Wednesday, October 14, 2009

Strong Intel/JPM Earnings Help Propel Stocks To New Highs

The market is very strong this morning, with the major indexes pushing into new high ground for the year. The Dow is less than 25 points away from the 10,000 level. I don't want to burst anyone's bubble, but that level really has no technical significance. It's just a big, round number that the media loves to highlight. But if it makes people feel good, them I'm all for it.

The catalysts for today's enthusiasm stem from some strong earnings reports from big companies like Intel (INTC), JPMorgan (JPM) and Abbott Labs (ABT). JPMorgan beat consensus estimates by a huge margin ($0.82 vs. $0.52), and Intel raised both 4th quarter revenue guidance as well as margin guidance. The strong top-line growth was a welcome sign for investors, who were worried that revenue growth might not show up. And Intel also highlighted notable strength from the consumer

There were also some solid economic reports this morning, with advance retail sales down less than expected (-1.5% vs. -2.1% consensus), after the end of the cash-for-clunkers program. Ex-autos, retails sales actually rose +0.5% in September. And import prices for September fell -12.0% vs. a year ago.

The dollar is lower again, making a new 52-week low. Oil is trading higher to $75, while gold is a bit lower, below the $1060 level. I devoted some space in my monthly newsletter to gold and the dollar, so if you want a copy just send me your email.

Asian markets rose overnight; the 10-year yield is higher at 3.37%; and the VIX hit a new low for the year, and is currently -2.52% lower to 22.41 - a very low level.

Trading comment: No big changes to my exposure so far this week. One thing I would look for is stocks that are failing to keep pace with the market. If you own stocks that are making lower highs, while the market is making higher highs, those could be candidates to trim/sell and rotate into market leaders. That is something I will be looking at this week.

long TBT, VXX


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