Thursday, November 07, 2013

Twitter Flies On A Weak Day For Stocks

Markets are down across the board this morning as growth stocks seem to be the brunt of some profit taking.  We have talked about the market consolidating from its recent highs, so a couple of down days should not be surprising.  Tomorrow is the big monthly jobs report.  Rumors are that we could see a weak employment number, so that could be on the minds of investors today as well.

The big news today was the IPO of Twitter (TWTR).  The stock opened 75% higher than its IPO price and has been trading between $45-50 after being priced at $26 yesterday.  So far the IPO looks to have gone much smoother than the Facebook (FB) IPO.

The other big news was a better than expected GDP report, with Q3 GDP rising 2.8%.  Normally this type of pickup in growth would be cheered by the market, but today some people might be concerned that this type of strong growth could put the 'taper' talk at the Fed back on the front burner.

While TWTR will steal the headlines, probably a more important event for global markets was the decision by the ECB to cut its key rate in half to 0.25%.  This was a big move for the ECB and really speaks to the sluggishness of their recovery and their continuing concerns with battling deflation.  The Bank of England made no changes to its monetary stance.

The ECB rate cut caused a drop in the euro and a spike in the US dollar.  That also weighed on commodities, with oil prices lower near $93.90 and gold prices down to $1310.

European markets are higher on the ECB news.  Also, Spain's industrial production surprised to the upside by rising 1.4% versus expectations for declines. 

Asian markets ended mostly lower last night.  China's big four banks reported October new loans of CNY182 billion, which is the lowest total of this year. 

Trading comment: We want to give stocks a little more room here to consolidate.  Growth stocks are succumbing to profit taking with many testing or breaking below their 50-day moving averages.  So while we plan on using upcoming weakness to add to stock positions we probably will not look to start putting any money to work today.  Just trying to be patient and pick our spots.


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