Friday was a volatile day on Wall Street as investors digested the premarket employment data. Originally stocks jumped higher as the non farm payroll number beat expectations for the first time in 3 months (even as the unemployment rate rose) but in the mid morning sold off quite sharply. The rest of the session was random as indexes finished mixed with the S&P 500 up 0.05% and the NASDAQ dropping 0.37%. This is the second day of underperformance by the NASDAQ vs the other indexes.
Employers added 175,000 jobs to their payrolls last month after creating 129,000 new positions in January, the Labor Department said on Friday. The unemployment rate, however, rose to 6.7 percent from a five-year low of 6.6 percent. Payrolls averaged about 205,000 new jobs per month in the first 11 months of 2013, but that figure dropped to just 129,000 for December, January and February. The report also showed the largest increase in average hourly earnings in eight months and the payrolls count for December and January was revised up to show 25,000 more jobs created during those months than previously reported. The labor force participation rate held steady at a paltry 63.0%.
For index watchers a spike today would have been a good area to unload short term positions began about a month ago when the NASDAQ breached the lower trend line in purple. Both indexes were quite a way from even their 10 day moving average and if the NASDAQ had spiked it would have hit an area it has stalled often. However we never really saw this index get close to the upper trend line today before reversing.
The bond market liked today's news as it was one of the few solid pieces of economic data in the past few months; ten year treasury yields had hit 2.6% just a few days back, but rallied to nearly 2.8%.
It was a good day for footwear, as Foot Locker (FL) delivered a better-than-expected 5.3% same-store sales in the fourth quarter.
This helped Nike (NKE) as well.
Big Lots (BIG) had a very ugly chart coming into the day but was a big mover after the retailer reported a better-than-expected adjusted profit for the holiday quarter.
We spoke yesterday of Chinese internet stocks having a good time of late - today we'll highlight a name that has become a momentum trader favorite: 58.com (WUBA). Per Yahoo Finance:
58.com Inc. (WUBA) operates China's largest online marketplace serving local merchants and consumers, as measured by monthly unique visitors on both its www.58.com website and mobile applications. The Company's online marketplace enables local merchants and consumers to connect, share information and conduct business.
Investor's Business Daily calls it the Craigslist of China... since reporting profit of 13 cents a share late in February (reversing a year-ago loss), the stock has been on fire. Sales growth accelerated, rising 83% to $45.3 million.
Original post: STTG Market Recap March 7, 2014
Mike Scanlin from over at BornToSell has been asking me to check out his site and covered call tools for close to a year now. With the StockBrokers.com 2014 Review published, I finally had the time to check them out. All I can say is nice, very nice.
BornToSell's service is focused on making it easy to screen for Covered Calls and manage your own current positions. What I immediately noticed was how easy the site and tools were to use. Mike commented,
Thanks. My design goal was "If Apple were to make a covered call screener, what would it look like?" I wanted it simple enough for anyone to use. I chose not to use words like "delta" or "implied vol". That annoys some power users but 90% of my users prefer it that way. And that's why we hide a lot of functionality.
The main screener has all the options necessary to filter quickly and easily including expiration, option proximity to being in the money, stock price, sector, alongside a variety of fundamental variables. As you update your filters, results are updated on the fly. The site has only a 15 minute data delay, which for screening isn't too bad at all as many use end of day data.
The site also leverages its users to show the top 10 most popular covered calls within the community alongside the 20 most currently watched stocks. Considering that investors of every skill level subscribe to the site, I was impressed with the effectiveness of the top 10 list.
Since I test all the brokers through StockBrokers.com, I was curious to know Mike's thoughts on why BornToSell was better than the screening tools offered by the best online brokers for options trading. He cited three key reasons:
- Simplicity. "Every broker has a screener. And most of them work marginally well for every possible strategy (condors, spreads, covered calls, etc). But none of them work exceptionally well for just 1 strategy. And they all require a steep learning curve. Most of them overly complexify a very simple strategy. We wanted to be best-of-breed for just 1 thing: Covered calls."
- Proper position tracking. "In terms of portfolio tracking, few have the ability to group trades together into a single trade. For example, maybe you leg into a buy-write to get better fills on the stock and option portions of the trade. Good luck having your broker recognize that those two trades, placed on different order tickets, are part of a single covered call trade. So you never really know how much time premium is left in the position if it's an in-the-money covered call."
- Removing the need for separate excel sheet tracking. "Excel doesn't (generally) update pricing data, and certainly doesn't know about ex-dividend dates or earnings release dates that occur prior to option expiration."
I can see Mike's points #1 and #3. Most brokers do not make it easy to screen for option trades, and for those who trade Covered Calls, tracking them in excel can be a hassle (I couldn't agree more). With that said, some of the brokers do a very good job with their option screeners, position management, and tools overall. tradeMONSTER is a great example.
Alongside the tools mentioned above, BornToSell also includes some other neat tools like the Roll Me tool which helps you compare the covered call you have vs 14 alternatives in case you want to modify an existing position. Another tool, the Income Goal screener, allows you to find covered call candidates based on your own personal portfolio metrics.
