Ian Harvey's  Instablog

Recap for Wednesday, 7^th April, 2010

Wednesday saw the bulls in trouble with all three major indexes finishing the day in the red due to renewed concerns about debt in Greece, interest rate comments from Kansas City Fed President Thomas Hoenig, and declining consumer borrowing. Federal Reserve Chairman, Ben Bernanke, made positive comments in regard to improved economic conditions and an ebbing unemployment rate this year, and an affirmative auction of 10-year notes, could not contain the bears.

The Dow Jones Industrial Average (DJIA – 10,897.52) had a loss of 72.5 points, or 0.7%, the S&P 500 Index (SPX – 1,182.45) gave up 7 points or 0.6%, whilst the Nasdaq Composite (COMP – 2,431.16) finished the day with a loss of 5.7 points, or 0.2%, faring the best of the major market indexes.

Note of Interest…. the Dow, at the end of the day, was behind its 10-day moving average for the first time since Feb. 10.

Success is simple. Do what's right, the right way, at the right time.

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Update for The Week Ending 2nd April, 2010     

The Week Ahead (Part 2)

Next Week’s Reports

Monday – The Institute for Supply Management's (ISM) services index for March and February's pending home sales.

Tuesday –The minutes from last month's Federal Open Market Committee meeting.

 Wednesday - Report on weekly U.S. petroleum supplies and February's consumer credit report.

Thursday – The weekly report on initial jobless claims.

Friday – February's wholesale inventories.

Outlook

April is normally a month that has, historically, been very good for the market trader. The table below shows monthly returns for the S&P 500 Index (SPX) during the past five- and 10-year periods. As you can see, April has been the best performer.

Despite the fact that the economic state still looks shaky at best, unemployment is still up  and consumer confidence is still not looking great…… for better or for worse stocks are taking off. Since these observations were made, the market's short-term momentum has indeed slowed, but the bulls have still prevailed. The S&P 500 Index (SPX) rallied about 4% during the first half of March, followed by a 1.6% advance in the second half. As well, the small-cap Russell 2000 Index (RUT) advanced 7.5% in the first half of March, and posted a 0.5% gain in the second half of the month. Finally, the CBOE Market Volatility Index (VIX) has risen higher to 17.47, from its 16.91 close on March 17.  With the dramatic fall just one year ago, the Dow is hitting new 52-week highs. It's up 67% since March of 2009. The Nasdaq is also looking good - it has nearly doubled in the past year. In fact all major indexes are performing well.

We again enter the trading week with several factors to consider. The VIX is trading at more than double the SPX's 20-day historical volatility. The put buying on the exchange-traded funds during the market's "slowdown" has created huge put open interest immediately below current levels. Also a great deal of call open interest in the April series is apparent.

Also, the trading on Monday could be greatly influenced by investors reacting to Friday's payrolls data. Nonfarm payrolls increased by 162,000, below the forecasts of 200,000.

It seems likely, based on the information above, that we will still see more bullish movement for the up-coming week.

If  you require further information check out www.stock-options-made-easy.com

Success is simple. Do what's right, the right way, at the right time.


                  

Update for The Week Ending 2nd April, 2010     

Overview for the Week (Part 1)

Monday saw the bulls take the reins particularly with some good reports coming in. The Commerce Department reported that consumer spending accelerated by 0.3% in February, the fifth straight monthly increase, and concerns about Greece's sovereign debt and robust economic indicators out of China eased which were a boost for crude and gold.

 As by the close-of-the-day, the Dow Jones Industrial Average (DJIA – 10,895.86) ended on a gain of 45.5 points or 0.4%, the S&P 500 Index (SPX – 1,173.22) added on 6.6 points, or 0.6%, whilst the Nasdaq Composite (COMP – 2,404.36) had a gain of 9.2 points or 0.4% for the day.

Tuesday saw the bulls floundering even with a round of generally positive economic data. The S&P Case-Shiller home-price index fell 0.7% in January, the slimmest annual decline in nearly three years, while home prices edged 0.3% higher on a monthly basis and the Conference Board reported that its consumer confidence index jumped to 52.5 in March. However, Standard & Poor's credit-rating downgrade for Iceland, along with a poor bond sale by Greece, saw most traders taking a sideways step for the session.

The Dow Jones Industrial Average (DJIA – 10,907.42) managed a gain of 11.6 points, or 0.1%, marking the Dow's first close above 10,900 since Sept. 26, 2008. The S&P 500 Index (SPX – 1,173.27) gained only 0.05 points, and finally, the Nasdaq Composite (COMP – 2,410.69) added on 6.3 points, or 0.3%.

