A Bit More Gas in the Tank
SUMMARY:
- Stock indices add just modest gains, but the action once again is the positive low to high move.
- DJ30 joins NASDAQ and SP600 in breaking through the prior bear market highs.
- Bernanke dismisses the jobs report more than we expected.
- Bernanke’s adherence to his dovish ways thumps the dollar and bounces gold.
- Bumping the highs, still good patterns, but watching the door.
A bit more gas in the tank but the indices were not putting the pedal down.
I am starting with the DJ30. It, too, closed above its post bear market highs, marking that move on Tuesday. It was a scant 2 points, but it is close enough for government work (I guess you can say that in this case). It did join the NASDAQ and SP600 after their breaks through their prior bear market highs as well. Then there were three. Will SP500 follow? I can say that SP500 moved up through its February peaks, so there are some things still working positive. The move was rather boring and mundane yet again, but the important point is that the indices came back late, yet again, to post gains.
The futures started to the downside. They were bouncing around premarket. Stocks were moving up into the open, but they could not hold that move and were selling off in the first half hour. But that was sufficient. They turned and started the march higher into, and just past, mid morning. They held that move for the rest of the day, bouncing in a lateral range and actually putting a bit of a spurt in late in the day to finish things off with a nicer look. It was nicer but still a relatively weak and boring session in terms of returns.
SP500, +0.2%; NASDAQ, +0.07%; Dow, +0.26%; SP600, -0.13%; SOX, +0.1%
Not scaring anyone with this action, but we do not necessarily want scary action; we want solid action. That is what the indices were showing with this low-to-high move yet again. It appears there was some more gasoline in the tank. That is something I talked about last night, noting that there was a recent test of this break to the upside as stocks came back after the NASDAQ and the SP600 broke through their prior highs. Then they consolidated at near support and broke to the upside. You would think there would be more fuel in the tank. There was, but investors were not putting the pedal to the metal because the moves were rather tepid. Although, as always, there were some pretty good moves in individual stocks.
There was not a lot of news for yet another day. Earnings were the key for the most part. KO and YUM dominated the pre-market trade with some very solid results that boosted those stocks higher. TM boosted its entire 2012 profit. It gapped upside sharply, moving well. A very nice move. Earnings continued after the bell. DIS came out with solid results. It was not blowing the market away after hours. It is lower. BWLD was exploding higher, trading near 81 after hours. It went out of the session at 70.36.
There are some very solid movers individually even as the market overall was lethargic at the prior highs. That is something to be concerned about. As always, I have to find something to be worried about. It is just the fact that the markets have not blasted up through these old highs, although they are through them. NASDAQ shows some constructive action, breaking through and now moving laterally. It is not giving up a gain. If it is not advancing, not giving up a gain, and volume trails off, then that is not bad action at all.
The big news had to do with Ben Bernanke. That had its impact on the other markets. Bernanke was speaking in front of the Senate Budget Committee, and he already spoke before the House last week. The results were similar, but there were some interesting kernels thrown in after the employment data.
WEDNESDAY
Wednesday there is a bit more news, but just barely. There is the Weekly Mortgage Index and Crude Oil Inventories for the week. No Ben Bernanke flipping the bird to Congress or otherwise, so things should quiet down. Well, maybe or maybe not. There is always the Europe question. Greece was rumored all day to be just about in agreement with a debt deal, but it never emerged. We have heard that for months now, and I am not holding my breath.
We will have other earnings. That will still be an important individual stock driver, if not an overall market driver, even at this late stage. That is because stocks are doing well. BWLD was moving quite well after hours. NTGR was not moving as well and was down some after the close. There will be a lot more coming out, however.
In the morning we will get all kinds of news and some important stocks in that they have helped move the market higher. ARAY will be out after the close (indeed, a lot of these are after the close). AKAM has moved up fairly nicely over the past few months, although the last month and a half it has been basically a stall. DIOD has been a nice mover. It will announce after the close. IR will be before the open. ORLY looks like it is making a push into the earnings results. SCSS is out after hours. We took a bit of gain off of the table today because it surged to the upside with a gap and then started to struggle. That is always a good time after a good run and right before earnings to take some gain off of the table. We did that, pocketing in one position some 17%+ stock gain and a 65% or better option gain. Not a barn burner, but a nice, steady move that this stock in a steady upside move delivered.
What is the market going to show us tomorrow? We have a lot of indices right at prior peaks. They are not breaking through with any authority. We saw the Dow move through its high on Tuesday, but it was not blowing things out. Maybe there is still more gas in the tank. You would think there would be some more. The point is we are getting toward the bottom quarter of the tank anyway, no matter how you slice it.
We have earnings saturation. We have so-so moves, but they are holding and showing the right kind of action. That does not necessarily mean the market will continue to rise indefinitely. We could get a pullback that resets off of this bump and test of the prior highs. That is what you would anticipate. We will have to see how far the moves goes, always anticipating at this level that there will be a pullback. We may be surprised and no pullback ensues. You would call that a pleasant surprise. Not to be confused with one of those nasty reversal surprises. We will just continue to look at good stocks that are in position to move higher, and those that actually make the breaks higher.
I would really like to see a bit of a pullback by all of the indices that comes back and tests this move and then makes the new break. Well, why not, let’s get another good push to the upside. That is what we would really like first. Just another good break to the upside, then clear out, and then let it come back and test. Yeah, right. We will just take what the market gives as we always do.
It has done exactly what we anticipated it would do. It has rallied all the way back to these prior highs, and that is not bad. It has made us a lot of money along the way. We have still taken new positions. We will also have to continue taking gain when it is there, managing the positions for those laggards that are not participating. Then if it does turn, we can have a buffer to exit without having stocks that are beaten down and will tank worse. Thus far it is pretty good. It is doing what we have planned. Now we will see what the market can give us further to the upside or whether it has had enough. I think it might have a bit more before we run out, but those are just my thoughts. The market will ultimately tell us what it will do.
Stock Splits & IH Alerts, Editor
InvestmentHouse.com
