Caterpillar earnings drive markets higher

     Sorry peeps for not posting anything this weekend.  My internet has been going up and down and up and down all weekend long.  It is really starting to piss me off.  Also, I've basically been in a coma the past two days after taking this drug called Seroquel.  Man that stuff really puts my lights out.  Has any of you taken Seroquel before?  Is sleeping for two days in a row normal?  I slept till 1 in the afternoon today and I still feel groggy as hell.  Anyways, I'll be back up and running today and the rest of the week of course and I'll be checking all your blogs!

     Today was a great day in the markets as Caterpillar blew away earnings forecasts, easing fears of a global growth slowdown.  Caterpillar builds backhoes, mining equipment basically all the things needed for construction and mining so it is a good proxy for global growth.  When CAT is doing well, the global economy can't be that bad.

     CAT had record revenues and a 44% rise in quarterly profit easily beating analysts expectations.  Caterpillar's stock jumped 5.6% on the news to over 90 dollars a share after being near 70 just 2 weeks ago.

     It looks like the breakout from last week is continuing and it is okay to buy stocks here.  The DJIA finished 105 points higer and the SNP and NASDAQ rose even more gaining 1.3% and 2.35% respectively. Oil jumped nearly 5% and gold was higher by 1%.

     I think this rally is going to continue until 1270 or 1280 on the SNP as we have some serious upside momentum building and this is the seasonal best period to own stocks.  Let's see what happens.

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

S&P 500 breakout

      Sorry, friends about the late post today.  My internet was down this morning so I could not post as per my usual.  I am really getting pissed off at my poor internet service.  It's has been down at least 6 hours each of the past 4 days.  I call tech support and of course they have no idea what's going on.  My line is a good distance away from the main office so that is why it's always going up and down.  I'm going to call them and ask for a free upgrade and if they don't give it to me, I'm going to get a new ISP.   Anyways, on to the markets...

     Today was a very good and powerful day for the indexes.  I'm calling the breakout on the SNP 500.  This should lead to more follow through buying next week.

 As you can see on the above chart, SPY finally popped above that little red line which had been like a brick wall for over 2 months now.  It is okay to buy stocks here and I will probably do some on Monday.

Qaddafi is dead!

     I don't know if you all have heard yet but Moammar Qadaffi has been captured and killed.  The Misrata Military Council led an attack on Qadaffi's hometown of Sirte where the ex-dictator was hiding.  Not all the details are out yet but it seems Qadaffi was shot in the head and the legs whilst trying to escape rebel fighters in Sirte.  More details to come later on.

     Libya is the largest oil producing country in Africa and oil prices dropped on this news.

     In other news, markets are quiet today trading in a 70 point range in the early going.  There has not been much news to catalyze the markets today although new claims for unemployment benefits dropped to 403,000 which was slightly higher than economists had forecast.  More importantly the four week moving average of new claims for unemployment benefits dropped to 403,000.  This shows that even though the economy seems troubled, employers are not laying off people like crazy.

Apple misses earnings shares are crushed

     Wall Street's golden child AAPL missed earnings for the first time in four years yesterday!  Profits were 7.05/share which came in below analysts expectations of 7.39/share.   The stock is down 4% in early trading after being down as much as 8% in after hours trading yesterday.

     Now AAPL is notorious for low balling guidance so analysts are always trying to figure out how much more they have to up their targets from AAPL's guidance.  Last quarter AAPL predicted they would make 6.40/share.  Analysts had raised their targets all the way up to 7.39 before earnings.

     AAPL disappointed on iPhone sales selling 17.1 million iPhones while analysts were expecting 18-20 million.  Sales were especially disappointing in September as consumers awaited the new iPhone 4S.

     iPad sales were 11.1 million which was disappointing to analysts as well.  iTunes had revenue of 1.5 billion in the quarter.  The company sold 4.89 million Macs in the quarter.  Revenue from the AAPL stores was 3.6 billion.  iPhone 4S sales were 4 million in their first three days!

