Sunday, October 9, 2011

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. 



Market Recap
There had been 3 things that were bothering the market recently.

1.  The European Debt Crisis- lack of coordination among policymakers has slowed response to the European Debt Crisis and called into question the viability of the euro as a common currency.

2.  Recession in the USA- after the stock market volatility in August and September and the budget fiasco killed consumer confidence, everyone wondered whether we were headed back into recession.

3.  Hard landing in China-  China has been powering worldwide economic growth during this recovery but policymakers there are concerned with inflation and so are tightening monetary policy.  Their efforts to throttle down growth has caused concern in the market that they will go too far killing demand for commodities.

     Recently, 2 of these fears have been alleviated somewhat allowing the market to rally.  The European policymakers finally seem to take the situation seriously and I believe Merkel and Sarkozy when they say they will do anything to keep the Eurozone together.

     In the United States, economic data has come in better than expected easing fears that we are going into a recession.  While the economy is not booming, it is definitely not falling off a cliff.

     In China, economic data has also come in decent but inflation is a little hot.  Commodity stocks and currencies have crashed recently because of this fear.  It doesn't look like there will be a China hard landing but the jury is still out on this one.

Rudimentary T/A

      Wow, what a day in the market's today!  The Dow rose 330 pts and the SNP 500 rose even more on  a percentage basis.  Stocks were led higher by financial and energy and materials shares.  A lot of the charts I posted on Friday had nice breakouts today which should lead to more rallying.  Here is the SPY chart...
SPY popped up above it's 50 day moving average which is the lower blue line.  The 50 day moving average is the average price of SPY for the last 50 days.  That should act as support for now.

Now for the AAPL chart...
AAPL popped up nicely above a downwardly sloping trendline(red line) and also popped back above it's 50 day moving average(blue line).  This should result in more follow through buying.

It is all systems go for now, next stop 1220 on the SNP.

    

    

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!

22 comments:

  1. Slow.motion train wreck sounds horrible. Well, well lets hope politicians dont listen to the popular vote.

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  2. It's good to hear that the US stocks are up at least, there's some good news at least. About your comment a few days ago on my blog, I probably won't be betting any money for about a month or so when I'm completely sure I can afford to lose it.

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  3. europe is in debt? how come euro is the priciest currency in our exchange rate... nah~ never mind, i'm stupid when it comes to this ^_^

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  4. I don't buy the Merkel's speech about doing everything it takes to help this situation. She is hating it and deep inside she is probably thinking...oh Lord, i wish i could say F*ck you to those screw ups.

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  5. I need an advice here. Do you think after this money boost, the stock will go south again ??

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  6. I guess just sitting tight and hoping for a smooth-ish ride is the way to go. Unless you can afford to be prepared.

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  7. It all looks like a big show to me :/

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  8. I just hope the Euro doesn't fall, I have so much cash in Euros - AGH!

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  9. France and Germany working together to SAVE Europe? ha. People of 1911 would not see that one coming.

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  10. The euro is looking weak as a means of United nations currency. won't be long until nations follow suit in making their own currency :I good post friend.

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  11. @Linux and Life

    Yes, I think it will go back down eventually. We will keep going up and down giving everyone a wild ride but in nov/dec we will rally.

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  12. don't understand anything of this, but nice post! daily love :P

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  13. This comment has been removed by the author.

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  14. Perfect, things are going up just as I'm able to start monitoring my stocks again.

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  15. I still have no idea what you write about, very confusing for me.

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  16. Am I the only one who doesn't understand a thing about those charts?

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  17. your blog is very useful :) i think im gonna learn some things here, thanks :)

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  18. thanks for the analysis

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