D&D Note (7-10-2012)
Markets started out the day strong and came down into the European close, then reversed back up as usual. However near the last hour of trading Cummins (CMI) came out and lowered their sales forecast for the year resulting in the stock falling 9%. As the transports go so does the market (DOW Theory) and we saw most stocks, especially the cyclicals, turn back over and fall into the close.
Chip makers also added to downward pressure today. Both Applied Materials (AMAT) and Advanced Micro Devices (AMD) warned that revenue would fall short of their forecasts. This led to all chip stocks and tech in general to rollover into the red as well.
DOW Today Chart:
The DOW (INDU) fell 84 points to 12,653.12. The S&P 500 (SPX) slid 11 points to 1,341.47. And the Nasdaq (COMP) lost 30 points to 2,902.33.
We’ll still have further volatility – so keep the shopping list ready when all stocks get taken down due to one bad performer in a particular sector. Just because one or two companies lower expectations that doesn’t mean all companies will suffer. However in a single day most often all companies within a sector will suffer – and it is up to the investor to separate the wheat from the chaff and find good companies that have been knocked down to poor performing peers.
Trading will be choppy over the next few months and for long term investors its best to wait for big down days (more so than today) when the S&P 500 falls closer to 1300 to jump in and go long.
Oil finished down $2.08 to $83.91 a barrel.
Gold lost $9.30 to close at $1,579.80 an ounce.
The 10-Year Note fell pushing the yield up to 1.52%.
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