Exxon, IBM and Chevron are three heavy weights in DOW and S&P. In fact, Exxon is now 5% of S&P. Despite the massacre in crude price in 08, XOM stock price barely budged. As Carterworth calls it, everybody is hiding in XOM. Tomorrow XOM reports, possibly bad numbers. I wonder if anybody is lining-up to buy XOM if they report “better than expected” results. Take a look at the charts of these heavy weights and let us know what you think.
Notice topping BB and other divergences on IBM.
A 5% correction in these three could knock DOW and S&P down big. Tomorrows XOM earnings report and GDP report can literally weigh in on the market. What do you think?
I think the PPT would be thrilled to only have to buy up 2 or 3 companies stocks rather than spreading all across the spectrum to keep things held up. They must be exhausted.
Off topic from this post, but I wanted to throw it out here. I’ll post it on the intraday tomorrow also…
Something that’s been annoying me in a big way is the fact that with 2009 S&P earnings currently pegged at approximately $42, that means we’re currently at a P/E ratio of 20. That is insanely high for a bear market, right? History has shown that during really bad bears, a P/E is around 10. So the S&P should be closer to 420, right?
Well I kept waiting and waiting for this to finally sink in but I think I may have stumbled across something. I hate to admit it but I heard one of the talking heads on CNBC mention the fact that inflation needs to be taken into account when looking at P/E ratios. I wasn’t familiar with this line of thinking so I did a google search and came across the below link. The explanation helps me to understand a little better why the markets aren’t plummeting the way I’d expect.
The caveat is that yes, inflation is very low right now, but once it leaps up we could see the lows we’re all expecting.
Something to ponder…
http://www.investopedia.com/ask/answers/123.asp
Interesting idea, but… here’s a line from the link: “When inflation and interest rates are low, there is a greater opportunity for higher real earnings growth, increasing the amount people will pay for a company’s earnings.”
Does anyone realistically expect higher real earnings growth right now? And what about deflation? What about massive job losses? Will rising unemployment (and thus necessarily falling 401k contributions) encourage people to pay more for stock? Hard to fathom. Keep in mind it takes time for the market to fall.
http://social.stocktock.com/photo/2348194:Photo:14075
they look bearish
I’m sure that these three companies, due to thier influence on markets, have been specifically told to report better than expected. our wonderful regulators have been specifically told not to look any closer at thier books. the auditors are specifically paid by the companies and will report accordingly. all this, under the watchful eye of Obama the saviour.
as for the 20x earnings. stocks were trading at 50x and being bought at negative earnings at the top so why not 20x at the bottom. of course i think this is retarded. i just found another Nasdaq stock with crossing averages and 40x earnings. ummmmm yah. i’ll be adding that to my portfolio but i better be ready to cover once its “properly priced” at 20x.
i was short this stock not long ago CASY as it was overvalued at $30. it corrected to an amazing steal at 13x earnings at which time i exited the trade quickly before it moved back up to a fair value
my feeling is that 20x is overvalued and im not a buyer at this level..not even close. however, not how we feel, but how pension plans feel and how the general market feels is what is important. you cant fight it. find companies you think will have a value of ZERO once this is all said and done so you can safely short those. place your bets as we slowly slide down.
There has to be a reason for XOM to only be down 19%. I think it goes much farther than it being a strong company. As odd as it sounds I believe XOM to be one stock that all money managers have agreed to stay in as a safe haven. This is really going out there but its a possibility.
I’m betting we get a negative reaction
Oil stocks – XLE shows a potential H&S pattern. Also, the EW pattern on the weekly chart shows the consolidation since 10/08 as a 4th wave triangle. Of course, the low in November might have finished the wave count (with a truncated 5th wave). However, ff everyone is “hiding in XOM,” then there’s even more potential selling pressure. From another contrarian perspecitve, the fact that CNBC Fast Money called a bottom in crude oil and oil services last wk is a positive. Too many people looking to go long on oil. I see USO getting to ~$20 which is the mid-line of the parallel downchannel.
IBM – has already had a nice ~30% run off the 11/08 lows and is nearing resistance in the low-mid $90′s (congestion and 20 wk avg).
In this market, seems like the most vulnerable stocks are the “winners.”
I sold my short position in Exxon, I think we baked in the bad news today. Buyers will pour in Friday……..maybe that is the last rally for a while anyway.
If XOM beats estimates, it goes up. If XOM does not beat estimate, then they double their dividend…price goes up. Ahh…..price goes up. They have more money then God so, yes….money probably will flow out of treasuries and it to XOM.
If you don’t believe it….just look at Royal Shell.
It is not that we don’t believe you, we don’t believe that stocks follow any logic anymore
Not me to beleive…..it.
All I am saying, is that people are buying stock because of the dividend, etc….and it is a safe haven. That is the logic. I would compare it to other safe havens for a pattern of logic.
Jan 30 2:18am † Change %Change Level
Dow +26.00 +0.32% 8,138.00
NASDAQ +4.00 +0.33% 1,210.00
S&P +4.10 +0.49% 846.90