BKS getting a lift from MSFT. SUN being acquired by ETP. AAPL falls back under 600.
Monday, April 30, 2012
April 30 Market Movers
| Stock | Movement | Reason | Our Comments |
| SUN - ETP | SUN - up 8 points. | SUN being acquired by ETP | Cash and stock deal. SUN will receive $25 in cash + 0.52 shares of ETP. Could be some strength in the other natural gas stocks. |
| BKS | Up 14 points. | MSFT to invest $300 million in BKS | MSFT and BKS partner up to form new E-book subsidiary. BKS more than doubling on this news. BKS has traded as high as 28.20 on this news. 30 may provide some psychological resistance. |
| HUM | Down $3.82 | Earnings. | Nearly every health care provider that has reported, has sold off after the report. So not surprisingly HUM follows suit. 85 should be a key swing number. |
| NYX | Offered slightly down. | Earnings. | Very light trade, so hard to gauge market sentiment on this report. 26.50 area provided some support last week, that may be decent swing number. |
| SCHL | Up 3 points. | Raises guidance. | Hunger Games publisher surging this morning on earnings guidance. Stock struggled in 34.50 area a while back, that may provide some initial resistance. |
Sunday, April 29, 2012
S&P 500 Index and Big 10 Weekly Outlook - April 30th
Right back at 1400 in the S&P 500 futures. If that was the extent of the correction, it certainly was a mild one. For those of you, including myself, looking for more of a dip in the market, think again. Stellar earnings for the most part, dividend increases, stock buybacks and splits set the stage for a major rally, after staring into the abyss on Monday morning. After failing to breach the low of the move at 1352.50 (Monday’s low was 1354), the shorts started to scramble and new money tried to find a home.
Therefore, Friday’s high (1403) should be a minor stopping point on the way to smashing through the high of the move at 1419.75. However, if the market cannot continue on its merry way early in Monday’s session and the futures slip below 1385, all bets are off on the correction being over.
What is wrong with Apple (NASDAQ:AAPL)? Perhaps I need to contact my data provider since AAPL is still a three digit stock. After Wednesday’s gigantic move, AAPL has responded with two lower highs, two lower lows and two lower closes. Hmmm, think some investors are just now reading that AAPL has substantially lowered guidance for the third quarter. Perhaps the company itself does not expect the unprecedented momentum to continue forever. And that makes one wonder about the final quarter as well. In my opinion, AAPL needs to hold 600.00 (the close was 603), take out 618 in a hurry, and march to new highs above 644, or this issue may drift lower for the next three months. Or as long as it takes for AAPL to reveal what is next in its pipeline.
Exxon-Mobil (NYSE:XOM) has recovered nicely from its visit to 81.88 earlier in the month. However, it appears to be running out of steam as it approaches its 52 week high (88.13). Of course, a 9 cent miss on earnings did not help the cause. On the other hand, a nice boost in the dividend should keep major investors content for now. At this time, it is hard to identify a catalyst that will propel XOM into a breakout mode and there might not be one until the second quarter earnings are announced. Institutional sellers all through the 87 handle and more at 88.00 have halted several rallies this year and expect that to continue. Below 85.15 (earnings day low), expect XOM to meander its way back down to the 82.00 level.
International Business Machines (NYSE:IBM) has recouped almost all of its losses since announcing solid earnings (as usual) and an increase in its dividend and stock repurchase program. Why IBM sold off 10 points following the announcement is beyond my understanding of technical and fundamental analysis. As long as IBM can stay above 206, prepare for an attempt at a new 52 week high (210.69).
Only one prediction for Microsoft (NASDAQ:MSFT), it is going to bust out one way or another. And by that I mean, break out to the upside above 32.32 and up to the 52 week high of 32.95, or break down below 31.83 and back down to major support at 30.94. No matter how hard the futures rallied, MSFT would not budge. In fact, MSFT topped out for the week on Monday as the overall market bottomed. Perhaps the street is not convinced MSFT can perform as well in the upcoming quarter and are locking in profits while they still can.
General Electric’s (NYSE:GE) price activity for the last few years reminds me of the children’s story book, “The Little Engine That Could”. But instead of the popular phrase of “I think I can” GE ‘s chart offers “I think I cannot”. Time and time again, it struggles to reach a crucial resistance level and then retreats no matter what analysts say, or how good the news or earnings seem to be. In fact, GE is still two points away from its post recovery 2011 high (21.65) and over 20 points from its 2008 high (38.52). If you can identify the catalyst for GE to make new highs than hold on, or otherwise you may have to be satisfied with its 3.44% dividend yield.
Chevron Corporation (NYSE:CVX) has rallied since flirting with the 100 level earlier in the month. CVX reported a 5% increase in profits as well as an 11% boost in its dividend. After four consecutive higher lows and higher highs, CVX may be in for a breather. A double top just under 107 has halted the rally for now. This area coincides with the 50% retracement from the mid-March high (112.28) to the mid-April low (100.51). If CVX does retreat expect minor support in the mid 102’s and major support at the recent low of 100.51. Above 107 there is minor resistance at 108.50 and major resistance at the all time high of 112.28.
AT&T (NYSE:T) has made a fool out of me. After writing this stock off for dead after going ex-dividend earlier in the month, T has exploded to levels not seen since August of 2008. A better than expected earnings report propelled the stock through major resistance at 32 and sent short-sellers scrambling for cover when it was taken out on Thursday. Follow through on Friday allowed T to tack on nearly 2 points on the week, which is unprecedented for this heavily traded issue. Expect some institutional selling at 33 and major resistance at the July 2008 high of 33.58. However, be cognizant that T has made five consecutive higher highs, higher lows and higher closes, and investors wanting to lock-in profits should focus on 32.45 as an exit point on weakness.
