Stocks held their own this week thanks to a good start to Q1 corporate earnings. The Dow Jones Industrial Average (chart) finished up 1.4%, the S&P 500 (chart) +0.60%, the Russell 2000 (chart) +0.96% and the Nasdaq (chart) actually lost a bit of ground falling a modest 0.36%. This however was the third straight weekly decline for the tech heavy Nasdaq.

Next week hundreds of companies will be reporting their first quarter results, but all eyes will most certainly be on everyone’s favorite stock, Apple Inc. (NasdaqGS: AAPL). Apple reports their earnings on Tuesday after the close and needless to say, this will be a market mover, at least for the Nasdaq. After surging an astonishing 77% since late November, the seemingly untouchable Apple has lost over 10% of it’s value over the past two weeks. So the question now is “is this a normal and heathy correction in Apple’s stock?” or a preview of more downside to come? If you are a technician and long the stock, you were very pleased that on Friday the stock held and closed above its 50-day moving average. However, with Tuesday’s earnings report on the horizon, I think for now you can throw all of the technical analysis out and wait to see how their quarterly results look.

If I were to take a side and as I continue to see all of the metrics point to a bullish quarter, this should be yet another earnings blowout for the company. But as I have learned over the years, it is always best to have a wait and see approach, listen to the conference call, see how the stock trades and then make a decision. Good luck to all.

Have a great weekend 🙂

~George

For the second straight week the major averages closed in the red. However, this past week the selling expanded and accelerated. The Dow Jones Industrial Average (chart) closed the week down 1.61%, the Nasdaq (chart) -2.25%, the S&P 500 (chart) -1.99% and the small-cap barometer Russell 2000 (chart) -2.68%. This week’s market declines occurred despite aluminum producer Alcoa (NYSE: AA) kicking off first quarter earnings reporting season with a solid earnings report.

Speaking of earnings reporting season, next week a slew of earnings reports are scheduled to be issued from the likes of Citigroup (NYSE: C), The Coca-Cola Company (NYSE: KO), Goldman Sachs (NYSE: GS), International Business Machines (NYSE: IBM), Intel (NasdaqGS: INTC), Bank of America (NYSE: BAC), Microsoft (NasdaqGS: MSFT) and General Electric (NYSE: GE) just to name a few.

Needless to say, first quarter earnings reporting season should confirm whether or not the bears will be coming out of hibernation. Good luck to all.

Have a great weekend 🙂

~George

The four key indices lost ground this holiday shortened trading week which seemingly was spawned by the Federal Reserve’s indication the further quantitative easing may no longer be in the cards. The Dow Jones Industrial Average (chart) lost 1.15%, the Nasdaq (chart) -0.36%, the S&P 500 (chart) -0.74% and the Russell 2000 (chart) on the week pulled back the most declining 1.46%. The markets were closed yesterday in recognition of Good Friday, however, the March jobs report was released as scheduled and hiring for the month of March came in far less than economists expected. The economy added 120,000 jobs compared to the 200,000 plus expected by most.

I am expecting a knee jerk reaction to the downside from the markets on Monday and it will be interesting to see if stocks can shrug this economic report off? At the very least, volatility should pick up in earnest this month from not only this report, but from the highly anticipated first quarter earnings reporting season. To me this will be the key catalyst to determine wheter or not this bull keeps running.

Happy Easter 🙂

~George

Simply put, stocks in the first quarter were on fire! This was the best Q1 for stocks in over a decade. The Dow Jones Industrial Average (chart) gained over 8%, the Nasdaq (chart) climbed a whopping 18+%, the S&P 500 (chart) +12% and the Russell 2000 (chart) finished the quarter up 12.06%.

These are the best first quarter gains for the key indices since the 90’s. Who would of thought as 2011 ended with the European crises at a breaking point, that our markets here and markets abroad would behave in the manner that they did? I think for the most part we can thank the federal reserve and central banks from around the world for their incessant accommodative monetary policies. One thing for sure is when interest rates are near or at zero,  you are going to be in a bull market regardless of whether or not the economy is expanding. I have got to believe that the short sellers are crying foul from the standpoint that a rising tide lifts all boats and certain stocks or sectors don’t belong elevated the way they are. Nonetheless, there is massive liquidity in the system which certainly bodes well for equities.

