Stock Market
All comments and Stock Market Ananlysis are made by Guy Brumley. Guy has been trading the Stock Market daily since 1992.
Trading, evaluating stock prices and predictions
Stock Market Commentary 6-23-2009
The DOW dropped 201 points on the first day after option expirations. The market makers must have really had to prop up the market last week. There must have been a large number of puts at 8500 on the DOW, or at 920 on the S&P. You have to wonder when the options were sold, (January or April), and what the costs were.
Even ISRG pulled back almost 7 dollars. If you had the June 160 put, you missed a paycheck by one day.
The question now is where we go from here. The DOW is back inside the 8200 – 8600 trading range from May. We could see continued selling to the 8200 level before the first buyers appear. If we can get fear pre-market and a panic sell-off, I would expect a break through the 8200 level, followed by an immediate reversal and positive close on the day. It is an old trading pattern, called the “Oh, Shit”. The market makers panic the amateur traders before the market opens, resulting in a mass of sell orders. After an hour or so, they start buying and prices rise. The individuals that panic sold now want back in, (at a higher price) and the market closes higher on the day.
The market has some housing numbers Tuesday, which will probably be a non-event. The other news is the statement from the Fed on interest rates on Wednesday. This too should not be enough to send the market out of its trading range.
Every sector of the S&P was down Monday. There was no sector rotation, which indicates cash is going to the sidelines. The metals were weak, FCX, AA, MT, X, all were down.
The chance of stocks going higher ahead of earnings is very slim.
Last, the new high list has an interesting stock, HWKN. This stock has a float of 10 million shares, at $22.00 its market cap is $220 million. With three quarters reported, the company sales are $240 million, and the earnings are $18 million. The sales are growing at 44%, and the earnings are growing at 104%. All great numbers, the stock could be a double. It could be a buy at $21.00, but a weak market could bring it back to $18.00. The only caution is the float. At 10 million shares, this can be manipulated very easily.
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