A week of respite for stocks…

Despite the Dow, Nasdaq, S&P 500 and the Russell all finishing lower on Friday, these key indices finally completed a week in positive territory. In fact, this is the first positive week for the bellwether indexes in the month of May. For the week, the Dow Jones Industrial Average (chart) closed up 0.69%, the Nasdaq (chart) +2.11%, the S&P 500 (chart) +1.74% and the Russell 2000 (chart) gained 2.57%.

Without question the markets last Monday experienced a technical bounce due to oversold conditions across the board. What was impressive to me is that equities for the most part managed to hold on to their gains. Not so sure if this will be the case this upcoming week. Between the never ending saga from across the pond and a slew of economic reports from here at home, next week is setting up to be to be a very volatile week. The most critical economic report that all will be watching is Friday’s jobs report. If we do not begin to see the private sector strengthen in a meaningful way, we could be in for a long summer and a possible new administration this fall. Good luck to all.

Have a safe and healthy Memorial Day weekend 🙂


Bears take charge!

Although the markets appear to be oversold, the bears have clawed their way back into the spotlight. For the week, the Dow Jones Industrial Average (chart) lost 3.52%, the Nasdaq (chart) -5.28%, the S&P 500 (chart) -4.30% and the Russell 2000 (chart) -5.42%. In my May 6th blog, I eluded to the 200-day moving average being tested on these key indexes and it appears that next week this major support line will indeed be intruded. In fact, the Russell 2000 (chart) not only tested its 200-day, it closed below it yesterday.

So what has happened in May to turn the markets and what is the retail investor to do? Without question the European debt crises is at the forefront of this selloff. Between Greece’s seemingly imminent default and multiple Spanish bank downgrades last week, this alone was more than enough to spook investors. Then add in the mix the continuing fallout of JPMorgan’s (NYSE: JPM) massive trading loss, plus the spectacular run that stocks have had since last October, it’s no wonder we find ourselves in the midst of a 10% correction.

So what is one to do? As an investor/trader when I see fear in the marketplace as we have now, I make a list of top notch companies and look for select buying opportunities. However, I have learned that you must be patient in this type of environment and if you think the market is close to bottoming, it is always best to take on positions very slowly and in very small increments. For example, if you are looking to buy 1000 shares of a given company that you have been waiting for to go on sale, you may want to consider 100 share lots over a period of time. Far too many times investors think that equities have hit bottom and buy all at once without considering that stocks and indexes can continue to go lower and remain oversold for an extended period of time. With the scale in method, the good news is that should the markets turn and go higher, at least you have initiated a position and will benefit from the turn. Whatever your strategies are, it’s always best to exercise patience in this type of climate and always use protective stops on all of your postions. Good luck to all.

Have a great weekend 🙂


A tipping point?

Over the past few weeks, the Euro Zone and in particular Greece has re-ignited fears in the marketplace and now JPMorgan’s (NYSE: JPM) $2 billion dollar trading loss disclosed on Thursday, just might be enough for the bears to take charge of the markets. The Dow Jones Industrial Average (chart) finished the week down 1.67%, the Nasdaq (chart) -0.76%, the S&P 500 (chart) -1.15% and the Russell 2000 (chart) -0.23%.

One confirmation I look for as it pertains to market sentiment is volatility and whether or not it’s on the rise. The most widely followed index that tracks market vol is the (VIX) (chart), also know as the fear gauge . Even though the value of the VIX (chart) is below 20 which historically represents a calm market environment, the VIX has spiked 25% since May 1st. I will be paying closer attention to this index over the coming weeks.

The week ahead promises to be yet another action packed week. A number of economic reports will hit the tape on Tuesday including the closely watched retail sales report and Empire state manufacturing survey. Also this week, earnings will be announced from Home Depot (NYSE: HD), Deere (NYSE: DE) and WalMart (NYSE: WMT)  just to name a few. Closing out the week is one of the most widely anticipated IPO’s in recent memory and that is the listing of Facebook on Friday. Facebook will be trading under the symbol (FB) and is reported to launch with a market cap of almost $100 billion dollars. Good luck to all.

Have a great week 🙂


A weak week for stocks…

The financial markets suffered sharp declines this week capped by a disappointing Jobs Report. The Dow Jones Industrial Average (chart) fell 1.44%, the Nasdaq (chart) -3.68%, the S&P 500 (chart) -2.44% and the Russell 2000 (chart) -4.07%. Both the S&P 500 and Nasdaq experienced their worst weekly performance this year.

So what now? As I review the technicals of how these key indices are setting up, three of the four are trading below their 20 and 50 day moving averages with the sole exception being the Dow. Certain market technicians look at these key moving averages as support and resistance markers with the most closely watched 200-day as the main barometer. Now one day or for that matter a few days trading below this popular technical indicator doesn’t necessarily make a trend, however, if these indexes remain below their shorter term moving averages for an extended period of time, I will be looking for the 200-day to be tested at some point and time. If that were to occur, we could be looking at a near term healthy correction for equities. Good luck to all.

Have a great week 🙂


All eyes on tomorrow’s Jobs Report…

April proved to be a tepid month for the markets with the Dow Jones Industrial Average (chart) barely eking out a gain and both the Nasdaq (chart) and S&P 500 (chart) closed the month slightly in the red. However, I believe that May will be far from languid for stocks. A key barometer as to how equities will fair in May is the release of the April Jobs Report, which will be issued before the open tomorrow. Most economists are expecting a gain of 160,000 new jobs and the jobless rate to remain at 8.2%. A report out this morning indicated a sharp drop in weekly jobless claims which should bode well for tomorrow’s report.

Once the markets digest the employment numbers, the question then is, will the old adage “sell in May and go away” apply this year? Historically speaking, May is one of the most favorable months for the bulls to take profits in and for the bears to sell. However, we are in an election year and we have one of the most highly anticipated tech IPO’s later this month with the listing of Facebook, which looks to be priced at a potential valuation of up to $95 billion. One thing I think we can all look forward to is an increase in volatilty in the month of May, which means if you are a trader, an increase in opportunites.

Good luck to all 🙂