Nasdaq

Volatile start to November…

Posted on by George Mahfouz

The markets kicked off the month of November on Thursday with a 1% gain only to give it back the very next day. The Dow Jones Industrial Average (chart) finished the shortened trading week essentially flat -0.11%, the Nasdaq (chart) -0.19%, the S&P 500 (chart) -0.16% and the small-cap Russell 2000 (chart) -0.14%. Without question the jittery start to November can be attributed to the upcoming election on Tuesday and the mixed signals from corporate America as companies continue to report their Q3 results.

Despite the increase in volatility, economic reports out this past week from consumer confidence to manufacturing showed signs of improvement. Even the labor market showed an increase in the number of new hires in the month of October. That said, it’s certainly easy for these metrics to be overlooked considering what’s in store next week. Once the Presidential and Congressional elections are over, I think all market participants can once again focus on the fundamentals of the economy, corporate America and the direction the country will go into with the newly elected officials in place.

Let’s not forget about Q3 earnings reporting season which will continue next week with reports coming out of the likes of Humana (NYSE: HUM), News Corp. (NasdaqGS: NWSA), Qualcomm (NasdaqGS: QCOM) and Walt Disney Co (NYSE: DIS) just to name a few. Good luck to all.

Have a great weekend 🙂

~George

Tough week for stocks…

Posted on by George Mahfouz

Earnings reporting season is in high gear and the markets are not liking what they are seeing. For the week, the Dow Jones Industrial Average (chart) fell 1.77%, the Nasdaq (chart) -0.59%, the S&P 500 (chart) -1.99% and the small-cap Russell 2000 index (chart) declined 2.89%.

For the most part, corporate America continues to show a slowdown in their businesses and companies are also providing tepid outlooks in the near term citing the uncertainty of the pending fiscal cliff, and the expiration of the Bush era tax cuts. Even tech-titan Apple (NasdaqGS: AAPL) guided with an outlook that caught the street off guard. Despite the disappointing earnings reporting season so far, the key indices have managed to remain above their respective 200-day moving averages. The 200-day is one of the most closely watched key technical support indicator that market technicians and institutional investors respect.

Next week, Q3 results will continue to pour in so I expect that the 200-day will once again be tested. If this is the case, and this key technical level can hold, we just may make a run into the end of the year? Good luck to all.

Have a great weekend 🙂

~George

Weak earnings spook stocks…

Posted on by George Mahfouz

Although Halloween is not quite here yet, the markets got spooked on Friday with weaker than expected corporate profits being reported. High profile companies such International Business Machines (NYSE: IBM), Google (NasdaqGS: GOOG), Microsoft (NasdaqGS: MSFT) and McDonald’s (NYSE: MCD) all disappointed investors, just to name a few.  On Friday the Dow Jones Industrial Average (chart) closed down 205.43 points, the Nasdaq (chart) -67.25, the S&P 500 (chart) -24.15 and the Russell 2000 (chart) lost 16.12 points.

The street should not be too surprised with the softer earnings numbers that are coming in, for most analysts have been lowering their estimates for some time now. This upcoming week over 700 companies will report their Q3 results with all eyes on Apple Computer (NasdaqGS: AAPL). Apple is schedule to issue their earnings results on Thursday. Let’s see how this week plays out before we draw any definitive conclusions as to where these markets may be headed. Have a great week and good luck to all.

~George

Chalk one up for the bears…

Posted on by George Mahfouz

Stocks notched their worst performing week since the beginning of the summer. For the week, the Dow Jones Industrial Average (chart) closed down 2.07%, the Nasdaq (chart) -2.94%, the S&P 500 (chart) -2.21% and the small-cap Russell 2000 (chart) closed out the week down 2.35%.

This upcoming week promises to be a doozy with Q3 earnings reporting season kicking into high gear. The following is a list of some of the high profile companies that are scheduled to report; Citigroup (NYSE: C), Goldman Sachs (NYSE: GS) Coca-Cola ( NYSE: KO), International Business Machines (NYSE: IBM) , Intel (NasdaqGS: INTC), CSX Corp. (NYSE: CSX), Bank of America (NYSE: BAC), US Bancorp (NYSE: USB), American Express (NYSE: AXP) and tech titans Ebay (NasdaqGS: EBAY) and Google (NasdaqGS: GOOG).