If you want to give BornToSell a whirl, you can start a two week free trial. The service runs $59.95 per month with quarterly and yearly discounted subscriptions also being available.
Original post: Great Covered Call Tools at BornToSell
Another session of mild digestion after Tuesday's large rally; stocks started off strong but gave up some steam late in the day. We ended with mixed indexes; the S&P 500 gained 0.17% while the NASDAQ fell 0.13%. Tomorrow pre-market we will get labor data from the U.S. government; it has been two bad months in a row in terms of non farm payroll gains so people will be watching to see if there is some reversion to mean and some revisions upwards to the last 2 months of data due to weather. Since the bar is so low tomorrow any positive number might be enough to give the market a jolt to push it up to the upward extreme level on the NASDAQ chart below. (upper purple line)
In economic news:
The government also reported a 0.7 percent decline in factory orders in January, slightly more than the consensus forecast for a 0.5 percent drop.
Indexes remain on track if a bit overbought short term... keep an eye on NASDAQ in the coming days if/when it hits that upper purple trend line.
For you wrestling fans out there, World Wrestling Entertainment (WWE) has had a mind numbing run the past half year - sub $10 to nearly $30 today; look at that volume as momentum investors pile in. When stocks go parabolic like this after an already large run it starts getting very dangerous to own.
Baidu (BIDU) had a strong day as a lot of "Chinese internet" stocks have seen momentum money flow into them the past few weeks.
Costco (COST) had a rough session after the warehouse club operator reported a 15 percent drop in quarterly profit, trailing analysts' estimates.
Shares of Staples (SPLS) fell sharply after the office-supplies chain projected a quarterly drop in sales and said it would shut as many as 225 stores in North America.
It was a rare bad day for the biotech space as Gilead Sciences (GILD) after a product recall:
According to a post on the FDA's website, Gilead initiated a nationwide recall of of about 39,000 bottles of its Atripla treatment. Atripla is a treatment for HIV-1 infection in adults and children at least 12 years old.
Original post: STTG Market Recap March 6, 2014
A very quiet session Wednesday digesting the big gains Tuesday. Indexes were in a very tight range all day vacillating around the unchanged mark. At the end of the day we had the S&P 500 down 0.01% and the NASDAQ up 0.14%. We continue to see weaker economic data in most reports and we continue to see bulls say it is all weather related. So the bull market continues.
ADP Research Institute reported the private sector added 139,000 jobs in February, less than the 160,000 estimated. The Institute for Supply Management's non-manufacturing index for February came in way below expectations at 51.6 in February versus a 54 reading in January.
Here are the longer term index charts - the NASDAQ chart has been an excellent tell for us the past year+ and if you took the opportunity to buy buy buy when the NASDAQ broke back above the lower purple line in early February, you are sitting pretty. Of course we are now not too far from the upper purple trendline which is where these rallies tend to stall short term.
We mentioned oil Monday potentially breaking out of a flag but of course it was news related so would be driven by the news out of Ukraine. With tensions simmering it fell back Tuesday and completely gave back all gains today.
On Monday's recap we wrote this regarding Facebook (FB):
If you are looking for a low risk entry for short/intermediate term trading, Facebook (FB) has pulled back nicely to its 20 day moving average here.
That was at $67. Two days later you would have booked a cool 6% gain. If only it was always that easy!
In terms of sectors, financials have had a nice spike the past two days; this is a bullish sign.
Industrials are also leading which is another pro-growth sector.
As is technology.
Combined with the small cap leadership we discussed yesterday these are the right sectors leading.
Original post: STTG Market Recap March 5, 2014
You can't keep a good market down. After a 1 day selloff, markets came roaring back today - gapping up at the open and grinding higher all session. Comments from Putin seemed to lessen tensions. Dip buyers have been trained to buy every dip as well, as we have a long litany of these type of crisis - Syria, Egypt, etc. The S&P 500 gained 1.53% and the NASDAQ 1.75%.
Reported comments by Vladimir Putin that the Russian president had called troops taking part in military exercises close to Russia's border with the Ukraine back to their bases helped calm worries of an immediate escalation of military force.
The indexes continue to look very good.
Let us also highlight the Russell 2000 today (which focuses on smaller companies), as it had a monster day up nearly 3%. Seeing this as a leading index is usually a good sign.
10 year Treasuries fell, pushing yields up from that 2.6% range yesterday to 2.7% as the "risk on" trade came back.
One area that continues to lead here are the homebuilders - the ETF took a hit yesterday but is building a high level flag.
The airlines - which were one of the huge winners of 2013 - continue to perform this year as industry consolidation has created a beautiful oligopoly. Delta is already up 26% this year!
Delta, the world's second biggest airline behind United, said Tuesday that traffic rose 2.4 percent last month, as passengers flew 13 billion miles. Delta said that revenue for every seat flown one mile rose 4 percent from a year ago. That statistic is watched closely in the airline business, and it rises when airlines put more people on each flight or raise average prices.
There was an interesting story regarding Facebook (FB) today as the company is looking to buy a drone company to provide internet access in areas that do not have it.
