A very quiet day as the markets digested the huge move of the past week and a half. It appears right now with D.C. out of the way and the Fed with zero chance to tighten for another half a year, no one really wants to sell despite overbought conditions short term. The government employment report, which was scheduled to be released two Fridays ago, will come out tomorrow due to the shutdown, but at this point the Fed is sidelined for the intermediate term as the "uncertainty" of this shutdown and the budget impasse / negotiations to come in January 2014 will have the Fed erring on the side of the caution. The S&P 500 gained 0.01% and the NASDAQ 0.15%. Most of the normal suspects rallied today as momentum traders are back in force and after the bell Netflix (NFLX) which already had a monster day, exploded after it reported earnings.
On the economic front, existing home sales in September slipped 1.9 percent to an annual rate of 5.29 million units, while prices rose at their slowest pace in nearly five months
First to the indexes - we are very extended and nowhere near the 10 day moving average. The NASDAQ is at top of this very long term channel already, which is hard to believe considering where it was a 2 weeks ago.
The NYSE McClellan Oscillator worked off a bit of its overbought condition. If the market simply goes sideways for another day or two it can work off more and a new leg can begin if bulls deem themselves bullet proof.
Speaking of Bespoke had an interesting story on how long it has been without a 10% correction:
More and more these days we hear calls that the S&P 500 is ripe for a "correction." A standard "correction" is a decline of 10%+ that was preceded by a rally of at least 10%. As shown in the chart at right, the S&P 500 has now rallied 58.6% over a period of 515 trading days since October 3rd, 2011 without declining 10% from a high. It's natural that the longer we go without a correction, the more we'll hear predictions that a correction is coming. But while 515 trading days without a 10% pullback is a long time, it's not without precedent. Below is a chart highlighting past rallies without a 10% correction since the index was created back in 1928. The current streak of 515 days is admirable, but we've actually seen two periods over the past twenty-five years that were more than twice as long! From March 2003 to October 2007 (the entire length of the last bull market), the index went 1,153 trading days without experiencing a 10% correction. And the longest streak on record without a 10% correction was from October 1990 to October 1997 that lasted 1,767 trading days! The current streak would have to extend all the way out to October 1st, 2018 to match that record.
Here is the Netflix (NFLX) chart at the close; it is up another 11% in after hours to the $390s as shorts continue to get roasted in this market.
Netflix shares jumped after the company said it gained more subscribers than expected at home and abroad, helped by original series like"Orange is the New Black," and predicted additional growth this quarter. Netflix, the biggest gainer in the S&P 500 in 2013, reported its net income more than quadrupled to $31.8 million, or 52 cents a share, in the third quarter, from $7.7 million, or 13 cents a share, in the year-earlier period. Revenue increased 22 percent to $1.11 billion from $905 million a year ago.
Analysts had expected the movie-streaming service to report earnings of 49 cents a share on $1.1 billion in revenue, according to a consensus estimate from Thomson Reuters. The company, which has invested heavily in original content such as political satire "House of Cards" to draw in subscribers, said it had 31.1 million U.S. streaming users in the third quarter. It expects to end the year with 32.7 million to 33.5 million users, accelerating that momentum.
Apple (AAPL) had a strong day as SocGen raised its rating to "buy" from "hold" and lifted its target price to $575 from $500.
McDonald's (MCD) was hit on disappointing earnings numbers, but recovered a good portion of those losses by the end of the session.
Not to beat a dead horse but the solar stocks continue to be where momentum traders are focusing on (outside of tech stocks). Another incredible session for First Solar (FSLR).
Priceline (PCLN) shot up as people are now searching for something that has not already exploded over the past 2 weeks.