Bernanke to Congress: Reduce the Deficit!

As stocks traded mostly sideways today, Federal Reserve Chairman
Ben Bernanke paid a visit to Congress to address the House Budget
Committee. In a surprising turn from what’s been the hallmark of
his reign as the head of the Fed, Bernanke seemed legitimately
concerned about sovereign debt issues here in the United
States.

He said, “To avoid sharp, disruptive shifts in spending programs
and tax policies in the future, and to retain the confidence of the
public and the markets, we should be planning now how we will meet
these looming budgetary challenges.”

Strong words for a Fed Chief who has been responsible for the
largest money supply increase in the history of the U.S. 

What? BP’s not American?

That was an excellent rally yesterday! The S&P 500 broke through important resistance at 1085. For more insight, I will turn to my trusted sidekick, technical analyst for TradeMaster Daily Stock Alerts Jason Cimpl…   

 

After the weakness on Tuesday, I was beginning to doubt the bulls ability to take the market higher. The group came through yesterday and took back 1085, which needs to become support. Volume was low again, but internals were commendable as buyers out numbered the sellers by 5 to 1. Today the big resistance to watch will be 1103 and 1115. SPX 1103 stopped the market dead in its tracks last week. Stronger lateral resistance exists at 1115 which dates back to December 2009 and is also the 20 DMA and gap resistance.   

Are the Sellers Done?

So far this year, the S&P 500 has dropped 3% or more in one session 3 different times. The two previous times, it clawed back some of the losses over the following week. We’ll have to wait and see of there is any upside after yesterday’s big drop.   

 

The S&P 500 is now testing the lows from the “flash crash” on May 6. This is interesting because it was assumed that trading that day was something of a fluke as computer trading programs went haywire. But now that stocks are back to those levels, we must consider that the drop may not have been a fluke.  

 

The question now is: can stocks find some strength? Or perhaps a better way to ask the question is: are the sellers done?   

Financial Darwinism

As Germany voted to approve bailout money for Greece, German Left Party lawmaker Gesine Loetzsch was quoted as saying "Speculators are Taliban in pinstripes, and people in our country must be protected from these Taliban…”  

 

It’s scary to me that any political leader could voice such an inflammatory and downright naïve opinion.   

 

If a hitter in baseball can’t hit the high fastball, then that’s exactly what he will see until he makes an adjustment. When Yahoo! failed to take advantage of its early-mover status on the Internet to implement a viable paid advertising model, it opened the door to Google.   

Memo to EU

“It was the last wish of the Icelandic economy that its ashes be spread over Europe.”   

 

I wish I could take credit for that gem.   

 

Flights are grounded once again in Europe as more ash from Iceland’s unpronounceable volcano drifts over the continent.  

 

Europe is providing a major downer for the stock market these days. It’s not the grounded flights, however. It’s debt problems with Greece (again), and potentially Spain, Italy, Portugal and Ireland

Big News from Apple

Morgan Stanley (NYSE:MS), McDonald’s (NYSE:MCD), Boeing NYSE:BA), United Technologies (NYSE:UTX), Apple (Nasdaq:AAPL) – all beat earnings expectations in the latest round of quarterly reports.   

 

Yes, earnings estimates appear to have been too low. But at the same time, the economy is surprisingly strong. I’m not sure there’s much reason to think analysts should have seen these numbers coming.   

 

Apple was the star of the bunch. It reported $3.33 a share in earnings, when analysts were looking for a measly $2.45. That’s a humongous beat by Apple. And the stock is moving 6% higher this morning. 

Never Short Goldman Sachs

Yesterday, investors have spoke loud and clear. And they said “If it comes down to Goldman Sachs (NYSE:GS) vs, SEC, I’m betting on Goldman.”   

 

And why not? Goldman is all-powerful. It’s #2 on my “never short” list, after Apple and before Google.   

 

Goldman has proved its ability to stay ahead of the curve. It survived numerous lawsuits and a $110 million settlement with the New York Attorney General for IPO fraud during the Internet bubble.  

 

Most recently, the accusations that inflated price projections and a huge oil trading desk at Goldman were behind crude oil’s run to all-time highs didn’t have any effect on the company. 

Why should this little matter with the SEC over taking advantage of the housing bubble be any different? 

Simon vs. General Growth

Today, I start by offering my condolences. It’s tax day, never a pleasant time of the year.  

 

Yesterday, I noted that the recent rally lacked enthusiasm. Low volume and small daily gains were the hallmarks. Did all that change yesterday after Intel (Nasdaq:INTC) posted blowout numbers?  

 

Maybe. Volume posted its best totals since February. And the S&P 500 made its biggest gain since March 5. 

No Doubt About Intel

Yesterday I gave a somewhat tongue in cheek treatment to the question of whether Alcoa (NYSE:AA) had beaten analysts’ earnings expectations or not.   

 

Intel (Nasdaq:INTC) left no room for doubt. The chip-maker crushed estimates by $0.05 a share, beat on revenues and profit margins and guided higher for the second quarter.   

 

What’s next for Intel? Fixing the housing problem?