Facebook Inc is in talks to buy drone maker Titan Aerospace for $60 million, according to media reports. The high-flying drones would give Facebook, the world's No.1 Internet social network, the ability to beam wireless Internet access to consumers in undeveloped parts of the world, according to the technology blog TechCrunch. The effort would help advance Facebook's Internet.org effort, aimed at connecting billions of people who do not currently have Internet access in places such as Africa and Asia.
BeSpoke has an interesting chart indicating this is a good time to buy (and to sell on Easter).
The table to the right lists the performance of the S&P 500 from the close on Fat Tuesday through Easter over the last 25 years. As shown in table, the S&P 500 has risen an average 2.04% (median = 2.37%) with positive returns 72.0% of the time. This is pretty much right in line with the average going even further back to 1945, where the S&P 500 has averaged a gain of 2.08% with positive returns 69.6%. More recently, in the current bull market the S&P 500 has risen during Lent every year for an average gain of 5.1% (median = 3.3%). There's an old market axiom that says that investors should sell on Rosh Hashanah and buy on Yom Kippur. Perhaps a Christian corollary to that saying is buy on Ash Wednesday and sell on Easter.
Original post: STTG Market Recap March 4, 2014
Stocks were hit by the deepening crisis in Ukraine but honestly speaking the damage was quite limited compared to a lot of foreign indexes where the losses were twice as much (or more). A good economic figure plus a persistent buy the dip mentality held U.S. stocks indexes up quite well. The S&P 500 fell 0.74% and the NASDAQ 0.72%. Russian stocks fell 11% on the day if interested. On the economic front we had 2 reports to watch:
Figures from the Commerce Department had consumer spending rising more than projected in January, with household purchases up 0.4 percent after a minuscule 0.1 percent gain the prior month. The Institute for Supply Management (ISM) said its index of national factory activity rose to 53.2 in February, up from January's read of 51.3, which was the weakest reading since May 2013. Readings above 50 indicate expansion in the sector.
Today's drop pushed the S&P 500 back down below those new all time highs they breached late last week after multiple attempts early in the week.
10 Year Treasury yields fell to the 2.6% range today as a "flight to safety" trade - they actually have been falling the past few weeks even as stocks ignore bad economic data. An interesting divergence...usually yields fall as a sign of a slowing economy.
A lot of action came today in the commodities sector, partly due to the typical reaction to global strife, and partly due to risk aversion type moves. We can see gold has continued its resurgence in 2014...
...and oil broke out of a multi week flag. It will be interesting to see if this holds once Ukraine is "resolved", or if oil will tumble right back down like it did post Syria.
If you are looking for a low risk entry for short/intermediate term trading, Facebook (FB) has pulled back nicely to its 20 day moving average here.
One of the few Russian stocks which trades on U.S. exchanges is Yandex (YNDX) which is their version of Google / Baidu.
Mobil Telesystems (MBT) is another but you can see bargain hunters came in for this stock today as it finished well off its lows. Note the huge volume.
Original post: STTG Market Recap March 3, 2014
Indexes shot out of a cannon Friday as it looked like stocks were going to build on the breakout over year highs accomplished yesterday but news that Russian forces potentially had entered Ukraine late in the day let to a sharp bout of selling and created mixed indexes at the close. The S&P 500 still finished up 0.28% while the NASDAQ dropped off 0.25%. Obviously any serious issue in Ukraine would be a potential short term issue for an overheated market.
The Wall Street Journal, quoting Russia's Interfax news agency, reported Ukraine's acting president claimed Russia sent troops to Crimea and seized Parliament. This followed unconfirmed reports from the BBC and AFP that Russian troops may have entered Crimea.
There was a slew of mixed economics news:
The National Association of Realtors reported pending home sales edged up 0.1 percent to 95.0 in January, below estimates for a 2.0 percent gain. However, the February Chicago Purchasing Managers' Index rose to 59.8 versus a 57.0 estimate. Revised figures from the Commerce Department pegged fourth-quarter expansion at 2.4 percent in the fourth quarter, versus the 3.2 percent gain projected in January. The economy grew 4.1 percent in the third quarter.
Here are the longer term charts for the indexes - both in good condition.
Tech company Salesforce.com (CRM) was all over the map after posting earnings Thursday evening. It raised its full-year revenue forecast but its profit forecast was largely below estimates.
Monster Beverage (MNTR) was a big gainer post earnings. This stock had a very rough 2013 due to legal concerns, but was a major momentum stock in 2009-2012.
Monster Beverage Corp. got a fourth-quarter jolt from higher sales of its energy drinks despite legal attacks alleging that the company's caffeinated concoctions pose health risks. The results seemed to validate Monster Beverage's recent efforts to combat the assault on its drinks and marketing practices. Regulators and lawsuits contend Monster Beverage targets children who could be harmed or even killed by the caffeine levels in its drinks, claims that the company has adamantly denied.
