News

Housing and Auto Data Send the Market Higher

By Robert Perrego, at 5:36 pm on February 2nd, 2010

Housing, financial and auto companies blazed the market path lower last year as the poster children for the economic nightmare that took the Dow Jones Industrial Average from its all time high of 14,198 to the low at 6,469.  Today, while Paul Volcker continued beating up on the banks, Ford Motor Co. (NYSE: F), General (Government) Motors and D.R. Horton Inc. (NYSE: DHI) released data giving the market optimism and also 117 points.  Ford reported their January sales increased 25% and GM was up 14% while Toyota and Chrysler dropped.  D. R. Horton actually posted a profit and the Pending Home Sales Index increased by a percentage point on a month-over-month basis, showing a flicker of strength in the housing sector.

The Dow Jones Industrial Average added 111.32 points (+1.09%, 10,296.85) with 28 of 30 companies finishing with gains while the S&P 500 rose 14.13 points (+1.30% ,1103.32).  The Nasdaq 100 lagged behind, gaining only 16.20 points or 0.92% (1,776.92)

Treasury Secretary Timothy Geithner defended the largest budget ever proposed in the history of the world, as Senators grilled him on President Obama’s new $3.8 trillion budget, fully loaded with a $1.56 trillion deficit.  At the same time, Paul Volcker was defending legislation to limit proprietary trading by banks.  Somehow, someone got the idea that proprietary trading caused the credit crisis.  Back when professional proprietary equity trading was taking off (prop day-trading), it seemed every evil deed within 50 miles of Wall Street was blamed on ‘proprietary trading’, ‘fast money trading’ and ‘day traders.’  I was a prop trader for six years and from what I remember, the people that knew the least about trading always blamed trading, even when it had absolutely nothing to do with trading.  “Deja vu all over again.” (Yogi Berra 1960)

New York spot gold added another $8.30 an ounce (+0.75%, $1,113.90, 4:32 p.m.) after popping up $25 yesterday as the PowerShares DB US Dollar ETF (NYSE: UUP) looks like its recent rally is over.  The UUP lost 0.34% today as it closed below its 200 day exponential moving average and also broke below the uptrend line that has been in effect since January 14th.  Nothing moves straight up or down in the financial markets so, while the UUP’s medium term trend is still up, the short term picture is down.  The UUP closed at $23.27 and the 200 day EMA is at $23.31.  The relevant support levels below are $23.16 (top support) and $22.90 (50 day EMA).

Oil is on fire, literally and figuratively, as a cold winter in the United States has propped prices up and Nymex crude gained $2.64 a barrel (+3.55%, $77.07, 4:32 p.m.) for a second straight very strong day.  Strength was seen in most commodities and the record $1.56 trillion proposed budget deficit cannot be ignored here.  If we start running the dollar printing presses like that budget says, while holding interest rates low to create jobs, some very nasty inflation will not be far behind.

PNC Financial Services Group (NYSE: PNC) is going to offer $3 billion of common stock in order to redeem $7.6 billion of preferred shares it gave the U.S Treasury for a TARP loan.  One by one the private firms are paying the TARP back with interest and click here for a great web page that tracks where all the money went.  From what I can see Fannie Mae, Freddie Mac, General Motors, Chrysler and AIG have all our tax money.  I hope Volcker makes sure the auto companies, government sponsored entities (Fannie and Freddie) and insurance companies are not engaged in proprietary trading to protect us from more economic calamities.

We have MBA Purchase Applications reporting at 7 a.m. tomorrow, the Challenger Job-Cut Report at 7:30 a.m., ADP Unemployment at 8:15 a.m., the ISM Non-Manufacturing Index at 10 a.m. (51.0 expected) and the EIA Petroleum Status Report at 10:30 a.m.  Watch the oil market around that EIA report as the 6% gain in crude in the last 2 days will set oil up for a plunge if the numbers do not come in bullish.

Selected earnings estimates for Wednesday, February 3, 2010:

AFFX -0.10 after the close, AKAM 0.43, AMP 0.75 atc, ARW 0.61, AIZ 1.01 atc, BDK 0.77, BRCM 0.44 atc, CSCO 0.35 atc, CMCSA 0.27 before market open, DBD bmo, FNF 0.22 atc, HNT 0.67 bmo, HMC bmo, IP 0.23 bmo, ITT 0.93 bmo, WFR 0.00, MWW -0.01 atc, NOV 0.77 bmo, ONNN 0.14 atc, PFE 0.50, RL 1.01 bmo, RVSN 0.17, R 0.47, SLAB 0.62, SPF 0.02 atc, TMX 0.40 atc, TMO 0.88 bmo, TWX bmo, V 0.91 atc, WWW 0.45 bmo, YUM 0.48 atc.

