chart1Wow. It was only a few hours before Tuesday market open that investors were running cautiously on the foreign markets due to the tension in North Korea. Many, including myself, were expecting this to carry onto the US markets. But the exact opposite took place.

After the results for May consumer confidence came out to be the biggest increase month to month is years, both the NASDAQ and DOW enjoyed heavy gains. Investors started buying enthusiastically after the Conference Board’s Consumer Confidence Index vaulted to 54.9 from 40.8, soaring past the 42.3 that economists surveyed by Thomson Reuters forecast.

With the increase in confidence, its accepted that consumers will start purchasing big ticket items like TV’s, cars and homes. Purchase by consumers does comprise of 2/3 of the US economy, so this could be a potentially major long term boost to the markets. Lets hope that next month, there is continued growth in confidence. As quick as there was a green day today, bad news will quickly pull stocks in the red.

Stocks dependent on strong consumer spending jumped. J.C. Penney (JCP) rose 6.5 percent, while Best Buy (BBY) was up 5.3 percent. Restaurant stocks were also up as people should be expected to start eating out more.

The other indicator that people were waiting for was an 18.7 percent drop in its March home price index. The decrease was a little bigger than in February, and slightly larger than economists predicted. This result did take a back seat to the other more surprising gains on confidence.

For the year, the Nasdaq composite index is up 11 percent in 2009 and the Dow is still down 3.5 percent.

Here is the market video for Tuesday:

For Tuesday, I got a quick chance to participate in the (GM) swing that took place in the morning. It opened and fell sharply before running up significantly. My entry was $1.24 for 1500 shares which I sold a little later for $1.59. This was all done via limit buy to get in and a stop loss to sell after the stock peaked. GM did fall further after I sold and managed to run flat for the day is down heavily after the close. The whole time today while I bought/sold, I was going about my normal daily activities. Talk about easy.

Total profit (GM) = $525

Looking at Wednesday:
Economic Indicator:
7:00AM Weekly Mortgage Applications
7:45AM Weekly retail sales
10:00AM Existing Home Sales for April

News Worth Reading:
Is Your Home A Good Investment? As assets, homes provide only modest annual returns in the long run.

Take-Two Interactive Software Inc. reported a loss for the fiscal second quarter on Tuesday as revenue fell by 57 percent in part due to the absence of a blockbuster video game release.

Terremark (TMRK) hit…and missed…and hit again: It hit on some fourth-quarter profit. It missed on revenues that fell short of expectations. It hit on an EPS of 6 cents — which beat analysts’ expectations of a penny.

MAP Pharmaceuticals’ experimental orally inhaled migraine drug reached all four goals of a late-stage clinical study, the company said Tuesday. Its shares more than doubled.

For Wednesday, I was hoping to get into Zales stock (ZLC) due to its earnings announcement. However, without much warning, the stock did take a premature increase on Tuesday and is down afterhours. I will keep it on the radar, but (GM) looks like another volatile play.

At present, its come out that the bondholders have voted NOT to accept any offers to swap debt for stock – virtually guaranteeing a bankruptcy filing in the next few days. Normally I would take a short end on this news, but can almost see a fall in the morning before a rally could form. I highly doubt the stock will close in the green, but look for a similar movement as Tuesday. (GM) is worth watching.

Happy Investing!

Aman, MBA

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