Oct 15th 2014 – Stocks Recover Considerably After Freefall

Market Correction

Market View:

Having been in cash for nearly 3 weeks through most of this drop off, I again had no fills on the orders I placed last night as I only re-buy on strength.  And there wasn’t much of that on display for the first half of the trading day.

Although I was very impressed with the comeback today, the S&P 500 was down over 50 points before closing down a mere 15.

So, I think given the market bounce at 1820 on the S&P, we will see a decent uptick from here.  So if you ask me, the bottom is in and we will see at least a considerable lower high on the chart in the coming week.

I will stick my neck out and say I would be surprised if we see 1820 again for a few weeks, if not longer as greed replaces fear in the market.  There was also significant volume at the lows today to warrant this potential outcome.

Market News:

U.S. stocks closed down on Wednesday but recovered significantly from historic intraday losses amid concerns about Europe, Ebola and the economy.

The Russell 2000 and transports turned positive as stocks came off lows in the last half hour before the close. S&P 400 midcaps also traded higher, and the Nasdaq traded briefly in the green.

The Dow Jones Industrial Average closed down 173 points, or 1.06 percent, at 16,141.74, with JPMorgan Chase the greatest decliner as six blue-chips gained, led by Johnson & Johnson.

In a cumulative move of about 1200 points in losses and gains, the Dow came off session lows of a 458-point drop to below 16,000, a level it has not breached since February 14. The drop was the index’s largest intraday loss since a 552-point decline on Sept. 22, 2011.

Earlier, the index fell as much as 369.59 points in the open, or about 2 percent, with the initial decline led by Intel and Disney.

The S&P 500 recovered losses to close down just 15.2 points, or 0.81 percent, at 1,862.50, with financials knocked the hardest and materials and energy the only sectors of 10 gaining.

Prior to the start of trading Bank of America posted a smaller-than-expected loss, while BlackRock reported better-than-expected earnings.

The Nasdaq dipped into correction territory and even turned positive before closing down 11.8 percent, at 0.28 percent, at 4,215.32.

In the morning, European stocks closed more than 2 percent lower on Wednesday as investors shunned risky assets on fears of crumbling global growth, weak economic data, and concerns about the political situation in Greece.

In the United States, transports recovered completely to close up 0.23 percent after a fall of about 2 percent in late morning trade led by a decline in airlines on reports that the new Ebola patient flew the day before falling ill. However, analysts said there were no reports of flight cancellations due to the disease and added that the news had more of a psychological effect.

Stocks held to a downward trend after the Fed released its “Beige Book” that said the economy is growing at a “modest to moderate” pace.

Business inventories rose less than expected in August, and U.S. retail sales fell 0.3 percent in September, slightly more than the expected 0.2 percent decline. The producer price index for September fell 0.1 percent as opposed to expectations of a 0.1 percent gain.

Thursday:

Earnings: Goldman Sachs Group, Google

8:30 a.m.: Weekly jobless claims for week ending Oct. 11

9:15 a.m.: Industrial production for September

10 a.m.: Home Builders Index for October

10 a.m.: Philly Fed

News Sources:  CNN Money & CNBC


Oct 14th 2014 – S&P 500, Nasdaq Composite halt three-day drubbing

Quote 7

Market View:

Today’s blogpost is all about trust.  I have finally arrived at buy orders after sitting out most of the dip from the September High.  I say trust, as I trust my system to keep me out of trouble and get me into great buying opportunities near or at market bottoms.

To be honest, I have no idea if this is the bottom or just another rung on the ladder down.  But I trust my system and therefore I am back into the breach tomorrow.  I am expecting a decent bounce at least, with positive earnings being the focus of Wall Street, we may see a good run up after what has been, in my opinion, too much selling.

There are of course more news on the horizon than earnings, we have quite a few reports out tomorrow, perhaps some will surprise to the upside?

Market News:

U.S. stocks mostly advanced on Tuesday, with the S&P 500 and Nasdaq Composite halting their worst three-day rout since 2011, with the energy sector slammed along with the price of oil, as investors considered earnings from banking powerhouses JPMorgan Chase, Citigroup and Wells Fargo and waiting to hear from Intel.

JPMorgan Chase edged lower after reporting earnings that missed and revenue that beat estimates; Citigroup rose after topping expectations on both the top and bottom lines; Wells Fargo declined after matching profit estimates and reporting revenue just above expectations. Johnson & Johnson erased gains that came after with the diversified health-care company’s earnings.

