8:50am (EST)
The bulls got their second straight win on Thursday but the margin of victory matched Wednesday’s slight gains. The bears dominated the early action after hearing initial jobless claims rose by 27,000 week-over-week to 412,000. Wall Street was looking for 385,000 and the jump back over 400,000 was the headline shocker. This was the first time in more than a month initial claims exceeded 400K which caused the weakness at the open.
Financial stocks also broke down (again), after rallying past their 50-day moving averages last week. The lack of leadership from this sector is really starting to weigh on the bulls and we mentioned yesterday that it will take another quarter or two before they bottom or start to rebound. We took a chance that there would be a slight rally but we got punched in the face by JPMorgan (JPM, $44.97, down $1.28) which told us to wake up.
Oil was also up and closed above $108 a barrel but somehow, someway, the bulls got a “W”.
The Dow added 14 points to finish at 12,285 but traded to a low of 12,163. The index did reach a high of 12,305 which was prior support but is now acting like resistance. The break below 12,200 has our attention as it appears 12,000 could come into play as early as next week.
The S&P was up less than a point and remained at 1,314 after trading down to 1,302. We mentioned on Monday the close below 1,325 spelled 1,300 for the index. More importantly, a break below 1,300 leads way to 1,275-1,250.
The Nasdaq was down a point and closed at 2,760 but made another “lower, low” after falling to 2,733. We have outlined 2,700-2,650 as the bears next near-term target area.
There are a few major earnings reports we will cover today but let’s focus on Google (GOOG, $578.51, up $2.23) which announced their numbers after the close yesterday. The company was expected to earn $8.11 but profits came in at $8.08 a share.
Revenue surged 27% to $8.6 billion but after commissions to its ad partners, Google’s revenue came in at $6.54 billion. This was still ahead of analysts’ estimates for revenue of $6.33 billion but expenses have ballooned at the company which is on a hiring spree and included a sweet 10% raise the company gave to ALL its employees at the beginning of the year.
Google has its fingers in a lot of pies so it makes sense that the company wants to attain the best and brightest workers to grow their business but Wall Street is impatient.
We said last night shares would be at $600 or $550 in after-hours and they were. Although it’s only a 5% move, the headline will be Google is down $30 at the open.
Futures are pointing towards a flat start this morning. The Dow futures are lower by 2 points t o 12,226 while the S&P 500 futures are up a fraction to 1,310. The Nasdaq 100 futures are down 2 points to 2,298.
We have added some new names to our Watch List and we may release a trade today for either our Daily newsletter or Weekly Wrap. If so, expect a Trade Alert before noon and after 10am. Subscribers, check the Members Area for the updates.
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