IRIS Wealth Creation & Management

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Monthly Archives: October 2010

Consumer Confidence lifted and luxury sales booming, OCT 26, 2010 Report

U.S. equities market looked weak at opening as the dollar got strengthened. In addition to that housing data did not give investors any reasons to cheer on Tuesday. The Standard & Poor/Case-Shiller reported a rise of +1.7% for the average price of a single home for the month of August. A Bloomberg survey said that Wall Street economists were expecting the data to be up +2.1%.

GOOD NEWS FOR THE BULLS, at 10 AM EST, the Conference Board lightened up investors’ mood with a rosier report. Consumer confidence for the month of October rose to 50.2; this showed a great improvement from September data at 48.6. Economists expected a 50 reading on the average, in according to Market-Watch Research.

Ken Goldstein, an economist at the Conference Board stated that consumers are still worrying about the high unemployment rate. Brent Wilsey, President of  Wilsey Asset Management believed the consumer spending is a better indicator of economy recovery than consumer confidence index. Both Goldstein and Wilsey said the consumer spending data after the Christmas holidays and midterm election might be a little troublesome. These data will be watched closely by economists to determine the true health of economy.  

While economists continue with their usual cautious tones, consumers are on a shopping spree with luxury goods. Coach Inc. reported a better-than-expected earning report on Tuesday; COH shares up +10.41% to a new 52 weeks high at $49.33 by 11:23AM EST. Tiffany & Co shares also went to a fresh new 52 weeks high at $52.50, up %1.28.  According to The Street.com, there is a report by Bain & Co., a global consulting firm, predicting a phenomenon growth of  +10% for luxury sector for 2010. This is an inspiring news since there was a decline of -9% for luxury products sale in 2009.

For the short term, the S&P 500 has strong supports at EMA(8)= 1176.58 and EMA(21)=1165.69. With good earning season upon us, there is a very likely chance that the market would take out the recent high at 1196.14 and hit the psychological level at 1200. We would trade long ONLY stocks that have a better-than-expected earning data.

Best regards to all, and good luck in your trading.
Disclosure: No positions at the time of writing.

Another painful day for U.S. banks and market led by Bank of America, OCT 19, 2010 Report

The strength of the U.S. dollars in today trading session caused U.S. stocks to trend….yes, DOWN. As usual, the dollar continued to be in an inverse relationship with commodities and the stock markets. U.S equities were trading in red across the board; and market breadth is negative, 3 to 4 ratio. SPDR Gold Trust shares (GLD) down -3.11% to $130.11, Market Vectors Gold Miners ETF (GDX) down -4.57% to $54.53, iShares Silver Trust (SLV) down -4.67% to $22.84, and Freeport-McMoRan Copper & Gold Inc. (FCX) down -3.72% to $92.72. 

Separately, on Tuesday the Bank of Canada surprisingly made a negative comment in regard to the country’s economic recovery, citing weak consumers’ spending. The central bank kept rate unchanged at 1% as economists have been expected. However, uninspiring comments from the Bank of Canada was a surprise factor, sending the loonies sharply lowered, down 1.8 cents to 96.81 cents US just before 12PM EST.

In the U.S front, the brightest spot of the day came from Goldman Sachs Inc. (GS) as the company surprisingly beat analysts’ estimates. GS shares traded up 1.96% to $156.72. Banking analysts have been very gloomy on U.S. banks. Some analysts were expecting earnings of only $2.32 per GS share; but GS reported earnings of $1.74 billion or $2.98 per share, well above analysts’  bearish expectation. However, it’s very true that earnings for banks are slowing down as the trading business of banks declined. Last year in the same period, Goldman Sachs reported an earning of $3.03 billion, or $5.25 per share.

Goldman Sachs however could not save the market on Tuesday. Bank of America (BAC) led the market lower right after 2PM EST. Pacific Investment Management Co. (Pimco), BlackRock (BX), and the New York FED stated that they are seeking to force BAC to repurchase bad mortgages worth $47 billions. BAC bought CountryWide in 2008 and this caused Bank of America going down with it. According to prominent banking analyst, Dick Bove, U.S. big banks are estimated to face another mortgage crisis worth around $80 billions. 

The DOW closed at 11,000, down -1.29%, Nasdaq fell -1.46% to 2,444.45, and the S&P 500 tanked -1.29% to 1,169.41. The S&P 500 has been up more than 11% in the September month. Profit taking is unavoidable and we believe the market needs to consolidate before it can move higher. In addition, we are in earning season; thus, traders must trade stocks selectively. For the long trades, it’s critical to chose only stocks with good earning stories, and stocks in a strong, bullish uptrend. Supports for the S&P 500 now are 1150 and its 200d-MA at 1120 range. Resistance are the 1175 and 1200.

Best regard to all, and good luck in your trading.
Disclosure: No positions at the time of writing.