Stock Market News Update
Friday, June 04, 2010



Due to the continued volatility of the markets, on which we were able to capitalize, our members who followed the recommendations for the past week enjoyed a 575% gain.

Here are the gains on some of the stock options recommended by SOME during the last week:-

Transocean Ltd (RIG)…………….23%

Amgen (AMGN)…………..34%

Monsanto (MON)………….53%

Synaptics Inc. (SYNA)………….18%

Fortinet Inc. (FTNT)………….25%

Pall Corp (PLL)……………32%

Anadarko Pete (APC)…………57%

Genworth Financial (GNW)…………45%

DirectTV (DTV)……………..36%

Flextronics International Ltd (FLEX)………..23%

BP Plc (BP)………..24%

Mariner Energy (ME)……..45%

Apple Computer (AAPL)…………………..35%

VIX……………86%

Congratulations on a great week and let’s keep the profits rolling!

If you are not already a member of Stock Options Made Easy, then you may wish to become one so that you can benefit from the profits that are being generated!

Friday saw the U.S. stocks having another mass exodus of bulls sparked after the government's highly anticipated employment report, which showed the fastest month-over-month job growth in a decade, fall short of the Street's expectations.

The ugly session showed that the jobs report failed to live up to the hype, and it was also driven by the euro plummeting to fresh four-year lows amid new signs of trouble in debt-ridden Hungary. Its prime minister's spokesman attempted to calm fears of Greek-like fiscal problems. Nevertheless, the latest sovereign-debt drama fanned the already-bearish flames, sending both the Dow Jones Industrial Average (DJIA) and S&P 500 Index (SPX) south of round-number support.

“This economy is going nowhere. The growth we’ve got is an illusion and based on temporary workers,” said Joe Saluzzi, co-manager of trading at Themis Trading. “It’s just a disaster.”

In a particularly bearish sign, the selloff accelerated throughout the day and stocks concluded just off session lows, signaling traders didn't want to be holding stocks heading into what could be another tumultuous weekend on the geopolitical front. Underscoring the jitters on Wall Street, the VIX, or the markets' so-called "fear gauge," surged more than 20%.

“The jobs numbers were pretty anemic. Unfortunately, there is no threshold for disappointment in the near-term and that does not bode well for the market,” said NYSE trader Ted Weisberg of Seaport Securities.

The result was one of the Dow’s third-worst day of the year, Wall Street's weakest close since Feb. 8 and a renewed sense of fear and risk aversion for equities and commodities.

Overseas Concerns

hungary

1/ Hungary & the EURO

As if the disappointment with the jobs report wasn't enough, Wall Street was already dealing with another European headache: Hungary. The euro plunged below $1.20 to fresh four-year lows after a spokesman from Hungary's new government, the ruling Fidesz party, said an official’s comments about a possible default were not “exaggerated at all.” The official also said the previous government falsified economic data, further hurting market confidence. The euro tumbling to its lowest level since 2006 put more pressure on multinationals and commodities that rely on a weaker U.S. dollar.

“It’s freaking the market out,” said Nick Kalivas, vice president of financial research at MF Global. “This whole European crisis is playing out like the mortgage crisis here. It makes for a frustrating market.”

Hungary doesn't use the euro or is part of the euro zone, but its woes affected the 16-nation shared currency on concerns that a broad European debt crisis is developing. Previously, the focus was mostly on Greece and the other PIIGS nations - Portugal, Italy, Ireland and Spain.

"Today you got a postcard from Hungary: All is not well, send money. It's a reminder that the debt issues are still there and they're serious and significant," said Karl Mills, manager at Counterpoint Select Fund.

Societe Generale Bank

2/ Societe Generale's (SOGN)

Further exacerbating the pressure on Wall Street were concerns from Europe about Societe Generale's (SOGN) derivatives business. The company said it would not comment on market talk about the bank's derivatives operations.

European sentiment towards these rumors has helped the French bank, Societe Generale, tumble 11% to fresh 52-week lows.