    Wall Street was disappointed in the past quarter but I don't think it's anything to get scared about.  After all that was LAST quarter's results...what is more important was their guidance which they raised to 9.30/share for this upcoming quarter.  To me, the stock was unfairly beaten up.  AAPL is not one of those high flying momo stocks with a 50 PE.  AAPL is still growing, raised it's guidance and isn't that expensive to boot.  This pullback is a good buying opportunity.

Stocks up on Bank of America earnings

     Bank stocks are up today after Bank of America posted better than expected earnings.  Bank of America stock was up almost 7% today in early trading.  The big positive surprise was Bank of America's revenue, which was  28.7 billion, increasing even in a tough quarter for most banks.

     Profit per share was .56 which was helped by a 9.8 billion gain for selling it's stake in China Construction bank.  Bank of America's core business appears to be shrinking however as it's net interest margin dropped to 2.32%.  Net interest margin is the difference between what it pays depositors for use of it's cash versus what it charges for loans.  Net interest income which is the bread and butter for banks shrank to 10.7 billion from 12.7 billion a year ago.  Bank of America stock has fallen more than 50% this year.

     In other earnings news, IBM's shares were down 4.5% in the early going after posting in line results.  Investor expectations were high for IBM after it rallied to a record high close a few days ago.   Analyst's were disappointed with the earnings which showed that IBM may have slower growth in the future.  IBM posted revenue of 26.2 billion for the quarter and profits of 3.28 a share.  IBM stock has risen more than 20% this year.

     The overall markets are higher today as of 8 AM PST after earlier being down almost 1%.  After the bell we get AAPL earnings which I will be watching closely.

Down and dirty all day long

      We have had one hell of a rally in the US where prices have risen 14.1% on the SNP 500 since bottoming October 4th.  We had been rangebound on the SNP 500 for the past two months but it now looks like we are going to break out of the range and head upwards.  It has been a truly remarkable rally.

        US stock futures are up and Asian and European market's are as well on a continuation of positive momentum from the past two weeks.  US Dow stock futures are up 81 points as of 1:15 AM PST.

     The Hong Kong Hang Seng index has also had quite a rally.  It is now 18,800 after rallying nearly 3000 points in the past week and a half.  That is a years worth of gains in less than two weeks!

     European bourses are up as well across the board with the FTSE, DAX and CAC all up over 1%.  It looks like we will get more rallying tomorrow.  I plan on buying some AAPL when I wake up.

My favorite songs of all time part 3

     In the past, I always liked listening to different music and was always on the lookout for great new radio stations to listen too.  One day whilst spinning the dial I found a station called KCRW.  To those that don't know, KCRW is the Santa Monica City College station and they are also affiliated with National Public Radio.  During the day they have various NPR shows but at night, KCRW plays some of the best tripped out electronic music that you could never find on any other radio station especially back when I started listening in 1998.

     There were a few great shows on there but my favorite was Chocolate City hosted by Garth Trinidad. I listened to it all the time for awhile and really enjoyed the hip hop, soul and world rhythms Trinidad mixed together seamlessly.  I think it was on twice a week back then but now it's is on only infrequently.  You can still listen to the occasional podcasts of Chocolate City here.  This show is where I found out about great bands like Kruder and Dorfmeister and Thievery Corporation, Gotan Project and St. Germain which I feature below.

Google blows away expectations

     Our favorite benefactor Google, reported monstrous earnings yesterday and the stockholders are reaping the rewards today.  Google was up more than 6% today after reporting a 26% gain in profits from a year ago.

     Google makes most of it's money from search ads and it has 76% of the US market and even more of the rest of the world.

     The number of clicks on ads rose 28% from the year ago period and the price they charge per click increased 5%.

     Google +, Google's answer to the Facebook threat increased it's user base to 40,000,000 increasing from 10,000,000 in July.

     Google is also grabbing a larger share of the smartphone marketplace with over 190,000,000 Android phones active worldwide.

