Market Commentary
Last week, the market dropped below major support when the Unemployment Report was much worse than expected. Job losses were 100,000 more than analysts had expected and bulls finally threw in the towel. Since March, they have denounced the Unemployment Report claiming that it is a lagging piece of information.
Month-after-month, the news continued to disappoint and the unemployment rate has jumped in a parabolic manner. Weekly jobless claims have not subsided and traders have hawked the number each week in hopes of improvement. This morning, initial jobless claims dropped by 52,000 and it came in at 565,000. That is well below expectations of 605,000. Before we get too excited about this number, keep in mind that it spanned a holiday. Often, people will postpone filing for unemployment until after they return from vacation. Continuing claims increased by 159,000 to its highest level ever (6.88 million).
This morning, retailers posted weaker than expected monthly sales. Wet weather and rising gasoline prices contributed to the decline. People are concerned about their employment situation and they have cut back spending.
Next week, earnings season will begin. We will get a big dose of earnings from financial institutions during the next two weeks. The spread between the borrowing and lending rate has never been higher and banks are hanging on to toxic assets. Profits should be good since they aren’t taking write downs. However, I’m not expecting a big rally from this sector. Banks have issued a lot of stock and it will take many quarters of stellar performance to work off that supply. Toxic assets, commercial real estate loans and high credit card default rates will keep a lid on any financial sector rally.
The market will have to find strength from other sectors. Although 70% of all companies beat Q1 expectations, the market has rallied 40% off of its low and good results are priced in. We will see if companies can “beat” by a big enough margin to spark a rally.
Traders are carefully watching interest rates. This week, the Treasury issued $75 billion in longer-term bonds and the auctions were very well received. That has kept the market treading water.
A head and shoulders pattern has formed and early this week the neckline was broken when we traded below SPY 89. That price level also represents the 200-day moving average. As that support level gave way, the selling pressure increased and it looked like we could have a major decline this week. After the 10-year bond auction results were released Wednesday afternoon, the market rebounded. That rally has continued today. The Treasury has to finance its $2 trillion budget deficit and it will keep issuing new bonds every other week. That means bulls will continuously be dodging the interest rate bullet.
The tone for next week will be set Tuesday when Goldman Sachs, Johnson & Johnson and Intel release results. By comparison, economic releases are very light and the market will take its direction from corporate earnings. Interest rates have stabilized and earnings will determine the market’s direction. If the market declines, option expiration could have a negative influence since we are trading near a one-month low.
We are teetering on a breakdown and great results are all that can keep us from falling. I believe the market will drift lower during the rest of the summer, but I am not looking for a meltdown. Leverage has been removed from the market and we will not see anything close to the panic selling we witnessed last fall. The market should be able to find support around SPY 80-83.
This is the perfect time to trade relative strength and weakness. The market may not go anywhere, but individual stocks will be making considerable moves.
Gomega GBP/JPY FX AutoTrader
I get a lot of member asking me to teach them how to trade since the last video I posted on how I did 1100% in just 38 days. I love to teach, but I can not do one on one coaching, I just dont have enough time to do so.
If you missed my video, you can see it again here.
http://flowerhornusa.com/option/trade-final.swf
Today, I am not going to teach you how to trade, it took me more than 16+ years of trading to learn how to make massive amount of money trading stock options, and it would be insane for me to unload my years of experiance to you. You simply can not absorb any or all the knowledge and experiance I have done in the last 16 years. Impossible for you to learn any of it in just 1 post. I have tried to explain it over the last 2 years here and there and none of the members here actually got it on how easy it is to make money online if you put some effort to it.
Now, I met my friend Jonathan last week while I was speaking at an event in Texas and discover a truly easy system that anyone can setup and run on autopilot. His product is only open for sale for next few days, and he will closed the beta program. I was fortunate enough to have spent 2 days with him understand the system he has build, and was able to get him to allow me to introduce them to my memebers here on FHUSA.
If anyone is seriously interested in setting up system that is going to set you free financially, you owe it to yourself to get involve with this program. For anyone who does sign up with this, I am going to make a personal comittment to ensure your trading platform is setup on auto pilot so it will run on its own for you, making insane return while you are sleeping.