Often in my Weekly Outlook and during the morning broadcasts at www.premarketinfo.com the term “institutional orders” is used. In other words, extremely large buy or sell orders placed on the Open Book of the NYSE. Both the long-term and short term affects of these orders are covered in detail. Why do I mention this now? During Procter&Gamble’s (NYSE:PG) climb from 64 to 68 from mid-February through early April, it had to claw through one gigantic sell order after another from 66.50 to 68.00. Furthermore, there was another 500,000 shares on the book at 68.00 that the High Frequency Traders salivated over for weeks. For the time being, the big boys had it right as PG revealed poor earnings and the stock crumbled to 63.95 on Friday before recovering to close at 64.48. It is crucial for PG to hold Friday’s low to prevent a test of minor support around 62.50 and major support at 60.00. Expect resistance from Friday’s high (65.26) up to the gap from Thursday’s low at 66.63, as short-term quantitative players exit their longs from Friday’s bloodbath.
Another issue that had me leaning the wrong way was Johnson&Johnson (NYSE:JNJ). After finally breaking its long standing trading range from 64-66 to the downside, JNJ is right back in it. During the rally from 62.76 to 65.13, JNJ has produced six consecutive higher lows and four consecutive higher highs and closes. Similar to PG, JNJ has been pestered with large institutional sell orders all through the 65 and 66 handle. Expect that trend to continue as JNJ cut through 65 on Friday, but was unable to sustain that level until the close. For those attempting to exit JNJ on weakness, focus on Friday’s low (64.68) in order to lock-in profits.
Along the lines of traders taking on large size at a whole number is Wells Fargo (NYSE:WFC) at 34.00. Since its better than expected earnings release WFC has been range bound from 32.43-34.00, unable to make a decisive move one way or another. Perhaps the major sellers from the 34.50 area have lowered their expectations to 34 and that may keep a cap on WFC for now. Here is yet another issue with an impressive string of four consecutive higher highs and higher lows. If WFC cannot clear 34 early in the week, it will most likely drift back down to the lower end of its recent trading range. Similar to other financials that posted better than expected earnings, the earnings have not been good enough to inspire a new 52 week high as a result.
In closing, earnings season has been impressive (many beats, dividend hikes and stock buybacks) except for one thing. No new high in the June S&P 500 futures. In my opinion, if the numbers are as good as advertised, than the index should clear Friday’s high (1403) with ease and make an assault on 1419.75 early in the week. If not, the old adage “sell in May and go away” just may be the play. Or at the very least, investors should consider exploring some downside protection tactics, if a new high is not made this week.
Therefore, Friday’s high (1403) should be a minor stopping point on the way to smashing through the high of the move at 1419.75. However, if the market cannot continue on its merry way early in Monday’s session and the futures slip below 1385, all bets are off on the correction being over.
What is wrong with Apple (NASDAQ:AAPL)? Perhaps I need to contact my data provider since AAPL is still a three digit stock. After Wednesday’s gigantic move, AAPL has responded with two lower highs, two lower lows and two lower closes. Hmmm, think some investors are just now reading that AAPL has substantially lowered guidance for the third quarter. Perhaps the company itself does not expect the unprecedented momentum to continue forever. And that makes one wonder about the final quarter as well. In my opinion, AAPL needs to hold 600.00 (the close was 603), take out 618 in a hurry, and march to new highs above 644, or this issue may drift lower for the next three months. Or as long as it takes for AAPL to reveal what is next in its pipeline.
Exxon-Mobil (NYSE:XOM) has recovered nicely from its visit to 81.88 earlier in the month. However, it appears to be running out of steam as it approaches its 52 week high (88.13). Of course, a 9 cent miss on earnings did not help the cause. On the other hand, a nice boost in the dividend should keep major investors content for now. At this time, it is hard to identify a catalyst that will propel XOM into a breakout mode and there might not be one until the second quarter earnings are announced. Institutional sellers all through the 87 handle and more at 88.00 have halted several rallies this year and expect that to continue. Below 85.15 (earnings day low), expect XOM to meander its way back down to the 82.00 level.
International Business Machines (NYSE:IBM) has recouped almost all of its losses since announcing solid earnings (as usual) and an increase in its dividend and stock repurchase program. Why IBM sold off 10 points following the announcement is beyond my understanding of technical and fundamental analysis. As long as IBM can stay above 206, prepare for an attempt at a new 52 week high (210.69).
Only one prediction for Microsoft (NASDAQ:MSFT), it is going to bust out one way or another. And by that I mean, break out to the upside above 32.32 and up to the 52 week high of 32.95, or break down below 31.83 and back down to major support at 30.94. No matter how hard the futures rallied, MSFT would not budge. In fact, MSFT topped out for the week on Monday as the overall market bottomed. Perhaps the street is not convinced MSFT can perform as well in the upcoming quarter and are locking in profits while they still can.
General Electric’s (NYSE:GE) price activity for the last few years reminds me of the children’s story book, “The Little Engine That Could”. But instead of the popular phrase of “I think I can” GE ‘s chart offers “I think I cannot”. Time and time again, it struggles to reach a crucial resistance level and then retreats no matter what analysts say, or how good the news or earnings seem to be. In fact, GE is still two points away from its post recovery 2011 high (21.65) and over 20 points from its 2008 high (38.52). If you can identify the catalyst for GE to make new highs than hold on, or otherwise you may have to be satisfied with its 3.44% dividend yield.
Chevron Corporation (NYSE:CVX) has rallied since flirting with the 100 level earlier in the month. CVX reported a 5% increase in profits as well as an 11% boost in its dividend. After four consecutive higher lows and higher highs, CVX may be in for a breather. A double top just under 107 has halted the rally for now. This area coincides with the 50% retracement from the mid-March high (112.28) to the mid-April low (100.51). If CVX does retreat expect minor support in the mid 102’s and major support at the recent low of 100.51. Above 107 there is minor resistance at 108.50 and major resistance at the all time high of 112.28.
