Swing Trading Strategies & Stock Picks Since 2003

Snapshot

• Dow ended -17.53 (-0.18%) points lower, S&P 500 up 0.2% and Nasdaq up 0.4%.
• Morgan Stanley downgrades semiconductors sector
• Berkshire bid for Burlington Northern boosts industrials. Burlington shares surged 28%.
• Market cautious ahead of Fed Reserve policy review meeting
• UBS reports bigger than expected quarterly loss
• Master Card reports higher than expected earnings

Current Market view – Cautious

Market Strategy

Traders/Investors are advised to let the profits run only in select stocks & use any correction as a buying opportunity. One should make long positions on every dip on stock specific basis.

Market Commentary

Major indices ended mixed on Tuesday after a volatile day of trade on the Street.

Investors shrugged of positive news flow and led the markets lower during the initial hours of trade.

Markets have been cautious from last few sessions following some negative news flow and there is also a concern that the stock markets have outpaced the actual recovery.

Markets could be in a short term downtrend but there is enough liquidity in the markets which will support the markets at lower levels.

Factory orders data was released on Tuesday. Data showed that factory orders rose 0.9% in September.

Warren Buffett's Berkshire Hathaway announced to buy Burlington Northern Santa Fe Corp at $34 billion. Burlington shares ended up 27.5 percent to $97. Following the news, The Dow Jones Transportation Average.DJT rose 5.3 percent.

In other deal news, Black & Decker Corp shares jumped 31 percent to $62, a day after Stanley Works Inc said it struck a deal to buy the company. Stanley shares rose 10.1 percent to $49.69.

Semiconductors’ sector declined on Tuesday as Morgan Stanley downgraded the sector to cautious from attractive. Intel Corp declined 2.68%.

In the earnings report, MasterCard Inc reported higher than expected quarterly earnings and ended the session down 1.6%. Another earnings report from the day included UBS which reported a bigger than expected quarterly loss and issued a cautious outlook for the year ahead. Shares ended down 3.2%.

There was weakness in the financial stocks as the two-day Federal Reserve monetary policy meeting went underway. There was concern in the markets regarding the Fed’s exit from the stimulus support. Investors will be looking forward to the Fed’s outlook on the interest rates and health of the economy.

In disappointing news for the job markets Johnson & Johnson said it will be cutting 7% of its global workforce as a part of its cost cutting plan.

Oil prices were higher on Tuesday and helped the advance in the energy sector. In the currency markets, dollar gained versus the yen and fell against the euro.

18 of the 30 Dow components ended the session in red. Intel Corp, Merck & Co Inc, HP and Microsoft Corp were the top drags on the Dow and ended the session down 2.68%, 1.89%, 1.35% and 1.26% respectively.

Leading the Dow were industrial stocks including Caterpillar Inc (+1.75%) and Alcoa Inc (1.44%).

The Day Ahead

·        ADP Employment Report and EIA Petroleum Status report are due for release today

·        Fed Reserve concludes its 2-day monetary policy review meeting today