BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Networking longs and Semi longs. I covered some of my (IWM) and (QQQQ) longs today, thus leaving the Portfolio 75% net long. The tone of the market is slightly positive as the advance/decline line is higher, most sectors are rising and volume is light. The AAII percentage of Bulls fell to 45.36% this week from 47.67% the prior week. This reading is now back to average levels. The AAII percentage of Bears rose to 27.84% this week from 23.26% the prior week. This reading is also back to average levels. Considering the average stock, as measured by the Value Line Geometric Index, is 7.4% higher already this year, these numbers still show muted bullishness which bodes well for further gains. I expect bullish sentiment to fall next week. I expect US stocks to trade mixed into the close from current levels as higher long-term rates and oil prices offset positive economic data.
Thursday, April 13, 2006
Stocks Mixed into Final Hour on Light Volume
Today's Headlines
Bloomberg:
- American scientists plan to create a human clone using stem cells, a feat that Korean scientists faked. US researchers at Harvard University and in California said they first will create “cloned” human embryos in the lab by combining women donors’ egg cells with DNA provided by other adults. The scientists will then isolate and extract stem cells from the embryos.
- Palm Inc.(PALM), whose Treo phone and e-mail devices have taken market share in the US, is now trying to crack Europe.
- US 10-year Treasury note yields rose to 5% for the first time since June 2002.
- General Electric(GE) said first-quarter profit rose 14%, driven by demand for jet engines, health-care services and financing.
Wall Street Journal:
- Pop star Michael Jackson, acquitted last year on child-molestation charges, may be forced to sell half of his 50% stake in a music publishing catalog that included 251 Beatles songs to Sony Corp.(SNE) as part of a loan refinancing agreement.
- Rules introduced by the SEC last year to stop “naked shorting” haven’t stopped the practice.
- Finish Line(FINL) will debut a new chain tomorrow that it hopes will appeal to affluent women, instead of its customer base of young males.
Daily Deal:
- SanDisk(SNDK) is considering an unsolicited bid for Lexar Media(LEXR).
Washington Post:
- Terrorists are beginning to worry about their online privacy and security.
NY Times:
- Owners of Nascar automobile racing tracks are building more luxury condominiums as the market for trackside housing heats up.
- Medical diagnostics, increasingly using sophisticated genetic and protein tests, is turning into a high-profit business.
NY Post:
- Morgan Stanley(MS) created a team of in-house bond traders to wager the firm’s own money, creating a potential conflict with hedge-fund clients.
Financial Times:
- Alan Greenspan said the US would probably alter parts of Sarbanes-Oxley corporate governance law that are discouraging companies from tapping US markets.
- American scientists plan to create a human clone using stem cells, a feat that Korean scientists faked. US researchers at Harvard University and in California said they first will create “cloned” human embryos in the lab by combining women donors’ egg cells with DNA provided by other adults. The scientists will then isolate and extract stem cells from the embryos.
- Palm Inc.(PALM), whose Treo phone and e-mail devices have taken market share in the US, is now trying to crack Europe.
- US 10-year Treasury note yields rose to 5% for the first time since June 2002.
- General Electric(GE) said first-quarter profit rose 14%, driven by demand for jet engines, health-care services and financing.
Wall Street Journal:
- Pop star Michael Jackson, acquitted last year on child-molestation charges, may be forced to sell half of his 50% stake in a music publishing catalog that included 251 Beatles songs to Sony Corp.(SNE) as part of a loan refinancing agreement.
- Rules introduced by the SEC last year to stop “naked shorting” haven’t stopped the practice.
- Finish Line(FINL) will debut a new chain tomorrow that it hopes will appeal to affluent women, instead of its customer base of young males.
Daily Deal:
- SanDisk(SNDK) is considering an unsolicited bid for Lexar Media(LEXR).
Washington Post:
- Terrorists are beginning to worry about their online privacy and security.
NY Times:
- Owners of Nascar automobile racing tracks are building more luxury condominiums as the market for trackside housing heats up.
- Medical diagnostics, increasingly using sophisticated genetic and protein tests, is turning into a high-profit business.
NY Post:
- Morgan Stanley(MS) created a team of in-house bond traders to wager the firm’s own money, creating a potential conflict with hedge-fund clients.
Financial Times:
- Alan Greenspan said the US would probably alter parts of Sarbanes-Oxley corporate governance law that are discouraging companies from tapping US markets.
Inflation Measure Falls, Retail Sales Rebound, Job Market Still Healthy, Confidence Still Subdued
- The Import Price Index for March fell .4% versus estimates of a .2% increase and a .5% decline in February.
- Advance Retail Sales for March rose .6% versus estimates of a .4% increase and a .8% decline in February.
- Retail Sales Less Autos for March rose .4% versus estimates of a .5% increase and a .3% decline in February.
