today’s tape

Stocks continued to advance after the FED’s decision to cut the key interest rate and discount rate by 25 basis points.  This may spark a year end rally that pushes the major indices to new highs.  But not all sectors rallied on the FED’s rate cut.  The homebuilders, mortgage lenders and banks still finished lower.  The XHB (homebuilder ETF) finished at its low of the day.

CFC and PMI also finished much lower on the session.  Interest rate cuts will not suddenly make these stocks rise again.  It provides support to the overall market, but the homebuilders and mortgage names cannot be owned.

Crude oil and gold prices reversed yesterday’s losses to reach new 52 week highs, once again.  The price of crude seems to be headed straight for $100.  The oil service stocks rebounded the most in the energy group, but the solar names have been the main beneficiary of surging energy prices.  FSLR, SPWR and JASO continue to reach 52 week highs almost everyday.

Most basic resource names avoided the decline from the prior two weeks, and they continued to outperform the markets today.  RIO, PCU, FCX, BHP and RTP remain the best names to own.  These companies have great exposure to the developing world, and they should continue to out pace the broad US market.

If the markets can extend today’s rally into tomorrow, the market should have no problem resuming the up trend.  As always, stay with what has been working – high growth  and large cap tech names (MSFT, INTC and DELL), commodity related names and infrastructure.  Though the rates cuts are supposed to help the under performing financial sectors, they should continue to lag.

today’s tape

One day ahead of tomorrow’s FED decision on interest rates, we saw the large cap tech stocks in the NDX outperform once again.  The NDX was the only major index to finish in the green today.  Even though we saw the DOW and S&P 500 retrace back down from their 30 day moving averages, today’s action will likely be trumped by the flurry of tomorrow’s afternoon trading, post interest rate decision.

Regardless of Bernanke’s decision, and the subsequent investor reaction, the financial groups will move the most.  Some groups already moved in anticipation of tomorrow’s meeting.  The homebuilders rallied from an early sell off to gain almost 2%.  Here’s a one day chart of HOV.

This was probably another round of short covering.  The mortgage names weren’t so lucky.  CFC lost another 5% after jumping 33% after the company’s earning release last week.  I still think names like PMI, MTG and may of the banks – WM, WB and C – are great shorting opportunities if they jump tomorrow afternoon after a rate cut.

Commodity prices eased today sending most related shares down, as well.  Though Crude oil fell about 2%, it’s still trading near record highs.  Yet energy stocks are starting to fall.  XOM dropped over 2.5% ahead of its report, due out Thursday.  The big three integrated names (COP and CVX being the other two) are starting to roll over.  I would not be looking at these names right now.  The same can be said for the service sector.  The OIH is forming a similar pattern of lower lows and lower highs.  The best performer – CAM – lost over 7% on 115% of its normal trading volume.

A rare down day for Gold futures dropped names like FCX, ABX  and GG, among others.  Long term, the price of Gold may continue to rise if the FED cuts rates.  Lower rates means a weaker dollar; this will help boost gold.

Outside of the above named sectors, nothing moved substantially.  The airlines jumped as oil fell, but this group remains stuck in a tight range.  The semis were able to move higher against today’s red tape.  Names like NVDA and KLAC were up about 2%, but most names in this sector were just recovering losses from the past few trading sessions.  The SOX still looks ugly.  You need to be overweight tech, but the semis can be avoided.

Tomorrow’s trading will likely be choppy around the unchanged levels until the FED rate decision is announced.  The same game plan is still in play.  Stay long tech, agriculture, infrastructure and mining.  Avoid and thing related to the financials and the suddenly weak energy sector.

today’s tape

I was out of state all day today. I’ll be back with a regular update tomorrow.

today’s tape

Strong earnings from MSFT, pushing the stock to its biggest one day gain in years, and rumors of MER’s CEO being pushed out the door helped spark a broad market rally that extended into the close. Ending the day at the session highs is bullish sign we had not seen in a while. It indicates that the markets may follow through next week into the FED meeting.

Ah yes, next week’s FED meeting. It is widely speculated that Bernanke will reduce rates again. The FED Funds Futures have a cut priced in, with nearly 100% probability. This is why we saw gains in the financial groups yesterday. The shorts are covering their positions ahead of a likely rate cut.

On Sunday, October 21, I warned that the XLF will likely determine whether the market sinks or rallies.

For trading equities, the key for the market is simple; can the XLF hold the support from August?…If the XLF continues to slide, and breaks below the $31.50 level, this market may collapse.