The company earned $76.1 million, or 44 cents per share, during the quarter. That compared to $68 million, or 39 cents per share, in the prior year. Monster Beverage would have fared better, if not for $4.7 million in expenses tied to the regulatory inquiries and lawsuits revolving around the safety of its drinks. Those costs more than tripled from $1.4 million in the prior year. Fourth-quarter revenue climbed 15 percent from the previous year to $541 million. The company sold 52.8 million cases of its drinks in the quarter, a 14 percent increase from the previous year.
We highlighted Target (TGT) Wednesday; the stock had a beautiful follow through move today...
Lululemon (LULU) was hit today on an analyst downgrade:
Credit Suisse's analyst Christian Buss has put out a new warning on Lululemon. The firm already had a Neutral rating, but the price target in this call was lowered to $46 from $53, versus a closing price of $53.05 on Thursday. Friday's report warns of a negative shift via Internet and social media monitoring via blogs, social networks and customer reviews. Another key concern is that a comparable store sales rebound will be delayed and that e-commerce growth likely will slow. Lululemon also supposedly is losing website traffic to competitors.
Have a good weekend and try to stay warm; we'll see you back here Monday.
Original post: STTG Market Recap February 28, 2014
Stocks continue to act well as we had a few days of consolidation to begin this week and today another attempt at yearly highs. Today that attempt was successful with a close above earlier year highs; as we said the past few days what was happening with the failures at a key level was not necessarily bearish especially with such a sharp rally to get to that point. The S&P 500 gained 0.49% and the NASDAQ 0.63%. The upper purple trend line continues to be a likely eventual destination for the NASDAQ! New Federal Reserve head Janet Yellen spoke today and said nothing to spook the market, so it was all systems go:
Testifying before the Senate Banking Committee, Yellen said the Fed would watch carefully to make sure weather was indeed behind the recent weakness. But she said it would take a "significant change" to the economy's prospects for the central bank to put plans to reduce its bond-buying program on hold.
In economic news:
Durable goods data was better than expected, with orders—excluding transportation—up 1.1 percent, the largest increase since May, after December's drop of 1.9 percent.
Indexes act fine.
Retailers were in the news again. J.C. Penney (JCP) shares surged, a day after the U.S. department store chain forecast more improvement in its comparable sales and gross profit margin this fiscal year. This has been a very troubled company but shows the danger of pressing a position (in this case - short) around earnings!
We highlighted Zulily (ZU) earlier this week on earnings - it took off again today.
Sears Holding Corp (SHLD) reported a quarterly loss that narrowed from the year-ago period, sending its stock up. Not a nice chart but a name often in the news.
Shares of Deckers Outdoor (DECK) tumbled 13% to the $73s in after hours after the company, whose brands include UGG boots and Teva sandals, posted earnings. The guidance was poor:
The company projected a loss of 16 cents a share for the current quarter. Analysts had estimated a profit of 10 cents on average, according to data compiled by Bloomberg. The operating expenses of opening 28 additional stores is weighing on profit, the company said in a statement. Revenue also will grow 6 percent in the period, Deckers said. That was half the 12 percent rate that analysts predicted.
In the fourth quarter, Deckers reported a 44 percent jump in net income to $140.9 million, or $4.04 share, from $98.1 million, or $2.77, a year earlier. Revenue advanced 19 percent to $736 million.
Original post: STTG Market Recap February 27, 2014
Indexes had nice gains most of the day on a good housing number but sold off a bit late in the day. This is the third day the S&P 500 has failed to break over year highs but the bullish take on this is we just came off a ferocious two week rally and are now consolidating before making a new push higher. The S&P 500 finished flat while the NASDAQ gained 0.10%.
New home sales spiked 9.6 percent in January, jumping to a 5-1/2 year high, to a seasonally adjusted annual rate of 468,000 units, according to the Commerce Department. Economists had forecast new home sales falling to a 400,000-unit pace.
Obviously no changes in the indexes
The past few days has helped the indexes catch their breath a bit and let the moving average move up some. We can see the NYSE McClellan Oscillator has come back from extreme overbought conditions.
The housing sector obviously reacted well today breaking out to a yearly high.
Target (TGT) had a big day after the company said the December data breach shaved two cents a share off its earnings and impacted sales as well, though CEO Gregg Steinhafel said sales trends have improved in recent weeks.
Lowe's (LOW) jumped after the home improvement retailer reported strong revenue growth.
Chinese search engine Baidu (BIDU) reported after the close and shot up 8% to $187 in after hours. As with all these internet companies, investors are focused on their mobile figures so Baidu did well here.
Baidu earnings beat fourth-quarter forecasts late Wednesday as the search giant's big investment in mobile gaming and app distribution starts to pay off. China's dominant search giant earned $1.39 a share excluding various items, up 8% vs. a year earlier, as it continues to invest heavily. Analysts expected $1.34. Revenue climbed 55% to $1.57 billion, topping views for $1.53 billion. It was the third straight quarter of accelerating growth. Baidu said 20% of revenue came via mobile, up from 10% in Q2, the last time it disclosed mobile's contribution. Wedge Partners analyst Juan Lin had expected 17% in Q4, which would have been a 300% year-over-year gain.
