Monday November 17, 2008
Navivest

Friday was quite an interesting session. Almost right out of the gate, stocks trended downward and by 1PM, a quick analysis would have had traders thinking that a down day for the stock market was a foregone conclusion.

At that point, the Dow, which had opened at 8822.19 from Thursday’s 8835.25 close, was down to 8469.99.

Around 1:15 the Dow and stocks in general, started rebounding from just about the lows of the session and kept moving to the upside until about 3PM, hitting an intra-day high of 8923.18. Then things turned around again and we saw another down trend. At about 3:52 PM, just 8 minutes before the closing, things fell of a cliff and we ended the day down 337.94 on the Dow Jones Industrial Average. Nasdaq was down 5%.

Things could continue to be dicey today. On Friday, the EU officially confirmed that the fifteen nations making up the Euro zone have officially entered a recession. A recession is defined as two consecutive quarters of negative growth and the EU zone saw a 0.2% decline in both the second and third quarters.

Overnight, Monday in Japan, the Japanese Economy Minister Kaoru Yosano announced that his nation had entered into a recession.

So the news keeps getting worse and stocks will continue to reflect that.

With all the news that the global economy continues to worsen, commodity prices should continue to suffer and investors should look to short related stocks. This should be down with the understanding that we will continue to experience volatility that could send the major indices up 5-8% or even more in one day. So taking profits whenever they occur and shorting whenever we get a nice rally might be a wise course of action unless you are willing to short and hold and have the fortitude to withstand those intermittent blips.

Tags: Economy  Recession  Trading Plan
 

Friday November 14, 2008
Navivest

Retail stocks will be front and center today as we got earnings report from several key retailers yesterday evening.

Walmart (WMT) reported third quarter earnings that rose ten percent from the comparable period last year, on a 7.4 percent rise in revenues to $98.64 billion in the quarter. Walmart, which prides itself on its low prices, is attracting more consumers who’ve had to tighten their belts as the economy continues to falter. The company in comparison to the rest of the stock market is doing very well and is the best Dow performer this year.

Wall Street was happy with the results for the quarter, but even as the company reported a sterling quarter, it also lowered its earnings forecast for the full year.

Kohl’s (KSS) on the other hand reported a 17% drop in profits while Nordstom (JWN) reported a 57% drop in profits.

Additionally, at 8:30AM today, the Commerce Department will be reporting retail sales for the month of October. While expectations are becoming so low that the number might not come in below forecast, it will still show that the economy is in a very fragile state and getting worse. Not that we need any reminder.

Unless we get a follow-through of yesterday’s incredible gains in the stock market, we expect the retail stocks to suffer today.

Consequentially, close to the close of the stock market yesterday, we had subscribers to our Options Capitalist trading advisory service for options traders, buy the Target (TGT) November 35 puts.

As it stands, the above-mentioned stocks are down in after hours trading. We are looking for the retail report this morning to drive retail stocks down further, allowing us to close out the trade very profitably over the next two trading sessions.

We are offering a free two-week trial to the Options Capitalist. To start your free trial, click here and fill out the short form.

If Target opens down less than $1.25 and we have a negative tone in the market, traders can still enter into a short position. And as we point out on this blog so very often, take quick profits.

Tags: Retail Stocks Trading Plan

Thursday November 6, 2008
Navivest

With the drop in stocks today, the major stock market indices have lost about 10% of their value in just two days.

Today, the Dow fell 443.48 points (4.85%), Nasdaq fell 72.94 points (4.34%) and the S&P 500 fell 47.89 (5.03%).

The losses in the past two trading days in the Dow and the S&P 500 are the largest since October 1987. This erodes more than 50% of the gains that we realized since stocks rebounded from a five-year low that was hit 11 days ago on October 27.

Fueling the drop was news from retailers, which showed that retail sales in October was the worst in 39 years. Walmart was one of the few exceptions. It reported that its sales for October rose 2.4%. This bested even the company’s own internal forecasts. If fuel sales are factored in, sales rose 2.5%, when compared to October 2007.

The good news for traders, is that the big drop in stock sets us up for another near-term bounce, the disastrous unemployment rate numbers that we will be getting tomorrow notwithstanding.

The biggest point decliner in the Dow today was Chevron (CVX), which shed $4.77 (6.37%) to close at $70.11. This was a reflection in the big drop we saw in oil prices today, which continue to fall on concerns that a weakening global economy will lower demand. Crude oil for December delivery dropped $4.53 or 6.9%, to close at $60.77.

