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Stocks Have Bad Breadth? 10.5.2012

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The 50-day moving average is a popular way to measure short-term momentum and price trend. This line is the average closing price over 50 periods. This technical indicator can be perceived as the dividing line between a stock that is technically healthy and one that is not.

Of the stocks in the S&P 500, 371 or about 74%, opened above their 50 day moving average today. Today in the Dow Jones Industrial Average, 23 of the 30 stocks are opened today above their respective 50.

On the other hand, the 200-day moving average is an indicator of long-term trend. Here, stocks like the more economically sensitive like CAT and AA are very much so off their recent highs and under their 200 day moving average.  The high today in AA just touched its 200-day and pulled back. While it may be tempting to pick bottoms in the losers, perhaps it is prudent to stay with the proven winners.

The chart below is an interesting indicator.  While it may look like just scribbles or bar code on a chart, it actually represents the NYSE advancing declining bias on a daily basis. The yellow and blue lines are respectively the 50 and 200 day moving average. This chart is confirming the bullish sentiment and price action in the market. Basically it is important to watch the yellow line fluctuate relative to the blue, for it represents the average short term bias of issues (stocks).

Screen shot 2012-10-05 at 10.54.58 AM

E-mail the author with any comments, questions, or inquiry

mark@keeneonthemarket.com“>mark@keeneonthemarket.com

Data courtesy of Thinkorswim

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Earnings Play of the Day STZ 10.4.2012

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Revenue has beat estimates for the last three out five quarters, however the last two out ofthree were lower than estimated. Annual revenues dropped around 18% from 2011 to 2012 but it is estimated to continue growing $100 million a year into 2015. The largest open interest position is in the Apr-13 32.5 Call, followed by the Nov 27.5 Put and the Nov 30.0 Call. The Oct ATM Strangle is implying a 9.3% move. 

  

My trade: Buy the Jan STZ 40-45-50 Call Fly for $0.30.

My reward: $4.70

My risk: $0.30

My break even $40.30 and $49.70

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Google October Returns and Statistics Since IPO 10.4.2012

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The sheet also displays a correlation coefficient. Statistics define this figure as the relationship between two properties of interest, and our properties were GOOG and QQQ monthly returns. The coefficient was a positive .681, which could be expected, for GOOG is a large weight and market leader in the NASDAQ 100. For those who are rusty or not statistically inclined, the correlation coefficient ranges from -1 to +1, with -1 indicating a perfectly negative correlation and +1 indicating a perfect positive correlation.

This seasonal occurrence has an average return of 16.9% in GOOG and 1.63% for QQQ. While this is all interesting, it is important to note that this was a rather small sample set; meaning that the data below was only from once a year since the GOOG IPO, or only eight observations each.

In related news, GOOG said that they will spend about $300M on severance as opposed to the prior $275M, estimated in August, in efforts to clean out MMI. On the lighter side, it is reported that Google’s famous ‘street view’ option will soon be available for the mobile app on smart devices. Analysts have and average price target of $772 on GOOG, with 37 buy ratings and 8 holds (zero sells). 

E-mail the author with any comments, questions, or inquiry

mark@keeneonthemarket.com

Screen shot 2012-10-04 at 6.09.42 AM

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Morning Rage 10.4.2012

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All index, energy, metals, and grains futures are higher today. The Dow futures are up fifty three points, S&P futures are up five and a half, and Nasdaq futures are up eleven. Crude is up a half of a point, while gold futures are up fifteen, silver is up a quarter and platinum gains thirteen. Corn bounces back up seven points.

Marriott (MAR) released its earnings after the market closed yesterday, beating the estimate of $0.40 by four cents. However, the company lowered its yearly earnings outlook. Marriott has been bolstering its lagging US revenue by focusing on overseas growth, especially in China.

Weekly jobless claims are reported today, which may be pushing futures higher this morning as well. Jobless claims are expected to grow this week up three thousand from its prior revised count of 363 thousand.