There is no use in going over our weekly breakeven line for the bulls and bears because if you bet the “over” there is a good chance you will be cashing in a winning ticket after the close. There were a number of traders who took the “under” this week as the major averages were on the verge of a breakdown but they got their teeth handed to them as many had to cover their short positions.
Economic news today has come in better-than expected which has helped extend the rally.
In earnings news, Apollo Group (APOL, $46.83, up $3.15) is trading higher after “beating” Wall Street’s numbers. The company reported a profit of $212 million, or $1.51 a share, versus $179.3 million, or $1.18 a share, in the year ago period.
However, the company took charges related to lawsuits and legal costs in both periods, so their profits really came in at $1.45 a share, which was lower than the $1.74 a share the company earned in the year before. The suit-and-ties were expecting lower earnings of $1.33 a share.
Still, the quarter was lousy as Apollo saw a steep decline in student enrollments which fell off a cliff. The number of new students signing up for classes plunged 40% and the number of people trying to obtain degrees tanked nearly 17%.
Apollo tried to downplay the drop-off in enrollments by saying new Department of Education rules and the steps the school itself has taken to make admissions more “selective” which have played a role in their ability to sign up students. This sounds like a reasonable response but it’s hogwash.
If you do a search on our website for Apollo Group you will find numerous stories we have written about their shady business practices and “boiler-room” antics. Trust us, they haven’t been “selective” in their enrollment process. Why do you think they settled a lawsuit? And come on, the government knows that many of these schools are rip-offs, yet, they still fund the loans. Enough said.
We mentioned this morning that the market is still in a trading range and we wouldn’t be surprised if next week is flat as we head into the start of 2Q earnings season which begins the week after.
The market is benefiting from an upturn in sentiment and the S&P Volatility Index (^VIX, 15.36, down 1.16) is back under 20 which means the market is confident. For now, all is good in the neighborhood as the major indexes are on track for their best week in over a year.
We have had an incredible busy day and we are looking forward to the 3-day weekend. June was an outstanding month for us and after a big run that include 5 triple-digit winning trades, it will be nice to relax and get away from the pressure cooker.
As we head out, the Dow is up 126 points to 12,540 while the S&P is up 14 to 1,334. The Nasdaq is showing a 30 point pop and was last seen at 2,804.
The market will be closed on Monday for the July 4 holiday but we will be releasing the Weekly Wrap at some point that day. Until then, enjoy the weekend!
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WEEKLY WRAP CLOSED TRADES for 2011: DNDN +9%, PCX +13%, SGEN +26%, TIVO +34%, REDF +11%.