Wednesday saw the bulls in trouble with all three major indexes finishing the day in the red due to downbeat economic data. The Institute for Supply Management-Chicago's business barometer fell to 58.8% in March, marking a steeper-than-anticipated slide from February's reading of 62.6%, and pointing to milder-than-forecast manufacturing activity in the Midwest. As well, the ADP's employment report indicated that private-sector firms issued 23,000 pink slips last month –economists were predicting a gain of 40,000 jobs. These reports, along with the Labor Department's highly anticipated nonfarm payrolls report slated for Friday, sent the bulls looking for cover.

The Dow Jones Industrial Average (DJIA – 10,856.63) had a loss of 50.1 points, or 0.5%, the S&P 500 Index (SPX – 1,169.43) gave up 3.8 points, or 0.3%, whilst the Nasdaq Composite (COMP – 2,397.96) finished the day with a loss of12.7 points, or 0.5%.

Notes of Interest….the Nasdaq Composite (COMP), being a tech-rich index, gained an impressive 7% for the month, adding on 5.7% in the first quarter. Crude futures settled at their highest price of 2010 today, despite an increase in domestic oil and gasoline stockpiles. Also, the S&P 500 Index (SPX) finished the month above its 160-month moving average for the first time since September 2008. The SPX added  5.8% in March and gained 4.9% for the quarter.

Thursday saw the bulls take the reins again, kicking off the second quarter of 2010 on a high note. With good reports from the Labor Department noting that first-time claims for jobless benefits dropped by 6,000 last week to stand at 439,000 and the Institute for Supply Management (ISM) with its index of manufacturing activity rising to a stronger-than-forecast 59.6% in March, helped push stocks higher. However, this theme did not last, with a surge of profit-taking in the afternoon, due to the equities market being closed for Good Friday, and the highly anticipated report on March payrolls slated for morning release caused a fear amongst traders. However, a last minute buying surge pushed the equities back into the black.

After gaining new highs of 10,956.39 in early trading, marking its best daily close since Sept. 26, 2008, the Dow Jones Industrial Average (DJIA – 10,927.07) reversed course to finally settle on a gain of 70.4 points, or 0.7%, as all but six of its 30 components ended higher. The S&P 500 Index (SPX – 1,178.10) ended the day on a gain of 8.7 points, or 0.7%. Finally after being in the red for much of the afternoon, the Nasdaq Composite (COMP – 2,402.58) finished the day with a gain of 4.6 points, or 0.2%.

Friday equity markets were closed for Good Friday.

By the close of the week, the Dow Jones Industrial Average (DJIA) was up 0.7%, the S&P 500 Index (SPX) was also up for the week, with a gain of 1.0%, whilst the Nasdaq Composite (COMP) managed a gain of 0.3%.

The end result, for the week, is as follows:-

·         The Dow Jones Industrial Average (DJIA – 10,927.07).

·         The S&P 500 Index (SPX – 1,178.10).

·         The Nasdaq Composite (COMP – 2,402.58).

The Dow Jones Industrial Average recorded its fourth straight weekly gain last week. All the major market indexes set new 2010 highs and reached levels not seen since before the financial disaster of 2008.

Last week was shortened due to the Good Friday holiday, but the bulls maintained their hold on the reins. At the end of the first quarter of 2010 on Wednesday, all three major market indexes logged quarterly gains of better than 4%, with the Nasdaq leading the group, with a gain of 5.7%.

Some notable news for the week

·         Goldman Sachs has stated that there is a renewed demand for commercial aircraft as Boeing and Airbus are now raising rates for production. This leads to Goldman Sachs decision to upgrade commercial Precision Castparts Corp. (PCP) to "buy" from "neutral".  Precision Castparts Corp. is a major supplier to the commercial aircraft industry. The brokerage firm lifted its 12-month price target for Precision Castparts to $153 per share from $136 per share.

·         Apple Inc. (AAPL) launched the sale of the iPad giving a boost to the tech-rich index.

·         Ford Motor Company (F) announced plans to unload its Volvo brand.

·         The Wall Street Journal reported, after the close last night, that Apple Inc. (AAPL) plans to launch a new iPhone this summer.

·         Insurer, Primerica Inc. (PRI), made its debut today, after the company priced its initial public offering (IPO) at $15 per share, above expectations for a range of $12 to $14 per share. Citigroup Inc. (C) will retain 39% of the firm following the IPO.

If you require further information check out www.stock-options-made-easy.com