Posts Tagged ‘CSX’

Dow Penetrates Millennium Marker

April 11, 2010

A late session push by the Bulls nudged the Dow Jones Industrial Average just above the 11,000 level before settling in for a 10,997 close. This was the highest apex for the blue chip index since September 29, 2008. The S&P 500 and NASDAQ Composite followed suit achieving new annual highs to close the week at 1194 and 2454, respectively. Fed comments about an improving economy, bringing into question the possibility of interest rates, threatened to continue the previous week’s pattern of failed attempts to hold above 10,900, but upbeat news on Thursday and Friday brought renewed enthusiasm, leading to an upside penetration of resistence.

A record-setting 9.1% surge in retail sales and a possible merger between United Air and US Airways began the rally on Thursday. Friday’s wholesale sales report and a positive outlook from Chevron continued the pace that led to the Dow’s penetration of the millennium marker. (Note – The Dow first penetrated 11,000 in July 1999) Momentum is clearly on the side of the Bulls driven by institutional buying who can protect long positions with by purchasing put options. Individual investors remain on the sidelines, fearful of the resumption of the Bear market, sustaining a bullish contrarian viewpoint.

The Russell 2000 Index of small cap stocks has been on a tear, more than doubling since its March 2009 low. It closed the week above 700, a level that acted as support in 2007 and 2008. The next level of resistence is 750, a level last reached in 2008. Support for the S&P 500 remains at 1150 with resistence at 1200. If the Dow is able to sustain itself above 10,900, an advance to 11,500 would be expected.

The week ahead brings the official kickoff of first quarter earnings season. It is unclear whether expectations are dangerously high, which could potentially lead to disappointment, or warranted, given the steady stream of positive economic news. Alcoa (AA), traditionally a proxy for the quarter’s results, will report on Monday. CSX Corp. (CSX) and Intel (INTC) are scheduled to report on Tuesday, with JP Morgan (JPM), Bank of America (BAC), General Electric (GE), and Google (GOOG) scheduled for later in the week.

Don’t forget, Tax Day is Thursday, April 15. Data suggests no unusual deviation from current market trends can be attributed to tax day. The good news is, if you owe taxes, you must have had a job in 2009. That’s something to be thankful for in the current economic environment. So Happy Tax Day! (Still seems like an oxymoron?) Hopefully, the rising trend in employment will endure.

There’s more good news for our managed portfolios which continue to produce phenominal returns.The hedged account closed the week of April 9 at $1,725,284, with the un-hedged account ending the week at $2,0260148. 


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Houston, We Have a Catalyst

October 11, 2009

sts-001-liftoff-desk1Monday’s ISM data wasn’t the only news for the week after all. The bulls found their catalyst with Australia’s 25 basis point interest rate hike, which helped to drive the U.S. dollar lower, in turn, lifting the Dow Jones into orbit with a new year-to-date high. The S&P 500 and the NASDAQ each posted 4.5% gains for the week. There was some concern early Friday as Fed Chairman Bernanke vowed to raise key interest rates and reduce stimulus efforts when the recovery in the U.S. economy becomes more pronounced. However, unexpected earnings  from Alcoa (AA) and the Commerce Departments report showing  narrowed trade defecit gave the market a late push adding to the weeks gains.

The week ahead brings another option expiration Friday. These weeks have had a positive bias in the past but often get started on a down beat. Be prepared for weakness on Monday but a rally during the week if we get better than expected earnings news. However, some are calling for the possibility of disappointing earnings when compared to the second quarter, which was buoyed by cost cutting efforts that may not be in place for the third quarter. Look for earnings from Johnson & Johnson, Intel and CSX on Tuesday, with J P Morgan, and Abbott Labs reporting on Wednesday. Citi, Goldman Sachs, Google and IBM will follow on Thursday with earnings from Bank of America, GE, and Halliburton due on Friday. Key economic reports including CPI and initial jobless claims will be released on Thursday followed by industrial production and capacity utilization on Friday.

Historically, good news from Alcoa, like we saw last week is followed up with more good news in the next few weeks. A break above the S&P resistence of 1080 could lead us to the 1120 range. Improving economic recovery has led to a rise in energy prices, in anticipation of rising demand. Still, I wouldn’t rest easy until after October is behind us.

Our model portfolios continue to soar with our hedged account closing at $1,311,790 and our newest portfolio coming at an astounding $1,361,408 a gain of almost $65,000.

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Good Luck and Happy Trading,