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Need to Know
JULY 11, 2013
6 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
In a year of stock-market streaks, another notable stretch is well
underway. It may not be getting the ink that Super Tuesdays and no-three-Dow-down-days did, but this one
could be more useful in plotting your investment strategy in the coming weeks.
The PowerShares QQQ ETF , which tracks the 100 biggest nonfinancial stocks
on the Nasdaq, has now gained for 11 consecutive sessions. By the looks of
the tasty premarket action, it's about to reach 12. The last time that
happened was back in July 2009.
What to make of it? Well, it bodes well for the medium term, according to Kora Reddy of the Paststat blog . He
points out that the trading odds are heavily in favor of the bulls who buy
into the QQQs when the streak reaches eight days. In fact, Reddy notes that
holding the ETF for 20 trading days after that point delivers a winner 85%
of the time.
Of course, Bernanke trumps trends, especially when he is spouting off about
how the Fed, regardless of the taper, won't be raising interest rates anytime soon
. As Upside Trader puts it:
"Cockroaches and rats will be crawling the earth's surface until well
after we're gone, yet Ben's printing presses will still be humming softly
in the background." There's your global rally and lock for an even
dozen for the QQQs.
Key market gauges: Yes, markets are going nuts around the
world. The Shanghai Composite led Asia to a resounding rally,
while Europe's major indexes are all higher in the early going. The
U.S. wants to come out and play, as well. Futures on the Dow and the
S&P are pointing to a raucous push to the upside.
Even gold is getting in on the action, with its 3% rally putting it
on track to log four straight days of gains. "Does the nonnews that
the Fed is not really serious about tightening mark the end of the gold
correction?" wrote SitkaPacific Capital's Mike Shedlock
. At the same time, the Fed's message is weighing on the dollar . Read: Gold rallies as dollar sinks .
Crude , meanwhile, broke past $107 a barrel earlier but has since reversed
course . It's now hovering about a buck below a 16-month high after
Wednesday's 2.9% rally. Read: Oil prices could be the next monster under the
bed .
The economy: Jobless claims data will hit at 8:30 a.m.
Eastern and economists are looking for 349,000 claims, up from 343,000 in
the prior week. That number has been hovering around 350,000 for most of
the year. At the same time, the government is expected to report that the
price of imports into the U.S. remained flat in June. Later, the Treasury
is projected to show a $115 billion surplus in June, a big turnaround from
the $60-billion deficit a year earlier. Read: Spotlight on economy .
The buzz: BlackBerry is in the spotlight again.
For all the wrong reasons. Again. Two key executives have reportedly fled the smartphone maker in recent weeks.
The stock fell 3.7% yesterday but is showing some signs of life premarket.
GlaxoSmithKline is also garnering unwanted attention after some of
its executives reportedly admitted to corruption in China . Other than the GSK
ticker, the StockTwits trending list is mostly littered with gold-related
companies, although Bank of America and Wells Fargo are drawing
clicks with earnings season for the banks kicking off tomorrow. Read: Earnings outlook .
Wholesale giant Costco posted a better-than-expected 6% improvement
in same-store sales. L Brands followed up with mostly flat numbers , while analysts had
been looking for a drop of up to 4%.
The chart of the day: Pimco has come under fire lately, with
its funds taking a beating and investors fleeing in droves . Now, Erik
Swarts of the Market Anthropology blog is piling on with this chart. He
cited a story from Pimco CEO Mohammed el-Erian
back in 2009 that assumed that the U.S. and the dollar were on the verge of
handing over economic leadership to developing nations, primarily Asia.
"In true contrarian fashion, the concept practically top-ticked the
balance of the world's outperformance (namely China) in the recovery and a
major pivot for the dollar," Swarts wrote.
The
call of the day: Michael Arold is looking to
cash in on the "ultimate Bernanke put trade"
following the chairman's dovish stance yesterday. He said that if
"lower interest rates" becomes the driving theme, he'll be trading
positions that are sensitive to yield changes. Arold's favorite at this
point is the iShares U.S. Real Estate ETF , which is setting up for an
"anti trade" and a "breakout" today.
Random
reads:Outback and Facebook , together
at long last, with a really weird chair that hugs you on your
birthday.
This Chinese eight-year-old is too busy hitting 220-yard drives to go to
school.
Why solitary confinement , where some 4,500
California inmates are held, is "such an anathema to human needs
that it often drives prisoners mad."
Young matadors fight to keep bullfighting alive .
After peeing in a bucket and verbally attacking a picture of Bill Clinton,
Justin Bieber apologized to the former president , who
didn't seem to have any hard feelings. Almost as if he's had some
transgressions of his own.
@billclinton
thanks for taking the time to talk Mr. President. Your words meant alot. #greatguy
— Justin Bieber (@justinbieber) July 10, 2013
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