Is the Google Nexus One Cannibalizing Android? DJIA and S&P set 52 Week Highs
By Robert Perrego, at 4:48 pm on January 7th, 2010The Dow Jones Industrial Average managed a small gain of 33.18 points today and closed at a new 52 week high at 10,606.86 (+0.31%). Not to be outdone, the S&P 500 also tacked on a small gain of 4.73 (+0.41%, 1,141.87) points, which was enough to push the broader index up to its highest close in a year. General Electric Co. (NYSE: GE) posted the largest DJIA component percentage gain (+5.17%, +$0.80, $16.25) as J.P. Morgan Chase & Co. (NYSE: JPM) raised its price target to $22 from $20. The Nasdaq 100 split the market by finishing lower, losing 1.70 points and closed at 1,876.72.
Weighing on the Nasdaq 100 was Google Inc. (NSDQ: GOOG), as the tech behemoth lost $14.16 today bringing its two day drop to $29.89 (-4.79%, $594.10). Was this drop a ‘buy on rumor, sell on news’ fatality as the new Google phone, the Nexus One, was announced yesterday morning? Google’s stock is down from its 52 week high at $629.51 set three days ago, with the biggest news on the company being a new product which is positioned to go into head-to-head competition with the iPhone. Some industry executives are saying that now that Google has its own handset, other phone manufacturers will be less likely to use the Google Android operating system on fears that the company will prioritize its own hardware. So is the Nexus One cannibalizing the Android or is it simply ‘buy on rumor, sell on news?’
Looking at the Google chart gives more reason to worry with today’s close breaking down through an uptrend line in effect since July 7, 2009. The stock closed at $595.10 today and has support just below from its 50 day exponential moving average at $582.38. A break down through the 50 day targets support levels at $550 and then $500 where the 200 day EMA is.
The debate on when the U.S. needs to raise interest rates is heating up again. Over the past few months Fed officials have come out and stated that interest rates will remain at their present 0-0.25% level for an “extended period of time.” Of course it would be just too easy if all the Fed officials agreed so the market had a clear picture, as Thomas Hoenig, President of the Kansas City Fed stated today that the Fed should start raising interest rates “sooner rather than later.” With the Fed’s purchase of mortgage bonds ending on February 1st, interest rates, at least on the mid to long end, may get a mind of their own and start to rise right after the Fed buying stops.
Oil ended its 10-day winning streak as Nymex crude dropped 51 cents to $82.67 a barrel (-0.61%, 4:11 p.m.) and the New York spot price of gold also dropped, losing $6.40 an ounce (-0.56%, $1,131.70, 4:26 p.m.). The usual suspect here is the rising dollar, as the dollar index future spot price was up 45 ticks (+0.58%) to 77.94.
This morning we got the initial Jobless Claims report, which came in better than expected with only 434,000 people registering to get their unemployment checks vs. the 450,000 expected. Tomorrow morning we are going to get the headline employment number at 8:30 a.m., with the expectation that the unemployment rate will rise to 10.1% from 10%. Non-farm month-over-month payrolls are expected to drop by 10,000. A good number tomorrow on the unemployment rate and this market, which just closed at 52 week highs, could take off. Funny thing about being up this high though, as this also means a bad number and we have farther to fall.
One last piece of news to report – it seems that at the 2010 International Consumer Electronics Show in Vegas, every single vendor has unveiled a new e-reader, tablet, three-ringed binder, netbook, notebook and someone even brought pen and paper and gave demonstrations. Just how many of these things do we need anyway?
