Indexes opened up but could not hold gains; again very different action than we saw in June and July. The S&P 500 fell 0.56% and the NASDAQ 0.46%. We’ve been cautious for about a week now due to a technical breakdown and thus far nothing in the market action tells us to change course. The normal culprit – geopolitics – was cited as a reason for the selling today. In the premarket weekly jobless claims fell by 14,000 to 289,000, and the four-week average falling to 293,500, the lowest since 2006.
This downtrend line we drew recently on the NASDAQ yet again proved to be where the index stopped on a dime this morning – pretty neat. Bigger picture neither of these charts scream anything bullish right now.
The NYSE McClellan Oscillator – a measure we like to use for short term trades WHEN it is at extremes – unfortunately did not update on stockcharts.com this evening but you can see we were at a -55 reading yesterday and with today’s action it probably is somewhere in the -70 area. So what does that mean? Any significant dip tomorrow is another SHORT TERM buying opportunity (you can simply buy an instrument like SPY ETF) for SHORT term traders to try a 1-2 day flip. For those who invest in the intermediate term (your trades are measured in weeks or a few months) you should have been lightened up earlier this week (raised cash), while those who focus on the LONG term can stay in full bull mode – it’s been the right way to be for quite a few years now.
Ten year Treasury yields are back to the 2.40% range which exhibits either a future slowing economy or fear in the market.
Twenty-First Century Fox (FOX) jumped after the company’s quarterly profit beat Wall Street’s expectations.
Keurig Green Mountain (GMCR) reported quarterly profit the beat estimates yesterday evening but its outlook was not good enough for the market. This is a chart that looks vulnerable – those who like to short stocks could use the purple line as an area to stop out of a short of GMCR.
Keurig Green Mountain late Wednesday reported that earnings growth perked up in its fiscal Q3, but the K-Cup maker’s revenue and its EPS guidance failed to meet Wall Street’s standards. Earnings rose 21% to 99 cents a share excluding items, topping views for 88 cents. That ended a three-quarter string of slowing growth. But sales rose just 6% to $1.02 billion, slightly missing analyst estimates for $1.05 billion.
For fiscal Q4, Keurig Green Mountain (GMCR) anticipates high-single to low-double-digit sales growth. It raised its adjusted EPS target to 68-75. But that’s still below Wall Street views for 86 cents and suggest a 20% year-over-year drop at the midpoint.
On the positive side we did have a nice breakout in E-Commerce China Dangdang (DANG) but this is a very volatile stock and one that can rip your head off in a bad market. However keep an eye on it and if it holds up during this correction it might be one to latch onto.
In markets like this individual stock picks are risky – you want to find some of these names which have held up well and slowly build positions as they are most likely to be new leaders on the next leg up; charts like Baidu and Facebook come to mind. But there is no rush right now until we see better behavior overall.