Kenneth Reid's blog
The S&P 500 posted a new closing high for the year on Thursday and the major indices are now entering the “speed zone” I have previously discussed. A speed zone is a previous area of trading where price moved very quickly. These areas provide very little price resistance when they are traversed a second time, in the opposite direction. My target of Dow 10,000-10,300 should be hit soon. Full Article
The Shanghai Index is down about 25% in the last few weeks and is testing its 200-day exponential moving average for the second time. Meanwhile, the more mature Hong Kong bourse has been trading sideways for a month. Stocks in Shanghai are no longer the bargains they once were, but they are not over-valued based on Nasdaq norms, which is a reasonable comparison. Full Article
9:00 am ET
Bonfire of the Vanities
Sears Holdings (SHLD), P/E n/a, Market Cap $7.7 billion
Sears is an American icon that is about to go under for the last time. Full Article
The next downside target for the S&P 500 is the 200-day ema around 950; for the Dow it is 8850. A test of that support would be totally normal. The major U.S. indices staged a technical breakout above the 200-day ema in July and breakouts almost always get tested. Hundreds of leadership stocks have gone through that testing process over the last month. Full Article
10:20 AM ET
China Green Agriculture (CGA) added another 13% on Monday, giving us a 63% gain in the TSR Pro Model Portfolio. I have sold some into the strength, but plan on buying dip in this stock. Why? Full Article
Overnight, financial stocks in Europe are rallying sharply, along with commodities. HSBC, Europe’s largest bank, posted a stunning $3.3 billion profit compared with a consensus estimate for a $600 million loss. Our expectation has been that financials will lead this leg of the rally. Full Article
Microsoft (MSFT), P/E 13, Market Cap $205 billion (and falling) After a string of better than expected earnings reports from the likes of Apple, Intel and Texas Instruments, Microsoft offered a disappointing earnings and revenue picture this past week, with no silver lining. Full Article
12:10 PM
In our weekly chat for Spear Report subscribers I set a target of $155 for Apple about 2 months ago. The stock hit $155.04 yesterday and is selling off today ahead of its earnings announcement after the bell today. I think the stock should be sold or shorted here.
The major indices are technically overbought, but are resisting downside pressure. One reason is that in Fed Chairman Bernanke's testimony to Congress, he stated that unemployment is likely to remain high into 2011 and the Fed will only consider tightening monetary policy once the job market shows signs of recovery. Full Article
The first installment of quarterly earnings reports last week was good enough to scare the bears and convert another portion of skeptics to believers in the improving fortunes of the economy. 71% of companies reporting have beaten analysts' expectations, which is better than the standard 61% rate; but naturally, expectations were in the gutter. Full Article
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