AT&T (NYSE:T) has made a fool out of me. After writing this stock off for dead after going ex-dividend earlier in the month, T has exploded to levels not seen since August of 2008. A better than expected earnings report propelled the stock through major resistance at 32 and sent short-sellers scrambling for cover when it was taken out on Thursday. Follow through on Friday allowed T to tack on nearly 2 points on the week, which is unprecedented for this heavily traded issue. Expect some institutional selling at 33 and major resistance at the July 2008 high of 33.58. However, be cognizant that T has made five consecutive higher highs, higher lows and higher closes, and investors wanting to lock-in profits should focus on 32.45 as an exit point on weakness.
Often in my Weekly Outlook and during the morning broadcasts at www.premarketinfo.com the term “institutional orders” is used. In other words, extremely large buy or sell orders placed on the Open Book of the NYSE. Both the long-term and short term affects of these orders are covered in detail. Why do I mention this now? During Procter&Gamble’s (NYSE:PG) climb from 64 to 68 from mid-February through early April, it had to claw through one gigantic sell order after another from 66.50 to 68.00. Furthermore, there was another 500,000 shares on the book at 68.00 that the High Frequency Traders salivated over for weeks. For the time being, the big boys had it right as PG revealed poor earnings and the stock crumbled to 63.95 on Friday before recovering to close at 64.48. It is crucial for PG to hold Friday’s low to prevent a test of minor support around 62.50 and major support at 60.00. Expect resistance from Friday’s high (65.26) up to the gap from Thursday’s low at 66.63, as short-term quantitative players exit their longs from Friday’s bloodbath.
Another issue that had me leaning the wrong way was Johnson&Johnson (NYSE:JNJ). After finally breaking its long standing trading range from 64-66 to the downside, JNJ is right back in it. During the rally from 62.76 to 65.13, JNJ has produced six consecutive higher lows and four consecutive higher highs and closes. Similar to PG, JNJ has been pestered with large institutional sell orders all through the 65 and 66 handle. Expect that trend to continue as JNJ cut through 65 on Friday, but was unable to sustain that level until the close. For those attempting to exit JNJ on weakness, focus on Friday’s low (64.68) in order to lock-in profits.
Along the lines of traders taking on large size at a whole number is Wells Fargo (NYSE:WFC) at 34.00. Since its better than expected earnings release WFC has been range bound from 32.43-34.00, unable to make a decisive move one way or another. Perhaps the major sellers from the 34.50 area have lowered their expectations to 34 and that may keep a cap on WFC for now. Here is yet another issue with an impressive string of four consecutive higher highs and higher lows. If WFC cannot clear 34 early in the week, it will most likely drift back down to the lower end of its recent trading range. Similar to other financials that posted better than expected earnings, the earnings have not been good enough to inspire a new 52 week high as a result.
In closing, earnings season has been impressive (many beats, dividend hikes and stock buybacks) except for one thing. No new high in the June S&P 500 futures. In my opinion, if the numbers are as good as advertised, than the index should clear Friday’s high (1403) with ease and make an assault on 1419.75 early in the week. If not, the old adage “sell in May and go away” just may be the play. Or at the very least, investors should consider exploring some downside protection tactics, if a new high is not made this week.
Friday, April 27, 2012
April 27 Premarket Outlook
AMZN, and EXPE flying last night. PG, CVX, F, MRK highlight this morning's earnings. Technical outlook on these issues and more:
April 27 Premarket Movers
| Stock | Movement | Reason | Our Comments |
| AMZN | Up 30 points. | Earnings last night. | Stock blasted off last night after report. Consolidating in premarket between 224 and 226. 220 could be a good swing number as that was resistance from November. |
| WDC | Down 5 points. | Earnings last night. | A wild ride for WDC last night. Traded up on initial report, and then got rocked. May find some support at 38, which is 1 month low. |
| PG | Down $1.85 | Earnings. | Stock falling this morning. Keep an eye on 1 month low of 65.77, that may provide some initial support. |
| MRK | Bid up slightly. | Earnings. | Major resistance remains at 39, with HFT resistance in the 38.90s. |
| F | Up 25 cents. | Earnings. | Trading through key 12 resistance area in premarket. 12 may be a good swing number. Has traded as high as 12.41 in premarket. |
| IP | Flat. | Earnings. | Quiet after reporting earnings. 52 week high of 36.50 remains major resistance. |
| EXPE | Up 20%. | Earnings. | Wow. Stock blasting to new all time highs. 40 is a big psychological number. |
| * Listen to Market Outlook show at 8:45 ET for more market movers. | |||
Thursday, April 26, 2012
April 26 Premarket earnings show
Lots of misses today. XOM, UPS, DOW, AET disappoint the street. Where are these stocks heading today?
April 26 Premarket Movers
| Stock | Movement | Reason | Our Comments |
| POT | Down 70 cents. | Earnings. | Disappointing results has stock down in premarket. Initial support in 42.50 area. Watch AGU for sympathy move. |
| TER | Up 7%. | Earnings last night. | Breaking out to new 52 week high this morning. Old 52 week high of 17.50 should be a decent swing number. |
| AET | Down 8%. | Earnings. | Ugly results, and stock under serious pressure this morning. 45.50 was old support level, since stock trading below that, use that number for swing number. UNH, CI could have a sympathetic move. |
| PEP | Flat. | Earnings. | Major resistance remains at 67. HFT resistance in 66.90s. |
| DOW | Down 1 point. | Earnings. | Took out major resistance at 36 at the close yesterday. Still might be some residual resistance in that area. |
| HRB | Down 16%. | Earnings last night, soft outlook. | Stock was at upper end of yearly trading range before report. Is falling towards lower end of yearly range after report. 52 week low of 12.54 should provide good support. |
| DB, STD, CS, ING | Down 2-4% | Euro-banks weak overseas. | These stocks trade like a yo-yo. Up one day, down next. These can still be a good indicator when trading US financials. |
| XOM | Down 1 point. | Earnings. | Slight miss. 85 area has been good support. |
| UPS | Down $2.50 | Earnings. | Slight miss has stock under pressure. May find some initial support in 76 area. |
| * Listen to Market Outlook show at 8:45 ET for more market movers. | |||
Wednesday, April 25, 2012
What To Do With Your Apple Stock?
