The Dow Jones index plunged sharply by 114.89 points on Friday where it closed at the level of 14,909.60, hence taking it up by 0.7% for the past week and bearish by 1.4% for the month of June.
IBM shares fell by 2.3% on Friday and were the poorest performers among the blue-chip firms; whereas on the other hand, the rival company – Accenture PLC’s (ACN) – released its quarterly report that disappointed the investors of Accenture, and also led a negative impact for IBM as well.
Nevertheless, the Dow Jones index is still performing well if we look at it on a bigger picture, where it has showed a positive trend of around 13.8% from the start of this year till now, which is quite commendable performance.
Bullish on Google, not so with HP
The past week it was Google Inc. (GOOG) and Hewlett-Packard (HPQ) that caught trader’s attention to make money.
Google: YouTube has a lot of potential
I used a DCF technique and came up with an intrinsic value that was nearly $1000 a share. GOOG is a stock that is fairly hard to predict over the long term. As the stock price gets closer to the $1000 mark, there will be a lot of profit taking and it will be time for some near term and maybe even long term puts. But until then, the fundamentals and technicals point towards even more bullish price action as analysts fully expect the share price to get close and even cross the $1000 milestone in the next two months.
However, there is the stock split and this will ensure that the major milestone will not occur as widely expected. Anyway, I am trading weekly/monthly calls on GOOG with the current price of $889 a share being a good entry point. When the stock split does happen, I will change strategy for a while and enter into a weekly put.
HP: Excessive goodwill combine with earnings decline makes me bearish
HP needs a turnaround and it needs it fast. The Google playbook sure does look appealing. But if everyone was doing that, how would we have PCs and printing! CEO Meg Whitman has made the right decision to pursue even more opportunities for growth in its core PC and printing business by making changes at the top and look for more market penetration in China. Nonetheless, 2012 left HP with some weak numbers with the -50% ROE and -10% net profit margin standing out.
I really like HP and its potential a few months back. But now I am going back on my words. Something I rarely do! I will trade weekly/monthly puts on HPQ.
Brief Update on Indices
The Nikkei and HSI witnessed a positive trend today in the Asian session where the Chinese and Japanese fundamentals helped boost the investor confidence in the market, where BoJ stimulus is likely to be continued based on the manufacturing index data that showed a drastic improved based on the easing measures that were carried on 2 months back.