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Thursday, October 21, 2004
Market Recap
The market continues to try and find direction. Today was another mixed market with the Dow losing -21 points, the NASDAQ up +20 points, and the S&P just above the flat line gaining 2 points. Oil prices also traded flat today and did not influence the stock market like it usually does. Tonight's chart of the NASDAQ shows where this index could be headed. Earnings releases for technology companies have been good lately, and this could be the driving force behind NASDAQ's recent moves. More positive after hours news could take this index up further tomorrow. Our chart tonight shows where the resistance is and where selling may come in. We are close to this resistance now, so a “sell the news” scenario is very possible. In any case, tomorrow should be interesting trading.
GOOG Gonna Gap Up?
As of tonight, over 45% of the S&P 500 companies have reported earnings. We said it would be a busy week for earnings and it sure has been so far. MSFT reported tonight and their numbers were good, but they can no longer move the market like they once did. The market now has new leaders. EBAY is one of these leaders, and they reported huge numbers yesterday and upped their guidance. The stock was rewarded today with a high of over $100 a share.
Tonight a new leader has emerged. The report we have anticipated over the last couple of months was released tonight. GOOG released earnings and the stock at last check was up above $160.00 in after hour trading. If there was ever a stock running on momentum, this is it. Earnings before special charges was 45 cents a share. The analysts were looking for 56 cents. That is quite a disappointment and would normally lead to a massive gap down on panic selling.
So what makes GOOG different? I am not sure; perhaps mass hysteria as witnessed in the late 90's bubble. Nothing will stop this stock at this point. It will reverse and gap down when we least expect it to. Many have asked and wondered why we have not shorted the stock. Tonight's action after hours should give you a good idea why. The stock has been in an uptrend since day one. I will never short a stock with the kind of power GOOG has right now. It is financial suicide in my opinion. I do not think the company is worth this stock price but that does not mean we should short it. It does not matter what we think a company is worth, all that matters is what price someone is willing to pay for the stock. Tonight, someone is willing to pay $162.00 a share for GOOG so that alone makes the stock worth that much. I own GNLB and I think it is under valued but I cannot get more than .63 for my shares if I wanted to sell them tonight. GOOG has a ton of momentum behind it and shorting it now is like stepping in front of a freight train. At this point, we would just be guessing at a top and when you start guessing, your portfolio will be in a lot of trouble.
Advertising Dollars
Could it be that advertising is coming back? Google generates all its revenue from advertising. Yahoo came out with very solid advertising sales numbers the other day, and Google has done so as well. It seems like advertising has been increasing.
This is like divergence in a stock. The price tells you one thing, but the indicators tell you something else. When advertising increases, it means consumers are spending. Companies do not spend add dollars if the consumer is not spending. This is indicating that behind the scenes, consumers are buying even though they say they are worried about the economy.
http://money.cnn.com/2004/10/20/news/economy/nrf_c...
I am not exactly sure how they come up with these figures, but it looks like enough consumers have said they are ready to spend this holiday season. Interesting how the consumer sentiment does not seem to reflect the same in the recent consumer sentiment numbers released by the government. What is really going on?
OTC BB Watch List
- NSOL.ob See chart tonight.
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