You owe it to youself, I been telling you for years on many of the same strategies and systems I use to to make millions for myself and my clients. All of you had let it pass you by? Why? Is it because you dont see the opportunity to change your life? Or is it you do not believe you are capable of succeeding? Or is it you went crazy and led to believe in failure and lies by people who steal and never experiance success in life? I hope that is not you.
Whatever the excuse or reason is, dont let it pass on again. We are half way through 2009 and you are going to let another 6 months go by and never take any action?
Don’t miss out again, let me help you change your life in 2009. Watch the video that explain the entire program on how easy it is to automate a cash generating system for you.
Email me once you gone through the order process to get the system. I will personally ensure your account is setup by the team of professional so we can retire together in the next few years.
To your success!
Andy
Market Commentary
A week ago a crack in the dam appeared when the market was not able to rally during option expiration. Stocks were at a major resistance level and option open interest favored buy programs. Any small catalyst would have sparked short covering–but it never happened. The market seemed very tired after a huge run and it lacked a catalyst to get ‘over the top’.
One way to measure momentum is to monitor the market’s reaction to news events. In the past few months, traders have been able to discount economic data and momentum players viewed every dip as a buying opportunity. A week ago, retail sales figures missed expectations and the market declined.
Today, the market is reacting to a bigger than expected rise in initial jobless claims. In the last week, 631,000 new claims were filed and 6.7 million Americans continue to draw unemployment benefits. Bad news once again is having a negative impact on the market–an ominous sign.
During the last two months, every dip has resulted in a snap back rally and the market consistently made new relative highs. Last week, the market drifted lower but it did not rebound. That move was rather delayed and it came Monday after the Communist Party was defeated in India’s election. Democracy and capitalism are good for the market, but even this move was suspect. During the rally, volume was light and we hit a number of air pockets on the way up. Sellers lifted their offers and the surge had more to do with a lack of sellers than it did pent-up demand. This news was not the catalyst we needed.
The problem is the market has run out of “drivers”. Stimulus plans, bailouts, quantitative easing, marked-to-market rule changes, stress tests and earnings are all behind us. The market has rebounded 40% and it sits just below major resistance at SPY 94. A long-term downtrend line, horizontal resistance and the 200-day moving average converge at that price level. It will take a major event to push us through and it’s hard to identify what that could be as stocks are no longer the bargains they were at the beginning of March.
The treasury is issuing bonds to pay for the government’s $2 trillion deficit this year. As the supply of bonds hits the market, interest rates are moving higher. That will provide a stiff head wind for stocks and the economy in general. Companies have been issuing stock like mad and the supply of new shares is also weighing on the market as existing shared become diluted.
The US budget deficit this year will be 13% of GDP, more than twice as high as it’s ever been in history. Fortunately, it is nowhere near England’s level but that’s like bragging that you’re the leper with the most fingers. Their budget deficit will hit 100% of GDP this year and they face a possible downgrade from their AAA credit rating. Portugal, Spain, Greece and Ireland have already been downgraded. Governments simply can’t control spending and the economic slowdown compounds the problem by reducing tax revenues.
Earnings releases will slow down dramatically next week and they are dominated by retail stocks. This sector has run up and if anything, it is priced for disappointment.
The economic calendar is full. Consumer confidence, durable goods orders, initial claims, new home sales, GDP and the Chicago PMI will be released. Now that the market momentum has slowed, weak economic news will have a negative impact. Last month, GDP missed by a large margin and dropped 6.1%. That news is likely to weigh on the market this time around if it is not revised upward.
This week, I have a few stocks I am eyeing on to take a put position. Will have more updates in the next few days. In the mean time, trade well.
To your continual success!
Andy Huang
Google First Quarter 2009 Result
“Google had a good quarter given the depth of the recession — while revenues were down quarter over quarter, they grew 6% year over year thanks to continued strong query growth. These results underline both the resilience of our business model and the ongoing potential of the web as users and advertisers shift online,” said Eric Schmidt, CEO of Google. “Going forward, our priority remains investing for the long term to drive future growth in our core and emerging businesses.”
Q1 Financial Summary
Google reported revenues of $5.51 billion for the quarter ended March 31, 2009, an increase of 6% compared to the first quarter of 2008 and a decrease of 3% compared to the fourth quarter of 2008. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the first quarter of 2009, TAC totaled $1.44 billion, or 27% of advertising revenues.
