Folks were very excited yesterday. We had very large index moves on the Nasdaq, DOW and S&P (as well as many foreign indices) – though on lower volume than the previous day. As we know, we can’t explain every market move but it looked like some traders were buying the near term steep dip in such stocks as Apple.
It also looks like a clean move above the 50 day moving average could have kicked in the algorithmic (computer) trading funds as well as many individual traders that watch such measures. We also had some positive expectations going to earnings from major companies like Intel and IBM.
A Mixed Bag
Both of those reports disappointed investors but there were other growth companies whose reports made investors very happy, like Intuitive Surgical. As we enter what may be a choppy season as traders play the long and short of it, we may have indices stay in a range for a few months while individual names jump or fall based on their reports.
Precious metals continue to leak as (I’m guessing) more investors take the thesis that there won’t be more money printing. Europe is still a wild ride as Spain has yet to fully manifest its situation onto the world. Asia was strong overnight. Tech is holding up despite the Intel report and the dividend payers have been doing ok – JNJ started to fall yesterday but investors pushed it up.
Revenues Lame But What Choice Do You Have?
I will say though that many large company reports are showing lame revenue increases – and for a few, foreign currency exchange was a main driver of revenue. And stocks are still jumping on these reports – no revenue growth and big earnings growth is ok but you can’t cost cut forever. However it does speak volumes about investors doing exactly what the Fed wants them to – buy stocks because earning 1-2% in bonds is so unappealing.
Let’s see what happens the rest of this week and see if we have a few more 100 point move days on the Dow.
At the time of this writing, I or my clients own the following investments or related investments mentioned in this column: IBM
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