Stocks Extend Gains for Third Straight Day

Early morning rally from European markets albeit on continued economic weakness helped fuel early morning gains in US Futures. China didn’t help matters with a disappointing Flash PMI reading with the Shanghai falling 2.6%. US economic data didn’t surprise to the upside with the Markit US PMI came in at 52.0 with the expectations at 53.9. The Richmond Fed Index fell to -6 reading showing continued weakness in US Economic data. New Home sales did gain more than expected fueling a big rally in equities. Even with a mini-flash crash mid-date due to the AP being hacked the market was able to claw higher with volume expanding. The market continues its choppy ways as more economic data is set to be released tomorrow. How could we not mention AAPL till the second paragraph? AAPL released earnings at 4:30 pm EST beating estimates for the quarter. Guidance was weak at best with margin compression taking hold. The company raised its dividend by 15% and doubled its stock buyback program by $50 billion! Initially, the stock jumped on the news. However, by the close of the after-hours session the stock fell back below the close of the normal market hours. Weakness is not a trait we want to see in our stocks and with the weakness in AAPL we’ll leave the stock be for now. Outside of AAPL’s earnings the entire after-hours session was filled with earnings disappointments. EW, CREE, PNRA, and AMGN are just a few stocks having a tough time with earnings. AMGN has been a big winner for the NASDAQ producing decent sized gains for the index. VMW was another earnings loser with the stock tumbling 6% in the after-hours session. Holding through earnings is a dangerous game and if you do not have enough cushion or you are holding in size it is prudent to reduce your position. ARMH was certainly an earnings winner, but this time of action post earnings has been somewhat scarce. Stick with your rules and earnings season will go smoothly. Tomorrow we’ll get a read on Durable goods with Autos expecting to bring down the figure. Given all the negative economic readings it would be fitting this number will disappoint too. We’ll follow price and ignore the noise. Stick to your rules and cut your losses!

Stocks Climb off the lows of the Session and Closed in the Green ahead of GOOG Earnings

The market was able to push higher despite disappointing news from existing home sales as well as data from the Richmond Fed manufacturing index. Existing home sales were expected to rise 1.2% but fell 1% and last month’s big number was revised from 5.9% to 4.8%. Richmond Fed manufacturing index fell to -12 while the market expected a reading of +5. Despite the disappointing economic headlines the market was able to push higher. Volume could not match Friday’s option expiry inflated figures. GOOG kicked off big tech earnings season with AAPL set to report tomorrow. The trend continues for stocks and until we have price action suggesting otherwise we’ll stay on this wave. Key ETFs and their short term trends: TICKER ST TREND DATE CLOSE % SPY UPTREND 1/22/2013 149.13 0.54% IWM UPTREND 1/22/2013 89.21 0.72% QQQ UPTREND 1/22/2013 67.18 0.16% USO UPTREND 1/22/2013 35.01 0.69% GLD UPTREND 1/22/2013 163.67 0.36% SLV UPTREND 1/22/2013 31.12 1.01% DBC UPTREND 1/22/2013 28.06 0.29% FXY DOWNTREND 1/22/2013 110.49 1.48% FXE UPTREND 1/22/2013 132.15 -0.03% TLT DOWNTREND 1/22/2013 120.04 0.19% IBM, GOOG, CREE, and ISRG catapulted higher in the after-hour session as Traders cheered their earnings report. TXN did not fare well as the stock is currently lower by 72bps, but completely overshadowed by other reports. The QQQs were trading 45 basis points higher while SPYs were trading 9 basis points higher. GOOG has yet to trigger a buy signal, but if it can break above its pivot would be a breakout candidate. Given the earnings and volume following earnings releases volume should be well above average tomorrow. Last night in our Gold forums we posted regarding the sentiment situation. Sentiment across the board is bullish, but not at extremes just yet. Perhaps with today’s move we’ll see a change in sentiment, but for now we aren’t at extremes. On the other hand, the number of stocks above their 50 day moving average is at highs suggesting there is a higher probability we’ll see stocks take a breather, after all the Dow is up 8 days out of 9 and the S&P 500 up 5 days in a row. Know one knows when this party will end or if it will ever end, but we have our exit plan and when we get our exit signals we’ll take them. There have been very few stocks showing sell signals suggesting we can go higher. Commodities continue to be very interesting with USO and DBC inching higher. Crude oil ended the day with a 96 handle and is poised to continue its recent uptrend. No doubt will higher crude prices continue to put upward pressure on prices. The endless QE the Federal Reserve has embarked on will likely impact prices of every day goods and services. Pain at the pump will soon rise as a concern again, but for now prices are headed higher. Have a great week.