Source:http://finance.yahoo.com/news/Google-Announces-First-bw-14949372.html
1100% in 38 Days
Hello everyone,
Just want to share a video with you guys on how I turned $5000 into more than $55,000 in just 38 days.
Enjoy!
Andy
Market commentary
Last week the market staged a nice rally and it briefly poked above the 100-day moving average--remarkably finding the silver lining in every dismal economic report. The Fed, Treasury, FASB and SEC have all been busy in the last month. Traders do not want to go home short because they don't know what news might change the landscape when they turn on their computers Monday morning. They didn't go home short today and this rally lasted right into the close. The Fed has lowered the Fed Funds Rate to zero and it plans to keep interest rates low even if it means buying US Treasuries. The Treasury Department has been busy with bailouts and stimulus plans of all sorts. Recently, they devised a plan to purchase toxic assets from banks to free up capital. FASB relaxed mark to market regulations and that instantly improved bank balance sheets. This week the SEC reinstated the uptick rule and is considering other short-selling circuit breakers. From the 12-year lows made a month ago, the market has rebounded sharply. In today's chart you can see that it is above horizontal support and it has moved above the 100-day moving average. A new relative high has been established and each of the pullbacks has been very short-lived. Bears are running for cover and a major short squeeze is underway. This rally will likely continue next week. Today, Wells Fargo surprised the everyone by pre-announcing excellent earnings. The company estimated a $3 billion profit during the first quarter of this year and it expects EPS of $.55. Next week, we will hear from the strongest of financial stocks. Goldman Sachs, J.P. Morgan and General Electric will release earnings. Goldman Sachs has a history of surprising to the upside. J.P. Morgan has weathered the financial crisis better than any of the other major banks. GE stated two weeks ago that if the Fed's 2009 economic forecast holds true, GE Capital will make money this year. Any sustained rally must start with the financial stocks. The spread between borrowing and lending rates has never been better and banks should be making money hand over fist. Before we get too excited, it's important to remember that massive write-downs lie ahead. It will take many years of profitability to overcome the toxic assets they have created. Nevertheless, signs of improvement are showing up and they are critical to the economy. Businesses might finally regain much needed lines of credit. Today's rally should continue right into the closing bell. This is clearly good news and shorts are covering. The market is near a one-month high and option expiration buy programs will add a bullish bias to the market next week. Bears don't dare to short financial stocks ahead of earnings releases after Wells Fargo's announcement today. If the momentum establishes itself early next week, I believe we could rally up to SPY 92. We will also hear from Intel, Google and Johnson & Johnson next week. Dismal earnings are already factored into Intel's number and if anything, we could see a rally in the stock on positive guidance. Google has been able to post good numbers and we expect the same next week. Johnson & Johnson has been profitable, but shares have been beaten down on concerns that healthcare reform will impact future income. The actual release should be positive for the stock. Next week is littered with economic releases. We don't want to downplay them, but the market has been able to rally in the face of dire news. This morning, initial jobless claims dropped 20,000 from last week's number. The unemployment rate continues to climb and 5.83 million Americans continue to draw unemployment benefits. This is the highest number ever. The market shrugged off weak durable goods orders, a decline in GDP and a horrible Unemployment Report. There's no reason to think that CPI, PPI, the Beige Book or the Philly Fed will be able to suppress this rally next week. This morning, retail sales also added fuel to the rally which is surprising because there isn't much to cheer about. Many stores beat lowered estimates but the results are still very weak. This rally has legs and retail, restaurant and commodity stocks all look good. However remember that this is a bear market rally and that you need to temper your optimism. Our government is $11 trillion in debt and it has not started financing the trillions of dollars it needs for the proposed bailouts and stimulus plans. The unemployment rate continues to surge and we are not out of the woods. Trade this rally, but be cautious and take profits! To your success Andy Huang
Google reported fourth quarter profit
Google reported today with Q4 revenue rose 18 percent to $5.7 billion. With Q4 GAAP earnings per share $1.2. Q4 traffic acquisition costs $1.48 billion
Google announced that it is planning to offer employees a voluntary, one-for-one stock option exchange. The program intended to create more incentives for employees to remain at Google.
Looks like Google continues to remain the winner at the Search Marketing place against rival Yahoo & Microsoft.