The million dollar question now is can this bull keep running? Look no further for that answer other than the upcoming first quarter earnings reporting season. If corporate America can pull off yet another solid earnings reporting season, then we could indeed see the markets continue their march north. However, if top line revenues do not begin to show growth, and companies continue rely on cost cutting measures and other efficiencies to improve their bottom lines, this could be the one catalyst that provides the correction in the markets that most pundits have been anticipating. Good luck to all.

Have a great week 🙂

~George

They are calling it the worst weekly performance this year! For the week the Dow Jones Industrial Average (chart) fell a modest 1.15%, the Nasdaq (chart) -0.41%, the S&P 500 (chart) -0.50% and the Russell 2000 (chart) basically closed the week unchanged. If this was the sharpest decline of the key indicies in 2012, I think the bulls will take it and the bears must be scratching their heads.

Coming into the new year, I don’t think anyone would of projected that the worst declines of the year for the major indexes would be a paltry 1% or so in a given week. Especially when you considered the enormous volatility that occurred in 2011. The week ahead may be back to the status quo for stocks as we will be in the final week of the first quarter of the trading year which should initiate the proverbial window dressing methods implemented by certain fund managers. Window dressing is a strategy used by institutional investors and mutual fund managers as the end of the quarter or year approaches to augment the performance of their respective funds or portfolios. In most instances these managers may sell the stocks in their portfolio that are at a loss and purchase high beta momentum stocks to improve the overall appearance and return on their portfolios. We will see if this strategy rings true by weeks end. Good luck to all.

Have a great weekend 🙂

~George

Stocks continue to lift this week as the nations top banks passed their respective stress tests and strong economic data continues to stream in. For the first time in years the S&P 500 (chart) closes above the 1400 level. Also, the Nasdaq (chart) on Tuesday closed over 3000,  a level not seen in over a decade. The Dow Jones Industrial Average (chart) continues its march north of 13,000 and the small-cap bellwether Russell 2000 (chart) closed in the 830 area. This 830 zone for the Russell has provided significant resistance as of late, so we will see if the this index can breakout like the other key indices have.

There is one other average I am watching to see if this incessant market run can continue, and that is the Dow Jones Transportation Average (chart). Market pundits have argued that during this bull market the transports have lagged and have not really participated in the rally. In fact, this is what the short side has relied on in part to support their short thesis. Historically speaking, when equities are rallying and the transports are not, this is an indication of an imminent reversal for equities. Well in today’s session the Dow Jones Transportation Average (chart) had one of its strongest days of the year. I am looking now for a a meaningful break above the 5400 level in the transports. If this occurs and if the transports can remain above 5400, this could be yet another powerful indicator that supports this bull market.

Good luck to all.

~George

The old wall street adage “The trend is your friend” is certainly ringing true in the stock market so far this year and now the job market apparently is beginning its own trend. February’s jobs report announced yesterday was once again better than expected. Although the headline unemployment rate remained at 8.3%, the economy welcomed in 227,000 new jobs. This is the third month in a row that payrolls have increased by over 200,000.

Once again traders and investors are embracing the signs of a stronger economy which is buoying the stock market. Just as the markets appeared to be headed for their first meaningful pullback of the year earlier this week, the bulls stepped into stocks on Wednesday providing a floor and sending equities higher the rest of the week. Most of the key indices were up on the week with the Dow Jones Industrial Average (chart) finishing slightly in the red off 0.43%. The S&P 500 (chart) notched a slight gain of 0.09%, the Nasdaq (chart) +0.41% and the small-cap index Russell 2000 (chart) lead the way posting a 1.82% gain.

