Stock Preacher

The Bull charged north today and the DJIA sliced into the psychological resistance at 10,000 for the 1st time since last October, as investors hailed the strong earnings reports from Intel Corp. and JPMorgan Chase & Co. The DJIA gained 134.45 pts, or 1.36%, to close at 10,005.51, the S&P 500 added 17.35 pts, or 1.62%, to end the session at 1,090.52, and the NAS tallied up + 27.97 pts, or 1.31%, to end the break thru day at 2,165.01. JPMorgan Chase, (covered in Stock Talk today) is the 1st major bank to report Q-3 earnings, the report announced profit in Q-3 climbed to US$3.59B, beating analysts’ estimates by almost 7 times. Intel, (covered in Stock Talk yesterday) the world’s largest computer-chip maker, reported a smaller-than-expected decline in profit and sales after the Bell on Tuesday’s closing bell. It also exceeded analysts’ estimates and guided higher into 2010. Read more

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Alcoa, the USA’s biggest aluminum producer, surprised Wall Street Wednesday by reporting a return to profitability in Q-3 after three consecutive quarters of losses, thanks to rising metal prices and aggressive cost-cutting. The results provided a positive start to the US corporate earnings season from a manufacturer that is closely watched as an early indicator of industrial earnings. Alcoa, reporting after markets closed in New York, was the 1st company in the DJIA to announce quarterly results for the three months to the end of September. Net income was US$77 M or 8 cents a share, down from US$268 M or 33 cents a share in the same period a year earlier but well ahead of analysts’ average expectations of a loss of about 10 cents per share. Revenue was US$4.6B, down from US$7.2B last year, but ahead of Wall Street forecasts. Read more

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Red Roadmaster’s Market Recap for the 3rd Quater – Thursday, October 1st, 2009

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US stocks ended higher Thursday as aircraft maker Boeing Co took off after it said it expects the first flight of its long-delayed 787 Dreamliner by the end of 2009, thus boosting the DJIA, + the financial shares’ put air under broad market. It was the DJIA’s 8th straight gainer day.

The DJIA rose 37.48 pts, or 0.39%, to end the session unofficially at 9,581.00, the S&P 500 gained 2.86 pts, or 0.28%, to finish unofficially at 1,030.98, and the NAS tallied up + 3.30 pts, or 0.16% to close unofficially at 2,027.73.

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The data is announcing that the institutional side lined money, i.e. Pension managers and Mutual Fund houses have been among the biggest buyers of the DJIA in recent weeks, confirming the growing belief the recession is over. Between July 14 and July 21, when the DJIA gained almost 600 pts to close at 8915, net buying by pension managers and mutual fund managers, the so-called “long-term” or “big” money managers, totaled US$1.9B, according to Thomson Reuters, who analyzed settlement records of the Dow components.The following week, when the DJIA approached 9000, Pensions and Mutual Funds were net sellers but only at US$578M, while hedge funds were net buyers of US$19M in Dow stocks but not after selling US$166M the previous week, the settlement records showed. “There is some momentum lost among pensions and mutual fund investors, but the move is still generally positive,” Shacket said on Tuesday. “These buyers are saying that this market is going to go higher, and not lower any time soon.” The move by these institutional investors into Dow stocks corroborates with economic data and earnings that have been better than expected.

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I am Bullish long term, the internal action of the market tells me that this correction is acting normally, and will soon yield to the long term up-trend.

March 9 to early June was red hot, with the (lagging) DJIA advancing 37% and the S&P 500 running up 41%.Since then, we are having a textbook one-month rotational  correction, sending the DJIA and the S&P 500 South by 6% and 7% respectively.

The Big Q: What does this mean?  
 
The Big A: From my POV, it is a buy signal. This new Bull Market is acting just like every previous Bull Market.

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