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!

S&P 500 Hits another High as Crude Oil Nears $100

Once again buyers support the market at the lows. It has been the trend as of late to find buyers as the market appears to be in free fall. Positive data from Case-Shiller did help the mood. Volume rose on the day across the board showing institutions were quite active in the market. Technology stocks, despite AAPL finishing in the green had a tough day with the likes of VMW, WDC, and STX had tough days. This market continues to hit new highs despite “overbought” conditions. The market now turns its attention to tomorrow’s release of fourth quarter GDP and the FOMC meeting minutes. Tomorrow will be a big day for the market with GDP and the Fed. Fed days are always fun with wild intraday swings. GDP estimates range between 1.1-1.5%, but even if GDP prints at 1.5% is still very pathetic. Despite all the Fed’s interventions the economy can only grow at 1.5% is really pathetic. The market may continue its trend tomorrow regardless of the GDP print. Knowing what the GDP figure will be won’t help you in tomorrow’s market. We could guess if the Federal Reserve does not change its language in its policy statement the market will continue higher. If the Fed hints at winding down its massive asset purchase program may be a reason for a decline, but it is anyone’s guess. We continue to be in an uptrend and until we get our sell signals we’ll stay on the long side of the market. We still have a few minor hiccups in the market right now. VMW, WDC, and STX were sore spots on the day and even with good earnings from F the stock couldn’t find buyers supporting higher prices. YHOO posted good results, but the stock gapped to the upside only to find itself lower on the day. Perhaps we are seeing some exhaustion, but not nearly enough to trigger a sell signal. Stay disciplined and keep your emotions in check! Short-term trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 1/29/2013 150.66 0.39% IWM UPTREND NO CHANGE 1/29/2013 90.05 0.06% QQQ UPTREND NO CHANGE 1/29/2013 67.16 0.01% USO UPTREND NO CHANGE 1/29/2013 35.29 1.00% UNG UPTREND NO CHANGE 1/29/2013 18.36 -1.02% GLD UPTREND NO CHANGE 1/29/2013 160.99 0.44% SLV UPTREND NO CHANGE 1/29/2013 30.32 1.57% DBC UPTREND NO CHANGE 1/29/2013 28.16 0.57% FXY DOWNTREND NO CHANGE 1/29/2013 108.05 0.07% FXE UPTREND NO CHANGE 1/29/2013 133.86 0.27% TLT UPTREND NO CHANGE 1/29/2013 117.6 -0.55% Crude oil – USO saw a big jump today along with SLV. Rising commodity prices will certainly squeeze the American consumer. Stay tuned.

The Dow and Russell 2000 Close Positive as the NASDAQ 100 Limps into the Close

Economic news was mixed with a disappointing durable goods figure and a better than expected Kansas City Fed Manufacturing reading. The dollar rose again as the European situation continues to act as an annoyance to the market. Europeans cannot get their act together and we continue to suffer having to see it used an excuse for bad execution. Volume dropped on the day and below average showing institutions weren’t dumping stock. We have seen the market gain support at the lows in back to back sessions as a sign buyers are willing to step in. Today was day 4 of an attempted rally and we’ll be looking for a follow-through day soon if this rally has any legs. The number of AAII bulls jumped back above 30% since it hit lows last week. Bears dropped below 40%, but held just at 38%. Sentiment remains bearish, but well off the extreme levels we saw last week. The Investors Intelligence survey didn’t move much, but tilted towards the bears. Sentiment is by far from the holy grail of investing indicators, but it does help at extreme points. Last week we saw a market massively oversold and sentiment heavily skewed towards the bears. For now, we have lifted these conditions and move forward. Cloud computing stocks took it on the chin after NTAP reported earnings. The stock got hammered and two other names FFIV and VMW were handed heavy losses as well. These moves along with DELL held back the NASDAQ. FFIV may have found support at its 200 day but cloud stocks have not been the leaders like they were in October of 2010. Former leaders tend to be the best shorts and if any of these stocks give us the signal we’ll jump aboard. This market still remains in a precarious position. The S&P 500 and NASDAQ have put in a lower high (end of April) and a lower low here in May. We are in a down trending market. Remember, in the fourth year of a bull market on average a 9 month bear market occurs. Given the lower high and lower low we could be in the midst of the 9 month bear market. Anything is possible and we’ll stick by our disciplined trading no matter what the market has in store for us. Have a great memorial day weekend!