By my nature I am a contrarian. I try to take cues from the herd and go the other way. For me, it is so tempting to fade the crowd and try to predict crucial turns in the market. However, I always try and base my contrarian calls on something more substantive. It can be based on fundamentals in the market, but more often than not my calls are based on technical analysis. Wall Street analysts, corporate executives and market commentators may not always tell the truth, but charts do not lie. They speak the truth, the whole truth and nothing but the truth about previous price activity in any financial instrument.
Which brings me to the world’s most talked about stock, Apple (NASDAQ:AAPL). The street was very bullish a few weeks ago (raising earnings and price targets) when the stock topped out at 644.00. And became very cautious, and a few analysts actually became bearish earlier this week as the stock bottomed out at 555.00.
Since Wall Street analysts are so fickle and the stock is so volatile, what can owners of this stock rely on to follow AAPL? An investor could adopt the Warren Buffet approach, “just own it and forget about it”. Unfortunately, that mantra has been followed by many investors in a myriad of different issues (internet tech bubble in the early 2000’s, financials on several different occasions, Gold, Silver, Oil and Enron).
At this time, the fundamentals of AAPL could not be better. The company blew away heightened Wall Street estimates, improved margins, topped estimates of sales for its I-Pads and I-Phones, while adding handsomely to their cash surplus. After the fact, is this really a surprise? By all accounts, customers were lining up to purchase the new I-Pad and now AAPL is in the early stages of worldwide deployment of its products. Therefore, it is hard to fathom earnings coming down any time soon, right? Not so fast, what is hardly being publicized by the mainstream media is that they have lowered revenue guidance for the third quarter substantially. Perhaps the company itself does not anticipate the same quantum leap in revenue and sales for the next quarter. Along these lines, imagine the reaction next quarter if they missed already lowered expectations.
Another fundamental reason for owning AAPL is that the issue has such a low price to earnings ratio. The reason for this should be obvious. Investors and funds have learned this lesson the hard way time and time again. How many times has the price to earnings ratio in stocks gone to astronomical levels only to come crashing down, when the earnings fail to meet expectations. For example, Walmart (NYSE: WMT) traded at 70.00 in 1999 and had a price to earnings ratio near 50. Now the company has greater earnings, and trades at 58.00 with a price to earnings ratio of 13. Clearly, the street’s expectations for growth in WMT were overblown. And how many Wall Street firms were downgrading WMT in 2000 based on valuation? It is difficult to compare WMT with AAPL, because the price to earnings multiple is much lower, but as WMT found out, the biggest hurdle to continued earnings growth in the double digits can be the size of the company itself.
Therefore, there is some skepticism as to whether or not AAPL can continue to grow its incredible pipeline of products. For those who have asked that question after the passing of Steve Jobs, that question still remains to be answered. At this time, AAPL’s two main products were created while Steve Job’s was still alive. Of course, AAPL TV will be a factor, but unless AAPL can create its own unique content (which is difficult and expensive) they will be dealing with the same issues that Netflix (NASDAQ:NFLX) is dealing with. Perhaps they are hoarding all the cash in order to purchase a major media outlet to provide content for AAPL TV. I certainly cannot see the company trying to develop their own network.
There is no doubt that millions of more I-Pads, I-Phones and I-Whatevers, will be sold in the United States and worldwide. What is most important to the future stock price of AAPL is the how many I-Whatevers it creates and if those new products have nearly the same appeal to consumers as its previous blockbuster products did. That is what will drive future earnings growth.
Enough with the fundamentals, let's inspect the technicals, both long and short term. Short-term I would focus on 600.000 for two reasons. First of all, that would be smack dab in the middle of the recent high (644.00) and the recent low (555.00). Therefore, all of the short term players that withstood the pain of being long all the way down will focus on that level as a stop-out level if AAPL retreats. On the other hand, shorts that did not cover on the way down may be saying to themselves “if AAPL ever gets back to 600, I will cover”. Secondly, it will be a strong psychological level for the “little guy” who rode it up to the high and down to the low. Longer-term, you have to remain focused on the recent high and recent low. If AAPL can maintain the momentum from its recent earnings announcement then 644.00 should just be a minor stopping point as the stock blasts to new all-time highs. However, if AAPL begins to gravitate towards and trade below 555.00, then perhaps we will find out why AAPL did not reach such a high price to earnings multiple during its parabolic climb.
If you don't like the technical or fundamental approach, I can offer you one more sure-fire indicator. If you really want to know when the top is in AAPL, I will let you know when I ditch my Blackberry for an I-Phone. To be honest, I actually did purchase an I-Phone a few years ago but returned it after a few days because it was too complicated. Good thing I did not allow my technological deficiencies to parlay into a shorting of the stock.
Which brings me to the world’s most talked about stock, Apple (NASDAQ:AAPL). The street was very bullish a few weeks ago (raising earnings and price targets) when the stock topped out at 644.00. And became very cautious, and a few analysts actually became bearish earlier this week as the stock bottomed out at 555.00.
Since Wall Street analysts are so fickle and the stock is so volatile, what can owners of this stock rely on to follow AAPL? An investor could adopt the Warren Buffet approach, “just own it and forget about it”. Unfortunately, that mantra has been followed by many investors in a myriad of different issues (internet tech bubble in the early 2000’s, financials on several different occasions, Gold, Silver, Oil and Enron).
At this time, the fundamentals of AAPL could not be better. The company blew away heightened Wall Street estimates, improved margins, topped estimates of sales for its I-Pads and I-Phones, while adding handsomely to their cash surplus. After the fact, is this really a surprise? By all accounts, customers were lining up to purchase the new I-Pad and now AAPL is in the early stages of worldwide deployment of its products. Therefore, it is hard to fathom earnings coming down any time soon, right? Not so fast, what is hardly being publicized by the mainstream media is that they have lowered revenue guidance for the third quarter substantially. Perhaps the company itself does not anticipate the same quantum leap in revenue and sales for the next quarter. Along these lines, imagine the reaction next quarter if they missed already lowered expectations.
