If that was a test we just failed!
The Dow did break it’s technical, it crossed 11,100 on the way down to 11,094. That puts us very close to a very terrible ten thousand level… The Nasdaq retreated right back to 2,164, 30 points above last week’s low spike but just barely above the low settle of 2,160 below which we are sure to test 2,025, which is where I now want it as THAT may finally be enough to consolidate for a real rally. The S&P was equally pathetic and landed right on the 200 dma at 1,259 but still above last week’s low spike of 1,245.
That makes the S&P tomorrow’s key indicator as any downward open will put it in a terrible spot. CNBC said decliners led advancers 4:1 but I challenge you to find that many positive stocks. Worst news of the day was that volume finally came in during the last hour and losses accelerated into the bell (note to the S&P – stopping at the 200 dma because you ran out of time to go lower is not what we call holding the line!).
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=1d
Oil went up but, as expected, oil stocks went down anyway. Tomorrow’s inventory should prove very interesting. This is holding in with my theory that demand was poor this weekend and those in the know are selling ahead of the reports.
Gold got off to a good start but settled flat, also as expected. As these commodity moves are occurring against a falling dollar (lowest since last April but still 5% higher than winter ’04) they are actually bigger than they look.
All in all, a terrible, terrible market with virtually no redeeming qualities whatsoever – that probably means we rally tomorrow but I’m not going to hold my breath but my bull market detector has been going off (Yahoo Finance is slow) although it could also be a bear rush.
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What the heck are people selling Google for?
The stock kissed the 200 dma today in the last 15 minutes of trading and looks more likely to break down to $332 than go up to $395. Why is this happening?
Their Q1 market share is up to 50% (6% better than last year).
Q1 Internet ad sales increased 38% from last year to $3.9Bn.
http://biz.yahoo.com/ap/060530/internet_advertising_google_yahoo.html?.v=1
The Q2 estimate for Google is $2.19, even though last quarter they earned $2.29 on 6% less industry revenue at 2% less market share.
Internet ad sales do not count Google’s vast small business revenues through AdWords. It is possible that Schmidt will clear some of this up at tomorrow’s investor conference and, for that reason alone it’s a buy.
Eric, Sergey and Larry all get paid in stock so I’m sure they (and their investors) would like to see an improvement – the question is are you more or less motivated when every dollar in stock price means $10 Million to your personal wealth?
So while it is well known to my readers that I am no fan of the company (more accurately the way it is run as I quite like the concept in general) I still see a possible buy in the making at this level.
The stock is stuck in a channel between the 50 dma at $393ish and the 200 dma at $372ish (hard to be exact on this one) so we really just have to wait for the breakout in either direction. Meanwhile, I will amuse myself with the $410s at $2.60, looking to get out at $5 or if the stock drops below $370. If it runs back up to $390 I will buy the $350 puts for $2.50 (rough guess) and look for $5, stopping out above $393. This should be a fairly low risk way to play the channel and any $20+ spike in either direction will make me very happy.
There is a theory being bandied about that Google is overpaying Dell for desktop space but, even if they are paying $1Bn, they have locked up 20% of all the world’s computer screens which I would think is a pretty good deal in an environment where web advertising is increasing 38% a year (still less than 1% of the global ad market).
Tomorrow will be a good test day for Google, especially if the indexes sink some more as they have often bucked the trends in the past. This stock has lost 20% in the past 5 weeks while Yahoo has been flat and the Nasdaq has lost less than 10%.
http://finance.yahoo.com/q/bc?s=GOOG&t=3m&l=on&z=m&q=l&c=qqqq,yhoo
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VOD was one of the only up stocks I saw today but they opened high and dropped to a 1% gain and, interestingly, the $22.50s actually dropped a nickle to .55, even though they’re now in the money, as nobody has faith in this market. If the Nasdaq turns around, these are a great one to grab.
GS had a lousy day, as expected, and the $145 puts already doubled to $2.30 and, in this kind of market, you should be taking that and running!
CA dropped all the way down to $21 after the as they delayed their results! They also said they have a surprise loss for investors as they screwed up accounting for sales commissions. Now I wish we had gone ahead and shorted it this morning…
GM gave back half of last weeks gains in one day, barely saved by the 5% rule and the closing bell! If I were a GM bull I’d say “sure, Deutche Bank gave them a downgrade, aren’t they German?” but after that I would still have nothing on the buy side.
If you were watching GOLD then you could have been in and out with a profit but the AU $50s finished the day at .70 (down 30%). Notice how GOLD led up and led down during the day:
http://finance.yahoo.com/q/bc?t=1d&s=AU&l=on&z=m&q=l&c=gold
TIF lost 1% today but with earnings out tomorrow the Jul $35s held .60. I’ve been thinking about this one and I’m liking it more as I think the fear factor is that costs (silver and gold) are rising but I see several positives there:
- High material prices make Tiffany seem more reasonable compared to jewelers who sell by weight
- Compared to any other jeweler, materials are the lowest cost ratio at Tiffany (you pay for the name baby!).
- They already have $8Bn worth of inventory, which was only worth $6Bn last year!
- I’m sure their buyers know how to hedge a bit after 150 years of bull and bear markets.
