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!

Support is holding for now

     World markets are selling off once again today but strong support at 1120 is holding on the S&P 500.

     As you can see from this chart, the 112 level has been support for the last two months on SPY which is the ETF that represents the S&P 500.  Every time prices hit this level, buyers have come in and sent us back higher.  That is why it is called support.  I'm of the opinion that that we are finally going to break through 112 and head lower.   Generally when we break through support, more people start selling and we head dramatically lower.  If we can hold support here, we will probably head higher back to 1200.  We are in a trading range market for now as long as support holds.  If we break support, look out below!

Market Recap
    The big story today was gold which fell 100 dollars!  Gold has formed a double top formation and there could be more downside on the way.

   

    The reasons for gold's selloff is that hedge funds are selling their winners to raise cash.  Also, with the dollar strengthening gold's appeal as a currency hedge is lessened.

    There will probably be a buying opportunity coming up however so I am going to keep my eye on gold.  The Chartographer has a great post on gold here and basically called the top in gold.  I am real glad I sold my gold yesterday, I would not want to ride out this kind of move.

     Stocks finished today in the green with technology stocks showing strength.  The Dow was up 38 pts but the S&P 500 was up 7 and the NASDAQ was up 28.  Support at 1120 has held for now.  Overnight, SPY hit a low 110.85 but we bounced back smartly from there.  We could be heading back up the range, however, I don't know if there is strength enough for us to power to 1200 again.  But we could have a little rally from here to 1160-1170.  

     Foreign stocks did good today with European and Emergent Markets stocks doing well after getting obliterated yesterday.  I thought the selloff was way overdone on foreign stocks and so dipped my toe in yesterday and bought some EM's for my long term portfolio.  That is working out well so far as EM's are up about 2.5% today.  You can track Emergent Market's stocks with EEM.  My friend the Hasidic Plumber likes to track the Brazilian Bovespa and the Argentina Merval and you can track those with EWZ and ARGT or the Argentine Merval index if you like.

     I was away from the computer all morning so wasn't able to track the stock market and did not do anything with my portfolio.  I am definitely looking to get back into AAPL and start a position in MCD at this time.  I like stocks that have shown strength and AAPL and MCD are two of the strongest stocks in the market right now.  Cyclical stocks like CAT and energy stocks like XLE have really gotten bombed recently.  XLE is an energy index and CAT or Caterpillar is a good proxy for global growth.  These sectors are so weak it's best to stay away from them right now and stick with tech and consumer staples.  Utility stocks are also strong right now.

     Being at the bottom of the range, it would seem like a good time to get back in and set a stop at the recent lows.  I will probably do that on Monday, although I will be away from the computer that day as well. 

     

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!

Stocks plunge worldwide

     A dour outlook from Fed chairman Ben Bernanke and slowing growth in China are contributing to a worldwide market selloff this morning.   US stocks are down 300 pts at the open.

     Yesterday's Fed statement offered a bleak assessment of the prospects of future economic growth in the US and said there are "significant downside risks to the economic outlook."  Markets sold off 284 pts after yesterdays Fed statement.

     Also, Chinese Flash PMI which is the purchasing manager's index, a measure or manufacturing output, declined to 49.4, the lowest in two months.  This is adding to fears that global economic growth is cooling.

     US Markets opened 300 pts lower with the SNP down 31 to 1135 and the NASDAQ off 66.  Oil cratered tumbling over 6% to 81 and change.  Gold fell sharply off almost 4% or 70 dollars down to 1737.70.  Meanwhile US 10 year yields hit a new 60 year low at 1.77%

     Foreign markets were down with the Hang Seng Index trading down 900 points or 5% and the Nikkei down 180.  European stocks as you can imagine are tanking as well with the French, German and British bourses all down 4% or more.

     Across South America, the Brazilian Bovespa is down 3.5% and the Argentina Merval is down 4.3%.

     It looks like we could be starting the next leg down in the selloff.  We still haven't broken down through support so I won't add any shorts until we do.  The bulls need to make a stand soon if they want to hold this bottom.  Interestingly enough, small cap stocks are outperforming today in a horrible tape which could mean we get a bounce from the lows.

Stocks I'm Watching

     IWM- The Russell 2000 small cap index is outperforming today in a brutal tape.  It is down 1% less than the Dow.  I watch the small caps for signs or risk taking and risk aversion.  Usually on a bad tape, the small caps underperform.  I'm taking this as a signal that we could bounce back from here and am adding a long.

     AAPL- Apple is also performing well today in a bad tape.  It seems to be a safe haven in this market environment.  AAPL is down only half as much as the DOW.  I will probably buy my AAPL back today.

     MCD- McDonalds is also performing well today down about half as much as the DOW.  MCD is a great place to hide out in this market.

     CAT- Caterpillar has been performing horribly lately.  It has completely broken down from support around 80 dollars.  This is a bad sign for global growth.  CAT is down over 10% in the last 2 days! 

     NFLX- NFLX is up today!  This is mildly surprising to me as today is a risk off day and NFLX short is a risk on trade.  NFLX is up 1%. 

     FCX- Freeport McMoran Copper and Gold has been getting absolutely obliterated lately on slowing global growth.  The breakdown in this name is a strong signal about slowing global growth.  It is down 9% today and 15% in two days.

Market Recap

     Well it was a pretty bad day for my trading account.  I sold my gold long for a 6 percent loss and I tried to trade AAPL today unsucessfully.  I bought AAPL in the early going and got stopped out when it dropped past 400 later in the day losing about 2 pct.  Today's action was brutal.  I don't understand this market right now.  I don't see how we can be down 500 pts on basically no news and when Greece was going to hell last week we were rallying!  Emergent Markets were down 6-9% today!  FCX was down 12%!  What the hell!  There was no news to justify that kind of action.  I know global growth was slowing but so did everybody else I thought.  China's PMI wasn't that bad last night! You would have thought Greece went belly up today based on the price action. 
    
    With that being said, I am now 100% cash in my trading account.  It looks like the market wants to break down from here.  EM's have already started the second leg down, it's just a matter of time for the US markets I believe.  Call me crazy but on day's like this I like to buy for my long term portfolio so I picked up a small amount of emerging markets stock today.  It's probably a mistake trying to bottom feed here but I don't see the justification for the kind of move we had today so I'll pick up some on the cheap. 

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!