The
market jacked higher yesterday. The indices were
boosted by superb earnings results, mostly technology earnings from
stalwarts like Intel INTC IBM IBM and VMware VMW which each reported record first quarters. Great financial reports
from those companies were enough to lift the indices over 1% and the Nasdaq
2%, and more importantly bring the indices back up to the previous highs
made in February.
Just as important as the gains in price was the increase to volume yesterday. An objection I have had about this latest rally from March was that volume levels were low. A low volume level may indicate a lack of confidence in a prevailing trend, which makes trading that current trend unreliable. High volume levels during sessions that take the direction of trend (for example: in a bullish trend the price moves higher on high volume) do not guarantee an index further gains but it does increase the likelihood of making higher highs.
Volume picked up yesterday. It wasn't overwhelmingly affirmative, but the above average total indicates that investors supported the rally. Of course, now those buyers need to continue to enter new positions and get the indices above resistance. Regrettably, Wednesday's highly bullish session will be for naught if the indices do not make fresh highs.
And the indices will be assisted today with more positive earnings announcements. After the close on Wednesday tech giant Apple AAPL obliterated analyst estimates and raised guidance. Shares are up 3% to start Thursday. The success of Apple underlines the hardiness of the consumer and is a bullish sign for future consumer spending.
In addition to AAPL last night, a slew of huge companies reported record setting quarters. The most important companies to note with great earnings were GE GE Morgan Stanley MS and Xerox XRX. Honestly, there were a ton of earnings today. In addition to the three companies above McDonalds MCD Newmont Mining NEM and Verizon VZ also reported huge profits.
The positive earnings were fantastic to see this week. Last week I noted that first quarter results were mediocre, and corporate results needed to improve this week. The earnings did indeed improve, and suffice to say, the market liked them. Although I gushed over earnings, and how bullish the market has become; this week's gain was most certainly assisted by another big decline in the dollar, which is now down over 2% in April and 7% for the year.
Over the past several months I maintained a bearish near term and bullish long term forecast for the dollar. While I still have that outlook, the dollar is literally at a must hold price. In order for my long term bullish call to play-out the dollar will need to hold the $75 area. Yesterday, the dollar indexed closed near $74.37 and it looks poised to breach $74.23 (the lows from 2009) today. Suffice to say, the dollar needs to find support next week or another 7% decline is on the table.
A decline in the dollar makes our exports more competitive, but America lost its manufacturing prowess decades ago and does not need the export assistance like the Chinese economy. A fall to the dollar makes commodities more expensive and your pay check count for less, which is not great for any economy. But the demise of the dollar makes debt payments of the government easier to make, so you can bet Bennie and the Feds will ignore the greenback's misery.
At TradeMaster we recently took a long position in Cardero Resource CDY as shares found support at $1.75. The downside is minimal since our recommended stop loss is $1.78. However, shares look ready to climb higher and back to $2.20 resistance. So the trade-off is a 3% loss for 17% profit. If shares can take out the resistance they have near $2.20 the stock could make a run towards $2.70. The trade-off becomes a 3% loss for a 45% profit. The ascent should be sharp, and I expect the trade to play out within two weeks.
Market News and Data brought to you by Benzinga APIsJust as important as the gains in price was the increase to volume yesterday. An objection I have had about this latest rally from March was that volume levels were low. A low volume level may indicate a lack of confidence in a prevailing trend, which makes trading that current trend unreliable. High volume levels during sessions that take the direction of trend (for example: in a bullish trend the price moves higher on high volume) do not guarantee an index further gains but it does increase the likelihood of making higher highs.
Volume picked up yesterday. It wasn't overwhelmingly affirmative, but the above average total indicates that investors supported the rally. Of course, now those buyers need to continue to enter new positions and get the indices above resistance. Regrettably, Wednesday's highly bullish session will be for naught if the indices do not make fresh highs.
And the indices will be assisted today with more positive earnings announcements. After the close on Wednesday tech giant Apple AAPL obliterated analyst estimates and raised guidance. Shares are up 3% to start Thursday. The success of Apple underlines the hardiness of the consumer and is a bullish sign for future consumer spending.
In addition to AAPL last night, a slew of huge companies reported record setting quarters. The most important companies to note with great earnings were GE GE Morgan Stanley MS and Xerox XRX. Honestly, there were a ton of earnings today. In addition to the three companies above McDonalds MCD Newmont Mining NEM and Verizon VZ also reported huge profits.
The positive earnings were fantastic to see this week. Last week I noted that first quarter results were mediocre, and corporate results needed to improve this week. The earnings did indeed improve, and suffice to say, the market liked them. Although I gushed over earnings, and how bullish the market has become; this week's gain was most certainly assisted by another big decline in the dollar, which is now down over 2% in April and 7% for the year.
Over the past several months I maintained a bearish near term and bullish long term forecast for the dollar. While I still have that outlook, the dollar is literally at a must hold price. In order for my long term bullish call to play-out the dollar will need to hold the $75 area. Yesterday, the dollar indexed closed near $74.37 and it looks poised to breach $74.23 (the lows from 2009) today. Suffice to say, the dollar needs to find support next week or another 7% decline is on the table.
A decline in the dollar makes our exports more competitive, but America lost its manufacturing prowess decades ago and does not need the export assistance like the Chinese economy. A fall to the dollar makes commodities more expensive and your pay check count for less, which is not great for any economy. But the demise of the dollar makes debt payments of the government easier to make, so you can bet Bennie and the Feds will ignore the greenback's misery.
At TradeMaster we recently took a long position in Cardero Resource CDY as shares found support at $1.75. The downside is minimal since our recommended stop loss is $1.78. However, shares look ready to climb higher and back to $2.20 resistance. So the trade-off is a 3% loss for 17% profit. If shares can take out the resistance they have near $2.20 the stock could make a run towards $2.70. The trade-off becomes a 3% loss for a 45% profit. The ascent should be sharp, and I expect the trade to play out within two weeks.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
Posted In: Computer HardwareConsumer DiscretionaryDiversified Metals & MiningFinancialsGoldIndustrial ConglomeratesIndustrialsInformation TechnologyIntegrated Telecommunication ServicesInvestment Banking & BrokerageMaterialsOffice ElectronicsRestaurantsSemiconductorsSystems SoftwareTelecommunication Services
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in