With last week’s market performance and lack thereof, the question I am now pondering is whether or not this earnings reporting season will be the catalyst to take the markets down further? Even with last week’s 2% pullback, the bellwether indexes are still up double digits on the year. There indeed could still be more room to the downside, however, I would expect that key technical levels would support any meaningful pullback. Let’s take a look at the S&P 500 (chart). The first level of support appears to be in the 1400 zone and then the 1370 area which happens to be the 200-day moving day average for the S&P. By no means am I suggesting that these levels will be reached, all I am saying is if Q3 earnings reporting season comes in weaker than expected, we could see a continuation of last week’s pullback.

Good luck to all.

Have a great week 🙂

~George  

 

A positive week for stocks, next up Q3 earnings…

Posted on by George Mahfouz

The market posted its first weekly gain in almost a month, this right before earnings reporting season begins. For the week the Dow Jones Industrial Average (chart) finished up 1.29%, the Nasdaq (chart) +0.64%, the S&P 500 (chart) +1.41%, and the small-cap Russell 2000 (chart) closed the week up 0.65%.

Third quarter earnings reporting season will be the highlight next week with earnings reports coming out of Alcoa (NYSE: AA) Yum Brands (NYSE: YUM) and JPMorgan Chase & Co (NYSE: JPM), just to name a few. Most analysts have ratcheted down their earnings forecasts due to the tepid pace of global growth and the number of companies that have pre-announced to the downside. The big question now is, are these adjustments already priced into equities and indexes? My feelings are that if there are any big surprises to the downside and stocks sell-off, that fund managers and institutional buyers are sitting on the sidelines ready to act. We cannot forget the position of the Fed which essentially gives this class of investors the green light to deploy capital into the markets. Of course there are no guarantees that this will be the mandate, however, odds are that any significant sell-off due to earnings reporting season would be met with support. Good luck to all.

Have a great weekend 🙂

~George  

Just like August, September produces unlikely gains…

Posted on by George Mahfouz

Although stocks were mostly lower on the week, the month of September produced rare gains for the benchmark indexes. For the month of September, the Dow Jones Industrial Average (chart) gained 2.65%, the Nasdaq (chart) +1.61%, the S&P 500 (chart) +2.42% and the small-cap Russell 2000 (chart) closed the month up 2.12%. This capped a very impressive third quarter for equities with all of these key indices advancing sharply higher.

So now the encore! What promises to be an event driven final stretch of the year, investors can look forward to Q3 earnings reporting season in October and of course the Presidential and congressional elections in November. Not to mention the ongoing saga in Europe, the seemingly everlasting middle east crisis, and whether or not our country will face the “fiscal cliff” outcome which could spin our economy into a recession?

So as you can see stocks and bonds are certainly exposed to an enormous amount of uncertainty in the final quarter of the year. Typically when markets are in such a quandary, much higher volatility usually ensues. In any market environment and  especially the one we are heading into, it is always best to use protective stops and or protection in the form of puts if you have a long portfolio. Furthermore, it is always a good idea to consult with a professional investment advisor before implementing any type of strategy. Good luck to all.

Have a great weekend 🙂

~George

A bull breather…

Posted on by George Mahfouz

After such a torrid bull run this summer and with most major averages posting double digit gains, stocks finished lower this week, albeit modestly. For the week the Dow Jones Industrial Average (chart) closed down 0.10%, the Nasdaq (chart) -0.13%, the S&P 500 (chart) -0.13% and the Russell 2000 (chart) finished the week off 1.06%. This minor pullback is nothing compared to the rare and impressive September monthly gains with all of the above key indices advancing well over 3% so far this month.

As equities continue to remain strong after the Fed announced their latest stimulus package last week, I continue to monitor the underlying technicals of the markets and from what I see, the coast continues to remain clear. The one exception to how the big four is looking technically is that these key averages are at or near the 70 value level on the Relative Strength Index (RSI).  The RSI is a technical analysis indicator which measures gain and losses over a given period of time to identify whether or not stocks or indexes are currently oversold or in this case overbought.