Economic Data

Jobs Market

At first glance, Friday's jobs report was good news. After losing hundreds of thousands of jobs a year earlier, the U.S. created 431,000 jobs in May -- its best month of job growth since March 2000. The unemployment rate even fell from 9.9% to 9.7%. However, the markets were spooked by the report because 411,000 of the jobs created were Census jobs that will be going away, meaning the U.S. has only created 41,000 private-sector jobs. Also, economists had called for much more robust overall growth of 513,000 jobs.

Also, while the government added 411,000 Census jobs, it also cut 21,000 other positions, leaving the total increase in government payrolls at 390,000.

On the upside, hourly earnings increased 0.3% after flattening out in April. Economists thought earnings would increase 0.1%.

All in all, the jobs report failed to live up to the hype and provided the bears with more ammo to hammer away at the beaten-down stock market. It also bolstered forecasts for a so-called jobless recovery.

Even so, analysts said it didn't alter their view that the economy is stabilizing, although gradually, with many expecting unemployment will remain high for some time.

"We interpret it that this is confirmation that we are not going to have a V-shaped type recovery, but are in a below- average recovery," said Hank Smith, chief investment officer of Haverford Trust Co. in Philadelphia.

"We think it will morph into a sustainable expansion, albeit below average."

The weaker-than-expected jobs report seemed to add to concerns that the problems with Europe's economy will cause the U.S. economy to experience a setback so soon after starting to recover from the recession.

"The jobs report was extraordinarily disappointing," said Phil Orlando, chief equity market strategist at Federated Investors. He said that in particular the weakness outside of Census hiring was worrisome.

"This employment number was definitely a disappointment," said Terry Morris, co-portfolio manager of National Penn Investors Trust. "This really kind of puts the bulls back on their heels."

Banks

As if they needed any more problems, financial stocks were spooked late in the day after influential analyst Dick Bove reportedly slashed his price targets on big banks Goldman Sachs (GS) and Morgan Stanley (MS).

The Energy Sector

BP (BP) shares continued to fall Friday in the aftermath of the massive oil leak, more than 6 weeks after its Deepwater Horizon rig exploded. Standard & Poor's cut its credit rating Friday after Fitch and Moody's, the other big ratings agencies, downgraded BP Thursday.

BP Plc (BP) began capturing some oil spewing from the ruptured oil well in the Gulf of Mexico. Efforts to plug the leak have been so far unsuccessful. While the company expects the flow to be capped by August, experts say there is a risk that it could drag on a lot longer.

The markets were also keeping an eye on oil giant BP (BP), which headed south after the company's financial conference call about the massive oil spill in the Gulf of Mexico. BP's chairman, Carl-Henric Svanberg, left open the question of a dividend cut as the cost to clean up the disaster climbs above $1 billion. BP also said it plans to create a new organization exclusively to deal with the spill.

BP's U.S. listed shares fell 5.3 percent to $37.16.

Energy stocks slumped, including Dow components Exxon Mobil (XOM) and Chevron (CVX). The Amex Oil index lost 4.3%. The Amex Natural Gas index lost almost 4%.

world stock market

Results for Major Market Indexes

The Dow Jones Industrial Average (DJIA – 9,931.97) finished with an enormous loss of 323.31 points, or 3.15%. The S&P 500 Index (SPX – 1,064.88) also had a great loss on the day, of 37.95 points, or 3.44%, whilst the Nasdaq Composite (COMP – 2,219.17) also fared badly, losing 83.86 points, or 3.64%.

The Russell 2000 index of smaller companies dropped 33.40 points, or 5 percent, to 633.97.

All 30 blue-chip stocks ended down at least 1.5%, led by Caterpillar (CAT), American Express (AXP) and Boeing (BA). The index's best performers were defensive in nature: Verizon (VZ) and Procter & Gamble (PG). The index ended the week off 2.%, its third-straight weekly decline.

Financial stocks also ranked among the worst performers, with the KBW Banks index .BKX down 4.4 percent. JPMorgan Chase & Co (JPM) slid 3.5 percent to $37.75, while Bank of America Corp (BAC) fell 2.9 percent to $15.35.

The Standard & Poor's 500-stock index (SPX) All of its sectors of the Standard & Poor's 500-stock index (SPX) ended lower on Friday, led by a 4.6% slide in industrials as the profitability of many companies in the sector depends on global growth. In addition, the international exposure of many industrials has put them at risk of being hurt by currency translations as the euro continues to weaken against the dollar.

