In the midst of Tuesday’s sell-off and after the S&P 500 broke through the 1173 support line the markets came off their lows yesterday, albeit most indexes still managed to close the day down approximately 2%. Once again buyers came in today with continued support as the S&P 500 eked out a gain even as the flood of negative global economic and market driven news from China to Ireland makes headlines. One must expect that the flow of negative news will continue along with pockets of positive headlines. This most likely will create more volatility in equities which could create “select” opportunities, keyword select.

Market technicians will continue to be watchful of key support levels as the Dow, Nasdaq and S&P 500 are trading in between their 50 and 200 day moving averages. If indeed one chooses to take advantage of these market retracements it is always good practice to apply the “scale in” approach a.k.a. don’t buy all at once.

Have a good evening.

~George

Equities experienced a modest pullback last week with most of the averages giving up 2% or so. Holding true to form buyers stepped in today offering support although stocks closed off their highs. Some pundits might point to the strong October retail sales report released this morning with a reading of 1.2% which was nearly double the increase expected. I think that helped a bit and certainly if the consumer can begin to demonstrate strength on a consistent basis this would bode very well for the market going forward.

I still believe the main reason equities will continue to be met with support when the markets do indeed retreat is when you have the Fed as your partner stepping into the marketplace as they have, couple that with the continuing record low interests rates that exist, it’s no wonder we have the floor that we do. Having said this, this type of market support cannot go on forever and at some point the Fed must hand the baton over to true capitalism in order to have an environment that is real and sustainable. The $million dollar question is when will this occur? Well Washington it’s time to get to work on the economic and tax policies at hand (aka don’t raise taxes) to get this country and it’s business leaders confident to start expanding and hiring in a meaningful way, it could indeed be as simple as that. 🙂

Have a healthy and prosperous week.

~George

I suppose when John Chambers talks people listen? Cisco Systems, Inc. (NasdaqGS: CSCO) reported their fiscal first quarter earnings which ended October 30th with an 8% rise in profits on almost 20% revenue growth. Not too bad, in fact very impressive but the company’s CEO John Chambers warned about slower growth over the upcoming quarters which brought about concerns for overall IT spending. That was enough to send not only Cisco lower, but most of the major indexes as well.

In my previous posts I have eluded to the inevitable pullbacks that will occur in equities during this incessant bull run and that it would create “scale-in” entry points in certain sectors. Key phrase “scale-in” for this could be the first of many pullbacks as the market digests future economic, political and corporate developments.

In closing, to all veterans and those serving our country, thank you for your service and for protecting our freedom.

Sincerely,

~George

Not only did the major indexes close the week at 2 year highs, small-cap and micro-cap speculation is picking up. Even the most riskiest assets, pre-revenue early stage companies that trade on the OTC Bulletin Board are beginning to show an increase in volumes. Now this is a metric that most industry pundits do not consider but I certainly keep it on my radar. For if investors begin to warm up to the most riskiest asset classes then what does this mean for the mid to large-caps? Historically it bodes well. This doesn’t mean to go out and start speculating across the board, however for me this is just another confirmation that this bull run we have been on has more to go. I definitely expect pullbacks along the way and will certainly be prepared for them.

Have a great week and good luck to all.

~George

Stock indexes soared to multi-year highs today as the federal reserve announces a $600 billion dollar bond buying spree. This stimulus action will most certainly provide significant support for the markets and was the main reason why we saw global equity strength across the board. Also today the S & P 500 broke through the psychological mark of 1200 to close at 1221, yet another bullish case for stocks.

So how does one capitalize now on equities? In this accommodative environment courtesy of the federal reserve, I would expect that when the markets do pullback this would be the opportune time to put capital to work. Even if the markets had a correction of 5-10%, the floor that the feds have put in with a $75 billion a month bond buying spree and interest rates kept near zero, these two factors alone is giving this perma-bull all the confidence needed to put capital to work.