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

Wall Street Wrap

Slow Day on the Street

By Robert Perrego, at 4:36 pm on December 23rd, 2009

Two of the four economic releases today showed a weak housing market after yesterday’s market experienced a modest rally off of the Existing Home Sales report.  A confirmation of the Existing Home report with strong numbers from the MBA Purchase Applications or the New Homes report would have been very bullish for the market, but as it is, the lone solid number from yesterday looks like an outlier.  The question is, was yesterday’s number the outlier or today’s?  Reading the reaction of the home-builder stocks, the rise yesterday was more than the drop today, so we can say the market thinks the positive trend illustrated by yesterdays number to be the path.  Over two days Pulte Homes Inc. (NYSE: PHM) is up 64 cents (+6.8%, $10.06), Ryland Group Inc. is up 80 cents (+4.05%, $20.54), D R Horton Inc. (NYSE: DHI) is up 38 cents (+3.54%, $11.12), Toll Brothers Inc. (NYSE: TOL) is up 77 cents (+4.19%, $19.15), Lennar Corp. (NYSE: LEN) is up 41 cents (+3.19%, $13.27) and Beazer Homes USA Inc. (NYSE: BZH) is up 3 cents (+0.60%, $4.99).

The market was very slow today with the biggest action coming at 10 a.m. when the New Home Sales number was released.  That number came out below expectations and the market sold off immediately with the Dow Jones Industrial Average dropping 30 points within the next 24 minutes.    The DJIA has dropped faster and farther many times so even this action, though it was the quickest move today, was not much.  The DJIA finished up 1.51 points (+0.01%, 10,466.44) on a day that probably drove day traders crazy and cost them money.  The S&P 500 added 2.89 points (+0.25%, 1,120.76) and the still outperforming Nasdaq 100 gained a decent 12.48 points (+0.67%, 1,851.99).

The New York Spot price for gold gained $3.80 an ounce ($1,087) after being up more than $12 during the day.  The SPDR Gold Trust (NYSE: GLD) was strong most the day, trading as high as $107.45 before gradually declining into the close at $106.55.  There was a sale of about a half-million shares in the last minute of trading that dropped the stock almost 30 cents.

Nymex crude jumped $2.20 a barrel (+2.96%, $76.60, 4:11 p.m.) on inventory supply data and dollar weakness.  The dollar opened lower today lending to the strength in gold and oil.  The dollar-euro relationship has traded to within 25 cents of its 200 day moving average and some say this may mark the end of the recent dollar rally.

Tomorrow we get Durable Goods Orders (0.5% expected) and Jobless Claims (470,000) at 8:30 a.m. and Natural Gas inventory levels at 10:30 a.m.

Friday the markets are closed for Christmas.

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

Wall Street Wrap

Fed Says Job Losses Abating, Leaves Rates Unchanged

By Robert Perrego, at 4:48 pm on December 16th, 2009

Well the good news is job losses are slowing down but the bad news is we are still losing jobs.  In the last meeting for 2009, the Federal Open Market Committee voted to keep interest rates “exceptionally low” for “an extended period of time” while noting that they are seeing some improvement in household spending.  This meetings statement was very similar to the past few except some comments were made on slowly improving areas of the economy such as household spending and decreasing job losses.  These statements strengthened the dollar with the US Dollar Index Future spot price trading up on the announcement.  You do not hear ‘The Fed’ without hearing ‘exit strategy’ these days and as it is widely thought that raising interest rates with 10% unemployment would not be greeted favorably by the Obama Administration, the first step towards the ‘exit’ would be to stop their quantitative easing programs.  So, The Fed also stated they will continue to purchase agency mortgage-backed securities through February 1, 2010 but after that ‘the store is closed.’

After The Fed announcement at 2:15 p.m., the Dow Jones Industrial Average dropped about 30 points net into the close to finish down 10.88 points (-0.10%, 10,441.12) while the S&P 500 dropped about 5 points on the announcement and finished up 1.25 points (+0.11%, 1109.18).  The Nasdaq 100 rose 2.61 points (+0.14%, 1,800.82).

The dollar traded up on the announcement and basically closed unchanged on the day.  Earlier in the day the usual relationships were acting as expected with the dollar down and stocks and commodities up.  Interestingly, the dollar rallied into the end of the day and erased its losses while gold and oil also closed near their highs on the day.  New York Spot Gold added $13.60 an ounce (+1.21%, $1,136.60, 4:14 p.m.) and the SPDR Gold Shares (NYSE: GLD) bounced off support and broke higher by $1.36 (+1.25%, $111.59).  The GLD’s chart looks very nice for more upside movement as the latest gold pullback may have seen its lows.  Paulson, Einhorn and most every other gold bull was saying they would be buying on dips and I wonder just how much they were able to add to their positions over the past 3 or 4 days.

