSO -0.92 atc, DOW 0.11, HSY 0.60 bmo, SMG -0.83 bmo, TNB 0.63 bmo, TDW 1.20 bmo, UPS 0.74 bmo, UNM 0.64 atc, VRSN 0.34 atc, WHR 1.32 bmo.

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Wall Street Wrap

4 Good Economic Numbers and The Market STILL Sells Off

By Robert Perrego, at 5:01 pm on January 29th, 2010

If you were still wondering what direction the market was headed in, today should have answered that question for you.  We got a very good GDP number and three other solid economic reports today, but you wouldn’t know it looking at where the market closed.  Apple Inc. (NSDQ: AAPL) got hit again for another $7.23 (-3.62%, $192.06) bringing the two day drop to $15.82 (-7.61%).  Microsoft Corp. (NSDQ: MSFT) reported after the closing bell yesterday and beat analyst expectations, then got sold off all day long after gapping up on the open (-$0.98, -3.36%, $28.18).  Tech has been taken apart over the past two days with the Nasdaq 100 losing 77.86 points (-4.28%)

The Dow Jones industrial Average dropped 53.13 points (-0.52%, 10,067.33) and the S&P 500 closed lower by 10.66 points (1,073.87).  Usually the DJIA and S&P run at about a 10-to-1 ratio, but strength in Home Depot Inc. (NYSE: HD) and a Goldman Sachs upgrade for Wal-Mart Stores Inc. (NYSE: WMT) provided strength to the Dow Average.  Sadly, one of the reasons these stocks were strong and upgraded was they are both firing people, and therefore cutting costs.  About 8 out of 10 stocks on my trading screen finished in the red (lower) today with 12 of the 30 DJIA components finishing in the green (higher).

For the Nasdaq it was a whole different story with the only relative strength of a large cap stock provided by Amazon.com Inc. (NSDQ: AMZN).  Amazon avoided getting sold off too hard by announcing a $2 billion share buyback.  The Nasdaq 100 dropped 30.06 points (-1.69%, 1,741.04) and when the tide goes out, all the ships go down, so Amazon still closed lower by 62 cents (-0.49%, $125.41).  Why would a company announce a multi-billion dollar buyback when their stock is at an all time high, and the market is looking ripe for a retreat?  Maybe the guys running Amazon should go to their website and buy a book or two about technical analysis and trading, because if they started buying today, they stand a good chance of buying too high.

The silver lining to this cloud is that the indexes have all sold off into support levels.  The DJIA closed at 10,063 with 10,090 as support.  Two closes through support are needed to confirm a break and today is only one.  The S&P 500 is right on support at 1,071 and the Nasdaq 100 has support at 1,733.  The first half of next week’s trading will be important to show whether or not this drop is a just a pullback or the beginning of a larger decline.  The fact that the longer term uptrend lines for all three indexes have been broken leads me to believe that the market is done climbing for awhile.  When an uptrend is broken it does not mean the market is going down.  It could mean the market goes into a sideways trend or a downtrend, or it could mean sideways and then a resumed uptrend.  Only time will tell.  I think we go lower from here as it looks like the big boys are selling earnings and unloading stock.

The dollar ripped higher on the strong GDP number (5.7% vs. 4.5%) as the PowerShares DB US Dollar ETF (NYSE: UUP) gapped above its 200 day exponential moving average ($23.32) and traded even higher into its close (+0.77%, $23.45).  Commodities got hit on the dollar strength as copper was off 2.08%, coal dropped 4.56% on bad earnings from Arch Coal Inc. (NYSE: ACI), steel lost 1.62% and the ag’s were weaker by 1.09%.

Surprisingly, gold hung in there tough as now it may be trading as more of a safe haven and a currency than a commodity.  As the money rotates out of equities it looks like some of it is finding a home in the shiny yellow metal.  New York spot gold lost only $5.10 an ounce to $1,080.30, which is a 0.47% drop (4:47 p.m.)  It is unusual that the absolute percentage move in the dollar is greater than the corresponding percentage move in gold.

