D&D Note (5-21-2012)
Markets got a nice lift today off of Chinese Premier, Wen Jiabao’s, comments that China is committed to growth along with the European leaders stating that they want Greece to stay in the Euro. Most likely this will be a relief rally from an oversold market ahead of the Euro summit this Wednesday.
The Facebook (FB) / Apple (AAPL) trade reversed today seeing Facebook fall 10.99% closing below the IPO price at $34.03 a share, while Apple rallied 5.84% to close at $561.28. Heading into the Facebook IPO traders had been selling Apple to raise cash for Facebook, a move D&D questioned heavily. Now that money is being pulled back out of Facebook and back into Apple. (D&D’s largest holding is Apple and has no position yet in Facebook).
Clearly today the support by the underwriters was gone allowing the FB stock to fall, as where as, on Friday Morgan Stanley (MS) was keeping the stock afloat above the IPO price of $38.
JPMorgan (JPM) trading losses continue to mount and now the bank might be looking at $6+ billion loss. This highlights why the large multinational banks are still too risky for the retail investor.
The DOW (INDU) rallied 89 points, the S&P 500 (SPX) was up 15 points, and the tech heavy Nasdaq (COMP) gained 52 points.
Oil rose today $1.02 to $92.50 a barrel, and it looks as though $90 has a lot of support and could be a floor.
Gold dropped $2.80 to $1,589.10 an ounce.
The 10-year U.S. Treasury sold off today pushing the yield up to 1.75%.
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