Wave Action In The Stock Market
-- Market Bites --
Wednesday, 20th January, 2016
Wave action – build it up, crash it down -- which is the similarity that is displayed in the stock market – and this will very likely continue for some time yet.
This scenario is very apparent when taking into account yesterday’s stock market trading – with stock market wave action at the forefront -- after beginning the day in a strong position the Dow Jones Industrial Average (DJIA) reversed its gains during the day – and was even showing a negative stage at some stage – but just managed to end back above the 16,000 mark, ending the day up 0.2%. Oil was another example, reversing its early lead to find a new 12-year low – which became detrimental to stocks that had reported solid earnings – such as UnitedHealth Group Inc (NYSE:UNH).
Also, following this wave action were the S&P 500 Index
(SPX) adding only 0.1%, but the Nasdaq Composite (COMP) losing 0.3%.
As at the time of writing, European shares had slid to their lowest since October 2014, which follows on from the losses suffered in the U.S yesterday, and the Asian stock markets today, as well as the relentless slump in oil prices --which continues to drag on risk assets.
It seems that China is again in talks with the idea that more stimulus may be on the way, and late Tuesday, China's central bank revealed that it would inject more than 600 billion yuan ($91.22 billion) into the banking system to help ease a liquidity squeeze expected before the long Lunar New Year celebrations.
A quick look at several companies that will be reporting today –
• Goldman Sachs is expected to report a decline in fourth-quarter profit as weak debt underwriting and trading revenue fail to make up for
stellar M&A activity.
• Xilinx Inc is expected to report third-quarter revenue slightly above analysts' average estimate. Xilinx is now one of the few programmable chipmakers left following Intel's acquisition of Altera.
And on Thursday….
• Verizon Communications is expected to report fourth-quarter revenue above Wall Street consensus. The company is likely to add more subscribers as it invests heavily in promotions
• Starbucks Corp, is likely to report first-quarter sales slightly above analysts' average estimate.
• Schlumberger Ltd, the world's No.1 oilfield services provider, is expected to report a steep fall in fourth-quarter profit as lower oil prices weigh on global drilling activity. The company had warned in October that it would incur a restructuring charge in the quarter due to additional job cuts.
• American Express is likely to report a decline in profit
for the third quarter in a row due to higher costs and a strong dollar.
• Travelers Cos Inc, a property and casualty insurer, is expected to report a flat fourth-quarter profit, hurt by insurance pricing, which was affected most severely in the quarter.
Therefore, expect plenty more wave action in the days and weeks to come. However, bear in mind that this movement certainly provides plenty of great opportunities for the nimble trader -- and members of Stock Options Made Easy (S.O.M.E.) will be making the most of this situation!
Best of Trading,
Director of Stock Options Made Easy