By Robert Perrego, at 4:53 pm on July 8th, 2009
Looking at the 5 minute chart of the Dow and you can see there has been a steady well defined downtrend since last Wednesday, July 1st. The market opened today and traded up until 10:20 a.m. and then rolled over and traded down to and through 8100. At about 1 p.m. Rick Santelli was on CNBC reporting that the $19 Billion 10-Year Treasury Note auction went very well with a 3.28 cover ratio (usually above 2 is viewed as solid, above 3 excellent) and this pulled the market out of its swoon and the ensuing rally brought the Dow right back to the down trend line that has been capping all rallies for days.
After this run-up the Dow once again rolled over and traded as low as 8087 before rallying into the close not only breaking this down trend line, but once it had traded through, the market climbed as high as 8205 before closing up 14.81 points at 8178.41 (+0.18%). Now, while this may seem like a small gain, the ability to close above this trend line is a positive for trading tomorrow. In other positive technical news, a few support levels were traded through but held on the day (Dow 8130, S&P 500 874).
- 5 minute upside break
Before the bell Family Dollar Stores Inc. (NYSE: FDO) beat their numbers and surged on the day showing that not all retail is dead, just that the consumer is becoming a value shopper for more than just stocks.
Just after the bell Alcoa, Inc. (NYSE: AA) announced a beat to earnings by losing less money than they were expected to, dropping 32 cents a share to continuing operations and posted a full 47 cent loss on restructuring charges. Alcoa is the first Dow component to report and officially kicks off the earnings season for Wall Street. Alcoa is usually regarded as a bell-weather for the economy and earnings, as their business is very tied to the economy and a good report by this company usually bodes well for company’s to follow.
In a speech today, Chicago Fed President Charles Evans was quoted as saying; “We expect modest increases in output in the second half of this year followed by somewhat stronger growth in 2010.” (for the full context of the speech click on the above link) This may have lent extra strength to the market as when the regional Fed Presidents speak the markets tend to listen.
Cybercrime jumped onto the headlines as the Treasury Department and the New York Stock Exchange were hit by denial-of-service attacks. Other media sites and sites in South Korea were hit as well and there is speculation the attacks came from North Korea – either the government itself or a sympathetic group. Seeing as there are probably not a lot of top-level programmers around seriously fond of the North Korean government I would think Kim Crazy and Co. had something to do with this.
Oil got hit again (-$2.79, -4.43%) and closed above the $60 mark at $60.16. A recent study has shown that over the past few years there has been a 76% correlation between the moves of oil and the market (source: talking head on CNBC, 7/8). Oil used to be viewed as a ‘tax’ on consumers and businesses thus a rising oil price would mean a down market, but that no longer is the case as the news that pumps up the price of oil is the same kind of news that pumps up the market – good economic news. Out of the March lows besides the financials, oil related stocks and the price of a barrel of oil were the biggest gainers and there are large oil companies in the Dow (Exxon) and the S&P 500 and when their stocks get hit on oil dropping, they help pull the market indexes down.
New York Spot Gold traded down $15 closing at $910.10 an ounce at 4:55 p.m. est.
The Dow closed in the green as did the Nasdaq 100 up 6.75 points (+0.48%, 1411.53) with the S&P 500 dropping marginally losing 1.47 points (-0.16%, 879.56).
The leading sector today was the Consumer cyclicals up 1.38% while finance dropped 2.63%.
Amgen Inc. (NSDQ: AMGN) lept 7.27% on positive news about its bone drug denosumab in Phase III trials. This is no small feat for a company with a market cap this large. Amgen added $3.38 billion to their market cap on this news. That’s a bit better than hitting yesterday’s Mega-Millions for $133 Million.
ICE got their stock put on ice as the Intercontinental Exchange (NYSE: ICE) lost 13% on recent news Washington D.C. thinks slippery happenings are happening in commodities trading, especially in slippery oil. CME Group Inc. (NYSE: CME) also took a 6.44% hit on this same news.
Good news after the bell from Alcoa and an upside break to a down trend line. At 4:52 p.m. Alcoa was trading at $10.02 up from its $9.46 close (+5.9%) Good news at last! Now let’s just stop the news from coming in altogether so we don’t ruin it!
