Tough Day For Stocks…

Stocks took it on the chin today with most of the major averages closing in the red. On the day, the Dow Jones Industrial Average (chart) closed down 279.47 points, the Nasdaq (chart) closed lower by 75.97 points, the S&P 500 (chart) closed the day off by 23.81 points and the small-cap Russell 2000 (chart) lost 21.04 points. Fears from Asia to Europe are spilling over in to U.S. Equities. Securities regulators in China are banning certain types of equities financing which will have an effect on margin trading. Furthermore, across the pond in Europe, investors are becoming more worried about Greece and whether or not that country will be able to make payments on debts that are coming due and whether or not Greece will even stay in the eurozone.

Despite today’s selloff, Q1 earnings have not been too shabby so far, especially out of the banking sector. Earlier this week, JP Morgan (NYSE: JPM) reported a $5.91 billion dollar profit or $1.45 per share surpassing most analysts expectations and Citigroup (NYSE: C) also exceeded analysts expectations by posting a $1.51 per share in earnings compared to the $1.39 per share the street expected. The stock that caught everyones attention this week was Netflix (NasdaqGS: NFLX). Netflix (chart) reported in their earnings release that almost 5 million subscribers came online compared to the 4 million analysts anticipated. This metric alone gave Netflix’s stock a boost of almost $90 dollar a share yesterday.

Fast forward to next week and we will get earnings results out of Morgan Stanley (NYSE: MS), Verizon (NYSE:V), United Technologies Corp (NYSE: UTX), Yahoo (NasdaqGS: YHOO), Boeing (NYSE: BA), eBay (NasdaqGS: EBAY), Facebook (NasdaqGS: FB), Qualcomm (NasdaqGS: QCOM), The Coca-Cola Co (NYSE: KO), Tractor Supply Co. (NasdaqGS: TSCO), 3M Co (NYSE: MMM), Amazon (NasdaqGS: AMZN), Eli Lilly & Co. (NYSE: LLY), General Motors (NYSE: GM), Google (NasdaqGS: GOOGL), Microsoft (NasdaqGS: MSFT), Newmont Mining (NYSE: NEM), Southwest Airlines (NYSE: LUV), Starbucks Corp (NasdaqGS: SBUX) and Biogen (NasdaqGS: BIIB) just to name a few. I think it’s safe to say we will get a very broad look as to how corporate America is faring after all of these earnings results come forward.

Have a great weekend and good luck next week 🙂

~George

Q1 Ends With A Bang!

Stocks closed out the first quarter of the year down impressively. The Dow Jones Industrial Average (chart) closed down 200.19 points, the Nasdaq (chart) -46.55, the S&P 500 (chart) -18.35 and the small-cap Russell 2000 (chart) finished the day down 5.03 points. The Dow Jones Industrials (chart) also finished the quarter slightly in the red, while the other aforementioned indices eked out modest gains.

Looking ahead to Q2, I suspect that we will be in for a very volatile and choppy market. As the first quarter was winding down we were experiencing triple digit swings on the Dow, as well as spikes in volatility across the board. Now I am beginning to think we will even see more volatility come into the market. April historically is a strong month for stocks, but we find ourselves entering into Q1 earnings reporting season in which I think corporate America may see widespread earnings declines. This is due in large part to how strong the U.S. dollar (chart) has been and how this will affect a wide array of multi-national companies who generate meaningful revenues overseas. A strong dollar does not bode well for U.S. companies with this type of earnings profile. Of course not all U.S. companies rely on overseas revenue and I would also think that certain technology and healthcare companies will do just fine.

The one sector I will be paying the closest attention to this upcoming earnings reporting season is the energy sector. Oil (chart) has been taken out to the woodshed since last fall as well as the majority of oil related stocks. So with the price of oil plunging as it has, earnings out of this sector should be horrific. However, these are the times when rare opportunities can and do present themselves. I will look for “washout” moments with certain oil related stocks after they report their earnings to step in and start building positions. I would expect most of the bad news in this sector is about to be released, hence, a set-up for the right buying opportunity. Of course, I will be looking for companies with pristine balances sheets, with minimal to no debt and have those companies at the top of my list. That said, before you make any investments in any sectors, make sure that you consult with a trusted and certified financial advisor(s) to understand the risks associated with stocks, commodities and the like. Also note, this is a holiday shortened trading week due to Good Friday and both Paula and I wish everyone a very safe and happy holiday weekend 🙂

~George