Another fundamental reason for owning AAPL is that the issue has such a low price to earnings ratio. The reason for this should be obvious. Investors and funds have learned this lesson the hard way time and time again. How many times has the price to earnings ratio in stocks gone to astronomical levels only to come crashing down, when the earnings fail to meet expectations. For example, Walmart (NYSE: WMT) traded at 70.00 in 1999 and had a price to earnings ratio near 50. Now the company has greater earnings, and trades at 58.00 with a price to earnings ratio of 13. Clearly, the street’s expectations for growth in WMT were overblown. And how many Wall Street firms were downgrading WMT in 2000 based on valuation? It is difficult to compare WMT with AAPL, because the price to earnings multiple is much lower, but as WMT found out, the biggest hurdle to continued earnings growth in the double digits can be the size of the company itself.
Therefore, there is some skepticism as to whether or not AAPL can continue to grow its incredible pipeline of products. For those who have asked that question after the passing of Steve Jobs, that question still remains to be answered. At this time, AAPL’s two main products were created while Steve Job’s was still alive. Of course, AAPL TV will be a factor, but unless AAPL can create its own unique content (which is difficult and expensive) they will be dealing with the same issues that Netflix (NASDAQ:NFLX) is dealing with. Perhaps they are hoarding all the cash in order to purchase a major media outlet to provide content for AAPL TV. I certainly cannot see the company trying to develop their own network.
There is no doubt that millions of more I-Pads, I-Phones and I-Whatevers, will be sold in the United States and worldwide. What is most important to the future stock price of AAPL is the how many I-Whatevers it creates and if those new products have nearly the same appeal to consumers as its previous blockbuster products did. That is what will drive future earnings growth.
Enough with the fundamentals, let's inspect the technicals, both long and short term. Short-term I would focus on 600.000 for two reasons. First of all, that would be smack dab in the middle of the recent high (644.00) and the recent low (555.00). Therefore, all of the short term players that withstood the pain of being long all the way down will focus on that level as a stop-out level if AAPL retreats. On the other hand, shorts that did not cover on the way down may be saying to themselves “if AAPL ever gets back to 600, I will cover”. Secondly, it will be a strong psychological level for the “little guy” who rode it up to the high and down to the low. Longer-term, you have to remain focused on the recent high and recent low. If AAPL can maintain the momentum from its recent earnings announcement then 644.00 should just be a minor stopping point as the stock blasts to new all-time highs. However, if AAPL begins to gravitate towards and trade below 555.00, then perhaps we will find out why AAPL did not reach such a high price to earnings multiple during its parabolic climb.
If you don't like the technical or fundamental approach, I can offer you one more sure-fire indicator. If you really want to know when the top is in AAPL, I will let you know when I ditch my Blackberry for an I-Phone. To be honest, I actually did purchase an I-Phone a few years ago but returned it after a few days because it was too complicated. Good thing I did not allow my technological deficiencies to parlay into a shorting of the stock.
April 25 Premarket update
Apple blows away estimates, rallies 50 points. BA flying. Joel talks about "painting the tape" in the premarket.
April 25 - Market Movers 8 am update
Stock
|
Movement
|
Reason
|
Our Comments
|
AAPL
|
Up 50 points.
|
Earnings last night.
|
50 point move has everyone that was bearish turning
bullish. Market sentiment seems to
drive this issue more than anything.
The 620 high from the 18th (GS upgrade day) might provide some initial
resistance.
|
BA
|
Up 2 points.
|
Earnings.
|
Traded as high as 75.45 in premarket. But whole 75 area looks pretty big.
|
CAT
|
Down 2 points.
|
Earnings.
|
110 remains major resistance. Some initial support in 105 area (Monday's
low).
|
LLY
|
Up 90 cents.
|
Earnings.
|
Traded as high as 41.50 in premarket. That's a little overdone. This stock usually doesn't move much on
earnings. 40 may now provide some
decent support.
|
GD
|
Flat.
|
Earnings.
|
No trades yet, but has formed a nice base in low 69s. A breakdown through 68 would not be good
for the longs.
|
WMT
|
Up 40 cents.
|
Downgrade, and continued news on bribery cover-up.
|
The free fall continued yesterday. It's hard to catch a falling knife, but 56
area looks like decent support.
|
* Listen to Market Outlook show at 8:45 ET for more market
movers.
|
|||
Tuesday, April 24, 2012
April 24 10:50 am update
Has the herd turned, are they too bearish on AAPL? T and HSY continue to rally.
April 24 Premarket Earnings Show
NFLX, and Big Lots (BIG) disappoint. AT&T (T), UTX, TXN, HSY beat. AAPL weak in premarket.
Monday, April 23, 2012
Messy Monday Continues - 10:50 am update
Ugliness across the board, as multiple sectors under pressure. AAPL, WMT, and K not pretty.
Premarket update - Messy Monday
A messy Monday morning as WMT is caught up in a bribery scandal, financials come under pressure again, and more disappointing earnings results.
Sunday, April 22, 2012
S&P 500 and Big 10 Outlook - Week of April 23rd
I am so confused. For the most part, we had stellar earnings and the market barely budged. It is as though nothing is good enough on the earnings front (with a few exceptions on Friday). Instead of buying into the good news, traders and investors are using the announcements to sell. Of course we are only one week into earnings season and there could be some positive responses to the earnings results this week. Perhaps the whole world is waiting for Apple’s (NASDAQ:AAPL) earnings on Tuesday and many investors appear to be taking a cautious stance ahead of that report.
Speaking of AAPL, this week many investors jumped off the “apple cart” or should I say bandwagon. No matter how bullish you are on this issue, the chart looks terrible. And when the 570 level gives way, get your bids out at the 550 level in a hurry, because it is going to be there in a heartbeat. For those investors who were not savvy enough to exit on the way up, good luck trying to sell on the way down. There is absolutely no liquidity in this issue and the High Frequency Traders can sense any sizeable seller from a mile away. From the institutional traders I talk to, you have to knock AAPL down five points to get 10,000 shares off and then pray to get another piece off on any rebound in the price. Considering the recent volatility in this issue, it would not be surprising if AAPL had another 50 point move off of their earnings results on Tuesday. For investors regretting not exiting AAPL above 600 prior to the earnings announcement, lower your target price to 590.00 and pray for a pre-earnings bounce.