     Google's profit for the 3rd quarter was 2.3 billion on sales of 7.51 billion.This equates to profits of about 8.33/share.  Google is a cash machine.

     Market's are up on this good news continuing the positive momentum of the past 2 weeks.  As of 8:00 AM PST the DOW is up almost 1%.  The SNP 500 keeps bumping it's head on the 1220 level.

Bank stocks drag averages lower

     Poor earnings results from JP Morgan  are dragging the entire market lower today and especially the financial sector.  JP Morgan's net income dropped 4 pct over the July-September period and investment banking revenues declined 31 pct because of increased volatility in the financial markets over the summer.  JP Morgan's results do not bode well for the rest of the financial sector.

     JP Morgan stock is down almost 6% as of 10:53 AM PST and down about 25% YTD.  Bank of America stock is down almost 5% to 6.23.  The broader market's were down as well with the DOW down as much as 150 points early in the session but has recovered somewhat to be down only 50 points at the time of this writing.  The SNP 500 was down about .5% but the NASDAQ was green because AAPL was higher by about 1%.

     After the bell we get Google earnings.

Stocks and Breaking Bad

<------mfw I win   

     Sorry about the late post friends.  I woke up late this morning and had to get out of the house really fast and so did not have time to put up a preliminary post as per my usual.

     Anyways, before I get to stocks, did you see the Breaking Bad finale??  OMFG, I just got around to watching the last two episodes last night and it was EPICCCCCC.  This show is the definition of epic!  I don't want to spoil it for anyone who hasn't seen it but it was just a sick ass finale.  Breaking Bad has to be one of the greatest shows on television right now and Tio has to be one of the greatest characters.  I don't know how they are going to top this past season next year.  It will be interesting to watch.  What did you guys think of it if you saw it?

3rd quarter earnings season kicks off today

     Earnings season is upon us!!  First up on the docket today is Alcoa(AA) after the bell.  Alcoa is an aluminum company that is somewhat of a bellweather for the global economy.  Alcoa's aluminum goes into the production of cars, trucks and airplanes so it will be intredasting to see what they have to say about these industries and the global economy in general.

     Other earnings this week will be PepsiCo, Mattel and JP Morgan.  JP Morgan will be an important one later in the week because we will get to see the state of the financial industry.  Expectations have been really lowered for bank profits because of this volatile market environment.  JP Morgan's stock has lost almost 30% of its value this year.

     This earnings season will be especially interesting to monitor because they can confirm or deny a global economic slowdown and a US recession.  Companies not only report 3rd quarter earnings but also give their outlook for the future which will be much more important with so much uncertainty around.  With the market having rallied over 100 SNP points in the past week or so, I believe we will need to see some good earnings from companies to sustain the rally.

Stocks blast off on European hopes

     US stock futures are up this evening as German chancellor Angela Merkel and French president Nicolas Sarkozy pledged to have a plan in place by the November 3rd G20 summit to address the slow motion train wreck that is the European debt crisis.  There will include a European bank recapitalization and a plan to deal with the Greece mess.

     Stock futures were up over 100 Dow points as of 10:30 PM PST.  The euro was also up by more than half a percent.

     French and Belgium officials also pledged to backstop the failing bank Dexia.  Merkel and the European leaders pledged to do "everything necessary" to stem contagion from the crisis.

     This week starts off the third quarter earnings season with Alcoa reporting after the bell Teusday.  The earnings reports will go a long way to show the sustainability of the recent rally.  Pepsico, JP Morgan, Google and Mattel all report earnings next week. 

#OCCUPYWALLSTREET

     I don't know if you all have been following the Occupy Wall Street protests recently but the occupation is really gaining momentum.  I have been watching it from the beginning when I first heard about it in the middle of August.  Here was my first post about it here.

     To be honest, I thought that this occupation promoted by online hactivist collective Anonymous and Adbusters had a real chance to create some havoc and I was worried about the effect on the stock market and my investments.  I kept close tabs on the protest on the first day of the occupation on September 17th, watching the livestream all day long.  Then the market opened on Monday and there was no media coverage of the event and I thought the occupation would just peter out.