Original post: STTG Market Recap February 26, 2014
The action continues to be great for the bulls. Down days are very mild as the indexes work off overbought conditions, in this very sharp rally. Today the markets opened down, dip buyers came charging in, but there was a selloff at the close to create a very small loss of 0.13% in both the S&P 500 and NASDAQ. The Conference Board's index of consumer confidence declined to 78.1 in February from a revised 79.4 reading in January. Economists polled by Reuters expected this month's reading to come in at 80.
So technically this was the second day in a row the S&P 500 made an attempt at all time highs and was rejected.
One name that was a star of the market today was Zulily (ZU). Readers make recognize it as we mentioned it in mid December, writing:
A recent IPO of a company that offers flash shopping (deep discounts for limited times) catering to moms. There is an interesting background on this company via IBD; amazing it started business in 2010 and now is valued by the market at $5B. It is growing like gangbusters but this is the type of action that has people whispering we are in a new bubble.
That was at $42; today the stock rocketed to $58! Today's move was in reaction to earnings released yesterday evening:
Late Monday Zulily, which specializes in short-term sales of goods and clothing for women and children, reported a fourth-quarter profit, excluding one-time items,of 10 cents a share, on revenue of $257 million, compared with earnings of 3 cents a share on $128.5 million in sales in the year-ago period. Wall Street analysts had forecast Zulily to earn 4 cents a share on revenue of $226 million.
Tesla Motors (TSLA) was another superstar, surging on news its Model S was the top overall pick among those surveyed by Consumer Reports.
Home Depot (HD) shares jumped as the company's earnings beat expectations, though sales fell more than expected in the fourth quarter. This was not a great setup technically coming into the report as the stock sold off with the rest of the market a few weeks back, but failed to rally back with it much.
Shares of Macy's (M) gained after the department store operator reported a drop in January sales, but said fourth-quarter earnings rose from the previous year.
After the close, shares of First Solar Inc dropped 12% to sub $51 after the solar panel maker reported that its fourth-quarter net income fell 58 percent.
First Solar said it expects to earn between 50 cents and 60 cents per share on net sales of $800 million to $900 million in the first quarter. Analysts on average were expecting the company to earn 84 cents per share on revenue of $898.3 million.
Original post: STTG Market Recap February 25, 2014
Note from Blain: Thank you everyone who has tweeted, linked, and shared my latest work, the StockBrokers.com 2014 Broker Review. I was interviewed by Andrew Horowitz of TheDisciplineInvestor to discuss the Review and STTG, you can check out the podcast here (interview kicks up at approx 18:00).
It was more of the same Monday as the "V shaped" bounce continues. The S&P 500 gained 0.62% and the NASDAQ 0.69%. The S&P 500 was at an all time high earlier in the session but broke back a bit below to close. In the week or so ahead let's keep an eye on the NASDAQ chart in particular and the upper purple trend line as this is where these rallies have stalled the past 1.5 years. There was not much to report on the economic front.
Here are our indexes - there is a dotted blue line in the S&P 500 chart showing recent highs and the rest of those levels today. With the NASDAQ the pattern has been to bounce all the way from the bottom trend line to the top trend line so we're about 70% of the way there.
Health insurer Humana (HUM) shares rallied after the health insurer said the government's proposed cuts to Medicare appear to be less than previously thought - look at that huge volume!
Shares of eBay (EBAY) climbed after Carl Icahn accused CEO John Donahue of ignoring or missing blatant conflicts of interest among the company’s board members, including Marc Andreessen and billionaire Scott Cook. Icahn said he found what he called “multiple lapses in corporate governance.” Icahn also renewed his call for the company to spin-off its rapidly growing PayPal business.
Las Vegas Sands (LVS) - which has a large presence in Asia - rocketed up after CEO Sheldon Adelson unveiling plans to spend $10 billion now to start developing casinos in Japan. Japan has only allowed limited gambling until recently. But after seeing the success of Macau, Japan's legislature is on the verge of legalizing integrated casino resorts like those in Macau and Las Vegas. Long term this could be a huge opportunity.
One are making a bit of a move here are the oil and gas exploration companies; part of this may have to due with the spike in natural gas prices we mentioned last week. You can see that unlike the general market in late 2013 this group was not doing much at all. In fact it was making a series of lower highs, but now we see that pattern broken. Here is an ETF that shows a lot of the key names in the group.
Since everyone has become a mobile phone nut today's announcement of the new Samsung Galaxy 5 might strike your interest.
Original post: STTG Market Recap February 24, 2014
Indexes were generally up most of the session Friday but sold off late to close with minor losses; the S&P 500 fell 0.19% and the NASDAQ 0.10%. Economic news continues to mostly fall short of expectations but the weather excuse is enough for the market right now:
Sales of existing homes fell last month to their lowest in more than a year, with the National Association of Realtors reporting sales in January fell 5.1 percent versus expectations for a 3.5 percent drop.
The indexes continue on in their bullish movement...
Biotechnology continues to be the superstar sector - here is the sector ETF (IBB)...
... but there were moves all over the sector - here are a sample of names, keep in mind there are many names in this group but all the names beow are multi billion market caps so it's not the small fry. Some of these had specific news like Isis Pharma as you can see by the volume spike, but it was a day of biotech on Wall Street.
