The Dow Industrials cruised past 10,000 yesterday. Clearly, the news that Germany may be coming to Greece’s aid was a big relief for investors. The euro rallied against the U.S. dollar as well, an important catalyst for stock and commodity prices on U.S. exchanges.
Some stability in Europe and progress on a jobs bill in Congress will be good for stocks. Earnings are already solid and I suspect there is more upside coming.
I got on the phone with TradeMaster’s Jason Cimpl to see if yesterday was the type of bullish activity he wanted to see from the market. He noted that although the market got a nice bounce (TradeMaster Daily Stock Alerts members closed short positions worth 15% and 5%), the close was very weak.
Typically, indices in a bull trend would have made a push higher into the close. Despite the weak close and his growing pessimism, he did note that market internals were "spectacular." The advancing volume data showed us that the upward action was more than just shorts covering their downside positions - it was also bottom feeders nibbling at the low stock prices. He’s watching the 1085 level on the S&P 500 as an important resistance point this week...
It sure was nice to see stocks make a nice move higher yesterday. Especially after I came out yesterday and said Dow 10,000 and S&P 500 1,071 were support points.
It’s also interesting that this advance came on the first day of February. Recall that the positive GDP surprise came on Friday, the last trading day of January. Investors were not interested in buying stocks in January. But now that it’s February, the buyers are back.
It might seem strange, but mutual funds and other institutional investors don’t base their buy and sell decisions solely on making money. They have to play the percentages. And that sometimes means taking profits when the economic data supports better earnings and higher stock prices.
Is that what took stocks lower in January? Maybe, although it’s a little too soon to say the upside trend has been re-established. But sometimes, when you hear hoof-beats, it’s best to think horses not zebras.
On the surface, earnings from IBM (NYSE: IBM) appeared excellent. The technology bellweather posted $3.59 a share in 4th Quarter earnings. That beat analysts’ expectations of $3.47 a share. IBM also beat slightly on revenues.
IBM also said 1st quarter revenues would be higher and even went so far as to raise earnings estimates for all of 2010. So why is the stock down?
Because IBM’s business services division, which includes consulting, reported a 2.8% drop in revenues. Obviously, strength in other divisions more than made up for it. But investors seem fixated on the negative.
Yesterday’s Daily Profit about Google’s (Nasdaq:GOOG) experience in China has raised some questions. Ray G. writes:
Anytime a government like the one China has can do whatever it pleases with any company in its country, the playing field is too much of a mine field to be attractive to me.
It is difficult enough for the individual investor to make money in any market but to try to do it in a country where one doesn’t understand the playing rules is sheer madness.
Good luck because you will need it.
I believe this question reveals a common misconception about China’s government. The simple fact is that China’s government can’t simply do "whatever it pleases". China has an export economy. It is dependent on countries like the U.S. Without foreign support, China can’t provide jobs to its people. It fails and collapses. In other words, China has to play ball.
In exactly the same way, China is dependent on foreign investment in the country. It must gain both the capital and the innovation of the West. Without that, again, China collapses. China must play ball.
And this is why Google’s stance on China’s attempts to "control" the Internet is so significant. I wrote yesterday that Google needs China more than China needs Google. But that’s not entirely true. If Google actually leaves China, it will be very embarrassing to China. And that’s more important than you might think…
Google (Nasdaq:GOOG) has been attacked. According to the New York Times, last week somebody hacked into its systems, and may have stolen corporate data and source codes. Google is blaming China.
As many as 34 companies may have been attacked by China’s Internet police last week, and Google is threatening to stop censoring its search results and exit the country altogether.
This is a time when we are reminded about the differences – and difficulties – of doing business in China.
Google and Yahoo! (Nasdaq:YHOO) both entered the Chinese market in 2006. They both had to agree to strict rules from the Chinese government. For all the progress China has made in opening up its economy, it still clings to the belief that it can control what the Chinese people see, read and believe.
So Google and Yahoo! had to agree to “censor” the Internet because certain search results will vividly show evidence of things that the Chinese government would rather pretend didn’t exist – like Tiananmen Square. A search for Tiananmen Square leads the Chinese Internet user to a blank page. At least it did…
"The question is not whether the dollar will weaken over time, but how it will weaken…" That’s what the CEO of bond giant PIMCO, Mohamed El-Erian, had to say as central bankers from around the world gather in Jackson Hole, Wyoming. They’ll review the various strategies implemented to stave off the global financial crisis and discuss what they’ll do as the world economy recovers.
*****Q4 GDP numbers are out today. The U.S. economy shrank at a 3.8% annual rate. Sounds bad. But it wasn’t as bad as economists were expecting. They were looking for a 5.4% decline.
Stocks are down in response, even though this is better-than-expected news. Many analysts were expecting Q4 GDP numbers to be horrible, and possibly the worst that we’d see. So since the number wasn’t as bad as expected, we can perhaps think that stocks are down because of a perception that the worst GDP number is yet to come. That’s the bearish argument.
AIG just doesn’t get it. First, there was the corporate boondoggle to some spa in California, then there were the bonuses that were paid presumably out of TARP money. Now an anonymous source is telling Bloomberg that 130 management level employees will be getting "retention" bonuses.
When there’s a lot of uncertainty in the financial markets, traders don’t like to hold positions over the weekend. Too much can happen that might lead to losses. So when traders are willing to hold over the weekend and even take positions on a Friday, it’s cause for some optimism.
Explain your investment process and criteria for investments.
Our goal is to follow the best the world has to offer. Global investments are expected to double to $300 trillion dollars in the next 5-10 years and 60% of that growth is going to come from markets outside the U.S. and Japan.The U.S. economy is hurting and will hurt for a long time that simply reinforces that…
The Summer Olympics in Beijing are now just 79 days away. I, for one, can't wait for the opening ceremonies for a couple reasons ' one's personal, one's business.
Almost two-thirds of the world is made up of young workers willing to work for low wages and in desperate need of such basic consumer goods as cell phones and refrigerators. They live in countries that lack the money or political will to build infrastructure or trade. Now, these young workers want change…
With the conclusion of another mega-holiday season, it seems fitting to look at a China fund. After all, how would Americans celebrate if it weren't for the Chinese?
As long as hedge fund and private equity managers show customers that their stellar investing performance is worth it, they'll keep earning those big fees. But can they?
Emerging market mutual funds were hot in 2005, receiving a record $20.3 billion in inflows. But last year was even better, with inflows rising to $22.4 billion, according to Emerging Portfolio Fund Research. And the love hasn't stopped.
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