Exxon-Mobil (NYSE:XOM) was immune to the selling pressure this week. Perhaps it was bolstered by decent earnings from other stocks in its sector. Keep in mind, XOM was not one of the issues in the Big 10 that was able to make a new 52 week high during the recent rally, so it may not be as vulnerable if the overall market goes into reverse. From a technical perspective, XOM is very straightforward, look at the last three nearly identical trading ranges from last week and go with the breakout above 86 or the breakdown below 85.
International Business Machines (NYSE:IBM) price action was the most puzzling of all issues that released earnings this week. IBM beat the street, raised guidance and the dividend, and then got pounded, trading down over seven points on Tuesday night after the announcement. IBM needs to put a string of closes together above the 200 level in order to reverse the selloff from the all time high of 210.69.
Hooray for Microsoft (NASDAQ:MSFT), following the script to perfection. Good numbers, gap and go on the open and a test of major resistance at the 33.00 level. It simply ran out of gas on Friday to take out the huge size surrounding the 33.00 level, but could easily make another attempt this week. But for now, 33.00 remains major resistance until proven otherwise. After that, there is no major resistance in MSFT until the 34.50 level (which would be a 50% retracement from the 2008 low of 14.87, and the all time high of 53.97). But there is no hurry to purchase the 35 calls, since MSFT is more likely to drift back down and fill the gap from Thursday before it resumes its rally.
Similar to MSFT, General Electric (GE) posted good numbers, but no one really seemed to care. After an initial rally, which failed to even sniff the 20 level, GE pulled back and settled in the lower portion of its trading range. As long as 19.25 holds up in GE, this issue has a chance to test 20 again and make another attempt at the 52 week high of 21.00. If a boost from GE’s financial unit was not enough of a catalyst to ignite a rally, I'm not sure if anything really can.
Chevron Corporation (NYSE:CVX) is in a major consolidation phase and is gearing up for its next big move. In fact, CVX has traded between 100.52-104.09 since April 9th, which is very unusual for this high flyer. Perhaps CVX’s earnings will be the impetus for a break out above 104.09 and a rally back to 108, or a break down below 100.51 and an attempt to fill the gap from late November at 98.05.
AT&T (NYSE:T) rode the coattails of decent Verizon (NYSE:VZ) numbers on Friday and traded above 31.00 for the first time since going ex-dividend at the beginning of the month. However, it was unable to sustain that level and closed at 30.86. Expect major resistance all the way from 31.16-31.38 as the dividend players that are still holding on, will be aiming for a scratch on their stock positions. Expect major support at the 30.50 level, and for T to be range bound unless it comes up with a surprise on the earnings front.
Once again, Procter&Gamble (NYSE:PG) is flirting with its 52 week high and there are huge institutional sellers at 68.00, that have kept a lid on PG’s ascent so far. Expect the HFT crowd to be doing what they do best, selling in the high 67.80’s, up to 67.99 until the seller at 68.00 is taken out. Do not expect a breakdown of this issue until 65.80 is taken out on a closing basis, the lowest it has traded since February 23 (post announcement of its drastic cost-cutting measures).
Johnson&Johnson (NYSE:JNJ) is down but not out. After being stuck in its year long trading range of 64.00-66.32, it finally broke down, trading down to 62.76 this week. But a rally ensued, and JNJ is banging on the door of 64.00 once again. However, multiple highs from 63.92-64.28 from the last several trading sessions reinforces the mundane but true technical analysis premise that “old support makes new resistance”. A string of closes above the 64 level is needed to prevent a retest of this week’s low.
The Great Wall of China in Wells Fargo (NYSE:WFC) has repositioned itself to just under 34.00 from 34.50, with four of its last six highs being between 33.74-33.87. And with Friday’s close of 33.00, its lowest close of the week, expect the major offers to come down even further this week. On the downside, 32.67 (post earnings low) is the only major support preventing WFC from trading back down to the 31.00 level.
The muted response to this week's mostly positive earnings announcements can be interpreted in two ways. All the “big money” supposedly on the sidelines is lying low and allowing profit takers and short sellers to do their thing, before they move into the action. Or many of the numbers were already anticipated by the street and already baked into the current stock prices and the prospects for the next quarter are not so rosy. Stay tuned, a rally above 1390.00 in the S&P futures or a break below 1360.00 will provide a better clue as to the price action in equities for the next three months.
Speaking of AAPL, this week many investors jumped off the “apple cart” or should I say bandwagon. No matter how bullish you are on this issue, the chart looks terrible. And when the 570 level gives way, get your bids out at the 550 level in a hurry, because it is going to be there in a heartbeat. For those investors who were not savvy enough to exit on the way up, good luck trying to sell on the way down. There is absolutely no liquidity in this issue and the High Frequency Traders can sense any sizeable seller from a mile away. From the institutional traders I talk to, you have to knock AAPL down five points to get 10,000 shares off and then pray to get another piece off on any rebound in the price. Considering the recent volatility in this issue, it would not be surprising if AAPL had another 50 point move off of their earnings results on Tuesday. For investors regretting not exiting AAPL above 600 prior to the earnings announcement, lower your target price to 590.00 and pray for a pre-earnings bounce.
Exxon-Mobil (NYSE:XOM) was immune to the selling pressure this week. Perhaps it was bolstered by decent earnings from other stocks in its sector. Keep in mind, XOM was not one of the issues in the Big 10 that was able to make a new 52 week high during the recent rally, so it may not be as vulnerable if the overall market goes into reverse. From a technical perspective, XOM is very straightforward, look at the last three nearly identical trading ranges from last week and go with the breakout above 86 or the breakdown below 85.
