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Market Recap

 The things which are most important don’t always scream the loudest.”Bob Hawke

Screams were heard on Wall Street this week, and we’re not just talking about the sale of Edvard Munch’s painting “The Scream” which sold for the highest price anyone has ever paid for a piece of art. The deafening shriek of investors with bloody fingers who attempted to catch the falling knives the market dropped was heard by all. Thus far, every sell off in the Four Sisters has been met by exuberance as dib buyers swooped in to rally the markets back up. However on Friday, the bears knocked on the door, fully locked and loaded.

 

The news on everyone’s mind is the outcome of the French elections this weekend between the incumbent Nicolas Sarkozy and Socialist Competitor Francois Hollande. The question on everyone’s mind is “What happens to the European debt situation if a socialist becomes President of France?” Clearly, with the drop in Sister SPX of 1.6%, investors didn’t want to wait to find out.

 

What’s even more frightening than Sister SPX’s worse weekly loss since December of last year is the fact that a head and shoulders pattern is being traced out. Friday’s close completed the right shoulder in this reversal formation and a sustained break of these levels could bring the Sister down by a measured move to 1300. This just happens to coincide with long term horizontal support.

 

In the wake of another intense earnings season where a company like AIG can beat earnings estimates by 23% yet are sold off for 3.8% loss, what is the informed investor to do? All we know for sure is that mud is clearer than the direction of the market. Sometimes, the best thing to do is wait out the storm. Just when you want to give up and scream, is when the market takes off without you.

Stay tuned for Monday’s Morning Cup of Jo as Kevin Tuttle treads through the murky waters in search for the direction of the market’s current

‘Four Sisters’ Performance

 

Source: TD Ameritrade, Inc.

The Four Sisters: A term coined by TAM which collectively refers to the four major U.S. Equity Markets. From eldest to youngest, the “Four Sisters” include: Dow Jones Industrial Average (DJIA), Standard & Poor 500 (SPX), NASDAQ 100 (NDX) and Russell 2000 (RUS).

ETF Watch

 

Source: TD Ameritrade, Inc.

Headlines & Earnings Reports

Spain recession ‘official’

Spain’s economy officially slipped into a recession on Monday after the country announced its Q1 Gross Domestic Product (GDP) fell by 0.3%, and that severe government spending cuts would likely delay economic growth. (4/30)

Microsoft – Barnes and Noble

Microsoft (MSFT) announced that the company will invest in Barnes & Noble’s (BKS) electronic book device, the Nook.  The agreement gives Microsoft a 17.6% stake in the book company, which will help them enter the growing market for tablet and e-book products.  (4/30)

Delta thinks outside the box

In order to cut down on rising fuel prices, Delta Air Lines (DAL) agreed to purchase an oil refinery from ConocoPhillips (COP) located close to Philadelphia, PA.  After $30M in support from the Pennsylvanian state government for providing job growth, Delta will spend approximately $220M to acquire the refinery, but the company estimates that they will save $300M on annual fuel expenses. (4/30)

P.F. Changs Buy out

P.F. Chang’s China Bistro Inc. (PFCB) was bought out by the private equity holding company, Centerbridge Partners, for $1.1B, or $51.50 per share, a 30% premium of the share value. Share prices jumped from $11.77 to $51.46 after the announcement was made on Tuesday. (5/01)

Murdoch ‘unfit’ for NewsCorp

After an on-going phone-hacking scandal, a committee of UK lawmakers deemed Rupert Murdoch “unfit” to run his global media company, NewsCorp. (NWSA).  The committee also found that Rupert’s son, James Murdoch, was largely at fault for the phone hacking scandal and that he displayed “willful ignorance” of the issue.  (5/01)

The Scream

Famed Edvard Munch’s painting, “The Scream,” was bought by Charles Moffett for $119.9M, the highest price paid for a piece of art.  The proceeds made on the painting will go to creating a new museum in Norway.  (5/02)

Greece gets Updgrade

After a large debt writedown was completed with private creditors, the Standard & Poor’s Credit Rating Agency upgraded Greece’s credit rating from selective default to ‘CCC’ giving the country a stable credit outlook. (5/02)

Decrease in U.S. Factory Goods

Demand for U.S. factory goods dropped in March by the most in three years.  The Commerce Department said the reduction in demand was greatly due to the drop off of orders for commercial aircraft. (5/02)

Earnings news

So far for th2012 Q1 earnings season, 402 companies from the S&P 500 have reported earnings.  Out of those e 402, 257 companies reported better than expected earnings, and 131 companies fell short of analyst expectations. (5/04)

Chart of the Week: S&P 500 

Chart of the Week: AAPL

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