Disney lost $1.42 during regular trading to close at $22.81. The shares are further trending lower in after hours trading, after the company reported that its fourth quarter net income fell 13%. Partly to blame was losses attributed to the bankruptcy of Lehman Brothers.

The company is expecting things to worsen consumer spending slows. According to Robert Iger, Disney’s CEO, “Consumer confidence is the lowest we’ve seen in over three decades, and even the best product out there is feeling the effect,”

Tags: Disney Earnings  Economy

Wednesday October 29, 2008
Navivest

At about 10 minutes to the close of the stock market today, it looked like we would be getting another bullish day and had things gotten shut down right then, the Dow would have been up over a thousand points in just two days.

At that time, the Dow was at its highest point of the day, up about 300 points from its open when a statement by GE’s CEO Jeff Imelt hit the wires. He said he was aiming for GE to maintain profits at the same level as last year, even if revenues falls 10-15%.

It does not take a genius to see that this is a troubling statement, Wall Street does not want to see GE coming out with disappointing earnings and at the very least, you would think the company could have waited til the close of the markets to issue the statement.

As soon as the statement hit the wires, stocks started falling and the Dow ended up closing down 74.16 points, to close at 8,990.96.

Tags: Stock Market  GE Earnings  Dow

Tuesday October 28, 2008
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Stocks put in a phenomenal day today, with the Dow, Nasdaq and S&P 500 surging 10.88%, 9.53% and 10.79% respectively. This is the second biggest point gain day on record. To put it in perspective, we saw percentage gains in one day that Wall Street would be satisfied with on an annual basis. The Dow rose 889.35points, the Nasdaq, 143.57 points and the S&P 500, 91.59 points.

This was despite the fact that we got the Consumer Confidence report for October that showed a dismal consumer confidence reading of 38, a full 14 points below the forecast of 52.

The Federal Reserve is meeting today and tomorrow and on Wednesday afternoon, will announce their latest interest rate decision. Wall Street is expecting that we will get a rate cut and that probably played into the big rally that we got today.

The rally was as broad-based as they come, with just about every industry group seeing strength. Every stock in the Dow Jones Industrial Average, was up and only 6 stocks in the S&P 500 were down.

Some of the biggest point gainers in the Dow that helped propel the index to an 889 point gain, include Exxon (XOM) $74.86 +8.77, Walmart (WMT) $55.17 +5.50, United Technologies (UTX) $51.29 +6.11, IBM (IBM) $87.28 +7.62, Boeing (BA) $48.91 +6.55 and Chevron (CVX) $70.02 +8.31.

The biggest percentage gainer was badly beaten down Alcoa (AA), which climbed $1.74, for a 19.25% gain on the day. In addition to Alcoa (AA), there were 20 other stocks that climbed over 10% on the day.

Tags: Stock Market  Stocks  Stocks Rally

Monday October 27, 2008
Navivest

Stocks ended the day lower today in what was a very volatile session. Investors initially actually had something to be hopeful about, as stock futures indicated the stock market would open with a triple digit loss in the Dow but when the markets opened, the Dow lost just 3 points.

But from there, things went haywire as stocks traded in and out of positive territory, with the Dow trading in a slightly more than 200 point rage.

Even with that, stocks spent enough time in the green - probably catching some traders who figured we would probably end the day up, in a bear market trap - for traders to view the trading action as relatively bullish. At its best levels, the Dow was up 220 points.

Things got ugly in the last half hour of trading after Moody’s downgraded GM (GM) to junk status and in the last 10 minutes of trading, the Dow accelerated its decline, ending the day down 203.18 points, or 2.42%, to close at 8,175.77.

The Nasdaq lost 46.13 points or 2.97%, to close at 1,505.90, while the S&P 500 lost 27.85 points or 3.18%, to close at 848.92.

Tags: Stocks  Stock Market

Monday October 27, 2008
Navivest

The stock market looks set to open lower this morning, as another wave of sell-off around the world spreads to the U.S.

The Dow futures are indicating an over 160-point decline at the open on the Dow, while S&P 500 futures are indicating a 21 point decline in the S&P 500 index.

In Asian trading, Hong Kong’s Hang Seng index tumbled an amazing 12.7%, while Tokyo’s Nikkei declined 6.3%.

We are seeing the same in European markets, with London’s FTSE currently off roughly 4%, Paris CAC down 6.3% and the German DAX down over 3%

High volatility should be the order of the day today, as economic prospects put a damper in stocks, while the possibility of a rate cut from the Federal Reserve as well as possible further government intervention, provides some possible upward momentum.