Outside that sector we saw Under Armour (UA) jump again. This is a very bullish pattern where a stock spikes on earnings, consolidates for a few weeks, and then begins a new leg up.
We'll see you back here Monday.
Original post: STTG Market Recap February 21, 2014
Quick plug before the weekend kicks off. If you haven't checked out TradingView charting yet, definitely recommend giving it a look.
Like all charting providers, there is a learning curve to become acquainted with the tools and functionality. TradingView charts are all browser based, HTML 5. Translation = latest and greatest web standards.
My favorite feature is the scaling and flexibility of the charts. You use your mouse scroller to quickly zoom in and out, something not many providers do because it can cause lagging. On TradingView though, smooth as silk.
The TradingView team set me up with a PRO account back December to give the product a try. You readers know I don't plug something unless it is good. And, after using the service for over two months now, I've finally accepted the fact that I am hooked. I use it every day I am watching the market.
You can't connect TradingView to your broker and use it for trading yet, but the charting does center itself around community notes, analysis, and trading ideas. I disable these on my charts to block out the noise, but they are interesting nonetheless.
I've embedded a chart below so you can play with one and give it a whirl. Head over the TradingView site for the full experience. Lastly, see my Top 5 Best Free Stock Chart Websites post for my full recommendations list.
Original post: Hooked on TradingView Stock Charts
After one day of rest, stocks were back off to the races Thursday; the NASDAQ has now been up 9 of the past 10 sessions. The S&P 500 gained 0.60% and the NASDAQ 0.70%. In economic news data from the Philadelphia Federal Reserve showed manufacturing activity in the Mid-Atlantic region unexpectedly contracted in February as new orders plunged. However, bulls have come to the conclusion that most of the slowing economic data is weather related and just buy, buy, buy.
We'll look at some commodities today as may have either made a quite nice move of late, or could be in the midst of a bull run. They are notoriously volatile however, compared to stocks. We noted silver and gold last week - both, like oil (which we'll show as well) could be creating a bull flag which is a nice tight range after a big move up. If the bottom of the flag is broken one must re-assess but right now they seem to be holding in.
A reader asked for a look at natural gas. As you can see below after creating a series of higher lows from May to late fall in 2013 - which is bearish - this trend changed late in November and into December. From there we had one nice thrust up, some consolidation, and then another move. Now here in the last week or two we've had more of a parabolic rise as the harsh winter has helped draw down supplies. In fact per news today: "Natural gas inventories were revised upwards but were still at their lowest for February since 2004."
Back to stocks, while the indexes are near their highs, transports have lagged on this leg up - maybe that is because of the higher costs of fuels, but it is a bit concerting.
Groupon (GRPN) reported after the bell and had a ridiculous range in after hours from the low $9s to the $12s area - that is 30%!
...the company forecast a loss of 2 cents to 4 cents a share for the first quarter, while analysts surveyed by FactSet are expecting earnings of 5 cents a share. Groupon shares were the most actively traded issue after hours with more than 20 million shares exchanging hands. Fourth-quarter results initially pushed the stock up as much as 16% at first as earnings and revenue topped expectations.
Via Tradingview.com here is the after hours chart:
Original post: STTG Market Recap February 20, 2014
After eight straight up sessions in a row the NASDAQ finally took a small break. In fact, both indexes took a rest with the S&P 500 falling 0.65% and the NASDAQ 0.82%. While various news outlets will find a "reason" the reality is it's been another epic V shaped rally that needed a rest. We had some economic news along with Federal Reserve news:
On the economic front, the Commerce Department said housing starts sank 16 percent to a seasonally adjusted annual rate of 880,000 units. The rate was the lowest since September. It was also the largest percentage drop in three years. The news came a day after home builder sentiment dropped 10 points, according to the National Association of Home Builders' monthly sentiment index, logging its biggest drop in the history of the survey, which started in 1985.
Meanwhile any hint that the Fed might raise rates (which is very unlikely for a VERY long time) is prone to hit such an overbought market, and some vague wording about that came in today's release of minutes from the last meeting:
Some Federal Reserve policy makers sought an early hike in its benchmark interest rate amid growing confidence in the US economy, minutes from their January meeting showed Wednesday. The minutes of the Federal Open Market Committee meeting of January 28-29 revealed the group was increasingly upbeat, shrugging off fresh turmoil in emerging markets and judging that poor December employment numbers were mainly weather-related. But in the first shift in months away from dovish caution in the FOMC, the minutes of the meeting disclosed a clear increase in members advocating monetary policy tightening this year. "A few" members saw it appropriate to raise the Fed's key interest rate "relatively soon", amid rising market expectations of faster economic growth and rising rates even as inflation remains very low.
Here are longer term charts of our two indexes; it would appear if earlier patterns repeat at some point the NASDAQ is going to hit the top purple line.
You can see with the NYSE McClellan Oscillator we went from extreme oversold conditions 2 weeks ago to extreme overbought conditions now.
