It was a week dominated by earnings reports. By Friday’s close, stocks had reached a one-month high as earnings reports from the industrials sector in particular reinvigorated hopes that recovery is well underway and here to stay. The Dow gained 102.32 on Friday, up 0.99% for the day and 3.24% for the week, closing at 10424.62. Verizon, General Electric, and American Express led the charge on Friday, though Boeing was the week’s star, up 10 percent between Monday morning and Friday afternoon. Verizon beat earnings expectations, though revenue fell as the company continues to battle an energized AT&T; GE’s board approved a 20 percent dividend increase, and a number of brokerages have raised ratings on American Express. Johnson & Johnson proved a laggard, down more than 3 percent for the week. The NASDAQ added 23.58 during Friday’s session, up 1.05% for the session and 4.15% for the week, finishing at 2269.47. The S&P 500 rose 8.99 on Friday, adding 0.82% for the session and 3.55% for the week, eventually settling late Friday at 1102.66.

YTD Stock Market Performance

Positive sentiment was generated (at least in part) by the fact that the vast majority of EU banks passed crucial stress tests, despite reservations among some analysts about the stringency of the tests themselves. Only seven banks failed, and they were generally small and regional, concentrated in Germany, Spain and Greece. Rising investor confidence could be seen in the fact that the CBOE volatility index—a crucial measure of investor fear—lost more than 10 percent, finishing on Friday below 24.

European banks such as Barclay’s, UBS, BNP Paribas, and Deutsche Bank had a mixed Friday on US markets. Royal Bank of Scotland and Bank of Ireland, however, responded positively to the stress test results, rising 4 percent on the news.

In Europe, the DAX rose 175.96 (2.94%) to finish at 6,166.34, while the FTSE 100, less convinced by the bank stress tests, fell 1.19 (0.02%) to close at 5,312.62. In Asia, the Nikkei remained flat, though the Hang Seng added 225.63 (1.10%) to finish at 20,815.33.

The euro closed marginally higher on Friday against the US dollar.

Gold finished the week flat at $1,187.80 per ounce, while oil dropped 3 percent, closing at $78.98 per barrel.

Overall, in a week marked by significant earnings reports, sentiment appeared to swing upward. Most companies beat expectations, though not by as much as many analysts and investors had hoped. In the coming week, 157 other major companies will report earnings, including DuPont, BP, ExxonMobil, Chevron, Boeing, Visa and Merck—among others. Will the current positive outlook hold after next Friday’s close? The vast majority of investors certainly hope so.

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The ARTS Team

About: Absolute Return Trading Systems (ARTS), Inc. www.absolutereturnsystems.com

Absolute Return Trading Systems (ARTS) Inc. delivers market timing instructions to its subscribers from its proprietary algorithmic market timing software.  The system, designed by a team of researchers over more than a decade, is designed to produce positive returns in both up and down markets.  ARTS provides performance and risk information on 43 exchange traded funds (ETFs) and 21 stock market indices and has consistently been a top-ranked market timing service as measured by the leading third-party performance verification service, TimerTrac.

Popularity: 61% [?]

July 19, 2010

US markets finished significantly lower on Friday, with the Dow losing 261 points (-2.52%), the S&P 500 off 32 points (-2.88%) and the Nasdaq tumbling 70 points (-3.11%). The slide was sparked when Bank of America and Citigroup reported weaker quarterly revenues and data suggesting collapsing consumer sentiment revived worries about the strength of the economic recovery. The University of Michigan’s consumer sentiment index fell to 66.5 in July—down from a healthy 76 in late June. Flat consumer prices intensified concerns, indicating weak demand on the part of consumers and an absence of inflationary pressure. Citigroup, Bank of America, General Electric, Intel, and Cisco Systems were among the most actively traded shares, and all finished significantly lower, despite the fact that reported earnings—not revenues—were generally robust. The sell-off wiped out what had been relatively strong gains for the week—between 1.7% and 2.3% through the end of Thursday’s session. In view of the Dow’s 7% gain over the previous two weeks, some retrenchment was perhaps inevitable.

YTD Stock Market Performance

Financial shares were at the center of negative sentiment, with the KBW Bank (BKX) index dropping 5.7%. Only Goldman Sachs was able to weather the prevailing mood, with Goldman shares rising on news that the firm had settled its fraud case with SEC for the relatively modest sum of $550 million.