Nymex crude added $2.03 a barrel (+2.87%, $72.72, 4:09 p.m.) as it seems the pullback in oil may be over with too.  We were below $70 a barrel on Monday but a nice run over the last two days has changed all that.  Copper, steel, coal and agricultural commodities were all up as well.

Another federal agency was in the news today as the Federal Trade Commission filed a lawsuit against Intel Corp. (NSDQ: INTC) for anti-competitive behavior.  I think the legal community founded Intel and they didn’t do it for semiconductor chips as this company generates lawsuits about every other day.  The lawsuit cites bundling practices and even a secretly redesigned compiler software that makes their competitors chips run a little slower.  Intel finished lower by 42 cents (-2.12%, $19.38).

Nvidia Corp. (NSDQ: NVDA) jumped higher as they are one of the firms that Intel is supposedly squeezing out of the chip market as the graphics chip company added $1.26 (+8.05%, $16.91).

Housing companies were strong today as Housing Starts were up 46k over last month and Permits were up 32k.  Beezer Homes USA Inc. (NYSE: BZH) gained 13.36% (+$0.60, $5.09), Pulte Homes Inc. (NYSE: PHM) gained 5.06% (+$0.45, $9.34), D. R. Horton (NYSE: DHI) gained 4.89% (+$0.48, $10.29) and Lennar Corp. (NYSE: LEN) was up 4.73% (+$0.57, $12.62).

The big economic news of the week was the FOMC meeting and with that out of the way we have Jobless Claims tomorrow at 8:30 a.m. with the expectations being 465k with a range from 460 to 470.  Friday is a quaruple witching day in the options market.

Tiger Woods name was only mentioned 232,000 times on CNBC today as something really important to all of our lives probably did not happen or have anything at all to do with Tiger Woods but CNBC was there to cover it.

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

Wall Street Wrap

Dell Earnings Weigh on Tech, Market Drops Marginally

By Robert Perrego, at 5:59 pm on November 20th, 2009

Merrill Lynch downgraded the semiconductor sector yesterday, causing chip giant Intel Corp. (NSDQ: INTC) to take a 4% hit.  Today it was the computer maker that boasts “Intel Inside” turn to get hit as after the close yesterday, Dell Inc. (NSDQ: DELL) reported earnings that were five cents below expectations ($0.23 vs. $0.28).  Dell also missed their top line revenue number by $300 million ($12.9 billion vs. $13.2 billion) and the stock got hit for 9.95% today, dropping $1.58 to $14.29.  The market was down most of the day but staged a late  rally, turning the Dow Jones Industrial Average positive briefly.  However, the tech heavy Nasdaq 100 opened in negative territory and stayed there all day.

The Nasdaq 100 dropped 8.80 points (-0.49%, 1,764.39) and was the weakest of the three major indexes.  The Dow Jones Industrial Average lost 14.28 points and was in positive territory fifteen minutes before the closing bell, but slid into the weekend.  The S&P 500 lost 3.52 points (-0.32%, 1,091.38).

The strongest news of the week probably came from Microsoft (NSDQ: MSFT) as they reported ‘Windows 7′ sales are very strong.  Mr. Softy went out at $29.62 this week and this stock has not seen these levels since June 2008.  I recall some of the talking heads on TV recommending buying Dell a month ago or so, on the premise that the whole computer upgrade cycle sparked by ‘7′ would benefit the computer maker.  We got the answer to that thesis today.  Try again.

D.R. Horton Inc. (NYSE: DHI) released earnings today and lost $0.73 a share which was much better than a loss of $2.53 a year ago.  Analysts expected a loss of $0.30 and this miss brought a fresh wave of selling into the home builders.  Yesterday home builders were hit on a Mortgage Bankers Association report saying that 14.4% of all homes with a mortgage were at least one month delinquent on their payment or in foreclosure.  D.R. Horton got hit for 15.34% today (-$1.88, $10.37) with most the other home builders losing about 3 to 3.5%.

The SPDR Gold Trust (NYSE: GLD) went into the weekend with an all time high close.  Gold has been strong all week, with the GLD closing on its high for the day at $112.94, just 15 cents below its highest trade from Wednesday at $113.09.  New York Spot Gold was up $5.10 an ounce at $1,149.70 (+0.45%, 4:51 p.m.).  Everyday the financial media devotes much attention to gold, and while there are a few gold bears out there such as Nouriel Roubini, the majority of the pundits and financial professionals are very bullish on gold.  There are many arguments to be made about why you should be a bull on gold, ranging from inflation to deflation, declining gold production, the weak dollar, etc… but the only one I need to know is that central banks have flipped from being net sellers of gold to being net buyers.

