STTG Market Recap July 30, 2014

Quick Note Blain: Friendly reminder, Mark Minervini’s Master Trader Workshop $1000 off special ends tomorrow night, July 31st. If you are thinking about attending Mark’s October workshop in Myrtle Beach, the discount is definitely worth taking advantage of.

The Federal Reserve did nothing surprising ($10B reduction in quantitative easing a month) and a market that was sort of weak/neutral rallied on some dovish comments on the labor market in today’s statement.  At the close the S&P 500 gained 0.01% while the NASDAQ added 0.45%.

Voting to cut another $10 billion from its monthly bond buys, the central bank left its short-term interest rate target near zero and signaled minimal cheer about growth.  They key line: “However, a range of labor market indicators suggests that there remains significant underutilization of labor resources.”

“The statement was still very, very dovish. It’s about as benign as you can have in a statement given the strengthening economy. So we have the best of both worlds, we have pretty good reassurances that the Fed intends to remain rather inactive in terms of raising rates for the foreseeable future,” said McCain.

The Commerce Department reported the economy grew 4 percent in the second quarter which many believe was a major offset of the very bad first quarter number which was affected by the severe winter.  This number will be revised a few more times but if you average the first and second quarter you get back to the 2% growth rate that the U.S. has been stuck in for years now.   Further the government said on Wednesday that core inflation, which strips out volatile food and energy costs, rose at a 2 percent annual rate in the second quarter, its fastest pace in more than two years.

As we do every Wednesday, we’ll post the long term charts of the indexes to see where we are and where we came from.  There is a clear trend line to watch for the S&P 500 – if this purple line breaks we have to watch for a change in conditions.  With the NASDAQ there was an attempt at a breakout about 8 days ago but we’ve been marking time since.

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Ten year Treasury rates jumped to the high end of a recent range but are basically pinging back and forth between two key areas.

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After the close, shares of Whole Foods Markets (WFM) fell 4% after the company cut its 2014 forecasts for a fourth time.  This basically erased the day’s gains.

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U.S. Steel (X) – an old school name – had a major move today post earnings after it posted a surprise second-quarter profit and raised the amount of cost savings it expects to achieve in 2014.  CEO Mario Longhi told analysts the market has “bounced back quite well,” especially demand for flat-rolled steel. He also said he expects the company’s third-quarter operating income to improve significantly as it ramps back up to normal operating levels.

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Traders rolled into Yelp (YELP) on the strong quarter from Twitter (TWTR) and after the bell Yelp delivered a surprise profit – the stock is not reacting much in after hours but had already moved up over 8% during the normal session.

The company reported net income of $2.7 million, or 4 cents per share, compared with a loss of $878,000, or 1 cent per share, in the same quarter a year ago. The average estimate of analysts was for a per-share loss of 3 cents.  The online business reviews provider said revenue rose 61 percent to $88.8 million from $55 million in the same quarter a year earlier, and beat Wall Street forecasts. Analysts expected $86.4 million, according to Zacks.

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As we’ve stated recently some key big names such as Apple are keeping the indexes up but there is some weakness underneath the surface – note the ETFs for the industrial and consumer staples sectors.

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