In the end, the slide spared few, with all 30 Dow shares giving up value. Weakening oil and gold prices helped to pull down underlying shares, with Proctor & Gamble and Wal-Mart being especially hard-hit.

In Europe, all indices finished lower at day’s end, with the CAC 40 suffering the most, losing 2.28% of its value. The FTSE 100 was down 1%, and Germany’s DAX slid 1.8%.

In Asia, results were generally mixed, with the NSE 50 moving the most—up 0.28%.

The euro posted modest gains against the dollar, while the dollar itself slid against the yen. Rising Treasury prices lowered the yield on the 10-year note to 2.94% from 2.98% at the close of Thursday’s session.

Overall, consumer sentiment has deteriorated sharply and Bank of America revenue results appear to have confirmed a persistent pessimism. It could be a rough ride in the weeks and months ahead.

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The ARTS Team

About: Absolute Return Trading Systems (ARTS), Inc. www.absolutereturnsystems.com

Absolute Return Trading Systems (ARTS) Inc. delivers market timing instructions to its subscribers from its proprietary algorithmic market timing software.  The system, designed by a team of researchers over more than a decade, is designed to produce positive returns in both up and down markets.  ARTS provides performance and risk information on 43 exchange traded funds (ETFs) and 21 stock market indices and has consistently been a top-ranked market timing service as measured by the leading third-party performance verification service, TimerTrac.

Popularity: 14% [?]

July 12, 2010

In the relative absence of news, and with light trading volume, stocks moved little during most of Friday’s session. However, in the final hour of trading, the major averages were able to shift upward and finish between 0.6% and 1.0% higher. Major indices—in a shortened week—posted their best weekly gains of the year so far. The Dow Jones Industrial Average added 59.04 (0.58%) to close at 10,198.03; the Nasdaq added 21.05 (0.97%) to finish at 2,196.45, and the S&P 500 Index rose 7.71 (0.72%) to finish Friday’s session at 1,077.96. The VIX dropped 3.1% on Friday, finishing below 25 for the first time since June 21st. The 10 Year Bond moved up 0.3600 to 3.0560%. The fact that wholesale inventories for May met expectations was viewed positively.

YTD Stock Market Performance

The materials sector led the way after the Bank of Korea announced that it was raising its benchmark rate a full 25 basis points (to 2.25%), clearly confident that the global economic recovery is unlikely to stall. Some of the strongest performers in the materials sector included Monsanto (MON 51.17, +3.45), US Steel (X 42.88, +1.79) and AK Steel (AKS 13.38, +0.69). Gold posted a respectable gain.

The financial sector also saw robust performance, finishing 1.6% higher. Regional banks were at the center of trading activity, with Regions Financial (RF 7.14, +0.31), Huntington Banc (HBAN 5.92, +0.25) and Zions Bancorp (ZION 23.24, +0.86) finishing strongly. The larger investment banks shared investors’ confidence, with JP Morgan (JPM 38.89, +0.73), Bank of America (BAC 15.10, +0.24), and Citigroup (C 4.04, +0.07) all enjoying solid gains as a prelude to next week’s earnings announcements.

Light trading volume on Friday can be attributed to the fact that most investors want to limit their exposure prior to the start of the earnings season. Alcoa (AA 10.95, +0.23) will kick off the season on Monday when it releases its second quarter results. Undoubtedly, the week ahead will prove an interesting one.

In Europe, the FTSE 100 ended Friday’s session up 27.49 (0.54%), closing at 5,132.94. The DAX added 29.58 (0.49%), finishing at 6,065.24.

In Asia, the markets were largely unchanged.

Advancing Sectors: Consumer Discretionary (+1.0%), Energy (+0.4%), Financials (+1.6%), Materials (+2.4%), Industrials (+0.8%), Utilities (+0.6%), Technology (+0.6%), Health Care (+0.2%), Telecom (+0.2%), Consumer Staples (unchanged)

Declining Sectors: None Nasdaq +21.05 at 2196.45… NYSE Adv/Dec 2378/630… Nasdaq Adv/Dec 1979/642.

