InTheMoneyStocks Roar: Nice Morning, Dead Now, Get Setup For Next Week

October 29, 2010

Markets remain flat, volume dying out. Fun morning with some small caps running and a few small caps. However, things are dead now and will remain that way for the rest of Friday. Congrats to a great week in the Intra Day Stock Chat and Research Center.

Next week should be a wild one starting Tuesday into Wednesday. Once the election results are posted and QE2 are announced, be ready for action Jackson! I will be posting trades this weekend in the Research Center for next week now that action should return. Join immediately to get yourself prepared.

Friday Effect With Elections And QE2 Looming

October 29, 2010

The markets are trading flat today as the normal Friday Effect is taking place. The Friday Effect is based off of black box trading programs and the Federal Reserve wanting to keep the markets flat to higher on a Friday. The point is to keep market self esteem up into the weekend.  This keeps the musical chair game going and gets consumers spending. As an example, what if the markets were to drop 300 points on a Friday?  Do you think the consumer would be as likely to spend as much money over the weekend? Definitely not. The American consumer spends 90% of their money a week on the weekends. Therefore it is extremely important to the government and Federal Reserve to keep the markets flat or higher on a Friday.  This is known as the Friday Effect.

The SPDR S&P 500 ETF (NYSE:SPY) is trading around the flat line at $118.46, +0.06 (+0.05%).  It is highly likely the markets will remain around the flat line not only because of the Friday Effect but because of the impending elections next Tuesday and the biggest FOMC Meeting possibly ever.  The FOMC will be releasing their QE2 (quantitative easing two).

Chevron Corporation (NYSE:CVX) is being hit sharply today after reporting earnings that missed Wall Street estimates sharply. The stock is trading at $82.82, -1.62 (-1.92%).  This is a key component of the Dow Jones Industrial Average.

International Business Machines Corp. (NYSE:IBM) is shooting higher today, reaching its all time highs just over a week after dropping sharply on earnings. This is an impressive recovery and move.  The stock is trading at $142.83, +1.93 (+1.37%).  This is also a Dow Jones Industrial Average component and has a large impact on the the index.

Gareth Soloway
Chief Market Strategist
#1 Rated

InTheMoneyStocks Roar: A Trader’s Call

October 29, 2010

The idea I proposed as much as two weeks or more ago has been dead on.  They will not let the markets fall before the elections. Today is another perfect example of that. Even earlier in the week when we were down over 100 points on the DOW in the mid day session, they saved it and we closed near the flat line.
Nice move on AMZN today, CVX getting hammered after missing earnings. RIMM strongly higher as well. FSLR down on earnings.

GLD Moves When The U.S. Peso Declines

October 29, 2010

The SPDR Gold Shares(NYSE:GLD) is on the move again as the U.S. Dollar Index declines. The entire stock market rally from late August has been on the back of the declining U.S. Dollar Index. This has caused gold, silver and most every other commodity to soar higher. The popular GLD will have short term intra-day resistance around the $132.00 level. Should the U.S. Dollar Index catch a bid most commodities will usually pullback.

Forget GDP, You Know What Happens On Friday

October 29, 2010
This morning the Commerce Department reported an in line gross domestic product(GDP) report. Economists were expecting the report to come in at 2.1% GDP and the actual number reported was 2.0%. Therefore, this was a perfect number because it will keep the quantitative easing part two alive. As soon as the GDP number was announced the U.S. Dollar Index declined sharply and this helped to inflate the stock index futures off the lows. Remember every trade is a dollar trade now. When the U.S. Dollar Index declines the stock market rallies and inflates higher. The opposite is true when the U.S. Dollar Index catches a bid higher the stock market will usually deflate and trade lower.

Next week will be the important elections that already seem to be baked into the market. The Republicans are expected to sweep the House of Representatives and gain some seats in the Senate. This is likely to cause gridlock and hopefully cut the spending of the government. On Wednesday the Federal Reserve Bank will announce its quantitative easing program. This is the real wild card as many investors are expecting a $1 trillion buy program. However, one never knows how much they will actually do. In any case the stock market has at least $1 trillion dollars worth baked into the cake. We shall see what the actual amount is soon enough.

As for today this is a Friday. Rarely does the stock market really sell off sharply on a Friday. It is usually a flat day to slightly positive trading day. The powers that be do not want to panic the U.S. consumer who is likely to spend his money over the weekend. Remember that U.S. consumer spending accounts for 70.0 percent of the GDP in the United States. Therefore, if he or she sees the Dow Jones Industrial Average down sharply ahead of a weekend their spending plans are likely to change. If this inflation rally is going to work it will require the U.S. consumer to spend money once again.

Often the trading volume on a Friday declines sharply after the first two hours of the day. Therefore, while the stock market can decline early it will often float higher throughout the day and finish near the flat line by the closing bell.

You Can’t Keep A Good Propped Market Down

October 28, 2010

Everyday the stock market seems to fight off the early declines and somehow makes its way to the positive side. Normally, I would say this is the sign of a true bull market, however, volume trends are so poor that we just cannot make that statement. Yesterday the stock market indexes declined sharply only to rally back into the close. Today is nearly a replay of yesterday except that the stock market indexes sold off sharply after the large gap higher open and then rallied during the second half of the trading day.

Many traders have simply thrown in the towel on the short side. Personally, I rarely sell short this market after the first hour of the day and only look for pullback setups to buy. The game of musical chairs continues nearly everyday. Today we did see a small change in character for the markets. The U.S. Dollar Index plummeted today and the stock market still sold off during the first half of the trading day. This is not a good sign for Bernanke and company as they may need to resort to another trick to prop the markets up. This is really the first day in quite a while that we have noticed this so it may really turn out to not be that important. I suppose every once in a while they must let the market decline along with the dollar so that everyone in the public’s eye won’t make the correlation.

InTheMoneyStocks Roar: STEM CELLS WHEEEE!

October 28, 2010

Called STEM at $.90 alert. Stock skies to $.97 so far. Another great small cap winner for the Intra Day Stock Chat.  Big winners called today. GRRF nailed at $2.30. Hit a high after the alert at $3.03.

The markets are hovering as expected. After initial selling on buyers from yesterday on POMO, the float is on to lift the markets and keep them flat into the elections and FOMC meeting next week.