MONDAY 1/27/14

Asian markets sell off substantially overnight. Japan’s exports rise but imports rise far greater due to the rising fuel and energy bill as a result of the ongoing Fukishima meltdowns. The US is the largest buyer of Japanese goods outpacing China for the first time in five years. The NIKK is down -2.5% playing catch-up to the US sell off and despite the weaker yen. The dollar/yen moves higher to 102.50. US futures are positive due to the weaker yen with the S&P +5 and Dow +15. China’s SSEC is down -1.0%. The maker of AAPL products, Foxconn, drops -1.3%. Interestingly, China IPO’s are well bid with several reaching limit-up due to demand.

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XRX loses -6% due to emerging market exposure. SNE -3% on its debt downgrade. MRK jumps above 54, +3%, to a new record high before pulling back sharply. Nasdaq is underperforming today with the social media stocks selling off. FB -1.6%. TWTR drops -6.2%. LNKD -5.6%. GOOG -2%. YELP -5%. AEO is a retail winner up +3.1%. The tape is very jump today with the major indexes fluctuating above and below the flat line with tech and small caps remaining weak. Today is a digestion day after the big drop late last week.

At the closing bell, the SPX loses 9 points, -0.5%, to 1782. The Dow drops 41 points, -0.3%, to 15838. The Nasdaq loses 45 points, -1.1%, to 4084, closing under the 50-day MA at 4085. The RUT dumps 16 points, -1.4%, to 1128, dropping under the 50-day MA at 1139. The SPX, Dow, Nasdaq and RUT are all under their respective 50-day MA’s; a very bearish indication. Tech and small caps led the way lower today. CAT finishes up +6% creating 50 positive Dow points today.

AAPL closes at 550.50 gaining +0.8% ahead of earnings. Apple beats on EPS and barely squeaks by on top line revenue. AAPL lowers guidance moving forward and reports iPhone sales at only 51 million far below the 58 million estimate. Apple has been slow to respond to screen size and folks are likely not interested in a small skinny screen. AAPL is beaten -3%, then -4%, then -5%, deteriorating as each minute passes. Seven minutes after the release, AAPL is down 30 bucks, -5.5%, to 520.00, in erratic trading. AAPL finishes down 39 bucks, -7%, to 512. Obviously, the Apple results will dampen the mood for the Nadsaq and the tech sector tomorrow after a bad day today.

Over 70% of the people that have accessed the Obamacare web site have had to deal with errors and problems. The First Lady requests help from democratic election donors to help support Obamacare. The State of the Union expectations are being played down so traders are thinking the speech may not have much of an impact on markets. Typically, markets rally the day after since lots of candy is promised to everyone. President Obama may continue his war on coal and natty gas so these industries may be affected negatively.

US Attorney Bharara charges a CEO and broker at the BitInstant bitcoin exchange with laundering drug money. BitInstant backers include the Winklevoss twins (originators of FB).