Stocks have been struggling all week and barring a great day for the averages, we will be closing down on the week. What’s more, the commerce department released the durable goods figures, which were less than economists had expected. Durable goods orders dropped 2.4% in August after increasing a revised 4.8% in July. Wall Street was expecting a gain of 0.5%. Stock futures were pointing to a slightly higher opening, until these numbers were released and are now looking to trade much lower.
After the close yesterday, Research in Motion (RIMM) reported 2nd quarter earnings. The company reported revenues that were slightly less than expected and the stock paid the price after hours. The stock got cut by about 12% after the close and it looks to trade even lower on the open. Currently, RIMM is indicating to be down just over 16% on the open. RIMM’s news has filtered its way through the rest of the handset makers. Apple, Palm and Nokia are trading lower in the pre-market.
I think the correction many of us have been waiting for is finally here. Although the major averages haven’t taken a big hit this week, the technicals seem very ominous. At the bare minimum, the averages should pull back to their respective 50-day moving averages. For the Dow Jones the 50-day is at 9363, for the S&P 500 it’s 1010 and for the Nasdaq we’re at 2011. This tells me that at least a 4% correction is likely…
I’m thinking about going back into the U.S. dollar as a long trade. I did this trade last year and was very successful. We all know the dollar has been blasted, but I think the time has come for it to stage somewhat of a rally. If I do take this position I will use the Direxion Dollar Bull 2.5X (DXDBX). This is a leverage open end no-load fund. It is leveraged so it’s not for the faint of heart. It will be volatile, so please be sure you can assume the risk. If you have any questions, please feel free to email me back.
Have a great weekend…