Despite the growing weakness in MER, WM and other names, the XLF held above the August lows. And Friday we saw a convincing move higher. If investors are pleased with the FED’s decision next Wednesday we may see another short term rally in the banks, brokerage houses lenders and housing stocks. But once the affects of the rate cut pass, and the financials become overextended to the upside, I still believe they are right to short. After all, only GS is significantly higher at the moment.

Investors will also be eying the price of Crude Oil next week. Already trading well above $90, $100 doesn’t seem as far fetched as many believed a few weeks ago. Eventually, the price of oil will put a ceiling on equities; but that time is not now. Even with Crude oil at record levels, some energy groups have had problems. The names that represent the OIH are still struggling from SLB’s earnings. At the moment, RIG and CAM are the ones to own. The integrated names are starting to worry me. COP has bounced from its earnings inspired decline, but the stock is beginning a pattern of lower highs and lower lows.

This group will probably follow the lead of XOM after it reports on November 1. The one time weak refineries exploded on Friday as TSO jumped almost 13%. Billion investor Kirk Kerkorian offered to buy 16% of the company.

The mining and metal stocks have been one of the few groups to avoid the selling that has dragged down the S&P 500. On Thursday I mentioned RIO as my future stock to watch. Along with PCU, BHP, FCX and RTP, RIO has been range bound for a month as the markets have swung back and forth. These names all had strong performances yesterday, gapping higher at the open and rallying into the close.

If RIO can break out above $36, another long term trend is likely.

The markets will probably be choppy early next week before the FOMC meeting. But if Bernanke pleases investors (with whatever decision he makes on interest rates), the market may be able to resume its year end rally.

today’s tape

Even with the reemergence of increased volatility, the markets continue to showcase their current upward bias.  We are five trading days removed form the giant 375 point drop in the DOW, but all major indices are are currently trading at a higher price. I find the comparative performance in the DOW, S&P 500 and the NDX particularly compelling.  Here’s a 5 day chart plotting each indices performance.

Notice that the NDX jumped on Tuesday, a direct result of AAPL’s earnings. But most tech names fell today as names like RIMM, GOOG, AAPL and others finally underperformed. This is too small a sample size to make any real inferences. But it appears the NASDAQ is starting to come in line with the DOW and S&P 500 (or vice versa). When the major indices begin to converge when confined to tight trading ranges we often see large break outs in the near future. MSFT reports earnings tonight after the bell, so perhaps it may provide the catalyst needed to jolt this market again.

Three companies that are heavily involved with mortgages may be going bankrupt. CFC, MTG and PMI all look like they are going to zero.  The 10 day loses in their stock prices are quit scary.  This is why you can’t own anything related to the financial sector.  Though, I will make an exception for GS.  It is the only strong performer in the group.

The price of crude oil finally finished a session above $90.  The oil service stocks are a little jittery right now.  Investors are still absorbing SLB’s earnings from last week.  Natural gas stocks have actually become the best energy stocks to own at the moment.  ECA was up over 2% on its earnings report.

The utility names added about 1.5% as a group today.  Both FPL and ETR spiked higher on very strong volume.  The utility ETF, IDU, may be setting up for a nice bullish run.

It’s becoming more and more dicey to own specific technology names.  VDSI, SNCR and NVDA were the latest to drop over 8% today.  The semis continue to get battered and should be avoided in favor of other technology sectors.

Health care stocks were boosted by the earnings of ESRX.  Avoid WLP and UNH.  ESRX and MHS are the ones to own.

Agriculture stocks continue to run up against the falling indices.  POT and TRA each released earnings and traded higher.  AGU, MOS, MON and CF are also worth owning.

Tomorrow will largely be influenced by the movement in MSFT and the price of oil.   If we can avoid the massive intra-day swings of the past few session in favor of one large move up (or down) from opening to close, we may see this market break out of its current trading range.

future stock to watch

When the subprime inspired crash brought down the markets this summer the basic resource stocks held up relatively well during the first two weeks.  But when it was their turn to fall, they dropped about 15% in no time.  Well, if last week’s selling spreads to all sectors (like it did in August) names like RIO may give up another 15%.

If the selling spreads, even the best performers like RIO can start sink like a stone.

today’s tape

The markets finished mostly lower, led by technology, as investors punished AMZN for its third quarter results.  But AMZN had already gained over $9 in the previous session, so today’s 12 point drop isn’t that bad.  Most encouraging was the fact that AMZN gained $5.50 from it’s session lows.  It even managed to climb above and hang on to the current $88 support level.