The Nadaq Composite declined by slightly more than the broader markets as stocks like Electronic Arts (ERTS) and Foster Wheeler (FWLT) suffered heavy losses.

Decliners carried the day handily, outnumbering advancers on the New York Stock Exchange by a ratio of more than 9 to 1, while on the Nasdaq, nearly eight stocks fell for every one that rose.

Treasury prices rallied, lowering the yield on the 10-year note to 3.22% from 3.38% late Thursday. Treasury prices and yields move in opposite directions.

b>By the close of the week, after suffering some volatile days, the Dow Jones Industrial Average (DJIA) settled on a loss of 2.0%, ending beneath the 10,000 level for only the third time since November 2009.

The S&P 500 Index (SPX) gave up 2.3% for the week, and also gave up its psychological support, finishing south of the 1,100 level. Meanwhile, the Nasdaq Composite (COMP) finished up the week on a loss of 1.7%.

The end result, for the week, is as follows:-

• The Dow Jones Industrial Average (DJIA – 9,931.97).

• The S&P 500 Index (SPX – 1,064.88).

• The Nasdaq Composite (COMP – 2,219.17).

Overseas Markets

Markets in Europe tumbled on Hungary's comments and after the EU reported European growth in the first quarter was just 0.2%, short of the United States and Japan.

The U.K.'s FTSE 100 fell 1.63% to 5126.00, Germany's DAX dropped 1.91% to 5938.88 and France's CAC 40 tumbled 2.86% to 3455.61. Asian markets were mixed.

Japan's Nikkei 225 slid 0.13% overnight to 9901.19 and Hong Kong's Hang Seng lost 0.03% to 19780.07. China's Shanghai Composite added a few points.

The euro tumbled to a new four-year low against the dollar, falling as low as $1.1956 before recovering a bit to stand at $1.1968.

The dollar fell 1% against the yen.

Notes of Interest….

• The Dow Jones Industrial Average (DJIA) ended beneath the 10,000 level for only the third time since November 2009.

• The S&P 500 Index (SPX) closed at its lowest level since February, falling below 1,070 and 1,065, the intraday low from the May 6 sell-off. Both were seen as support levels by technicians. The SPX has now fallen more than 1% in six of the last eight Fridays.

• July-dated crude oil surrendered $3.10, or 4.1%, to finish at $71.51 per barrel. For the week, the front-month contract gave up 3.3%. The strengthening dollar and disappointing jobs data were the major catalysts for the decline.

• Gold for August delivery advanced $7.70, or 0.6%, to finish at $1,217.70 an ounce. For the week, gold added 0.3%. With data showing a 15% decrease in gold-mine production in South Africa – the world's top producer – in the first quarter of 2010 which sparked supply-related concerns, combined with a need for a safe-haven for nervous investors, gold was on the up.

• About 11.05 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, far surpassing last year's estimated daily average of 9.65 billion.

VIX-june04,2010

Today was another volatile day on Wall Street, the CBOE Volatility Index (VIX), or the markets' so-called "fear gauge," was still in top form producing some great figures for options traders.

The volatility was quite high and capitalizing on this was very acceptable, with starting price being $31.81 and reaching a high of $36.12, to finish on $35.48 with a gain of $6.02 or 20.43%.

"The new worry over Hungary is rekindling sovereign debt issues. The additional uncertainty is naturally lighting a fire beneath the VIX as premiums on options boost volatility," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut.

Company Earnings Reports

There has been some positive notes today particularly from the earnings arena. Several companies have presented earnings reports that exceeded the analysts’ expectations. These are:-

• China Finance Online (JRJC)

• Quiksilver Inc. (ZQK)

• Blyth Industries Inc. (BTH)

• Ulta Salon Cosmetics & Fragrance (ULTA)

Cooper Companies Inc. (COO) presented a quarterly report which was no surprise to analysts.

Company News and Movements:

AOL (AOL) eluded the selloff as it benefited from market chatter that it could be scooped up by software titan Microsoft (MSFT). The results of talks with multiple partners over a new web search deal could result in an outright sale of AOL, Business Insider reported.

