 Posts tagged with: Small Cap Investor Pro |
Yesterday’s headlines made it sound like the sky was falling after China’s Shanghai Index sold off 6.7%. There’s no doubt bulls are a bit nervous and bears are getting a bit bolder. That’s to be expected after a six month rally that’s been remarkable in that there have been no corrections.
Stocks are selling off around the world. And China is in the lead. The Shanghai Composite is down 23% since August 4. Former Morgan Stanley Asia economist Andy Xie says Chinese stocks have been in bubble mode and there are more declines to come.
GNK |
"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.
Last week’s better-than-expected payroll data is being offset by new jobless claims today. 558,000 people filed new claims for unemployment benefits. That was more than the median estimate of 545,000.
The number of people collecting unemployment fell by 141,000 and that lowers the unemployment rate. That sounds good, but I don’t think it is. Most likely, benefits for these 141,000 have run out. So what little money they had coming in is now gone and they’ve just stopped asking.
JAZZ |
The next 12 months look great. Economists are now raising their GDP expectations for the U.S. economy to a minimum of 2% growth for the next four quarters. That’s a significant improvement to what they were expecting just a few weeks ago. (One thing to keep in mind however, is that this is moving target, one week they’re doom and gloom and the next it’s all sunshine.)
The reason should be clear - cheap money and stimulus spending is kick starting both lending and spending, albeit from low levels.
Nobel Prize winning economist Paul Krugman thinks August is the trough month for the U.S. economy. And yes, he is reading a lot into the improved unemployment numbers from July.
Of course, it took trillions in direct spending, guarantees and loans to do it, but he believes we’ve got actual growth coming. It’s worth noting, too, that Krugman estimates the stimulus plans have saved 1 million jobs. So, without the stimulus, unemployment would be around 12%.
WMT |
The unemployment rate…fell? 247,000 people lost their job in July and that was enough to push the jobless rate down to 9.4% from 9.5%.
July was a lot better than June, when 443,000 people lost their jobs. And the talking heads are already saying its more evidence that the economy is stabilizing.
Oil prices are slightly lower this morning. That should mean stocks will trade lower today as well. And while many are saying the fundamentals of this economic recovery do not support current prices for stocks or oil, I wouldn’t get too excited about an imminent trade-worthy decline.
More likely, we will see any dip get bought by the bulls. And I doubt any dip will last for more than two days…
GS |
Stocks look poised to continue moving higher. Our leading indicator for investor expectations, oil prices, is up over $70 a barrel.
Despite the still-compelling argument that the economy is staging a tepid recovery that will take years to gather steam, and even though many feel that housing prices and unemployment have not yet bottomed, stock prices are clearly showing that investors believe that the financial crisis is past.
With the exception of the Nasdaq, the major indices finished yesterday with slight losses. And it looks like an even money bet whether they’ll finish in the red today. We’ve seen an unlikely move over the last two weeks. The S&P 500 has made gains in 9 of the last 11 sessions and moved 11.3% higher. Volume hasn’t been especially strong during this move, but it is summer. Volume is always a bit lighter in the summer.
TRLG |
Jason and I received an excellent question from a reader yesterday. "I am doing a 30 day trial of TradeMaster and have watched you last couple videos…an[d your]…email this morning suggesting [ULTRASHORT FINANCIAL(NYSE: SKF)].
GS |
The steady march of positive earnings reports continues to move stock prices higher. Except for a select few, revenues aren’t growing. But profits are. That obviously can’t continue, because earnings growth from the recent quarter is largely a result of cost-cutting. Now, without a rise in revenues, earnings growth will stagnate. So will stock prices, if we’re lucky. Prices could also move lower…
gs |
Oil dropped below $60 a barrel as consumer confidence came in below expectations. The belief is that when the American consumer is not confident, he or she does not spend money.
Earnings season has begun. Alcoa (NYSE:AA) kicked things off with a report that was better than expected, even though the company lost $454 million in the second quarter. Yes, nearly half a billion dollars.
Alcoa went on to say that aluminum demand will be down 7% this year. One analyst widened his loss estimates for the remainder of this year and 2010. And yet the stock is up 6% in the early going.
How can that possibly be bullish, you ask?
AA |
Thursday’s nasty sell off appears to be bleeding into today. Of course, TradeMaster technical analyst Jason Cimpl had us prepared for more declines today with his excellent video chart analysis that accompanied Thursday’s Daily Profit. If you missed Jason’s analysis, here’s the link again.
The positive headlines are everywhere this morning. On Bloomberg alone, we read that the worst is over for Treasury bonds, factory output improved in Japan for the second straight month and home values in England remained stable for the second straight month.
It’s enough to make you think that there’s an economic recovery underway…
The FOMC is expected to announce no change to the overnight lending rate later today. Economists also expect the Fed to say that it will continue to purchase Treasury bonds to provide liquidity and keep interest rates at least somewhat in check.
In other words, there’s no way this Fed can say anything about supporting a strong U.S. dollar with anything approaching credibility.
Oil, steel, gold and other commodities all rallied as the dollar weakened against the euro and the yen. When the dollar falls in value, you need more of them to purchase things.
BAC |
On Monday, an influential bank analyst raised his price target for Bank of America (NYSE:BAC) to $19. That implies a 40% jump for BAC. Curiously, this particular analyst didn’t cite any improvements to the business or strength in the bank’s balance sheet. Rather, he based his analysis on improving investor sentiment.
bac |
Jason Cimpl, technical analyst at TradeMaster Daily Stock Alerts, called yesterday’s 2.5% drop on the S&P 500 to a tee. If you watched the video chart analysis from Jason that I included in Friday’s Daily Profit, then you were ready for Monday’s sell-off. I hope you were able to profit from it.
And bonus points to Jason for calling the closing level of the S&P within 2 points. I think Jason’s video chart analysis will be a welcome addition to Daily Profit. Look for the next one in Friday’s edition.
The International Energy Agency (IEA) reported that demand for oil is picking up. Instead of the 3% drop in demand, the IEA says that it now expects demand to be off a whopping - drumroll please - 2.9%. Sheesh.
When you’re talking about 83.5 million barrels a day, a one-tenth of a percent revision should not be headline news. Somebody owes me an apology.
GHM |
|
|