Tuesday’s triple digit loss for the Dow Jones Industrial Average (chart) could of easily unnerved the bulls and gave the bears hope that the much anticipated sell-off had begun. However, once again equities demonstrated their undeniable resilience and continues to find support with any attempt of a pullback or sell-off. Although the bears argue that volumes remain light, there is no denying that this is one of the most powerful trends to the upside that the markets have seen in years.

Have a great weekend 🙂

~George

For all of you college basketball fans, March Madness has arrived! For all of the investors and traders out there, will the bullish madness continue? I guarantee the short interest is exhausted and asking that exact question.

On the week, the Dow Jones Industrial Average (chart) closed basically flat at 12977, The Nasdaq (chart) closed the week up 0.42%, the S&P 500 (chart) +0.28%, and the small cap bellwether Russell 2000 (chart) lagged this week falling almost 3%. However, these key indices are off to the best start to a year ever and it seems like every time the market wants to sell-off, it is met with unprecedented support. I have been around these markets for almost 17 years and I cannot remember such resilience in equities. Call it an election year, call it an improving economy, call it that Europe is out of a catastrophic state, call it what you want, this freight train doesn’t seem to want to stop.

Technically speaking and according to the Relative Strength Index (RSI), the markets continue to trade near the upper end of overbought conditions, however, investors and traders alike don’t seem to care. Personally, I think a meaningful pull back in equities and commodities are long overdue, but I too have been expecting this for weeks now. One thing I know for sure is that the markets do not always give you what you expect when you expect it, so whether you have a long or short thesis, it’s best not to try to time the market. In closing and as a reminder, it is usually a good idea to keep protective stops in place should your position move against you.

Have a great weekend 🙂

~George

Stocks for the most part eked out modest gains this week as volatility remains dormant. For the week, the Dow Jones Industrial Average (chart) finished up 0.26%, the Nasdaq (chart) +0.41%, the S&P 500 (chart) +0.33% and the Russell 2000(chart) actually ticked down less than a quarter of a percent.

The S&P 500 (chart) did manage to close at its highest level in almost four years, however, oil keeps creeping higher as well and closed at almost $110 a barrel. If oil continues its upward trend, this could be the one catalyst that begins to put the brakes on this multi-month bull market run we have witnessed. The payroll tax cut extension will help off-set rising gas prices but I don’t think anyone wants to see oil prices climb higher or gas prices at $5.00 or $6.00 a gallon.

Everyone from economists to technicians have been proclaiming that the market is due to pause, that it’s overbought and needs a retracement. Well if oil trades above the $120 mark in the near future, we may just get what the pundits are predicting.

Have a good weekend 🙂

~George

This is beginning to sound like a broken record and the bulls like what they are hearing. Once again stocks closed the week up across the board. On the week the Dow Jones Industrial Average (chart) + 1.16%, for the year the DJIA is up almost 6%. The Nasdaq (chart) finished the week up 1.65% and for the year the Nas is up a whopping 13.31%. The S&P 500 (chart) closed the week up 1.38% and so far this year the S&P is up 8.24% and last but not least, the Russell 2000 (chart) finished the week up 1.89% and for the year the Russell is up a stellar 11.84%. This has been one of the best starts coming out of the gate for the stock market in decades and there doesn’t appear to be too much getting in its way.

Market technicians including myself have been expecting a pullback to occur and have been citing “overbought” conditions for weeks now (blog). However, these markets remain incredibly resilient and are seemingly poised to go higher. I am remaining cautious as to how much longer this incessant bull run will continue and will look for additional clues as to when the inevitable retracement will occur. There were a lot of traders and investors who missed this enormous bull run over the past few months. What kept many investors on the sidelines was and is the on-going debt crisis in Europe and what has caught many investors off guard, is the stronger than expected flow of economic data here at home.

That said, there are now a lot of traders and hedges funds licking their chops on short side opportunities in this overbought market. However, a short strategy is incredibly risky and requires an enormous amount of experience to execute successfully, so let’s see if this time they get it right.

Have a great holiday weekend 🙂

~George