Swing Trading Strategies & Stock Picks Since 2003

Weekly Market Commentary- (Nov 2-Nov 6)

DJIA Industrial Average

Open: 9712.73

Close: 10023.42

Change: 310.69 (3.2%)

RSI: 47.06

MACD: 40.24

Strategy: In the coming week starting Nov 9, it would be a better strategy on part of the trader, to buy stocks only on stock specific basis on correction, as the market shows signs of tiring up every time it tries to out the resistance level of 1090-1100 points on broader index S&P 500.

Highlights of week:

·        The week was dominated by status quo strategy adopted by FED regarding the interest rates.

·        The Nasdaq Composite Index moved up by 3.3% from its opening on Monday, compared to an almost comparable pick up of 3.2% in the DJIA, and similar gains noticed in the week from opening in S&P 500 index.

·        The gains in stocks posting good results was short lived, whereas all such stocks ending up with poor results for September ended up with strong losses.

·        AIG, major insurer ended up with profits for the second straight quarter, but earlier its bear rally in anticipation of better results was short-lived and witnessed a sell off on Friday.

·        The US $ remained volatile throughout the week, but ended up with minor loss of 0.7% against Euro and some other global currencies.

·        Gold picked up strongly, and breached all time level of $1100, but ended at a level of $1095 per troy ounce, or net gain of 5.3% for the week.

·        The unemployment data was disappointing, with a 10.2% unemployment rate estimates, but was absorbed later in the session.

The Weekly Commentary

The 3.2% gains for the week recorded in the week were led largely by some better earnings for the quarter, which were announced in the last week.

Of the larger market cap companies reporting last week -- Cisco, CVS, Kraft (KFT), Qualcomm (QCOM) and Time Warner (TWX) -- all reported better-than-expected results. Kraft, however, came up came up short on revenue, and as a result fell 2.7% for the week. 

Regarding Cisco, the tech giant authorized $10 billion more in share buybacks issued a solid outlook during its conference call, helping its shares gain 4.3% on the week.

In one of the major merger and acquisition activity announced during the week, Warren Buffet's Berkshire Hathaway announced a cash and stock offer for Burlington Northern at $100 per share. The news sent BNI up 29% for the week. Its peers, Union Pacific and CSX also posted healthy gains of 13%.

General Electric was also a standout gainer during the week after a pause, as some analysts upgraded the stock citing the chance of company going for disinvesting some of its non core business lines in near future.

An unemployment rate of 10.2% was reported by Labor Department this week. However, the week on week new jobless claims is now slowing down.

Apart from AIG, Fannie Mae also came out with its earnings, which were not outstanding.

The consumer staples giant, Starbucks, which is a coffee major from US, shot into limelight following its reasonable earnings this week, and may remain in focus in near future.

Gold was a precious commodity which shot into limelight again last week, by breaching $1100 mark, and ending the week with over 5.3% gains.

The Week Ahead

At the fag end of results season, some of the major retail companies like Macy’s, Wal-Mart, Dollar General and J.C.Penny report their earnings from Wednesday to Friday.

Apart from these companies, there are some other companies like Tyco, Vodafone, Flour, Disney also announce their earnings during the week starting Nov 9.

Economic events ahead

Monday: No major economic events are scheduled for Monday.

Tuesday: The NFIB small business survey is released on Tuesday.

Thursday: Jobless claims are due to be released for the week; Federal Budget is also scheduled for the same day

Friday: Consumer sentiment for the month of November; International trade and import prices are to be reported.