International Business Machines (NYSE:IBM) price action was the most puzzling of all issues that released earnings this week. IBM beat the street, raised guidance and the dividend, and then got pounded, trading down over seven points on Tuesday night after the announcement. IBM needs to put a string of closes together above the 200 level in order to reverse the selloff from the all time high of 210.69.
Hooray for Microsoft (NASDAQ:MSFT), following the script to perfection. Good numbers, gap and go on the open and a test of major resistance at the 33.00 level. It simply ran out of gas on Friday to take out the huge size surrounding the 33.00 level, but could easily make another attempt this week. But for now, 33.00 remains major resistance until proven otherwise. After that, there is no major resistance in MSFT until the 34.50 level (which would be a 50% retracement from the 2008 low of 14.87, and the all time high of 53.97). But there is no hurry to purchase the 35 calls, since MSFT is more likely to drift back down and fill the gap from Thursday before it resumes its rally.
Similar to MSFT, General Electric (GE) posted good numbers, but no one really seemed to care. After an initial rally, which failed to even sniff the 20 level, GE pulled back and settled in the lower portion of its trading range. As long as 19.25 holds up in GE, this issue has a chance to test 20 again and make another attempt at the 52 week high of 21.00. If a boost from GE’s financial unit was not enough of a catalyst to ignite a rally, I'm not sure if anything really can.
Chevron Corporation (NYSE:CVX) is in a major consolidation phase and is gearing up for its next big move. In fact, CVX has traded between 100.52-104.09 since April 9th, which is very unusual for this high flyer. Perhaps CVX’s earnings will be the impetus for a break out above 104.09 and a rally back to 108, or a break down below 100.51 and an attempt to fill the gap from late November at 98.05.
AT&T (NYSE:T) rode the coattails of decent Verizon (NYSE:VZ) numbers on Friday and traded above 31.00 for the first time since going ex-dividend at the beginning of the month. However, it was unable to sustain that level and closed at 30.86. Expect major resistance all the way from 31.16-31.38 as the dividend players that are still holding on, will be aiming for a scratch on their stock positions. Expect major support at the 30.50 level, and for T to be range bound unless it comes up with a surprise on the earnings front.
Once again, Procter&Gamble (NYSE:PG) is flirting with its 52 week high and there are huge institutional sellers at 68.00, that have kept a lid on PG’s ascent so far. Expect the HFT crowd to be doing what they do best, selling in the high 67.80’s, up to 67.99 until the seller at 68.00 is taken out. Do not expect a breakdown of this issue until 65.80 is taken out on a closing basis, the lowest it has traded since February 23 (post announcement of its drastic cost-cutting measures).
Johnson&Johnson (NYSE:JNJ) is down but not out. After being stuck in its year long trading range of 64.00-66.32, it finally broke down, trading down to 62.76 this week. But a rally ensued, and JNJ is banging on the door of 64.00 once again. However, multiple highs from 63.92-64.28 from the last several trading sessions reinforces the mundane but true technical analysis premise that “old support makes new resistance”. A string of closes above the 64 level is needed to prevent a retest of this week’s low.
The Great Wall of China in Wells Fargo (NYSE:WFC) has repositioned itself to just under 34.00 from 34.50, with four of its last six highs being between 33.74-33.87. And with Friday’s close of 33.00, its lowest close of the week, expect the major offers to come down even further this week. On the downside, 32.67 (post earnings low) is the only major support preventing WFC from trading back down to the 31.00 level.
The muted response to this week's mostly positive earnings announcements can be interpreted in two ways. All the “big money” supposedly on the sidelines is lying low and allowing profit takers and short sellers to do their thing, before they move into the action. Or many of the numbers were already anticipated by the street and already baked into the current stock prices and the prospects for the next quarter are not so rosy. Stay tuned, a rally above 1390.00 in the S&P futures or a break below 1360.00 will provide a better clue as to the price action in equities for the next three months.
Friday, April 20, 2012
April 20 Mid-morning update
MSFT off to the races, approaching 52 week high of 32.95. Defensive names strong again, and financials relatively weak.
April 20 Premarket update
Options expiration....and we are looking strong in the premarket. Can we hold up? or is this a nice rally to sell?
Thursday, April 19, 2012
April 19 Mid-morning update
Discussing the trading action in some of your key earnings movers including BAC, EMC, QCOM, AXP, and EBAY. And a look ahead to AAPL next week. Street in many cases still "yearning for better earnings".
Street Yearning For Better Earnings?
As we review the early results for this quarter’s earnings, the street's expectations are not being satisfied. Or shall I say even though many companies are meeting or beating the street, it is not good enough. Dare I say the market is priced to perfection and no matter what the results are, we are destined for a selloff.
Beginning with Google (NASDAQ:GOOG), who supposedly did everything right by meeting expectations and announcing a stock split. The end result, GOOG has been punished. After closing at 651.01 on Thursday, GOOG is now flirting with major support at 600.00, which if taken out, could trigger a quick drop to 580.00 or even 560.00.
Along these lines, JP Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) did not disappoint the street, but they have not rallied either. Although both issues sold off sharply on the initial news, they have recouped those losses and are flat since their respective announcements. But since they both had monster run-ups going into their earnings, it is difficult to see what the driver will be going forward.
Goldman Sachs (NYSE:GS) cannot decide what to do since its earnings announcement. Although the results can be construed as a slight miss, they really are not. The comparison to last year’s first quarter results is unfair since those results were askew from the rest of the year. At this time, its modest increase in dividend has not offset the negative vibes surrounding GS since “Muppetgate”.
And how about two stocks that did disappointed the street, International Business Machines (NYSE:IBM) and Intel (NASDAQ:INTC), they are getting punished. IBM who had been clinging on to the major support in the 202.00 area has now given way. If the path it took after its last positive announcement is any indication (straight up for three months), then the path it takes after a negative announcement might indicate that it is time to exit IBM.