The Federal Reserve will be holding a two-day meeting starting tomorrow and on Wednesday, will announce their interest rate decision. The market is betting on a rate cut, with some economists now forecasting a 75 basis point cut.

At 10:00 AM, we will be getting New Home Sales numbers for September that will probably show further worrisome declines. Last Friday, we got Existing Home Sales for September that showed a 5.5% increase over August, or an annual rate of 5.18 million units. This was the biggest gain in over five years. However, the rise was fueled by sales of foreclosed homes.

Oil is now at $62.31, down another $1.84 even after OPEC promised on Friday, to cut production by 1.5 million barrels.

Tags: Stocks  Stock Market

Friday October 24, 2008
Navivest

U.S stocks will open down dramatically lower at the open as a global sell off spreads to the U.S. Stock market.

Futures for all major indices, Dow, Nasdaq, S&P 500, are all trading limit down, meaning that we currently have reached the maximum level at which the exchanges will let the futures decline and a trade won’t occur below these levels.

The Dow is now indicating to open down about 550 points, the Nasdaq, 85 points and the S&P 500, 60 points. These represent roughly a five percent loss in the Nasdaq and 6 percent losses in the Dow and S&P 500.

There is also a very good chance that we will see even more selling pressure when the stock market opens. So it will be ugly.

Tags: Stock Market Crash  Limit Down  Stocks  Stock Market
 

Wednesday October 22, 2008
Navivest

Concerns about a deteriorating global economy, caused a broad-based sell-off in stocks on Wednesday that saw the Dow, Nasdaq and S&P 500 lose 5.69%, 4.77% and 6.10% respectively.

Adding fuel to fire was the fact that companies that are now reporting their earnings are giving weakened forward guidance, confirming the fact that the economy is in fact slowing.

Shares of Amazon (AMZN) are falling about 7 points in after hours trading, after the company reported its 2008 third quarter earnings. The company actually beat Wall Street estimates by two cents per share with its $0.27 EPS, but it also said that sales started slowing towards the end of the quarter and expects the slowing to continue into the fourth quarter.

Back in July of this year, Amazon (AMZN) forecasted sales of sales of $19.35 billion to $20.10 billion. However, the company revised that downward yesterday, saying it now expects full year sales for fiscal ’08 to come in at $18.46 billion to $19.46 billion, obviously a result of consumers tightening their belt.

The Dow closed at 8,519.21, down 514.45, the Nasdaq closed at 1,615.75, down 80.93, while the S&P 500 closed at 896.78, down 58.27. Unlike recent days when stocks wildly fluctuated between positive and negative territory and then rallied towards the close, the tone was negative all day.

The Dow opened at 9,027.84, from yesterday’s close of 9,033.66 and by 10:15 AM, we were down 398 points to 8629.44. We got an attempt at a rally, that saw the Dow climb back up to 8796 at 10:55 AM, but the index down trended from there, falling to 8619 at 1:35 PM.

From there, we traded in a roughly 104 point range until about 3 PM, when things got even uglier, and the Dow lost another 320 points to hit an intra-day low of 8,335.30. We then saw some buying that pushed the Dow to 8,519.21, for the loss on the day, of 514.45 points.

Tags: Stock Market  Dow

October 10/15/08
Navivest

It was another ugly day for stocks across the board that saw the S&P 500 sell off to the tune of 9.03%, the Dow shed 7.87% and the Nasdaq saw a loss of 8.47%.

On Monday 10/13/08 when the stock market saw that amazing rally on the EU and U.S. government plan to buy stakes in banks, the Dow opened at 8,462.42. With today’s close of 8,577.91, the Dow is now only a hundred and fifteen points above the open on Monday. So we’ve in effect just about lost all those gains.

The concern was the economy, both here in the U.S and abroad. We saw oil for November delivery lose $4.80 today to close at $73.83 as OPEC warned that demand is slowing. As a result, we saw energy and commodity stocks get battered. We also got a report that showed car sales in China slowed last month.

This morning, the Commerce Department released retail sales report for September that showed fell much worse than was forecasted. The actual drop was 1.2%, while economists had been looking for a drop of 0.7%. The drop in August was only 0.3%.

As things get worse, we can look for stocks to continue moving to the downside. However, we will probably see a very volatile stock market with wild swings in the near term. After today’s 700-point plus drop, we are now looking for a rebound over the next day or so and we are positioning subscribers to our Options Capitalist accordingly.

Tags: Stock Market  Dow Jones  Nasdaq  S&P 500