Well, Japan and Europe are bouncing back but we have to wait and see how our markets react. I am concerned that Japan’s quick rebound will suck global capital into Asia and away from our lackluster markets.
Cash was a great call yesterday as was obeying the Valero rule which told us well in advance that oil prices were going to come down. At this moment (6am) I am still not ready to jump back in until we recover at least Monday’s open, which is quite a ways away.
A strong market makes dramatic recoveries (like the Nikkei today), not little incremental improvements. The same can be said for a strong stock…
The Nasdaq made only a token recovery yesterday and now needs to break back over 2,300 to avoid a confirmed downtrend. 2,250 is the key resistance on the way down – I would have felt better if we had tested it yesterday.
The S&P is in slightly better shape holding above 1,275 for now but it needs to break all the way over 1,300 before anyone will be impressed.
The Dow, having hit 11,000 already, took a nice bounce off its resistance of 10,825 and looks most poised to recover.
Oil pulled back from a market killing number of $67.50 yesterday as profit taking occurred ahead of today’s inventory reports but could easily break back up if we have a draw down.
The oil traders are catching on to my theory that the supply disruptions in various countries and the Iranian’s sudden interest in Nukes may simply be ploys to pump up the prices. That being said, as long as this game goes on prices will remain inflated but very volatile.
Gold is recovering, as expected and ABX looks like it as low as it will get for a long term play.
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Yesterday’s TOTD NVDA was invalidated by the market action – good thing too as it went the wrong way.
AMD had a wildly successful quarter and looks like it really is kicking Intel’s butt this year. Still I think earning $96M a quarter is stretching a $15Bn market cap a little thin.
APPL posted a phenomenal quarter but in this, “sure, but what will you do next?” world we live in, their guidance was conservative and will cost the company today. This is a normal pattern for Apple and the post-earnings drop usually presents a buying opportunity (but wait until tomorrow).
Google hit my predicted 5% drop yesterday and bounced off of that but just a bit.
DHI posted a strong quarter coupled with a strong outlook, this was a pick way back on 11/16 when it was 30% lower but I still like this stock at $40.
BZH also posted strong numbers but there is renewed fear of Fed activity so it will be interesting to see if the sector can overcome it.
Yahoo looks very attractive at $35 but we need to give it another day or two to see if it can fall a little further.
PFE had a big beat in earnings (after adjustments), this is a real market mover so I hope the numbers hold up and the guidance doesn’t disappoint. The 50 dma of $25 has been a very solid barrier and a move above that line will be very significant for big pharma in general.
JNJ got a nice boost yesterday as it is starting to look like they are playing it my way and letting BSX choke on GDT.
SNE had a great quarter and was only held below $45 by the Nikkei disaster yesterday.
As expected, EBAY can’t say anything that can make this market happy. 36% increase in profit = 5% drop in price in the early market but that should correct a bit – I hate earnings season! Take a look at a chart from last January to see how out of favor this stock can become…
Speaking of ridiculous earnings, 12/4 selection STX apparently didn’t thrill investors by “just” doubling profits and raising outlook for next year. I think the $25 line is being held by option manipulation but the stock is up 100% since November.
Just one week until CY’s earnings release – I’m very excited about my Feb $15 calls! There has been huge activity at $17.50 and $20 so hopefully that’s a good sign. A very interesting 10,000 Jan ’08 $25s went out for a whopping $1.50, that’s a 70% premium!!!
Monday’s not quite TOTD MER had great earnings which should push it well above it’s $71.30 high.
Things that make you go hmmm: Google, after going down $30, then up $60 is now within $1 of where it was on option expiration day last month. This stock is held 35% by insiders and 58% by institutions meaning there is a whopping 7% of the float that gets traded back and forth by retail holders.
MCD has been holding up through thick and thin and I think its really poised to break out soon. I like the March $32.50 for $3.40 (a $1.30 premium) as a nice way to play this short-term. You can also buy the Jan ’07 $30 for $7.40 and sell the Feb $35 for a quick $1.20 but you are severely limiting the upside.
Good trading,
– Phil