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The ARTS Team

About: Absolute Return Trading Systems (ARTS), Inc. www.absolutereturnsystems.com

Absolute Return Trading Systems (ARTS) Inc. delivers market timing instructions to its subscribers from its proprietary algorithmic market timing software.  The system, designed by a team of researchers over more than a decade, is designed to produce positive returns in both up and down markets.  ARTS provides performance and risk information on 43 exchange traded funds (ETFs) and 21 stock market indices and has consistently been a top-ranked market timing service as measured by the leading third-party performance verification service, TimerTrac.

Popularity: 30% [?]

July 4, 2010

US markets closed down on Friday, with the NASDAQ dropping 9.57 to finish at 2,091.79 (off 0.46%), the S&P 500 sliding 4.79 to close at 1,022.58 (off 0.47%), and the Dow falling 46.05 to end at 9,686.48 (off 0.47%). The 10-year US Treasury Note added 3.98% (+4.00) to finish at 104.44. Stocks made a valiant effort to break a series of recent losses, despite disappointing employment data, but sellers managed to maintain their momentum. US nonfarm payrolls fell by 125,000 for June, outstripping expectations of a more modest fall, though private payrolls did better, adding 83,000. US unemployment numbers declined more than expected–to 9.5% from 9.7%–but this was largely the result of a contraction in the labor force. Factory orders for May slid 1.4%.

The markets responded to this downbeat economic data by taking stocks as much as 1% lower despite a short-lived rally that allowed them to reclaim some of the losses. By day’s end, however, stocks had fallen to their ninth loss over the past 10 sessions, giving up a full 9% of their value over the same period. Though some observers suggest that sellers are overreacting, the fact remains that a relative absence of positive economic data has given them solid grounds for pessimism, which remains remarkably persistent and pervasive. The S&P 500 and Nasdaq composite are flirting with a bear market—normally characterized by a drop of 20% off the highs. The Dow is faring slightly better, down 13.5% from the April highs versus a slide of 16% for the S&P 500 and 17% for the Nasdaq.

YTD Stock Market Performance

Consumer discretionary stocks fell 1.2%, financials dropped 1.1%, and industrials declined 1.0%. The materials sector was able to contain its losses—dropping a mere 0.3%–thanks to diversified metals and mining plays (+0.5%) and a compromise tax deal in Australia on mining profits. BHP Billiton (BHP 62.71, +0.29) gained on the news. Biotech plays added a healthy 1.8% on word that Sanofi-Aventis (SNY 29.40, -0.98) may be considering a still-unidentified multibillion dollar acquisition. Health care stocks advanced 0.3% overall. Verizon (VZ 26.81, +0.53) finalized its $8.6 billion spinoff of its local wireline operations to Frontier Communications (FTR 7.35, -0.34), with Verizon gaining and Frontier sliding markedly in response. Trading volume overall was robust.

Advancing Sectors: Health Care (+0.3%), Telecom (+0.2%), Utilities (+0.1%).

Declining Sectors: Consumer Discretionary (-1.2%), Financials (-1.1%), Industrials (-1.0%), Materials (-0.3%), Consumer Staples (-0.3%), Energy (-0.2%), Tech (-0.2%) DJ30 -46.05 NASDAQ -9.57 NQ100 -0.4% R2K -1.0% SP400 -0.7% SP500 -4.79 NASDAQ Adv/Vol/Dec 948/1.64 bln/1681 NYSE Adv/Vol/Dec 1209/1.10 bln/1812.

In Europe, the indices finished mixed at the day’s close, with the FTSE 100 having had the greatest change, up by 0.67%.

In Asia, the indices also closed mixed, with the most active market–the Hang Seng—finishing off 1.11%. The Nikkei was up 0.13%.

Overall, investors maintain a bleak outlook—one supported by a dearth of robust economic numbers. Fears of a double-dip recession are rising, with analysts deeply concerned about the relative failure of the US economy to add jobs in the absence of federal stimulus efforts.

Be sure to follow our performance on Twitter and Facebook!

The ARTS Team

About: Absolute Return Trading Systems (ARTS), Inc. www.absolutereturnsystems.com

Absolute Return Trading Systems (ARTS) Inc. delivers market timing instructions to its subscribers from its proprietary algorithmic market timing software.  The system, designed by a team of researchers over more than a decade, is designed to produce positive returns in both up and down markets.  ARTS provides performance and risk information on 43 exchange traded funds (ETFs) and 21 stock market indices and has consistently been a top-ranked market timing service as measured by the leading third-party performance verification service, TimerTrac.

Popularity: 42% [?]