BeSpoke has another indicator of the extreme overbought conditions per the 10 day advance / decline line.
It has been an impressive rally for equities over the last 10 trading days. The rally has been so strong that the 10-Day Advance/Decline (A/D) line for the S&P 500 is currently near its highest levels since at least 1990. The 10-Day A/D line is a breadth indicator that measures the 10-day rolling total of the daily net number of advancing stocks in the S&P 500. At a current level of +1944, the 10-Day A/D line is near its highest levels of the bull market. In fact, since 1990, the two periods in late 2009 shown in the chart are the only times the 10-Day A/D line has been higher than it is now.
After the close Tesla Motors (TSLA) exploded higher 11% on its earnings report; this helped offset the 5% loss in the normal session.
Tesla Motors (TSLA) capped 2013 with Model S sales above expectations and an outlook for this year that sped by views, too. The company sees more than 35,000 deliveries in 2014, up at least 55% from the 22,477 cars sold last year. That amounted to nearly $2.5 billion in 2013 revenue for the luxury electric-car maker, ahead of the $2.4 billion analysts expected. Shares hit an all-time high of 206 on Tuesday. "Production is expected to increase from 600 cars/week presently to about 1,000 cars/week by end of the year as we expand our factory capacity and address supplier bottlenecks," Tesla CEO Elon Musk said in the company's letter to shareholders.
Facebook (FB) fell in after hours on very heavy volume after the social-networking site announced it would buy WhatsApp for $16 billion in cash and stock, with an added $3 billion in restricted stock units over the next four years. That said the stock held up great in the normal session.
Original post: STTG Market Recap February 19, 2014
After hundreds of hours of research and testing over the last five plus months I am thrilled to share that the StockBrokers.com 2014 Stock Broker Review is now live.
We launched StockBrokers.com back in 2011 with the goal to provide unbiased reviews and ratings for online brokers. Since then, we have referred tens of thousands of accounts and over $100 million in assets.
Quoting from this year's opening letter:
Seeing the industry evolve and make positive changes is what we clamor for. Our yearly review is designed to serve two goals: push the industry forward, and help all of us as investors find the right broker for our needs.
Less the brokers themselves, we are the toughest critics. Our grading criteria, which includes several hundred variables, sorts through the fluff to identify the true leaders. With a “for traders, by traders” mentality, the StockBrokers.com yearly review has a reputation for being the toughest review in the industry, and we don’t plan on it changing anytime soon.
With more than 100,000 reads the past two years, I am proud of what we have accomplished. This year, we had one new broker join, Merrill Edge, and one broker drop out, Cobra Trading, resulting in once again 17 total brokers participating.
So who took the #1 spot Overall?
Head on over the StockBrokers.com 2014 Review and find out.
How does your broker stack up?
Note: Market Recaps will return tomorrow.
Original post: StockBrokers.com 2014 Broker Review Results are in!
Bulls could not have asked for more this week - after a sharp bounce late last week, indexes either went up or sideways each day this week as our "V shaped" bounce off of oversold levels is happening yet again. This despite some soft economic news throughout the week. The S&p 500 gained 0.48% while the NASDAQ was up 0.08% Friday. For the week, the S&P 500 rose 2.3% while the NASDAQ added 2.95. The S&P 500 now stands just 0.5% away from its all-time closing high. There were a few economic data points on the day:
U.S. export prices rose 0.2 percent in January, the third straight monthly increase in a potentially positive sign for global economic demand and the outlook for American manufacturers. In the latest data point affected by harsh winter weather, factory production fell 0.8 percent in January, the biggest drop in more than 4-1/2 years. Investors have been willing to forgive soft data of late, attributing weak results to bad weather as opposed to a slowing economy.
We are still in up, up, and away mode in the indexes. It will be interesting to see if the NASDAQ spikes all the way up to the top purple line before it makes any meaningful rest.
You can see volatility has plummeted in the past week and a half.
Silver was highlighted earlier this week (thanks to a reader comment), and we mentioned it needed to clear this purple downtrend line to make a move. Well it looks like we were not the only ones who thought that....look at this pop after clearing resistance.
Just as a warning for you short term oriented traders out there, we are at one of the most overbought moments in the NYSE McClellan Oscillator over the past year. Meaning even bulls could use a rest for a day or two.
It was a tough day in certain corners of the consumer space as Weight Watchers International (WTW) plunged after it forecast a full-year adjusted profit far slimmer (pun intended) than estimates, and GNC Holdings Inc (GNC) tumbled as the health supplements retailer posted weaker-than-expected quarterly results.
With WTW we see a stock that did not rally at all with the market during the late 2013 surge, a clear warning sign.
As for GNC once a stock falls below it 50 day moving average, if there is not a quick recovery back above it, it usually is a good bearish signal.
Have a good weekend and we'll see you back here Monday.
Original post: STTG Market Recap February 14, 2014
After a morning drop on poor economic data, the now impervious dip buyers showed up again pushing stocks up, up, up to close 'em near the highs of the day. We are in the midst of yet another V shaped rally and at this point it has become the expectation rather than the exception. The S&P 500 added 0.58% and the NASDAQ 0.94%.
