April 18, 2013

Logical Market Update: Earnings Mixed – Buy the Rumor Sell the News – Correction Finds Support – All’s Well? – Nope

Earnings Mixed – Buy the Rumor Sell the News – Correction Finds Support and a Bounce – All’s Well? – Nope!  


Thursday’s Notables:


American Express presented a mixed bag after the close yesterday by beating on an EPS basis but missing on revenue, but still managed to find buyers mid-way through Thursday’s session. 


PepsiCo on the other hand basically reported the same – beating on an EPS basis and missing on revenue – but faired much better in finding buyers to push the stock to new multi year highs against the longer-term charts clear sell signals produced earlier in the week. 


eBay reported in-line quarterly numbers but unfortunately negative guidance for the 2nd quarter and FY 2013 produced a nearly 6% drop in the stock price. 


IBM disappointed on Thursday – dropping 10 in after hours trade.  Chipotle sees stronger production numbers despite the higher cost of food and a tough economy.  This didn’t stop the company from producing a 22% gain in profits.  Google spiked higher after reporting better than expected 1st quarter earnings, but analyst’s were quick to point out that it may be at the hands of some clever paperwork since it seems the market missed it’s Motorola mobile phone business was sinking fast. 


Repost from Wednesday’s Blog:


I continue to advocate switching strategies if necessary and focusing on day trading and less if at all on position trading.  I continue to recommend what I have found to be the best trading platform available to a broader range of traders from novice to expert.  Diversified Trading System offers cost effective products that allow a trader to enter into the “chaos” and trade more effectively.  


Trade Manager from Indicator Warehouse automatically calculates the correct amount of contracts or shares based on your account size or market volatility.  Automated stop-loss management and position sizing eliminates most of the problems most individual traders have.  Day trading and position trading both require (actually demand) good risk management.  Trade Manager does the job across the board and is an essential trading tool that ensures that you take the maximum profit from all your trades. 


Friday’s Expectations:

Notable Companies releasing earnings on Friday:


Friday is April expiration and I expect volatility and momentum to increase.



Broader Indexes – What to Expect


The correction remains in force, additional upside should continue to be limited with momentum acceleration more likely to the downside. 


DJIA – 14570 to 14640 should provide a strong enough resistance zone to contain upside before the market begins to break below  – there remains light support at the 14500 to 14450 area, but eventually downside momentum will prevail with stronger support coming in at 14400 to 13750.


S&P 500  – 1550 to 1565 remains the resistance zone that should contain follow through upside if the market is going to continue to break below 1536 this week.  Stronger support lies below between 1525 and 1475.


Russell 2000 – continue to look for 908 to 910 to contain upside before a further break below 895 occurs.  Ultimately it could get very ugly for the Russell 2000 with stronger support seemingly far below at the 850 to 820 area. 


Precious Metals –


Gold held higher for most of Thursday’s session.  The trading picture for this metal though has not changed.  I expect gold to continue to trade with increased volatility and although the range has decreased substantially over what was seen on Monday.  The downside does not appear over yet.  Continue to look for 1400 to 1423 to contain upside before this metal puts in additional downside with a break below 1300 very likely.  As previously discussed it is going to take some time before stability and a sustained reverse of direction take place. 


Silver also remains unchanged for the short-term outlook.  I continue to expect the market to be held below 24.25 before joining gold in another leg down.  I suspect that 22 will be broken with next stronger support not available until the (dare I say) 18 to 20 area. 

The Diversified Trading System used together with Trade Manager should continue to produce numerous trading signals in Gold and Silver futures, GLD and SLV – gold and silver ETF’s and several mining stocks.   


U.S. $/ Euro-


The US $/Euro quieted down on Thursday and spent most of the US session consolidating around 1.3050.   I continue to expect buying to be contained to resistance at 1.3116.  The same message on a break back below 1.2974 may ultimately lead to a stronger down leg carrying the potential for a drop to the 1.2350 area. 


Here is an updated list of the markets where I have found that DTS (all three birds) are producing numerous signals:

  • DJIA future (e-mini available)
  • S&P-500 future (e-mini available
  • US$/Euro futures (e-mini available)
  • GS (Goldman Sachs)
  • AAPL (Apple Computer)
  • GOOG (Google)
  • LNKD (LinkedIn)
  • NFLX (Netflix)
  • 30-yr Treasury Bond future
  • 10-yr Treasury Note future
  • TLT (Treasury Bond Long ETF)
  • TBT (Treasury Bond Short ETF)