When Bad Means Good…
So far today,
stocks are trading mixed
as investors pondered a collection of so-so earnings reports. Today is
expiration Friday. April options expire at the close of business today.
The Dow has been hanging pretty tough this morning. One big story is
Microsoft
(
MSFT |
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Investors wavered in their reaction to a mostly
downbeat earnings update late Thursday from Microsoft, initially sending shares
lower, but then taking a brighter view.
After the close of regular trading Thursday, Microsoft announced
weaker-than-anticipated first quarter earnings and said revenue for the current
quarter would fall below previous estimates.
Although the shortfall appeared to disappoint investors at first, Microsoft
shares fell 2.6% in after-hours trading. The mood had turned by Friday morning. Microsoft shares were up 1.4% Friday in late-morning trading.
Often when stocks do not go down on bad news, it could indicate that
they’re going up instead. Merrill Lynch’s decision to raise its rating on Microsoft’s stock to “buy” from
“neutral” may have taken some of the sting out of the company’s warning. This
has investors scratching their heads. Read what Tony Saliba is saying about this
news on MSFT in
Saliba’s Option Views.
In late-morning trading, the
Dow Jones Industrial Average
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$INDU |
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was positive and hanging on to its gains at almost 50 points to 10255, after
declining 15.50 on Thursday.
But the Nasdaq Composite Index
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$COMPQ |
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is all over the place, which is typical for an Expiration Day. One of the drags
on the tech-heavy Nasdaq is the Phlx Semiconductor Sector Index
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$SOX.X |
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The SOX pulled back and tested its 20-day MA to put in the lows for the day,
then pulled up. Today’s range thus far has been between 1796 to 1816.
The
June S&P 500 futures
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SPM2 |
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just above its Pivot Point of 1121.50.
Bond prices are modestly positive. In the
currency markets, the dollar strengthened against the yen and the euro.
On the Comex, the
June gold futures
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GCM2 |
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is pulling back.
June gold has been forming a cup–and–handle pattern,
and yesterday settled up $2.40 per ounce at $305.20.
Gold seems to be benefiting from the weakening U.S. dollar.
Within the week, June gold had been resurrected from the $298 region to 11-day
highs above the $305-an-ounce resistance line. Yesterday at 1:30 PM EST,
some of the gold mining stocks began to sell-off. Anglogold
(
AU |
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Bold
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ABX |
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PowerRating), Newmont Mining
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NEM |
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(
PDG |
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closed lower. The PHLX Gold & Silver Index
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$XAU.X |
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off at the end of the day. The XAU is slightly positive currently, and some of the gold
stocks are mixed.
Ameristar Casinos (ASCA) is in the
52-week high area. The stock ventured out of its 12-week base, but closed below
its pivot point of 30.90, or 10 cents above its April 10 intraday high of 30.80.
Yesterday, volume rose four times its average to its highest level since December,
clearly showing institutional interest in the stock. With this kind of volume, it
could help a long-term rise in ASCA.
ITT Educational Services
(
ESI |
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into all-time new high territory Tuesday, gapping up 2.66 to 49.98 on volume
more than twice its 50-day average. While stock prices are by nature volatile,
ITT’s big gains this week illustrate the kind of volatility a trader would like
to see. Look at the weekly chart. ESI has a
TradingMarkets.com RS3 rating of 87 and an uptrending
ADX of 52.
Multimedia Games
(
MGAM |
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PowerRating) is moving in a
countertrend rally after its plunge to the downside. MGAM is currently up
2.40 to 27.40 and is carrying
3-month relative strength rank of 17 from TradingMarkets.com
Wellpoint Health Network
(
WLP |
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PowerRating) is trading
100% average volume before 1:00 PM EST. However, this is an average over 65 days. If
you take a look at the daily chart, volume (so far) looks like it may be lighter
than the previous two days. WLP could be getting tired and due for a
pullback. It is still early in the day, but WLP looks like it wants to put
in a reversal doji. This stock is still in an uptrend, but may offer some short
opportunities for nimble traders on Monday.
There will probably be more volatility in the
second half of trade due to options expiration.
I would encourage you to read Mark Boucher’s
“Boucher On The Big Picture”. Very insightful!
Good Luck in the second half of trading!