     It seemed that way when the thousands of people who initially occupied the park dwindled to hundreds, but then something crazy happened.  After an incident with the police where some protestors got pepper sprayed, the movement finally got some media coverage and the protests really gained some traction.

A Nice Jobs Report

     Markets are up in the early going after a better than expected jobs report eased fears of a recession in the US.  The government non farms payroll report showed  that 103.000 jobs were created in September, a number greater than economists had forecast.  Economists were expecting 60.000 jobs created.  The unemployment rate held steady at 9.1% as more people rejoined the workforce.

     In some more good news, payroll data for July and August were revised upward by 99.000.  Remember that horrible payroll number from August were we added a big fat 0 jobs?  Well, it was wrong.  Everybody panicked over that number but it turns out the US economy isn't as bad as the market thinks.  The economic data we have been getting recently are consistent with an economy that is slowly growing and not an economy going into a recession.

     Stocks have reacted well to the news with the DJIA up 75 points in the early going as of 7:47 AM PST.  The other major averages are mixed.  European bourses are all higher by more than 1% and the Asian indexes closed green as well with the Hang Seng up almost 10% in the past two days.

Quiet and observant day in the markets so far

     Steve Jobs was a true visionary whose loss will be felt for a long time in the company he cofounded with Steve Wozniak and the products he pioneered.  Steve Jobs changed all aspects of our lives.  He was a tech geek and his life was computers.  He is the type of person that epitomizes the entrepeneurial and innovative spirit of America.    He will be missed.

     After the frenetic activity of the past few months, today has been a quieter day so far.  I believe that traders are not making too many big moves in observance.  AAPL stock has not sold off like many believed and was actually up a little bit as I type this.  I was hoping for a huge selloff by idiots so I could purchase some shares on the cheap but it didn't happen.

     All markets are green so far today.

RIP Steve Jobs

You will be missed...

Stocks struggle in the early going

     Well it turns out that huge spike into the close yesterday where the SNP 500 rose 4.1% in about 45 minutes was caused by a story in the Financial Times that the Europeans finance ministers are finalizing a plan to recapitalize the European banks.  It is estimated that European banks will need up to 261 billion dollars to protect themselves from insolvency should Greece or other European nations default.  A failure of large banks in Europe could set off a chain reaction which destroys the financial system of the world and sends the world into an epic depression which would last for years.  It is amazing to me how close we are to armageddon.

     Meanwhile, the US markets have opened today slightly in the red.  We got some good economic data out today and on the whole the data has been better than expected and consistent with an economy which is growing albeit slowly.  Markets have not had much reaction to the data however as our fortunes are tied to Europe at this point.   Right now, it is a headline driven market which makes it untradeable for me.

Economic Data
     The ISM Services Index for September came in at 53 this morning which was above economists forecasts of 52.8.  Any reading above 50 indicates expansion.   This index measures the activity of the services part of our economy like retailing and hotels and restaurants. 

     The ADP private payroll survey also came in better than expected with private industry adding 91,000 jobs on expectations of 75,000.  On Friday, we get the government non farm payroll number which is expected to show a gain of 60,000 jobs.

Market Recap
     Well today was very constructive in the markets.  The DJIA rose another 130 points today building on the 400 point rally from yesterday.  Strong momentum is propelling the markets upwards right now.  It looked like the market was going to breakdown after Monday and early yesterday but we have reversed and risen back into the trading range from previously.

     The best performing sector today was the energy sector.  XLE rose over 3.5% as oil was up over 4 dollars.  Technology stocks also performed well as AAPL the biggest component of the technology sector rose almost 2%.  AAPL made a picture perfect tag of the 200 day moving average yesterday at 354 and has exploded to the upside rising almost 10 pct from there. 

     Gold also rose today as people were bargain hunting after a big drop yesterday.  Gold has found support near the 150 day moving average and it would seem like a good place to initiate a position.  Gold is one of the strongest markets right now technically.