Good luck to all 🙂

~George

Congratulations to America for speaking out yesterday at the polls and for taking the first step in holding Washington accountable for their actions. No matter what side of the aisle you are on, these historic mid-terms have put Congress on alert and that warning is to start genuinely representing the people or else!

Now that the elections are over what will the markets focus on? One matter for sure is whether or not the Bush tax cuts will be extended. I think both U.S. equities and corporate America need clarity across the board with not only tax issues, but for all economic policies in order for real confidence to occur. Also I think U.S. equities will continue to lift if going forward corporate earnings can demonstrate top-line growth. Yes so far earnings this year have been impressive however those results for the most part have come from better efficiencies, higher productivity and cost cutting measures. I think when top-line growth begins, the markets reaction could catch everyone off guard.

Have a great day…

~George

For the month of October the key indices were up more than 3%. Who would of thought considering the state of the economy and the pending mid-term election results. Friday’s GDP report indicated that the economy grew at a tepid 2% which is certainly not enough to have a meaningful effect on job growth. I have got to believe that the markets recent strength and stability is in part in anticipation that the GOP will take control of the House and possibly the Senate. If this occurs this should bode exceptionally well for businesses and taxes, which in my book are the two keys to build the confidence of business owners so they can start deploying capital for expansion and to start hiring again. One thing for sure, America is about to speak out and Congress will most certainly look very different going forward.

Have a great weekend.

~George

Over the past couple of months it seems that every time the market wants to go lower it is met with support and ends up rallying by the close. At one point today the Dow was down 150 points or so however closed down only 43.18, with the Nasdaq actually turning positive. This type of market action is seemingly indicative of expectations that the economy 6 to 12 months from now should be growing at a much faster pace. I have been looking forward to hearing what Norfolk Southern (NYSE: NSC) had to say in their earnings report and as mentioned in my previous blog for me the railroad transportation sector is a key metric in understanding economic activity at least from the ground floor level. Today’s earnings report by NSC indicated that their shipment volumes are increasing across the board.

Although it may not feel like we are in an economy that is growing you can’t ignore the hard data from the transports and what that industry’s view is on the state of the economy.

Have a great evening.

~George

Stocks rose for a 3rd straight week as earnings have encouraged investors, especially from the tech sector. The week ahead promises an even broader picture on the health of the economy with one third of the S&P 500 reporting their earnings results. I will be particlarly interested in what Norfolk Southern (NYSE: NSC) has to say on the state of the rail transportation industry, a key metric in my book that sheds light on economic activity. NSC reports their 3rd quarter results this upcoming Wednesday.

Capping the week on Friday we get our first look at the 3rd quarter G.D.P. numbers. I do not think that anyone is expecting meaningful growth in our economy yet, but any signal of an increase especially from the consumer would be a surprise and would be welcomed. In my most recent posts I elude to the markets potentially double topping, this could be the week that decides whether we have a double top breakout or if the double top stands true to it’s form.

Have a healthy and prosperous week.

~George

We are smack dab in the middle of the 3rd quarter earnings reporting season and I gottta tell you folks if companies don’t knock it out of the park and I mean out of the yard, this market is going to take you lower! Just look at the spectacular earnings results reported by Apple (NasdaqGS: AAPL) which reported all time record earnings for it’s last quarter and yet the stock went below 300 in Monday’s after hours session and subsequently recovered a bit. Or look at the earnings report that IBM (NYSE: IBM) issued after the close on Monday reporting an 18% eps increase and it’s 31st consecutive quarter of earnings growth and yet the stock got a haircut in Tuesday’s trading session. Point being you must blow out your numbers in order for these markets to reward your performance and seemingly there are certain issuers that are indeed priced to perfection.

Which leads me to the question of, is this market getting tired and could it be in the process of double topping? Take a look at the 1 year chart of the S&P 500 index. The S&P is approaching the zone of the April highs and only time will tell if we can break through this double top or if it will serve as one of the catalysts to a leg down in the market. Good luck to all.

~George