Morning Coffee, Wednesday 20 April, 2011

n America:

1. Dow Industrials +0.53% 
2. Dow Transports +0.52%
3. SP500 +0.57%
4. Russell 2000 +0.18%
5. Nasdaq100 +0.63%

Comment: Apart from the Russell 2000, all the major indices traded moderately higher. The relative weakness in the small caps is a concern.  The Materials Sector was up a robust +1.78%.  That's a plus for Australia today.

Europe

1. France +0.7%
2. Germany +0.18%
3. London +0.46%

EWA (Australian Shares ETF traded on the New York Stock Exchange) +0.15%, The Australian Dollar was flat +0.2% to finish at 105.28.

Technical Comment on the American Market:

1. The S&P 500 finished at 1312.6.  
2. The Index is below the 50-Day MA but lifted at important support.  That's a positive.  
3. Indicators:
• Slow Stochastic 33.7 and flattening but needs to break back above signal line.
• Well below the 13-Day MA 
• RSI below its mid-line, now 48.4.  Still needs to break above 50
• MACD Histogram below Zero.  Negative
• CCI -54.  Probably needs to fall below -100 then rise before a recovery is assured.
4. Volume was the highest in the 100-Day period shown - that suggests strong buying by smart money.

The Dow Industrials has bounced off its 50-Day MA which coincides currently with a medium term oblique uptrend support line.  The lift off that double support becomes important.

  

In the past 24-Hours Gold in Ozzie Dollars has fallen -0.51%.  That's a positive for our broad market.

It's reporting season in America, and after-hours saw some significant action.  Here's a report from Bespoke Investment Group:

Fifteen out of 21 companies beat revenue estimates, and 4 companies raised guidance.  Three of the 4 companies (VMW, INTC, IBM) that raised guidance also beat earnings and revenue estimates, which results in a "triple play." 

In terms of price action in response to the earnings reports, 11 of the 21 stocks are trading higher after hours on the news, while 8 are trading down.  VMware (VMW) and Intel (INTC), two of the three "triple plays," are up the most after hours, with VMW leading the way at +11.46%.  Intel is up nearly 5%, which is a big move for such a big name.  Other widely followed names like Juniper (JNPR), Wynn Resorts (WYNN), and Yahoo! (YHOO) are also trading higher after hours in response to their earnings reports. 

CREE is leading the way to the downside this evening with a decline of 6.42% after missing earnings estimates and lowering guidance.  IBM is also trading lower by roughly 2% even though it reported a "triple play" along with INTC and VMW.  IBM has been the only tech name in the Dow that has been doing well over the past year, while Intel has performed horribly.  So while both reported "triple plays," investors probably weren't expecting much from Intel, while IBM had more expectations to live up to. 

Good luck

Red

Clearly our market will gap down early today.  I wouldn't be surprised to see something of a recovery later in the day.  Last night, in Postprandials I suggested that our market wanted to go lower and would probably continue lower until oversold levels are reached on the major Indicators.  Let's see how low they get today.  They might tell us if we're getting close to a bottom on this run-down.