Syria Can't Stop the Dow From Rising

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The markets rallied higher today despite the likelihood of U.S. military action in Syria. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) closed the day up 96 points, or 0.65%, and now sits at 14,930. The S&P 500 (SNPINDEX: ^GSPC  ) gained 0.81% and the Nasdaq increased 1.01%.

These moves higher came as July's trade deficit met analysts' expectations of $4.6 billion from June and the Mortgage Bankers Association reported a 1.3% jump in mortgage applications this past week, compared to the previous period.  

As the Dow closed the day up nearly 100 points, only four of its components ended the session in the red. This afternoon, I explained why Microsoft (NASDAQ: MSFT  ) and Procter & Gamble were lower, which you can read about by clicking here, or stick around to learn why Hewlett-Packard (NYSE: HPQ  ) and IBM (NYSE: IBM  ) lost value today.

Shares of Hewlett-Packard fell 0.45% on very little news directly about the company. But that doesn't mean nothing important happened to HP today. We all know the company is currently going through a transition period in which CEO Meg Whitman is attempting to turn the company around and take its business mix to an area that is less reliant on PC sales. The recent move by Microsoft to purchase Nokia, however, may actually have a negative effect on HP.

First, the move means that if HP were to go with a Windows-based operating system on one of its smartphones, it may no longer be able to do so. Also, as a Morgan Stanley analyst recently noted, a new Microsoft CEO will now need to spend a good deal of time merging the company with Nokia, which may take attention from other areas of Microsoft's business, one of them being the Windows PC operating system, once believed to be the saving grace for falling PC sales. A lack of attention to PCs from Mr. Softy will ultimately hurt HP even further as it is unlikely its business will ever become fully disconnected with PCs.  

As for IBM, it also lost 0.45% of its value. The stock is now trading within 1.18% of its 52-week low and off its 52-week high by more than 15.17%. Year to date, the stock is down 4.4%, making it one of only three Dow components to be in the red for the year and the third-worst performer in 2013, behind only Alcoa, which is off 9.68%, and Caterpillar, which is down 6.77%. IBM seems to be struggling to keep up with the competition as more players like HP are moving into the coveted IT services business. Just a few days ago, HP signed a deal with Cerner, an IT health-care giant, to upgrade two of its analytics services. Just a few years ago, IBM, as one of the only players in the market, would have likely gotten the job. Clearly, that's no longer the case.  

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  • Report this Comment On September 05, 2013, at 12:50 AM, DZPM wrote:

    FCS is > God short sell candidate

    Fairchild Semiconductor International Inc.'s earnings have declined to an estimated $0.16 from $0.49 over the past 5 quarters; they have shown deceleration in quarterly growth rates when adjusted for the volatility of earnings. This is an indication of weakness that could lead to declining earnings.

    FCS seems highly valued with the highest PEG value in the Semiconductors & Semiconductor Equipment industry of 104.3551, which is supported by a PE of 521.7755 that is also the highest in the industry.

    The prior quarter Operating Margin of 1.50% is less than the TTM Operating Margin of 7.85%.

    Balance Sheet Strength: n The Long-Term Debt/Capital is 15.57%. This indication of financial leverage measures the extent of a firm’s capital that is provided by lenders. Below 25% reflects well on a company’s financial stability. The average LT Debt/Capital for this Industry Group (Electr. Semi.) is 11.21%. Growth Potential: n The prior quarter EPS of $-0.06 is less than the EPS of the year over year quarter of $0.02. n The prior quarter EPS growth rate of -400.00% is smaller than the TTM EPS growth rate of -41.97%. n The TTM EPS growth rate of -41.97% is less than the TTM Sales Per Share (SPS) growth rate of -0.08%. n Earnings Trend is Negative for the last three quarters on a year over year basis. FCS is nothing but a SELL

    Nothing new! Federal Reserve comity and Ben Bernanke “Giant Ponzi Scheme” .When we have bad economic data market is going up on speculation Fed Chairman Ben S. Bernanke will kip printing money. When we have god economic data market is going up speculation Bernanke is steel printing? This entire look like exuberance sign of market is in the crash mod and will burst 1000 down ward point any second. There is no exist without big consequences Bernanke know that and kip printing money we all American will go down to drain. Either way he will finish as slowly anyway. Bernanke ruin billions and billions of ordinary people’s lives with kipping interest zero in favor of Banks and Speculators Bernanke committed the biggest crime to humanity The Biggest Ponzi Scheme Ever. Bernanke is a Scam bag! Communist was using seam principals like Fed > Bernanke (printing money for ever), and day collapsed next is USA to Collapse, because off sociopath Bernanke. Printing money is poor pyramid scams, artificial unreal! Stock and everything is doom for crash. Every pyramid scam crash everybody loses regular investor watch out doesn’t fall in to the trap.

    A record breaking stock market is distorting a frightening reality: The U.S. is being eaten alive by a horrific cancer that will ultimately destroy the economy and impoverish the vast majority of its citizens.

    That's according to Peter Schiff, the best-selling author and CEO of Euro Pacific Capital, who delivered his harsh warning to investors in a recent interview on Fox Business.

    "I think we are heading for a worse economic crisis than we had in 2007," Schiff said. "You're going to have a collapse in the dollar...a huge spike in interest rates... and our whole economy, which is built on the foundation of cheap money, is going to topple when you pull the rug out from under it."

    Schiff says that, despite "phony" signs of an economic recovery, the cancer destroying America stems from a lethal concoction of our $16 trillion federal debt and the Fed's never ending money printing.

    Currently, Bernanke and company is buying $1 trillion of Treasury and mortgage bonds a year. That's about $85 billion per month against a budget deficit that is about the same level.

    According to Schiff, these numbers are unsustainable. And the Fed has no credible "exit strategy."

    Eventually interest rates will rise... and when they do, Schiff says, stocks will tank and bonds dip to nothing. Massive new tax hikes will be imposed and programs and entitlements will be cut to the bone.

  • Report this Comment On September 05, 2013, at 1:40 AM, EchoVectorVEST wrote:

    For recent and refreshingly accurate additional technical analysis perspective on what is moving the markets, you can also 'google' the following titles, "Dow Heads To The Downside: It's Not Syria" and its follow-up article's,

    "Today's Tomorrow Quarterly EchoVector Chart Perspective: Update and Analysis" and

    "DOWPIVOTS: DJX: TODAY'S TOMORROW ECHOVECTOR PIVOT POINTS MULTI-PERSPECTIVE FRAMECHARTS UPDATE: ALERT"

    Each article can also be found free and online at The Market Price Forecaster Newsletter by Market Investor Weekly. And at DOWPIVOTS.

    Now may be a good time for an advanced market straddle.

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