Oil dropped on the dollar strength as Nymex crude lost 98 cents and last traded at $72.65 a barrel (-1.28%, 4:42 p.m.)

Next week should be interesting, to say the least.  It is Friday now, after the close and high time to close the trading screen and go have a great weekend.

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Tracked.com Topics

The NEW Tech Boom

By Taryn Cooper, at 5:48 pm on December 21st, 2009

Inevitably with the end of the decade near we’re going to hear about Top Ten lists ranging from television shows to albums and now with technology events, according to this post from Tech Republic.  No doubt, technology drove much of the economy over the past ten years, and it is far from bottoming out at this point.

At the end of the year 2000, we saw the tech bubble about to burst, and it’s almost literally come full-circle in this year.  Possibly the biggest the-more-things-change-the-more-they-stay-the-same story of 2009 was that AOL went public,  spinning-off from Time Warner officially earlier this month.

One of the most intriguing stories in tech-media is the advent of social networking sites.  I would love to see the statistics on it, but I am sure there is a high percentage of folks using MySpace, Facebook and Twitter on a daily basis, showing just  how much technology has evolved in the past 10 years.  In fact, an article came out today on Twitter, and how they are in-the-black since it’s 2006 inaugural year.  Remember how long it took tech-retail stalwart Amazon.com to return a profit in the early part of the decade?

Google has also done its part to change the face of technology as well, after going public in 2004.  They’ve been incredibly acquisitive, buying such “hot” technology properties as YouTube and AdMob.  Except for today, when Google almost announced a deal where they would acquire customer-ratings service Yelp.com, however the deal reportedly fell through at the last minute.

Ten years ago, no one had ever heard of “smart phones,” let alone owned one.  Mostly anyone who uses a cellular phone has some kind of  “smart phone” ability, mostly made by Research in Motion or Apple.  Motorola emerged as the Phoenix out of the ashes with its new Droid product this year, making the smart phone choices numerous.

At the end of 2000, websites were shutting down and the “old economy” was thumbing their collective noses at the idea of the “new economy.”  What we’ve seen however in the last ten years is that it’s not only resistant, it has evolved and looks like it is here to stay.  Most of us should be interested to see what is going to happen in the next ten years.

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Wall Street Wrap

Wall Street Bounces Back, A Little

By Robert Perrego, at 5:09 pm on November 30th, 2009

On Friday the markets retreated on news that Dubai World, a government owned investment holding company, was not going to be able to meet payments on their $59 billion in debt.  The company is now asking for a restructuring of $26 billion of that debt.  The bears came out of the woodwork screaming for a market collapse and the Dow Jones Industrial Average dropped 154 points.  Today, world markets firmed as clearer heads prevailed.  First, Bernie Madoff alone beat these guys by $1 billion (U.S. number one again!) and secondly, Dubai is sitting on 80 billion barrels of oil.  Why the markets got scared on this one is beyond me as all those oil dollars should be able to handle this problem without breaking a sweat.

The one question that could be worrying everyone is that there are other cockroaches about to see the light of day and where they will come from and when they are discovered is unknown.  The ripple effects of this problem are not completely known, but Citigroup Inc. (NYSE: C) and the Royal Bank of Scotland have been mentioned as the hardest hit in the U.S. and U.K. respectively.

The Dow Jones Industrial Average regained about a fifth of Friday’s loss or 34.92 points (+0.33%, 10,344.84) and the S&P 500 gained 4.14 points (+0.37%, 1,095.63).  The tech heavy Nasdaq 100 was up 1.97 points (+0.11%, 1,767.43).

Other big news today was all about Black Friday and Cyber Monday.  Depending on the web site or news source you read, sales were up from Black Friday of 2008 or down.  Who to believe?  ShopperTrak had a report that sales were up 0.5 percent and then the National Retail Federation said sales were down 8 percent.  Are these the same guys that gave us “jobs saved and created?”

