More Multi-Year Highs for the Dow, SPX as Summertime Rally Continues

08 Sept 2012 Wall Street end the shortened week on a bullish note
U.S. stocks clung to the flatline and stayed near multiyear highs Friday as disappointment over the August jobs report was countered by hopes the gloomy data could give the Federal Reserve further reason to unleash a third round of quantitative easing. The Dow Jones Industrial Average (DJI) drifted below breakeven before lunchtime, but battled its way back into the black in the last minutes of trading. With that, the blue-chip barometer secured a respectable return  of 1.65% for the week.

The markets will be laser focused on the Federal Reserve next week, anxiously awaiting word on whether the central bank will initiate another round of economic stimulus.

The Federal Open Markets Committee, which sets most Fed policy, is meeting Wednesday and Thursday and a statement is due at the end of the second day. Fed Chairman Ben Bernanke will hold a press conference Thursday afternoon.

Stock markets are all hoping for another round of quantitative easing, in which the Fed buys      U.S. securities in an effort to goose the stumbling U.S. economy. Friday’s dismal labor report which revealed that just 96,000 jobs were created in August only boosted hopes among investors for QE III.

The Dow Jones Industrial Average (DJI – 13,306.64) was rather flat all session long, but found itself up 14.6 points, or 0.1%, by the closing bell. The Dow posted its best daily settlement since December 2007. Half of the 30 components slipped into negative territory, with Kraft Foods Inc's (NASDAQ:KFT) 5.5% loss pacing the laggards. On the other hand, the 15 outperformers were led higher by Bank of America's (NYSE:BAC) 5.4% gain. During the holiday-shortened week, the Dow enjoyed a 1.65% rise.

 

Adding 5.8 points, or 0.4%, the S&P 500 Index (SPX – 1,437.92) prolonged its stay in the black today and closed at a fresh four-year high. Plus, the SPX marked its best daily close since January 2008. For the week, the broad-market index climbed 2.2%.

 

The Nasdaq Composite (COMP – 3,136.42) enjoyed another multi-year high run, touching 3,139.61 in intraday action -- its loftiest price since mid-November 2000. And after the dust cleared, the tech-rich barometer eked out a fractional win. The COMP turned in the best weekly performance of its peers, rallying 2.3%.

For every stock sliding in New York Friday, more than two gained on the New York StockExchange, where nearly 680 million shares had traded. Composite volume reached 3.7 billion.

 

HAPPY WEEKEND

Alcoa surprises Wall Street with first-quarter profit

Alcoa Surges Past Estimates
After the bell on Tuesday, Alcoa (AA) released operational results for its first quarter of fiscal year 2012 that surpassed the Street's estimates on both the top and bottom lines. Management indicated that rebounds in the automotive and airplane manufacturing helped boost the results. Alcoa reported a record revenue figure of $6.0 billion (above the Street's $5.77 billion forecast) and earnings, excluding items, of $0.10 per share (above the Street's forecast of a $0.04 loss per share). Last year during the first quarter Alcoa reported earnings of $0.27 per share.

Growth at the company was driven by a surge in its Engineered Products and Solutions unit, which jumped 11%. Process improvements contributed to that gain, and Alcoa is expected to see further market share gains in the second quarter. However, in what could be construed as a negative, the company reaffirmed its demand projections for 2012, seeing aluminum growth of 7%, even as it said growth in the aerospace industry would outpace previous estimates. Elsewhere around the world, Alcoa projects China consumption to gain 11% after surging 15% during 2011. Management indicated it projects mid-single digit consumption growth in both Russia and Brazil, while Europe contracts 0.3%. I expected growth in China to slow as well as Europe to show more of a contraction.

The beat has a bittersweet feeling to it as the Street's forecasts have been in free-fall mode since November of 2011. According to Thomson/Reuters, estimates were for earnings of $0.20 per share in November, then $0.12 per share in December before falling to a loss of $0.04 per share by January. The Company capped its alumina production earlier this year, and there continues to be an oversupply in the marketplace, something that slightly higher demand from the auto and air business is not going to replace. Additionally, pricing power continues to be a problem as management indicated that the Company realized a 9% drop in aluminum prices during the quarter.