After a 142-point gain and 47-point fall, the Dow Jones Industrial Average lost 5.88 points to 16,315.19, with Johnson and Johnson leading the drop and Intel leading gains; with the semiconductor giant reporting after the close.

After a dip into red, the S&P 500 added 2.96 points, or 0.2 percent, to 1,877.70, with industrials the best performing and energy leading sector losses.

The Nasdaq gained 13.52 points, or 0.3 percent, to 4,227.17.

On Monday, the S&P 500 finished below its 200-day moving average for the first time since November 2012, leaving it down 6.8 percent from its record closing high on Sept. 18.

Wednesday:

Earnings: Bank of America, American Express, eBay, Netflix

8:30 a.m.: Retail sales for September

8:30 a.m.: Producer price index for September

8:30 a.m.: Empire State Index for October

10 a.m.: Business inventories for August

2 p.m.: Federal Reserve’s Beige Book

News Sources:  CNN Money & CNBC


Oct 10th 2014 – Worst week for S&P 500, Nasdaq since May 2012

QLD

Market View:

Take a look at the system at work in the above picture.  If that doesn’t impress you nothing will!  This is the ETF we trade in our basic service, giving signals on this one ETF, the QLD.

I’m certainly not getting cocky, as nothing will humble you like the stock market, but I am absolutely delighted to see this market fall as hard as it has while I sit in cash waiting to swoop.  Just where this bottom is nobody knows.  This was a huge sell off towards the close.  The bulls have clearly ran for the hills.

We are going to need another sideways plateau before we can go higher, which I suspect we will get early next week. Just as it was in August, these sell offs create a tremendous opportunity to get back in when everyone is fearful. Let it fall some more I say!

Market News:

U.S. stocks fell sharply on Friday, with benchmark indexes falling for a third week in a row, as computer-chip manufacturers led the losses after Microchip Technology lowered its sales outlook.

Equities fell further after Standard & Poor’s downgraded its outlook for France to negative from stable.

Ahead of the open, the Labor Department reported U.S. import prices fell in September for a third month as the price of petroleum prices fell and a stronger dollar made it cheaper for Americans to purchase European goods.

After rising as much as 98 points in the early going, the Dow Jones Industrial Average dropped 115.15 points, or 0.7 percent, to 16,544.10.

Down 3.1 percent on the week, and up 3.1 percent for the year, the S&P 500 dropped 22.08 points, or 1.2 percent, to 1,906.13, with technology hardest hit and utilities faring best among its 10 major sectors.

The Nasdaq declined 102.10 points, or 2.3 percent, to 4,276.24, leaving it off 2.3 percent on the week and up 2.4 percent on the year.

News Sources:  CNN Money & CNBC


Oct 9th 2014 – Worst Point Loss This Year For Dow

Market View:

WOW, just WOW!

Just when I thought I was missing the boat being in cash the market has its biggest drop of the year.

NOW I think we will see it move sideways to slightly higher tomorrow, I very much doubt the bulls will have the audacity to stage another rally after such a terrible dip.  The cartoon above says it all, no encore, just hooked off by the bear!

However, the opportunity is about to knock for those bold enough to grab the bottom of this latest downtrend.

Not that I am sure that it is the bottom of the downtrend, but the probability is high that it will at least be a decent swing higher for a small profit at least.

Market News:

U.S. stocks sank on Thursday, erasing all and more of the previous day’s rally, as investors bypassed U.S. corporate earnings and economic reports to focus on global concerns, including Europe’s softening economy.

Ahead of Wall Street’s start, data showed a 5.8 percent drop in German exports in August, adding to downbeat numbers that had German industrial orders and output falling as well.

Stocks furthered their losses after European Central Bank President Mario Draghi said there are indications that the euro zone’s economic growth is slowing and that central bankers should strive to boost inflation.

Separately, wholesale inventories rose 0.7 percent in August, compared to expectations of a 0.3 percent gain.