That said, with central banks from around the world ready to flood the markets and economies with liquitidy if needed, I am now of the belief that stocks and certain commodities should remain overbought for the foreseeable future with the occasional pullbacks along the way. Good luck to all.

Have a great weekend 🙂

~George  

Stocks soar, the Fed pulls out all the stops!

Posted on by George Mahfouz

I know we keep talking about the Federal Reserve, but on Thursday Ben Bernanke announced the mother of all stimulus programs. The new stimulus package includes $4o billion a month to be injected into the economy  and a promise that it won’t stop until the unemployment picture dramatically turns around. Never before has a central bank made such a large extended commitment and then tie it to the jobs market.

On the heels of this announcement, stocks soared with the Dow Jones Industrial Average (chart) finishing the week up 2.15% and is now up year to date 11.26%. The Nasdaq (chart) closed the week up 1.52% and year to date is up a staggering 22.22%. The S&P 500 (chart) on the week marched 1.94% higher and so far this year is up 16.55%,  and last but not least, the Russell 2000 (chart) small-cap index closed up 2.66% and is tracking a year to date gain of 16.71%

Yes I triple confirmed the above statistics and there are no typos. Now the multi-million dollar question is  “is this bull market out of breath?” It’s only natural to think that this tape is overdone and is well overdue due for a healthy 5% or even 10% pullback? This may especially ring true with the most recent middle east tensions, the upcoming third quarter earnings reporting season and of course the U.S. presidential elections all on the horizon. That said, with the Federal Reserves unprecedented commitment to truly do whatever it takes to get this economy and now the unemployment picture completely turned around, I would think that any pullbacks would provide excellent entry points. Whatever you choose to do, make sure to always consult with a professional investment advisor.

Have a great weekend 🙂

~George

Nasdaq at 12 year highs, up over 20% year to date…

Posted on by George Mahfouz

Now who said we are in the dog days of summer? Stocks once again took off this week after the European Central Bank promised to buy the debt of struggling countries in the eurozone. For the week, the Dow Jones Industrial Average (chart) closed up 1.65%, the S&P 500 (chart) +2.23%, the Russell 2000 (chart) +3.72% and the tech heavy Nasdaq (chart) closed the week at fresh 12 year highs finishing up 2.26%. What a run this has been so far this year with staggering double digit gains for most of the major averages. Congratulations to all of the bulls out there!

The million dollar question now is; “is it time for some profit taking?” The short answer, yes! Always make sure to consult with your professional financial advisor when considering taking action, but I would think he or she would agree that it would be a good idea to take some off the table. The bulls case is that as long as the governments from around the world continue to expand their balance sheets, the markets should continue to go higher. All you have to do is look at the performance of the key indices so far this year and it’s easy to see the power of the central banks. The bears case is stocks are trading at multiples not seen in years and that earnings estimates are way too high and need to come down. No matter what the case is, and in my humble opinion, taking some profits after such an unprecedented run would be the responsible thing to do. Good luck to all.

Have a great weekend 🙂

~George

Rare August gains for key indices…

Posted on by George Mahfouz

The four most followed indexes produced unlikely gains for the month of August. Typically the dog days of summer is seasonally weak for equities, but not this year. For the month of August, the Dow Jones Industrial Average (chart) closed up 0.63%, the Nasdaq (chart) +4.34%, the S&P 500 (chart) +1.98% and the small-cap Russell 2000 (chart) finished the month up 3.2%.

Stocks once again benefited by the Fed promising to take further steps to help boost the economy if needed. Speaking in Jackson Hole, Wyoming, Ben Bernanke reiterated his concern over the state of the economy and that the central bank is prepared to act if warranted. So how will this mantra play out for the month of September?

September is typically one of the weakest months of the year for equities, however, could this month buck the trend just like August did? We should find out in short order with the release of the unemployment report next Friday. Talk about market and political implications! If the job market continues to deteriorate, you better believe this will become even more of a focal point as the election approaches. A further decay in the unemployment picture should also give the fed confirmation to further stimulate the economy. If this scenario plays out, one could surmise that the markets would continue to lift and that Mitt and Ann Romney may be soon moving to Pennsylvania Avenue.

I hope everyone has a safe and enjoyable Labor Day weekend 🙂

~George