I had modeled for revenues to rise to $5.81 billion with a loss of $0.06 per share. Alcoa reported a much stronger rebound in the Engineered Products segment, which helped to offset the higher cost of goods and lower aluminum prices. The stock is up approximately 5% in the aftermarket, but is still down dramatically from this time last year (almost $18). I am not taking the bait; I would still avoid the stock, but if you are stuck in the stock, this looks like a great opportunity to take advantage of the positive news and sell while you can.

WALL STREET >>> Critical Earnings Season Begins Tomorrow with Alcoa

A strong round of corporate earnings could help to offset last Friday's jobs disappointment

 

Alcoa (AA) kicks off first-quarter earnings for 2012 after tomorrow night's close. Historically, Alcoa's report has been very predictive for both corporate earnings and the subsequent price action within the equity market. While some say that too much emphasis is placed upon AA's actual report, it is undeniable that major corporate earnings numbers will have a huge impact upon the market's price action going forward.

 

Since the end of 2011, analysts' earnings estimates have been revised dramatically higher. Lowered expectations have given way to an increasing level of optimism, both on the macro and micro fronts. This could be a function of the increasingly positive economic data that has surfaced over the past few months. Of all the sectors within the market, financials have seen the most drastic upward revisions (currently at their highest level since 2008). Since the market bottom in March 2009, bears have held onto the mantra that the market cannot rally without participation from financials. Up until the beginning of this year, the bounce in financial stocks had been fairly modest, especially given the dramatic sell-off that they experienced during the crisis of 2008.

However, the Financial Select Sector SPDR Fund (XLF) is up dramatically this year, outpacing the S&P 500 Index (SPX) by over 7%. Since these stocks are now performing strongly, could continued outperformance by financials be the next catalyst to take us even higher?

Historically, upward earnings revisions have preceded very strong periods within equity markets, as evidenced by the accompanying Bespoke data (above charts). After last Friday's disappointing jobs number, a strong earnings season could be just what the doctor ordered to cause sideline money to come back into the market, driving it to new highs. All eyes will surely be on the upcoming data, which is now of paramount importance given the recently heightened expectations. 

Bottomline

Pre-market Dow Futures give a good indication of market traders expectations towards upcoming season's corporate financial reports.

WALL STREET : Dow Failed To Sustain Above 13K, Again.

SPX & Nasdaq closes at highest since June 2008

Crude Oil tops $109 a barrel

U.S. stocks were little moved today, as the busy-but-abbreviated week -- which included a Greek bailout deal, a slew of corporate earnings, and a surge in crude oil prices -- came to an end. On the economic front, Wall Street sifted through a stronger-than-expected consumer sentiment index reading and a hot-and-cold home sales report. Meanwhile, well-received quarterly reports from the likes of Salesforce.com (CRM) and OmniVision Technologies (OVTI) helped lure some buyers off the sidelines, but today's new nine-month peak for crude -- prompted by familiar supply concerns -- leveled things out a bit, pulling the major market indexes back toward breakeven as the session wrapped up. Against this backdrop, however, both the Dow Jones Industrial Average (DJIA) and Nasdaq Composite (COMP) were able to tag new highs.

The Dow Jones Industrial Average (DJIA – 12,982.95) touched the 13,013.82 level early in the session -- its loftiest price since May 2008 -- but ultimately ended the day down 1.7 points, or 0.01%. Among the Dow's 30 components, 16 finished lower, led by a 1.8% decline for Bank of America (BAC). American Express (AXP) paced the bullish minority with a 1.3% gain. For the week, the blue-chip barometer inched up 0.3%.

The S&P 500 Index (SPX – 1,365.74) added 2.3 points, or 0.2%, to close at its highest level since June 2008. For the week, the broad-market barometer turned in a 0.3% increase. 

The tech-rich Nasdaq Composite (COMP – 2,963.75) ended the day up 6.8 points, or 0.2%, and finished the week with a 0.4% trek into positive territory. Near midday, the COMP hit the 2,970.88 level -- its highest point since December 2000.