Nymex crude dropped 74 cents a barrel today and finished the week at $76.72, after trading above $80 a barrel briefly Wednesday.  As oil peaked at just over $80 at about noon on Wednesday, the dollar was trading its low of the week.  The dollar traded higher both Thursday and today and all the carry trade cowboys that are short must be getting nervous.  We could see a spike higher in the dollar if some event triggers a short squeeze as this carry trade is very, very crowded.  The longer term direction for the dollar is most likely lower, but these squeezes can be brutal to sit tight through if you get caught short.

We have a short trading week next week as Thanksgiving Thursday gives the U.S. markets the day off.  Usually Friday is marked by light volume as many traders take the four-day weekend.  We get a GDP report on Tuesday but the week is light on other economic reports, which might be a good thing.  I don’t know how many more housing numbers the market can take like the ones we got yesterday.  It’s Friday and lets worry about that next week.

Have a great weekend!

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

Wall Street Wrap

Wall Street Wrap – Goldman ups Gold to $1,200

By Robert Perrego, at 5:44 pm on November 11th, 2009

Goldman Sachs Group Inc. (NYSE: GS) raised their price target on gold to $1,200, citing continued low interest rates and central bank buying.  The interesting shift over the past year or so has been that central banks are now net buyers of gold, where in the past they were sellers.  “Gold conspiracy” allegations exist, due in part to central bankers being such traditional sellers of gold.  The “conspiracy” is that the world’s central banks are suppressing the price of gold to hide the true rate of inflation.  Goldman has noticed that central banks are now deciding that even if their government needs money, and the gold they have had on hand for decades now has a very large profit built in, the perception is that a) it is going higher, and b) that it is a good way to diversify from paper currency, most importantly the dollar.  Governments from India to China to Chile are now net buyers of gold.

China reported that their industrial production was up 16% showing that somewhere on the planet an economy is doing well.  Next week Obama travels to China and he has stated he will ask them to appreciate their unit of currency, the yuan.  China has seen decent internal economic growth but a large share of their jobs still rely on the export business.  Appreciating the yuan will make U.S. goods cheaper relative to Chinese goods, and thus hopefully create more jobs here at home.  Sounds good right?  Appreciating the yuan also depreciates the dollar even more, and that means the trillion dollars plus the Chinese are holding will be worth less.  The Chinese may agree to appreciate the yuan even though they lose jobs and dollars, as they would like to see the U.S. consumer back on their economic feet and buying Chinese goods like locusts as we did in the good old days.

The reason I am so bullish on gold, and pretty much every other commodity, is that if this economic recovery remains tepid and jobs are hard to find worldwide, we could end up with a spiral race to the basement among the world’s currencies.  Each government will be trying to steal jobs from the others by devaluing their currency to make their products cheaper worldwide.  As the currencies are devalued, relatively, commodities increase in value.  It is not easy to run a printing press and have a gold bar pop out the other end.

The Dow Jones Industrial Index was up 44.29 points today (+0.43%, 10,291.26) with the S&P 500 gaining 5.5 points (+0.50%, 1,098.51) and the Nasdaq 100 put in the strongest performance rising 9.78 points (+0.55%, 1,782.95)

New York Spot Gold is up $11.90 an ounce (+1.08%, $1,117.70, 4:54 p.m.) and traded an all time high of $1,119.60 this morning.  Something VERY unusual happened today as both the Dow and gold rose AND the dollar was UP!  For quite some time now the Dow and gold would go exactly opposite the dollar.  I can see the Goldman stamp of approval on gold hyping up some buyers but the Dow rising too?  This is very strong relative performance for gold, and my chart of the iShares Gold ETF (NYSE: GLD) shows me that gold has now broken out to the topside of the ‘return’ or ‘reaction’ line of its trend channel.  This is very bullish as this means there is NO MORE resistance to the upside.

Nymex crude was up 23 cents to $79.20 a barrel today.  Hurricane Ida turned into tropical storm Ida and is no longer threatening oil production in the gulf.

The home-builders were on fire today with Toll Brothers (NYSE: TOL) saying business jumped a greater than expected 42% year over year.  This had all the home-builders up over 5%.  TOL +16.42%, BZH +12.35%, PHM +8.13%, DHI +5.73% and LEN +5.73%.

Tomorrow we get Jobless Claims.  Let’s look at this positively, Thursdays are always an adventure now.

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

« Older Entries