Wall Street Wrap

Financials Weak and Dow 10,000 No More

By Robert Perrego, at 5:06 pm on February 8th, 2010

The Dow Jones Industrial Average slid steadily all afternoon closing down 103.84 points today (-1.03%, 9,908.39) and closed below 10,000 for the first time since November 4th of last year.  All but 2 of the 30 components were losers today with the three weakest stocks all being finance related companies.  Bank of America Corp. (NYSE: BAC) dropped 3.46% (-$0.52, $14.48), American Express Co. (NYSE: AXP) lost 2.80% (-$1.06, $36.79) and the Travelers Companies Inc. (NYSE: TRV) finished lower in the red by 2.44% (-$1.23, $49.05).  Home Depot Inc. (NYSE: HD) was the strongest of the Dow components gaining 2.18% and also up were home builders Lennar Corp. (NYSE: LEN) +4.62%, Beazer Homes USA Inc. (NYSE: BZH) +3.64% and Pulte Homes Inc. (NYSE: PHM) +2.29%.

The S&P 500 dropped 9.45 points (-0.89%, 1,056.74) and the Nasdaq 100 was down 11.24 points (-0.64%, 1,734.88) and was the leader by being the smallest loser.

I guess the sky stopped falling over in Europe as the euro stabilized against the dollar and Greece was mentioned by the talking heads on CNBC slightly less than the babbling about former Merrill Lynch & Co. chief John Thain getting a new job over at CIT Group Inc.  Various cures for what ails Greece have been proposed from applying for loans from the International Monetary Fund to getting more on their credit card from other EU members.  I vote the EU members bail the EU members out as we pay into the IMF and the chances of Greece paying that money back anytime soon with a strike or protest every other day does not look to good to me.  The Greeks are proud of the fact they invented democracy and the rest of the world is pretty happy they gave it to us, but constantly striking, protesting and having your voice heard pays less taxes than actually going to work.

The dollar slipped marginally, but stayed up at level it has not seen since August of last year.  With the dollar at this relatively high level and basically scared up a tree by the crisis in Greece (and other countries), commodities are looking like a bargain if you think the dollar will come back down when (if) Europe stabilizes.

New York spot gold lost $2.70 an ounce and last traded at $1,062.30 (-0.25%, 4:24 p.m.) as this percentage loss outperforms the 1%+ the DJIA lost.  CNBC has had gold up all day over $10 an ounce and I am guessing the futures contract they are watching is longer dated than the spot market.  If you are invested in or trading the gold ETF’s you will find that they correlate more closely with the spot market than whatever CNBC decides to display.

Oil gained $0.48 to $71.65 a barrel (+0.65%, 4:27 p.m.) as the steep slide down from last Wednesday’s peak is halted.  Oil reversed in this general neighborhood last December with the United States Oil Fund (NYSE: USO) bottoming at $35.48 on December 11th before running up to $41.17 on January 8th (+16%).  For all you channel and range traders out there, today’s close at $35.09 does hit short term bottoms from last December, September and August.

We have a relatively light economic calendar this week with no speeches or testifying for Timothy Geithner.  Fed Chairman Ben Bernanke testifies in front of the house Financial Services Committee on Wednesday about how he is going to let all the air out of the liquidity balloon without crushing job creation (like that is happening now anyway).  As long as I don’t hear ‘then we pray’, it sounds like a plan to me.  Ben is a pretty smart guy and the fact that our economically challenged politicians are going to quiz him on whatever he decides to do and then possibly even understand his answer is comical.

Tomorrow at 7:45 a.m. we have the ICSC-Goldman Store Sales, at 8:55 a.m. we get the Redbook and Wholesale Trade numbers come out at 10.

Selected earnings estimates for Tuesday, February 9th:

AGU 0.24, AFG 0.98 after the close, BIDU 1.68 atc, BJS 0.04, CAM 0.53, CHD 0.80 before market open, CVH 0.56 bmo, EOG 0.98 atc, IT 0.26 bmo, IFF 0.62 bmo, LGF -0.23 atc, MLM 0.33, TAP 1.10, NYX 0.48 bmo, PCH 0.04 bmo, PHM -0.19 bmo, RNR 2.50 atc, TIN 0.03 bmo, KO 0.67 bmo, VSH 0.12 bmo, VMC -0.01, DIS 0.39 atc, XL 0.70 atc