HAPPY TRENDING 

A Peek Into The Week Ahead >>> On A Canter

Wall Street Week Ahead :

Key Jobs Report, Earnings & Data

ANALYSTS QUOTES

“The big news the last couple of weeks is the program they launched over in Europe, the lending facility to the banking system, seems to be working. The market seems unrattled.”

“This earnings season hasn’t been nearly as robust as the last couple; there’s a bias toward companies beating versus missing, which is reflecting a slow-growing economy.”

“We’ve had such a good run, one of the strongest we’ve had in a long time from the start of the year, so we’re overdue.”

“There are a lot of bullish surveys, which is usually a clear sign that things are going to correct.” 

“The program they launched over in Europe, the lending facility to the banking system, seems to be working, with yields on Spain and Italy’s sovereign debt making substantial moves in the right direction.” 

“We all know it’s just a matter of getting everyone lined up in terms of getting private investors to take a haircut, and here domestically, things have been headed in the right direction.” 

On negotiations of the Greece debt fiasco ..... "Important understandings were reached on legal and technical issues."

BSKL To Maintain Strong Risk Appetite 

Market expected to trend higher next week along with other regional markets

VIEWS & OPINIONS

"We view the dovish statement from the US Federal Reserve (that interest rates would remain exceptionally low until at least late 2014) was a positive surprise for investors."

 "Trading volume at the local bourse over the week was fairly heavy considering it being a holiday-shortened week, with many investors expected to return on Monday, the market is expected to be buoyant."

"The water dragon may rear it's head next week."

"We expect the Europeans to open the possibility of huge asset purchases to boost the global economy. Going forward, we believe the local equity market will maintain strong risk appetite, with commodities and emerging market currencies seeing strong demand."

"The local market would continue to be influenced by external events significantly despite local fundamentals remaining strong and speculative play ahead of the 13th general election." 

HAPPY WEEKEND & GONG XI FA CAI 

U.S. Stocks Edge Higher on Cautious Optimism Out of Europe 13/01/2012

Industrial, Material Shares Lift Wall Street
A late-session rally in industrial and basic materials stocks offset losses seen across the energy sector, lifting the markets into positive territory on the day.


The Dow Jones Industrial Average gained 21.6 points, or 0.17%, to 12471, the S&P 500 rose 3 points, or 0.23%, to 1296 and the Nasdaq Composite rose 13.9 points, or 0.51%, to 2725.

Market participants parsed through a slew of European and economic developments on Thursday.

From Monday till Thursday's close, the Dow is up +111.10 or +0.90% with 1 more session to complete an enthused week.

Analyst's Quote

“We’re breathing pretty shallow until we get developments on both fronts,” he added, pointing to corporate results and, in particular, guidance, along with aggressive enough steps by European leaders to assuage worry about the ramifications of the region’s debt crisis. “Stronger moves by the [European Central Bank] would be one, then maybe the market would give Europe some time to heal some of the wounds.”

HAPPY TRADING & GOODLUCK2ALL 

WALL STREET : DJIA Chart & Commentaries 11 Jan 2012

Dow boosted by lower Dollar, Alcoa

To further ENLARGE image please right click on mouse follow by choosing

"OPEN" or "OPEN IN NEW TAB"

 

HAPPY TRADING 

WALL STREET : Stocks Surrender Early Gains on Post-Fed Sell-Off

FED STRIKE A SELL CHORD 

U.S. stocks explored both sides of breakeven today, but ended in the red after the Fed seemingly rained on the bulls' parade. Specifically, despite surprising no one by maintaining rock-bottom interest rates, and essentially standing pat on its economic outlook, buyers hit the exits in the wake of the Federal Open Market Committee (FOMC) policy statement. While some economists attributed the afternoon about-face to a lack of QE3 signals, others said the turnaround was simply due to light volume and year-end liquidations. In any case -- and thanks to a round of lackluster retail sales data and bailout-related rumors out of Germany -- the major market indexes gave up early gains to settle notably lower.