Sales at U.S. retailers fell sharply in January and the final two months of 2013 turned out weaker than initially reported, offering more evidence the economy may have softened toward the end of the year. Sales tumbled a seasonally adjusted 0.4% last month, the Commerce Department said Thursday. Economists had expected a 0.1% drop. What’s more, an originally reported increase in sales in December was wiped out to show a small decline. The increase in sales in November was also trimmed a notch.
Having some fun with the NASDAQ chart we placed 3 blue arrows signifying "up up and away!"
We are now back to clearly overbought on the NYSE McClellan Oscillator just over a week after being oversold.
If you are wondering which groups have led the chart we can see the technology and healthcare sectors (of which biotechnology is a subsector) have been the 2 at the top of the standings; both are at or near highs even as the indexes are not there yet.
We had mentioned Chinese online discount retailer Vishop Holdings (VIPS) a few weeks ago; it held up reasonably well during the correction and today blasted out of this range.
We showed the gold and silver chart a few days ago; it is interesting to see the gold miners also acting better in 2014; here is their ETF.
Original post: STTG Market Recap February 13, 2014
Stocks had a quiet session Wednesday, digesting another huge V shaped bounce from the middle of last week. The S&P 500 fell 0.06% while the NASDAQ gained 0.13%. After large, quick moves up bulls want to see a bit of digestion before embarking on the next attempt upward. News flow was slow for the day.
We have our longer term index charts posted today; this NASDAQ chart continues to amaze as it repeats the same pattern over and over - much more apparent on this longer time frame.
After the close Whole Foods Markets (WFM) issued a miss on this earnings report and disappointing guidance and the stock is being slammed down 7%+ to the $51.50s. This type of chart usually offers hints that something is amiss as the stock has been creating lower highs as the market has rallied and/or gone sideways.
Shares of Whole Foods Market Inc. dropped in after-hours trading after the grocery chain reported fiscal first-quarter profits and revenue fell below analysts' forecasts. The Austin, Texas-based grocery chain, known for its organic and natural food offerings, also lowered its earnings projections for the year and pared down its top end of its full-year revenue guidance. The latest results show that Whole Foods is facing an increasingly competitive landscape. The chain had been able to boost sales in large part because of its healthy product selection fits with Americans' changing eating habits. But more mainstream players like Kroger Co. are increasingly tapping into that trend as well, and rolling out more products or sections labels as natural or organic. Revenue at stores opened at least a year rose 5.4 percent. Analysts were expecting a 5.6 percent gain. The figure was slower than the 5.4 percent increase in the previous quarter and below the 7.2 percent pace seen in the year-ago period.
Despite all the talk of slowing China and a tough time in emerging markets in 2014, Caterpillar (CAT) which is very tied to these type of markets for growth has had a nice 2014 thus far; this was one of the key slugs of 2013 so it could be a game of catching up to a lot of other names that had a big 2013.
Amazon.com (AMZN) fell after UBS downgraded the online retailer to neutral from buy.
There are some internet names at or near recent highs; watching for what rallies to a recent high before the indexes is one way to identify potential new leadership stocks. While online real estate co. Zillow (Z) has some issues on its intermediate term chart, it is trying to build out of congestion here in recent weeks.
Meanwhile, Priceline (PCLN), after testing the top of a multi month range yesterday, broke out today on nice volume.
Original post: STTG Market Recap February 12, 2014
So far so "here we go again" as we repeat the pattern of 2013. A very short term break of a major trend channel in the NASDAQ for a few sessions, and then an immediate bounce....but a bounce that is near vertical. Three of the last four sessions up have been of that variety. With Janet Yellen doing nothing to dispel the party the S&P 500 added 1.11% and the NASDAQ 1.03%. As we said yesterday, there would be nothing ground breaking from Yellen but perhaps Wall Street just wanted to hear that for itself.
In her prepared remarks before the House Financial Services Committee, Yellen stressed continuity in monetary policy and said the recovery in the labor market is far from finished. "She hit the right notes; the theme of the day is continuity. If there were one area where she made news, it was her view that cyclical issues are still hanging over the economy, and additional Fed stimulus is likely," said Dan Greenhaus, chief global strategist at BTIG.
The NASDAQ pattern continues to repeat over and over and over. It is surprising really because something that has become so obvious usually fails to work.
The NYSE McClellan Oscillator has in 4 days moved from quite oversold to nearly overbought.
A reader asked for an update on gold and silver - we see gold is trying to get out of a mini inverse head and shoulders (bullish) formation. It was a heartbreaker of 2013 but thus far has performed decently in 2014. Silver is butting up against a multi month downtrend line as we speak.
As for sectors, the sector for the past 2 years has been biotechs...and continues to be. While the market is not yet back to highs, this sector already is.
A nice continuation move today in Green Mountain Roasters (GMCR). Recall, it had that deal news with Coca Cola middle of last week - after a large gap up, it based for a few days forming a very short and quick bull flag from which it broke up and out of today.
Do you have the world's worst password??? Hope not.
Original post: STTG Market Recap February 11, 2014