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News

Consumer Confidence is Up, So is the National Debt

By Robert Perrego, at 5:07 pm on January 26th, 2010

Consumer Confidence came in at 55.9 vs. an expected 53.5, giving a boost to the market this morning that is trying to make up the heavy losses sustained last week.  Since dropping 5.2% in the last three days of last week, the DJIA has tried to rally both yesterday and today, only to sell off into the close and the resulting two day ‘bounce’ is a whopping 21 points.  Early on it looked like we may grab a triple digit day back in the Dow and Apple Inc. (NSDQ: AAPL) was strong on their earnings report and the anticipation of the unveiling of their tablet computer tomorrow.  The DJIA traded as high as 10,285 (+88) but closed at 10,193.54 (-3.32, -0.03%) and Apple traded as high as $213.71 (+$10.64) but closed up only $2.86 (+1.41%, $205.94)

The S&P 500 closed down 4.61 points (-0.40%, 1,092.17) and the Nasdaq 100 was the hero on the day gaining a herculean 1.47 points (+0.06%, 1,803.86).  The light action and relatively unmoved indexes are not uncommon on a Fed Tuesday.  Even though the Fed is certain not to raise interest rates, the market hates uncertainty and the action will be slow until 2:15 p.m. tomorrow when the language of the ‘non-move’ will be sliced and diced and over-analyzed.  Where the economy is right now, if Ben Bernanke even dreamt that he raised interest rates and Obama found out, there would be a new Chairman of the Fed and Ben would be teaching economics at Princeton for the spring semester lickety-split.

As of January 22nd, the public debt of the U.S. Government is $12.3 trillion dollars.  The budget deficit for fiscal year 2009 was a mere $1.4 trillion dollars, more than triple that of fiscal 2008.  Who says we cannot afford health care reform?  According to my handy iPhone national debt app, each and every one of us Americans has a $41,765.93 share of that debt.  What?  You say you were born in Canada now?

The dollar was strong today as the PowerShares DB US Dollar ETF (NYSE: UUP) gained 0.43% ($23.15) and closed at its highest level in a month.  Looking at the UUP chart shows that resistance is not much higher from bottoms made in August ($23.24) and a gap down in September ($25.25).  Above this resistance level the 200 day exponential moving average looms at $23.32.

Gold has a decent inverse correlation to the dollar, so close resistance for the dollar and close support for gold means a long gold trade is setting itself up.  I mentioned in a previous post that there looks to be support for gold in the $1,060 to $1,070 level.  Whether or not gold goes that low, or the dollar rises high enough to tick resistance is any one’s guess, but you don’t need to pick the bottom clean, just be aware of the overall direction of the ride and get on.  New York spot gold barely budged today and was last trading at $1,097.30 (4:33 p.m.)

There was not much action in oil as Nymex crude dropped 66 cents (-0.89%, 4:26 p.m.) and a barrel is now going for $74.60.

Yahoo! Inc. (NSDQ: YHOO) reported after the close today and hit their 11 cent a share estimate and fourth quarter revenues fell to $1.26 billion from $1.38 billion.  When you think of all the major Internet stocks and companies, Yahoo! is probably glad AOL got spun off so they don’t look like the only lame Internet operation hoping someone buys their shares.  Oh wait – someone wanted to buy all of their shares at $34 but the brilliant board, and yes you can call them all “Yahoos”, refused right about the same time the market caved in.  Yahoo! closed today at $15.99 and on the earnings news was trading $16.26 in the after-market (4:51 p.m.)  Only $17+ to go to get to that $34 price!

Tomorrow we have MBA Purchase Applications at 7 a.m., New Home Sales at 10 a.m. (370k expected) and the Fed announcement at 2:15 p.m.

First blush for tomorrow’s earnings is that there are a lot of major oil producers, refiners, drillers, etc… reporting tomorrow.  COP, HES, MUR and VLO to note a few.

By the way – between the time that you read how much your share of the national debt was and now – you owe another dollar.

Selected earnings for Wednesday:

ABT 1.17 before market open, ATI 0.23 bmo, BLK 2.12 bmo, CBT 0.27 after the close, CAT 0.28 bmo, CTXS 0.52 atc, COP 1.13 bmo, ETFC -0.04 atc, FLEX 0.15, GD 1.57, HRS 0.94 atc, HES 0.91, ITW 0.72 bmo, LRCS 0.40, LSI 0.11 atc, MWV 0.23 bmo, MUR 0.85 atc, NFLX 0.45 atc, NE 1.58 atc, NSC 0.84 atc, PX 1.09 bmo, ROK 0.35 bmo, RYL -0.26 atc, SAP 0.94 bmo, STJ 0.62 bmo, BA 1.36 bmo, UA UA -1.47, UTX 1.14 bmo, VLO -0.47 bmo, WLP 1.02 bmo

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