The Dow Jones Industrial Average (DJIA – 11,954.94) explored a range of more than 240 points, but eventually ended with a loss of 66.5 points, or 0.6%, to finish south of the 12,000 level and its 10-day moving average. However, the blue-chip barometer maintained a perch atop its 200-day trendline, which hasn't been violated on a daily closing basis since Nov. 29. Among the index's 30 components, Pfizer (PFE) led the seven advancing equities with a 1.8% gain, while Alcoa (AA) paced the 21 decliners with a loss of 3.3%. Both Boeing (BA) and Merck (MRK) finished flat.

HAPPY TRADING 

WALL STREET : EU Deal Scare Bears; Bulls Gain 3%

DJIA Skyrockets 340 Points, Tops 12,000 on Euro-Zone Relief & GDP Rally

A bullish tide swept over Wall Street today, as investors cheered a long-awaited plan to address European debt. Most notably, European Union (EU) leaders agreed to recapitalize the region's banks, and to boost the scope of the European Financial Stability Facility (EFSF). Furthermore, under the terms of the deal, private investors of Greek debt will take a 50% write-down on their holdings -- which translated into a major boon for banks both at home and abroad. With the fiscal fate of the euro zone seemingly coming into focus, and thanks to a respectable uptick in third-quarter gross domestic product (GDP), the major market indexes now boast double-digit percentage gains for the month of October.

The Dow Jones Industrial Average (DJIA – 12,208.55) blazed a steady path higher today, touching an intraday peak of 12,284 before paring its gains by the close. Still, the blue-chip barometer tacked on a healthy 339.5 points, or 2.9%, when all was said and done, ending north of its 200-day moving average for the first time since Aug. 1, and extending its month-to-date gain to 11.9%. In fact, not one of the Dow's 30 components finished lower, with Bank of America (BAC) and Alcoa (AA) paving the path into the black with gains of 9.5% apiece.

The S&P 500 Index (SPX – 1,284.59) rallied 42.6 points, or 3.4% -- but not before topping out at 1,292.66 in late-session trading. Like the Dow, the SPX conquered its 200-day moving average for the first time in close to three months, extending its October lead to 13.5%. Likewise, the Nasdaq Composite (COMP – 2,738.63) skyrocketed nearly 88 points, or 3.3%, after touching an intraday peak of 2,753.37. As such, the tech-rich COMP is on pace to end the month nearly 13.4% higher.

HAPPY TRADING 

WALL STREET : DJIA Bullish Ahead Of EU Summit Week

Bulls Thump Bears For 267 >>> +164.3 pts Gain Weekly
 U.S. stocks blazed a steady path higher today, as investors rolled the bullish dice ahead of this weekend's highly anticipated summit of European Union (EU) leaders. Although German Chancellor Angela Merkel and French President Nicolas Sarkozy said no decisions would be made until a second meeting early next week, the duo vowed to come up with a "comprehensive and ambitious" plan to tackle the euro zone's fiscal problems. On the home front, meanwhile, Wall Street is also applauding solid earnings from blue-chip behemoths McDonald's (MCD) and Honeywell (HON), which have helped to offset a less-than-stellar earnings showing from fellow Dow component General Electric (GE). Against this rose-colored backdrop, the Dow Jones Industrial Average (DJIA) ended north of 11,800 for the first time since Aug. 3, extending its winning streak to four straight weeks.

The Dow Jones Industrial Average (DJIA – 11,808.79) finished near a session high, advancing 267 points, or 2.3%, when all was said and done. Only Bank of America (BAC) and General Electric bucked the trend, giving up 0.2% and 1.9%, respectively, while Travelers (TRV) led the 28 advancing blue chips with a gain of 5.2%. For the week, the Dow rallied 1.4%, and ended north of its 20-week moving average for the first time since mid-July.

The S&P 500 Index (SPX – 1,238.25) also ended near an intraday acme, tacking on 22.9 points, or 1.9%, by the close. For the week, the SPX added 1.1%, extending its own winning streak to three straight, and ending above its 20-week trendline for the first time in three months. Finally, the Nasdaq Composite (COMP – 2,637.46) broke out of the red to gain 38.8 points, or 1.5%, but settled the week 1.1% lower.

HAPPY WEEKEND