INTC has recovered nicely from its premarket beating and is trading well off its opening low. However, expect the sellers to come out in droves if INTC can claw its way back to the 28.50-28.78 level.
Another stock in big technical trouble after earnings is Johnson&Johnson (NYSE:JNJ). After trading between 64.00-66.32 for the entire year, JNJ has made a break to the downside. And every time it sneaks above 64.00 it gets beat right back down. Furthermore, on its earlier travels through the 64, 65 and 66 handles, JNJ had to claw through huge institutional sell orders at all the half and whole numbers. The big boys appear to be out and most likely they are waiting to see what plans the new management has to increase earnings for JNJ.
So far the big and somewhat surprising winner is Coca Cola (NYSE:KO). I really did not notice folks drinking that much Coke this quarter but apparently they were overseas, as sales increased across the pond. Stay focused on the 74.50 level as KO visited that level earlier in the month, sold off, and has now revisited it. If in fact, KO can close above that level, the rally can continue. But until it can break-out over that 74.50 level it is a low-risk short.
And what about Wednesday’s announcements, American Express (NYSE:AXP) and Qualcomm (NASDAQ:QCOM) both surpass expectations and both are trading lower. Of course, one may attribute the price action to specific company comments about forward guidance. In my opinion, it further supports the premise that no matter how the earnings are coming out, they are not good enough. That coupled with the massive rally in these issues makes them prone to wicked selloffs, because believe it or not, some investors do take profits.
Which sets us up for next Tuesday's big earnings announcement, Apple Inc. (AAPL). Of course, the whole world knows that AAPL is going to beat the street (by the world I mean Wall Street analysts, many of whom raised their price and earnings targets after the stock rallied). Perhaps they are letting the P (price) affect their E(earnings) views which is not the way it should be. But my question for the AAPL bulls is twofold. First of all, after this quarter that will be driven by the new I-pad, what will be the next catalyst for this stock. In other words, how many more technological advancements could Steve Jobs have left behind before his passing in October? What in the world could people possibly need? Or was the reason for AAPL finally paying a dividend, is that the company really doesn't have a lot of need for their excess cash.
This market's early earnings announcements have been okay, but the pricing action after the reports has suggested that this market is priced for perfection. More importantly, many of the issues that have beat and soared in the premarket have failed to reach those levels during the regular session. Unfortunately, no matter what earnings results have been so far, good or bad, traders have been more willing to sell the news than buy into it.
Beginning with Google (NASDAQ:GOOG), who supposedly did everything right by meeting expectations and announcing a stock split. The end result, GOOG has been punished. After closing at 651.01 on Thursday, GOOG is now flirting with major support at 600.00, which if taken out, could trigger a quick drop to 580.00 or even 560.00.
Along these lines, JP Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) did not disappoint the street, but they have not rallied either. Although both issues sold off sharply on the initial news, they have recouped those losses and are flat since their respective announcements. But since they both had monster run-ups going into their earnings, it is difficult to see what the driver will be going forward.
Goldman Sachs (NYSE:GS) cannot decide what to do since its earnings announcement. Although the results can be construed as a slight miss, they really are not. The comparison to last year’s first quarter results is unfair since those results were askew from the rest of the year. At this time, its modest increase in dividend has not offset the negative vibes surrounding GS since “Muppetgate”.
And how about two stocks that did disappointed the street, International Business Machines (NYSE:IBM) and Intel (NASDAQ:INTC), they are getting punished. IBM who had been clinging on to the major support in the 202.00 area has now given way. If the path it took after its last positive announcement is any indication (straight up for three months), then the path it takes after a negative announcement might indicate that it is time to exit IBM.
INTC has recovered nicely from its premarket beating and is trading well off its opening low. However, expect the sellers to come out in droves if INTC can claw its way back to the 28.50-28.78 level.
Another stock in big technical trouble after earnings is Johnson&Johnson (NYSE:JNJ). After trading between 64.00-66.32 for the entire year, JNJ has made a break to the downside. And every time it sneaks above 64.00 it gets beat right back down. Furthermore, on its earlier travels through the 64, 65 and 66 handles, JNJ had to claw through huge institutional sell orders at all the half and whole numbers. The big boys appear to be out and most likely they are waiting to see what plans the new management has to increase earnings for JNJ.
So far the big and somewhat surprising winner is Coca Cola (NYSE:KO). I really did not notice folks drinking that much Coke this quarter but apparently they were overseas, as sales increased across the pond. Stay focused on the 74.50 level as KO visited that level earlier in the month, sold off, and has now revisited it. If in fact, KO can close above that level, the rally can continue. But until it can break-out over that 74.50 level it is a low-risk short.
And what about Wednesday’s announcements, American Express (NYSE:AXP) and Qualcomm (NASDAQ:QCOM) both surpass expectations and both are trading lower. Of course, one may attribute the price action to specific company comments about forward guidance. In my opinion, it further supports the premise that no matter how the earnings are coming out, they are not good enough. That coupled with the massive rally in these issues makes them prone to wicked selloffs, because believe it or not, some investors do take profits.
Which sets us up for next Tuesday's big earnings announcement, Apple Inc. (AAPL). Of course, the whole world knows that AAPL is going to beat the street (by the world I mean Wall Street analysts, many of whom raised their price and earnings targets after the stock rallied). Perhaps they are letting the P (price) affect their E(earnings) views which is not the way it should be. But my question for the AAPL bulls is twofold. First of all, after this quarter that will be driven by the new I-pad, what will be the next catalyst for this stock. In other words, how many more technological advancements could Steve Jobs have left behind before his passing in October? What in the world could people possibly need? Or was the reason for AAPL finally paying a dividend, is that the company really doesn't have a lot of need for their excess cash.
This market's early earnings announcements have been okay, but the pricing action after the reports has suggested that this market is priced for perfection. More importantly, many of the issues that have beat and soared in the premarket have failed to reach those levels during the regular session. Unfortunately, no matter what earnings results have been so far, good or bad, traders have been more willing to sell the news than buy into it.
Subscribe to:
Posts (Atom)