The one winner everyone seems to agree on is Amazon.com Inc. (NSDQ: AMZN) as the stock closed at a 52 week high at $135.91 today (+$4.17, +3.16%).  Amazon was the most visited site with Wal-Mart pulling a close second.  Yes, that is Wal-Mart online.  While Black Friday is the ‘Super Bowl’ for the brick and mortar retailers, today is supposed to be the day for online retailers.  I have received about 50 Cyber Monday spam e-mails already, and if your Internet is slow tonight it might be your neighbor sucking up bandwidth buying that robot hamster.

New York Spot Gold gapped down on the open, regained ground as the day went on and was up $2.10 an ounce ($1,178.80, +0.18%) at 4:31 p.m.  The SPDR Gold Trust (NYSE: GLD) traded as low as $114.27 before buying pushed the ETF up to close at $115.64 (+$0.58, +0.50%).  Gold gained 13% in November and today closes one of the best months the shiny yellow stuff has seen in 10 years.

Oil spiked on reports that five British sailors aboard a racing yacht had been seized by the Iranian Navy and on a weaker dollar.  I guess these guys could sail fast but navigation was not their strong point as they supposedly wandered into Iranian waters, which I would assume no one does on purpose.  Nymex crude was up $1.23 a barrel (+1.62%, 4:29 p.m.) at $77.26 after trading as high as $78.00 on the news.

We have a full week of trading and on Friday the Employment Situation number is looming.  Expectations are that the current 10.2% unemployment level will either stay flat or even decrease.  While the weekly Jobless Claims numbers have been coming down slowly, I don’t think a decrease is coming as the only stories I see about jobs are about companies cutting more jobs.  Tomorrow we get Motor Vehicle Sales (7.75 million expected) and at 10 a.m. we get ISM Manufacturing Index (55.0) and Construction Spending (-0.4%).  Wednesday brings the ADP Employment Report at 8:15 a.m. with the follow up number for that being Thursday morning’s Jobless Claims (485k) at 8:30 a.m.  Also on Thursday we get the Productivity and Costs report (8.6%, -4.2%) at 8:30 a.m. and the ISM Non-Manufacturing Index (52.0) at a.m.  Friday is the big unemployment number and Factory Orders (0.2%) at 10 a.m.

Fed Governors are going to be speaking with Philly Fed President Charles Plosser on Tuesday at 12:20 p.m. and then again Friday at 10 a.m..  Chairman Bernanke appears before the Senate Banking Committee for reappointment on Thursday, and I am sure CNBC will be airing some of the very entertaining and witty verbal exchanges.  My favorite part is when Senator Blowhard makes a 15 minute speech prior to asking a 4 second question and then does not want to wait for a long detailed answer as he will claim he is running out of time.  St. Louis Fed President James Bullard speaks at 1:15 p.m.

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News

Hunt for a Green October

By Mark Pason, at 5:37 pm on October 27th, 2009

October, the month of Halloween, has been anything but scary for a few tech titans.  Jeff Bezos, the Founder, Chairman, CEO and President of Amazon.com (NYSE:AMZN) is having quite a month so far.  In a time where many CEOs and Board Members own very little of their company’s stock, Bezos continues to put his money where his mouth is, still owning almost 22% of AMZN’s total shares outstanding.  As of Tuesday’s close, Bezos has made an October profit of $2.96bb.  Bill Gates, who owns a little over 8% of Microsoft (NASDQ:MSFT), through Cascade Investments, made a $2.6bb profit so far in October.  Steve Jobs who, surprisingly, owns less than 1% of Apple Inc. (NASDQ:AAPL) cleared only $91mm on his 5.5mm shares.

You will rarely find an executive who has his hands around the day-to-day operations of a company more than Jeff Bezos.  The fact that he owns 22% of the company is a real incentive for him to come to work with his “A” game each day.  One last note about Bezos.  He doesn’t sit on the board of any other public company.  Why waste time and energy at another company’s board meetings when you can be working on the next version of the Kindle, making your $11.5bb worth of AMZN stock worth just a little more?

Greenoctober

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