     European stocks had large gains across the board with the DAX rising almost 5% and most other bourses rising 3-4%.  One notable outlier from the bullish action is the continuing decline of the Hang Seng index which dropped another 3.5% last night.  That makes an almost 10% drop in only 3 days!  I don't think the Asian economies are that bad and so the selloff is way overdone and it is definitely time to buy.  I expect the Hong Kong index to bounce back strongly soon and as a matter of fact EWH which is the Hong Kong index ETF was up 3% today. 

     I think we have put in the bottom for awhile.  Newsflow out of Europe is more positive and it looks like the policymakers there understand the gravity of the situation.  US economic data has not fallen off a cliff considering the horrible consumer confidence data.  Jobs are still being added and the manufacturing and service sectors are still growing.  Despite the best efforts of US policymakers besides Bernanke to wreck the economy, we are still chugging along in a slow growth scenario.  All this says to me is moar trading range. 

PS

Natural One asked me how much cash it would take to get started making real money in the markets. 

I guess that depends on what your definition of "real money."  There are some brokerage accounts that require a 500 dollar minimum deposit, but if you are only buying 500 dollar worth of stock you are not going to make much money and transaction costs will eat up your profits.  Generally it costs between 5-10 dollars to buy and sell stock in a single transaction.  Even if you bought 500 dollars worth of stock and made 20% on your trade, you would only make 90 dollars after buying and selling.  This market is tough as well so it would be hard to make 20% unless you are buying a risky stock.

     I would say it would take about 5000 dollars to start off with to make a decent amount of money after transaction costs.  I don't know your experience level or knowledge of trading but what you can do if you want to learn to trade is to start a play money account.  Start off with 10000 dollars of fake money and make some pretend trades and see how you do.  That is a good way to start off and learn the ins and outs of trading.  This market is very dangerous right now so its definitely best to practice before you get in it.  If you do a search on play money trading accounts on google, there are numerous places to get started.
     

    

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

October is the cruelest month

     For stocks it is.  Here are some fun market facts for stocks in October

• October 28-29 1929 The stock market crashed 25% in two days heralding the onset of the great depression
• October 19,1987 The stock market crashed 20% in one day on what became known as Black Monday
• October 6-10, 2008 The stock market dropped 20% in one week as it looked like the entire financial system was going to meltdown.  
• October has marked the end of the 1946, 1957, 1960, 1962, 1966, 1974, 1987, 1990, 1998 and 2002 bear markets

     The lesson?  While there is lots of panic now, get your buy list ready because there are going to be some bargains out there coming up.

     Markets have opened sharply lower today as the European Union has denied a vital aid payment to Greece.  The Greeks keep missing their budgeting targets and the European Union has said that they must cut more.  It looks like a Greek default is imminent and that is why market's are crashing.  Like I said before, trying to get money out the Greek people is like squeezing blood from a turnip!  It's time to let Greece default and let the chips fall where they may.  This extend and pretend just isn't working anymore.

Market Recap
     WOW, WHAT A FREAKING DAY FOR THE MARKET!!!!!!  Just insane movements today.  In the last hour of trading, we moved up over 350 points!!  There was some BIG BIG MONEY in the markets today buying in the last hour of trading.  Some say it was the PPT or Plunge Protection Team, but whatever it was, big institutions were putting money to work today in the markets.

     The DJIA ended up 153 points today after earlier being down as much as 250 points.  The S&P 500 more than 2% and the NASDAQ was up 3%.  Oil was down 1% and gold was down 3%!  This looks like the bottom for now.

     In the early going stocks spiked up and I thought we might have a huge reversal today so I closed my short positions that I opened yesterday for a tiny loss.  Good thing I did because had I kept them I would have been stopped out already!!  The Dumb Money indicator works!

     Unfortunately, I did not go long at the end of the day because my brain is fried right now watching this crazy action and I was too frozen to do anything.  I would have loved to buy some AAPL today which tagged it's 200 day moving average in a vicious selloff on the release of the iPhone 4GS.  Apple dropped from 384 to 354 during the day and then bounced hugely off the 200 day moving average to finish at 372.

