Tuesday’s Market Recap: Markets pulled back responding to unexpected poor retail sales data and also on worries about banks ahead of key earning reports. Markets were in extremely overbought condition, and in my opinion, this pull back was needed.
For the day, Dow lost 138 points or 1.7%, to close at 7920. The S&P 500 lost 17 points or 2%, to 841, while the Nasdaq shed 28 points or 1.7%, to 1626. Crude fell 64 cents to settle at $49.41 a barrel, and gold lost $3.80 to $892 an ounce.
Financials led the stock market lower on Tuesday as investors brushed off an upbeat earnings by GS and focused on disappointing economic data. Retail sales for March came in at -1.1%, far below the expected, a 0.3-percent increase. Excluding the autos, sales fell 0.9%. January and February sales figures were, however, revised upward. Still, the unexpected sharp drop spooked the market. Meanwhile, the PPI dropped 1.2%. Excluding food and energy costs, core PPI was flat. Business inventories dropped 1.3% in February as expected.
A spirited speech by President Obama explaining the origin and nature of the economic crisis, and an all out effort by the administration to grow the economy – could not inspire the markets. Similarly, Ben Bernake’s speech was also ignored despite his observation that “the economic decline is slowing down off late”
TaurusTrader portfolio closed a position for profit and added a new position. CMED hit the profit target of $18.60 in the morning for a 12.9% profit. AGU and AMR came very close to hitting target before retreating. Very volatile TNA lost about 10% for the day. Today’s pick, GNK was bought at $15.67. The other pick, FAS did not activate the buy limit, hence was not bought.
Focus list for Wednesday: Earnings and economic data will be the center of focus again on Wednesday. INTC reported earnings of 11 cents a share after the close on Tuesday. This beat the street expectation handily, but the shares were down in after-hours trading as the chip giant refused to provide an outlook. The rail-road giant, CSX was up over 3% in the after hours trading following it’s better than expected earnings report.
On the economic front, the scheduled events for Wednesday include: Weekly mortgage applications; NY Fed Empire State survey; CPI; industrial production; weekly crude inventories; NAHB housing index; Fed’s beige book.
Markets are still in a flux …. It is hard to predict the short term direction. TaurusTrader portfolio has 12 open positions, and is well diversified. I’ll be watching my positions with tight stops. I do not want to risk more capital on new positions. I’ll be happy to watch from the side lines, at least for now on Wednesday.
If there are questions, please do post ….
Happy trading …