And the markets as a whole were able to rally into the closing bell, ending the day well off their lows.  This is impressive for a few reasons.  First, he NDX has yet to have any type of sell off – it is still near its current 52 week high.  Second, MER’s report continues to bring the focus back to the subprime problem.  MER threatened to pull down the rest of the investment banks, but the financial groups held up relatively well.  Note the recovery in the XLF to close above the $33 support.

The price of crude oil spiked 3% after falling the past few days, but the equity markets did not seem to mind.  However, the recovery in oil stocks was not as convincing.  Part of this may have been caused by COP reporting a decline in its quarterly net profit.  Interestingly, the refineries mostly added 2-3% today.

The infrastructure names finished mostly hire against today’s tape.  SGR led the way followed by FWLT, JCI and JEC.   The exchanges have been humming along again, and even some of the recent laggards are starting to move.  NYX finally broke out of its down trend down late last month and is starting to reach higher ground.  CME and ICE each gained on strong volume after reporting their earnings.  Even range bound NMX jumped 3% on 162% of its normal trading volume.  There is always acquisition speculation in this group – an added bonus.

The semis are real trouble.  The SMH and SOX each lost 3% today and are amazingly not far from their 52 week lows.  INTC and NVDA each rallied off their session lows and are the only two names you should consider to own.  (The solar names are technically semis, but they are more of an alternative energy play).  You could pair two semi positions by owning NVDA and shorting AMD.

The weakness in the semis worries me slightly.  If the rest of tech starts to roll over, we could be in trouble.  It’s also not pleasing to see the reaction to tech names like JNPR ad RVBD after they release earnings.

The S&P 500 has held the 1490 level I’ve been monitoring, but the downside risk in the financials hands over the index.  Stick with the sectors and stocks that continue to exhibit strength.

today’s tape

Strong earnings from AAPL and late day news of RIMM reaching a deal with China sent tech stocks higher, pushing the NDX to a new 52 week high.  Meanwhile, the S&P 500 still  sits well below its 30 moving average.  Hopefully my persistent cries of staying long tech and shorting the financials invaded your trading strategy long before today’s continued divergence between the two groups.

You can continue to profit from any type of broad market moves by staying long strength and avoiding/shorting weakness.  That’s all I have for today.  Tomorrow will somewhat influenced by AMZN (reports after the bell tonight after gaining 10% today) and by MER tomorrow morning.   Many view MER to be in serious trouble and could report a wider than expected loss after already lowering its third quarter forecast earlier this month.

today’s tape

The markets rallied off their early, substantial losses to finish the session near their high’s of the day.  This was a very bullish move, but a near term bottom may yet to be reached.  Earnings releases will likely determine where we end the week.

The brokerage firms, lenders, banks and home builders, having suffered the worst of last week’s selling, bounced form their early lows and they may be the first group to temporarily bottom. The XLF began the session lower, but buyers came in to bid the stock up 1%.  I can’t upload any graphs at the moment, so you’ll have to find your own.

With most oil and metal stocks still well above their moving average, many names were unloaded for a second straight session.  SLB dropped another 4%.  The OIH traded below the $185 level, but it managed to end the day just above this support level that was once resistance in September.  Most metal companies ended lower, but the group rallied well off their lows of the day.  PCU opened at $121, but reclaimed $8 in the first half hour of trading.  Many gold stocks had similar sessions after the commodity repaired some of its morning loses.

The solar companies had very strong session today.  FSLR, SPWR and JASO are the best performers to own.  Even with crude oil sliding the past few sessions, these stocks continue to rally.

The Chinese names gapped lower, but the FXI climbed all session long to finish higher by 1%.  ACH and CHL each rallied substantially off of their lows.  Chinese stocks remain in strong up trends, even in the face of this volatile market.

The NDX is still the best overall index to invest in.  It gained 1.25% today while the DOW and S&P 500 added just .33%.  If AAPL reports a blow out quarter and surges to a new high tomorrow, this index may reach another 52 week high.

High growth tech is still the best place to invest.  The oil/metal/agriculture/infrastructure stocks should continue to out pace most other sectors.  Just beware that short term fluctuations will pull the price in both directions the next couple of weeks.

future stock to watch

Investors were mostly disappointed with earnings last week.  We will need strong reports from the major companies over the next five trading days.  Leading off Monday after the bell will be APPL.

AAPL has been lumped together with other high growing tech stocks (GOOG and RIMM) as companies that can do no wrong.  RIMM and GOOG had tremendous runs leading up to their reports, and they are both trading higher since releasing their earnings.  If AAPL can continue to please investors and trade higher, technology may remain somewhat immune to any upcoming selling.