April 10. At 11:00 AM, the Dow Jones is up 170 points at 11,285 on earnings expectations for three Dow components, General Electric (GE), General Motors (GM), and JP Morgan (JPM). Earnings are out this week, and expected to show sharp gains from last year. The problem going forward is that if earnings are showing such sharp gains versus last year, how can earnings rise again next quarter at such a high rate? They can't. Likely that the Dow, and these 3 stocks will sell off after the earnings announcements. At 11:00 AM the Dow is now trading above all seven chart support/resistance levels by an excessive amount, and I am entering into the Model Portfolio 10 DJX May 106 puts at $1.00 (total price $1,000-symbol DJVQB). A position of 10 DJX May 104 puts (total price $1,375-symbol DJVQZ) is already in the Model Portfolio. I expect the Dow to start falling around noon. Nasdaq has been trading down all morning and looks like it is ready for a big drop, while the Dow by contrast sports a nice 1.5% gain. The S&P 500 is unchanged. I expect all three major averages/index to be moving down by the end of the day.
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