Morgan Stanley's (MS) price target was cut from $41 to $35 by Bove, who maintained his “buy” rating but predicted the stock will “remain under pressure,” Reuters reported. Bove said he sees a “quite poor” outlook for Morgan in the second quarter.

Goldman Sachs (GS) saw its price target get lowered by Bove from $200 to $182 amid worries about Europe, the “weak” business environment, lack of financial reform and the SEC civil fraud suit, Reuters reported. While he cut his 2010 EPS outlook on Goldman, Bove kept a “buy” rating on the stock.

Wal-Mart (WMT) unveiled plans for a $15 billion share repurchase plan. The retail giant said it has repurchased $10 billion in stock since a 2009 shareholder meeting. Wal-Mart also said it will create 500,000 jobs globally over the next five years.

McDonald's (MCD) announced a voluntary recall of about 12 million Shrek drinking glasses that had been found to contain toxic metal cadmium.

Stocks on the move-june 4, 2010



high stocks june 04 2010



stock lows june 04 2010



Conclusion

All three major indexes are firmly in correction territory -- down more than 10% off the rally highs hit in late April. They are at risk of falling even further in the near term, although analysts are mixed on how deep the pullback is likely to be.

"There's a war between relatively constructive domestic metrics and the fear that the problems abroad are going to jump the pond and poison the U.S. economy through contagion," Orlando said.

U.S. stocks could face further pressure next week unless investors get some relief from worries about Europe, jobs and the toll they might take on the economic recovery.

Reports on retail sales and consumer sentiment, both of which should offer clues on the outlook for spending, are among the coming week's major economic indicators. Also on tap will be international trade data.

The impact of BP's (BP) massive Gulf Coast oil spill on the environment and the energy industry is also likely to stay in focus, with moves to contain the spill so far having failed.

"I think we're going to take our clues from what's happening in Europe as it seems to be the emotional drain on the market," said Robert Froehlich, senior managing director of The Hartford Mutual Funds in Simsbury, Connecticut.

It means "the downtrend from late April is reasserted," said Chris Burba, short-term market technician at Standard & Poor's in New York.

It’s not clear yet if the markets will be able to bounce back from this week’s ugly conclusion, but it seems that more wild swings could be in the cards.

“Going forward I see increased volatility. The market is going to have a difficult time in the short term to rally until these fears are allayed somehow,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research.

“The market is showing a lot of signs of being very oversold,” said Craig Peckham, equity trading strategist at Jefferies & Co.

He added that the markets need to see “clear data points showing the recovery is still underway… The euro zone story is not going to go away. The U.S. recovery story is being met clearly with skepticism."

"It was a double whammy," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

"Between the issues with Hungary and the euro and then the realization that the jobs number was mostly census, we were weaker right from the open," he said. "Then you add in the fact that it's a summer Friday and no one wanted to hold going into the weekend."

Stu Schweitzer, a strategist with J.P. Morgan Private Bank, noted that Friday's jobs report had investors questioning the recovery in the U.S. However, he believes there are still enough economic yardsticks moving in the right direction. He noted that this week's reports on manufacturing activity, jobless claims and construction spending were all better than expected.

"Even with the disappointing jobs report today, it remains clear that the recovery here is continuing," Schweitzer said. "There's a question of sustainability, but for the short term, it's very much in place."



Success is simple. Do what's right, the right way, at the right time.



Take control of your future prosperity the Easy way. Become a member of Stock Options Made Easy today!



Back to Stock Options Made Easy from Stock Market Update - June 04, 2010



Search Stock Options
Made Easy



Enjoy Relaxed or Fast-Paced Trading? Choose your Membership Style...

Whether you prefer to take a laid-back approach to your trading,

or to charge ahead in your options trading,

 Stock Options Made Easy Armchair Trader and Cut-to-the-Chase Trader Memberships put everything you need to succeed at your fingertips for just  $39 or $79 per month.





Search Stock Options
Made Easy




newsletter-free


Subscribe to our FREE
newsletter for all the latest options news!


Enter Your Email Address

Enter Your First Name











Follow S_O_M_E on Twitter











Subscribe to our FREE
newsletter for all the latest options news!


Enter Your Email Address

Enter Your First Name











Follow S_O_M_E on Twitter