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 4-08-2009
The DOW pulled back today 186 points. Volume was lower than yesterday, and the majority of trades were people going to cash. The expectations were for Alcoa to lose money the first quarter, and they did not disappoint. Sales dropped from 5.7 billion to 4.1 billion, and the loss was $497 million. I have not seen any of the guidance numbers for the balance of the year, just a little of the spin the CEO said about the $1 billion reduction in capital expenditures and gains from plant closings.
The after-market has Alcoa down, and the Asian markets weak. This will be the theme throughout earnings, this week and next. Look for bad news pushing stocks down and then good news bringing them back up, then followed by bad news pushing stocks down again.
Remember this is the week before option expirations. That means one-day pretty, and one day ugly. The market makers need the extreme swings to get the most profit. After they tally this week's positions, they calculate where they need to close the market next Friday to pocket the most money.
Right now, the VIX index (fear measure) is at 40, which is low by recent standards, indicating low fear levels, so low open interest on puts. Look for a downward bias for this holiday shortened week, and a reversal into options next week.
The GLD looks to have a pop back up to the low 90’s, for a quick trade.
Yesterday’s new high list included ORLY, NTES, NFLX, TSYS, and KIRK. I do not buy the first day a stock shows on the new high list. I wait for the news to die down and usually get an opportunity to enter the stock at a price 10%-15% lower. All of these stocks were lower today than their close yesterday. After making the list, I reviewed some simple data from their financials.
ORLY is trading at a 2.4 billion market-cap and has only $200 million a year in earnings. It does not look attractive.
NFLX is also looks pricey.
TSYS looks interesting. Sales are up 52% year over year, and earnings are growing more than double. The float is only 45 million shares. It definitely makes the watch list.
NTES is a Chinese internet company, but when you look for financial data, it shows no employees, no earnings, and only reports one quarter of sales a year. I would stay away.
NFLX has a value of 2.4 billion, but has only 78 million in earnings. This is up from 58 million last year, but the stock is still expensive, and requires a higher growth rate to reach this kind of valuation.
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