     Just an insane day in the markets today.  I went ahead and bought some small caps, european large caps and ems today for my long term portfolio.  This could be the bottom for awhile.  Let's see what happens.

    

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Hang Seng getting hanged tonight

     Any last words for the Hang Seng index? The Hong Kong index is getting creamed tonight on China growth worries. It has completely broken down and is back to May of 2009 levels. Stocks connected to the China growth story are getting hammered the most with Wynn Macau down over 10% and CNOOC or China National Oil Company down over 5%. The Hang Seng index is down 870 points as of 9:47 PM PST.  It looks to be another interesting day in the markets tomorrow.

     Dow Futures are down a more modest 80 pts. Gold is up and oil and copper are down.  The Euro is down a small amount as well.

   
Market Recap
      The SNP 500 and Russell 2000 small cap indexes have made new lows for the year as the DOW was off 260 points at the close today.  The SNP 500 was off 32 points finishing below 1100 for the first time in a year.  Gold was up 27 dollars and oil was down 3% to 77.

     European shares also finished lower by 1-2% and the Euro got obliterated today dropping 1% which is a big move in currency markets.  The dollar rose against most major currencies as the flight to safety continues.  10 year treasury yields dropped to their lowest level in a few weeks at 1.784.    

My Take
      Bend over and grab your ankles!  That is how the market felt today.  We got a complete breakdown of the 1120 level on the SNP that had been providing support for the past 2 months.  It looks like we are starting the next leg down in this bear market.  I have been busy this morning but got to the computer in time to put on a short position on the Russell 2000 small cap index via RWM and also put on a short of the MSCI All World index via EFZ.  I will buy more only if they go higher and I have set a 5% stop on them in case my trade goes against me.  I anticipate we will get a quick and sharp drop down to 1040 as we have breached the 1100 level at the close today.  I also got stopped out of my XLE position early on in the day for a 3% loss. 

     October traditionally has been the month with the most stock market crashes by far.  I think this October will follow that script as stock traders are a superstitious bunch.  The good news is however, that after crashing during October, the market finds it footing and rallies into the end of the year.  The last quarter of the year is the best performing quarter of them all with average gains of 4%.  That is the script I will follow for the time being unless things change. 

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!

Some more of my favorite songs

      In my last post, I put some of my favorite rap songs of all time.  I wanted to put many more but I know no one wants to sit here for an hour listening to music so I only put four.  As I got older, my taste's started to get more varied.  I moved to old school R&B to see where all these rap songs came from.  I found that Juicy was just an Mtume sample and a lot of rap was just sampled from old school songs.  So I really got into old school R&B for a time.

     I tell you, I think the 80's was the best decade for music.  Everything seemed so fresh with the first electronic music coming out.  One of my favorite's was Kraftwerk who has been sampled numerous times of course especially this song...

I love Kraftwerk so much, I am going to put another Kraftwerk song.  This is such a great video.  KrazyBen did a sick ass mashup of this song with Timbaland too.  It is here if you want to check it out. 

I guess those songs aren't really old school R&B so I will put some of my favorites.  I've got to put Juicy Fruit by Mtume, one of the best songs ever and one of my personal favorites.

Another one of my favorites was Double Dutch Bus...

Since I did two Kraftwerk songs, I'll go ahead and post one more old school R&B song.  Another one of my personal favorites is...I'll be a freak-a-zoid come on and wind me up!  I love these old music video's they are a trip to watch nowadays.

Old school R&B is some of the best music ever.  There is so many more songs I could've put.  Anyways, these are some of the songs I got into besides rap.  What are some of your favorite old school songs of all time?

For those of you who wanted to hear some of the songs I made way back when, here is another one.  I put one in my music post from last week which is here if you want to check it out.
  

Disclaimer: Nothing in this blog should be construed as a recommendation to buy or sell any securities! Please do your own due dilligence before buying any stocks or bonds!