Friday:

Earnings: Fastenal, Infosys, Progressive

IMF fall meeting

8:30 a.m. Import prices

9:00 a.m. Philadelphia Fed’s Plosser on monetary policy

1:00 p.m. Kansas City Fed President Esther George on economy

2:00 p.m. Richmond Fed’s President Jeffery Lacker on the economy

2:00 p.m. Treasury budget

News Sources:  CNN Money & CNBC


Oct 8th 2014 – Stocks Rocket After Fed Minutes

Quote 4

Market View:

What a yoyo the last 2 days have been.  Yesterday in my remarks I had said that the one curve ball to break up what was going to be a tight sideways market was the Fed Minutes.  However, I did not expect such a broad rally on the back of some words on paper.

In the medium term this is good news for the stock market, the Fed is basically saying to the economy, we have your back.  So it is good news for equities for sure.

But on the down side for me, it does appear to be a short term bottom indeed and it happened so fast I wasn’t able to capitalise on it.  At the end of the day as the above quote spells out, in such a volatile market with crazy swings up and down it is better to wait for calmer waters and not overtrade!

Market News:

U.S. stocks ended about 2 percent higher on Wednesday as markets extended gains on the FOMC minutes and recovered from Tuesday’s selloff.

Closing 274.8 points higher, the Dow Jones Industrial Average had its best day since December 18, 2013. The index rose more than 275 points in intraday trade, briefly touching 17,000 and surpassing Tuesday’s 273-point loss. The S&P 500 and the Nasdaq had their best day since nearly a year ago on October 10, 2013.

Stocks had traded flat to modestly higher before surging on the release of the Fed minutes in the early afternoon. The report showed that the Federal Reserve staff cut their growth outlook due to the higher dollar, as a number of committee participants had concerns with global weakness.

Thursday:

IMF fall meeting

Earnings: PepsiCo

Chain store sales

8:30 a.m. Initial claims

9:00 a.m. Philadelphia Fed President Charles Plosser on monetary policy

10:00 a.m. Wholesale trade

10:30 a.m. St. Louis Fed President James Bullard, opening remarks at St. Louis Fed conference

10:30 a.m. Oil inventories

11:00 a.m. ECB President Mario Draghi at Brookings, DC

11:00 a.m. Fed Vice Chair Stanley Fischer at Brookings on ECB

1:00 p.m. 30-year bond auction

1:10 p.m. Fed Gov. Daniel Tarullo on regulatory reform

1:15 p.m. Richmond Fed President Jeffrey Lacker on growth and the labor markets

1:30 p.m. Fed’s Fischer at IMF on global economy

3:40 p.m. San Francisco Fed President John Williams on economic outlook

News Sources:  CNN Money & CNBC


Oct 7th 2014 – European Woes Tumble the US Market

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Market View:

Pays to be in cash sometimes!

My target decline of 1940 on the S&P was breached today, but I genuinely think this is the bottom here.  We should see a tight sideways market tomorrow as the bulls got a little carried away on Friday, so have been put in their place today.  Therefore, caution should be the story now causing little movement tomorrow.

From a news point of view the only thing that could really set a spanner in the works to my view above is the Fed minutes that will be released at 2pm tomorrow.  But I seriously doubt there will be any surprises there that haven’t already been priced into the market.

We also have the beginning of earnings season with Alcoa first up as usual, reporting after the bell tomorrow.  If there is going to be a quick recovery from all the recent selling it would certainly help if earning season starts with Alcoa beating analyst’s estimates.

Market News:

U.S. stocks fell sharply on Tuesday, extending losses into a second session, as investors fretted slowing economic growth in Europe and the potential impact on coming third-quarter earnings from U.S. corporations.

The CBOE Volatility Index jumped 11 percent to 17.22 and the Russell 2000 Index of smaller-cap companies shed 1.7 percent.

The International Monetary Fund downgraded its global growth forecast for this year and 2015, with the organization that represents 188 countries now projecting world growth to come in at 3.3 percent in 2014, down 0.1 percent from its July forecast. Next year, it expects growth of 3.8 percent.

German industrial output fell by 4 percent in August, with the worse-than-expected drop coming a day after the country’s industrial orders had their largest monthly decline since the global financial crisis in 2009.

The S&P 500 dropped 29.72 points, or 1.5 percent, to 1,935.10, its lowest level since Aug. 12, with industrials hardest hit and all 10 of its main industry groups losing ground.

The NASDAQ shed 69.60 points, or 1.6 percent, to 4,385.20.

