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Falling Friday – Markets Begin a Slow Roll

Posted on the 26 July 2013 by Phil's Stock World @philstockworld

Those 50 dmas are about 2.5% below where our indexes are and 28 companies that reported yesterday gave us negative guidance vs 9 that guided up.  As I noted yesterday, this is not an encouraging trend and certainly not a trend that says "new highs ahead".  

On the Russell, the 50 dma is 5% below it's current 1,054 and the NYSE isn't even at 10,000, down 3.5% from that level and 8.5% behind the Russell.  That's notable because the NYSE and the Russell, two broad-market indexes, usually move in tandem but, since January of this year, the Russell has gone INSANE and is now widely ahead of the much bigger NYSE.  

Falling Friday – Markets Begin a Slow Roll

That's why the Russell, via TZA, is one of our "go to" shorts in our Income Portfolio – just in case gravity turns out to be more than just a theory…  Gravity doesn't seem to bother AMZN, who missed by a mile on Earnings (-.02 vs +.07 expected) and missed on Revenues by a little (though up 22% for the year) and had a 76% drop in Free Cash Flow DESPITE record-low borrowing costs AND they guided down for next quarter.  

Falling Friday – Markets Begin a Slow Roll
Is the stock down?  Barely ($3 of $300)  In fact, Jefferies RAISED the price target to $350 from $300!  Don't expect any insights from me, I think it's nuts.  If all goes great, AMZN will earn about $1.25 this year, giving them a p/e of 240 and, if things go spectacularly for another year, their earnings may hit $3 a share and knock the p/e down to 100 (unless it's at $350 by then). Are we grading on a curve now?  What does it take to get investors to take profits these days?  

Falling Friday – Markets Begin a Slow Roll
Of course, the bullish argument (which I made myself at the beginning of the year) is – where else are you going to put your money?  Commodities?  No.  Bonds?  No.  Banks? No. Emerging Markets? No. Japan? No. China? No.  Europe?  LOL, now we're just getting silly…  

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