Wednesday:

Earnings: Alcoa, Costco, Monsanto, RPM International, Ruby Tuesday

7:00 a.m. Mortgage applications

8:30 a.m. Chicago Fed President Charles Evans

1:00 p.m. 10-year note auction

2:00 p.m. FOMC minutes

News Sources:  CNN Money & CNBC


Oct 3rd 2014 – Stocks Rally Strong On Payrolls Report

Caution

Market View:

As expected a relief rally ensued, however, I’m cautious about this initial boost.  I think we will see further weakness early next week before we can move higher.  It was just a little too whipsaw like for my liking.

So while I think the majority of the drop is over and a new wave higher is about to start, I think we need to see what happens on Monday before I am ready to commit any capital to this latest euphoric upturn, as according to my system, the downtrend is still in place.

Market News:

U.S. stocks surged on Friday, with the Dow industrials jumping 200-plus points, after a better-than-projected payrolls report bolstered a positive view of the U.S. economy.

The government reported the U.S. jobless rate fell to 5.9 percent in September and companies added 248,000 in payrolls after a 180,000 hike the prior month, more than previously estimated.

Other economic reports had the U.S. trade deficit unexpectedly narrowing in August as exports climbed to a record.

And the Institute for Supply Management said its service index fell to 58.6 in September from 59.6 the month before, with last month’s reading better than the expected 58.5 estimate.

News Sources:  CNN Money & CNBC


Oct 2nd 2014 – US Stocks End Little Moved Before Jobs Report

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Market View:

Despite the recovery from a serious dip today, the European exchanges took an absolute beating on the news of no action from the ECB.  The German DAX going down 2% and the French CAC dropping a whopping 2.8%!

I think we are at a bottom here given the oversold nature of this market as well as the impressive recovery today, but time will tell.  We are certainly due a sizable bounce at least.

Market News:

U.S. stocks finished little moved on Thursday, with smaller companies rebounding after dropping into corrective mode the prior day, as investors mulled an unexpected drop in weekly jobless claims ahead of the monthly payrolls report.

President Barack Obama spoke about the economy in a speech Thursday afternoon from suburban Chicago, saying the United States is making more progress than other countries.

U.S. data had the number of Americans filing claims for unemployment benefits unexpectedly dropping last week, falling by 8,000 to 287,000. The report comes a day before the September jobs report.

Less positive was a 10.1 percent drop in factory orders in August, with the number worse than the estimated 8.7 percent decline.

Stocks had fallen sharply during Thursday’s session after the European Central Bank held interest rates unchanged, and ECB President Mario Draghi saying the central bank would purchase assets for two years or more to lift inflation and increase economic growth.

And, International Monetary Fund Managing Director Christine Lagarde said the IMF would cut its forecast for potential growth, with only a modest pickup expected in 2015.

After finishing more than 10 percent down from its record on Wednesday, leaving it in correction territory, the Russell 2000 erased Thursday losses and turned positive.

Friday:

8:30 a.m.: Employment report

8:30 a.m.: International trade

10:00 a.m.: ISM nonmanufacturing

News Sources:  CNN Money & CNBC


Oct 1st 2014 – Scary Start To October

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Market View:

A mixed bag of economic reports didn’t help matters today after the futures indicated that we were heading lower at the open.  Of course there was no way to predict a drop similar to Thursday of last week.

I see this as an opportunity to get in near the bottom on a very oversold market.  I will have new buy orders very soon.  I just want the dust to settle tomorrow before committing capital.

From a technical standpoint I did not think we would break through 1955, but we did and then some, but the bottom is very close now I think.

Market News:

U.S. stocks declined sharply on Wednesday, with the fourth quarter starting off on a dour note after the S&P 500’s seventh quarterly gain, as investors fretted global concerns, mixed U.S. economic data and earnings ahead.

Benchmark indexes posted their worst beginning to October since 2011 as investors sought safety in U.S. Treasury bonds and gold,with the CBOE Volatility Index, a measure of investor uncertainty, rising. The Russell 2000 fell into correction territory, down 10 percent from its July record.

The Institute for Supply Management reported its manufacturing index hit 56.6 last month.

A separate report had construction spending dipping 0.8 percent in August.

U.S. private employers created 213,000 jobs last month, with the ADP National Employment Report roughly in line with expectations and coming ahead of Friday’s nonfarm payrolls for September.

Thursday:

Earnings: Constellation Brands, McCormick, Actuant, Global Payments

8:30 a.m.: Initial claims

10:00 a.m.: Factory orders

News Sources:  CNN Money & CNBC