- Initial Jobless Claims for last week rose to 313K versus estimates of 305K and 301K the prior week.
- Continuing Claims fell to 2424K versus estimates of 2450K and 2428K prior.
- Preliminary Univ. of Mich. Consumer Confidence for April rose to 89.2 versus estimates of 89.0 and a reading of 88.9 in March.
- Advance Retail Sales for March rose .6% versus estimates of a .4% increase and a .8% decline in February.
- Retail Sales Less Autos for March rose .4% versus estimates of a .5% increase and a .3% decline in February.
- Initial Jobless Claims for last week rose to 313K versus estimates of 305K and 301K the prior week.
- Continuing Claims fell to 2424K versus estimates of 2450K and 2428K prior.
- Preliminary Univ. of Mich. Consumer Confidence for April rose to 89.2 versus estimates of 89.0 and a reading of 88.9 in March.
BOTTOM LINE: Prices of goods imported into the US unexpectedly fell in March, held back by cheaper natural gas, oil and industrial supplies, Bloomberg said. Excluding petroleum, prices still fell .3%. Less expensive consumer goods from China and other Asian countries helped bring prices down. I still believe most measures of inflation will continue to decelerate through year-end.
Retail Sales in the US rose more than forecast in March as an improving labor market sparked demand for cars, building materials and furniture, Bloomberg reported. The strong employment picture is bolstering confidence among American consumers, helping them weather higher prices at the pump. Consumer spending is projected to grow 3% this quarter, slowing from a 4.7% gain in the first quarter. I continue to believe consumer spending will slow to average levels from robust rates through year-end.
First-time claims for US unemployment benefits rose to a level that still signals strength in the labor market, and the total number of Americans on jobless rolls fell to a five-year low, Bloomberg said. The four-week moving-average of claims fell to 307,500 from 309,000 the prior week. The US economy has generated 590,000 new jobs in the first quarter of the year. The unemployment rate among those eligible for benefits, which tracks the unemployment rate, remained at 1.9%. I still expect the job market to remain healthy without generating substantial unit labor cost increases over the intermediate-term.
Americans grew more confident for a second month in April as rising wages and job growth muffled the impact of higher gas prices, Bloomberg said. The expectations component of the index fell to 75.1 from 76.0 in March. The current conditions gauge, which measures consumer perceptions regarding the perception of their financial situation and if it’s a good time to buy large items, increased to 111.1 from 109.1. I continue to believe consumer sentiment is irrationally low and will rebound to cycle highs by year-end as employment remains healthy, interest rates fall, energy prices decline and stocks rise.
Wednesday, April 12, 2006
Thursday Watch
Late-Night Headlines
Bloomberg:
- SanDisk Corp.(SNDK) will replace Chiron Corp.(CHIR) in the S&P 500, S&P said.
- New Orleans may get $2.5 billion more to repair levees damaged by Hurricane Katrina, according to a federal official overseeing recovery efforts.
- Warren Buffett scored lowest in managing his own company’s pension assets, according to a study by consultant Milliman Inc.
- Tiger Woods apologized for using the term “spaz” to describe his putting during golf’s Masters Tournament, a remark that was criticized outside the US as insensitive.
- Americans want to maintain good economic relations with China and are less concerned about the near-record US trade deficit, according to a Bloomberg/LA Times Poll.
- Crude oil in New York fell for a second day after an Energy Dept. report showed US inventories rose to the highest in almost eight years.
China Securities Journal:
- China’s economy grew about 8.5% in the first quarter, slowing from 9.5% in the previous year, citing the investment dept. of the nation’s top economic planning body. For the year, the body expects China’s growth to slow to 7.5%.
BBC:
- At least 15,000 people in the New York area are being treated for illnesses stemming from the attacks on the World Trade Center in September 2001.
AP:
- A group of supporters of the Duke University lacrosse team hired President Bill Clinton’s former attorney as a spokesman in the wake of rape allegations against team members.
Nihon Keizai:
- Sony Corp.(SNE) may say its operating profit last business year was better than its most recent forecast, thanks to an increase in sales of liquid display televisions.
Late Buy/Sell Recommendations
Wachovia:
- Rated (LAD) Outperform.
Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated +.01%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (GE)/.39
- (HTLD)/.23
- (JBHT)/.31
- (MTG)/1.62
- (NYT)/.27
- (PII)/.26
- (RMBS)/.07
- (TRB)/.35
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Import Price Index for March is estimated to rise .2% versus a .5% fall in February.
- Advance Retail Sales for March are estimated to rise .4% versus a 1.4% decline in February.
- Retail Sales Less Autos for March are estimated to rise .5% versus a .6% decline in February.
- Initial Jobless Claims for last week are estimated to rise to 305K versus 299K the prior week.
- Continuing Claims are estimated to rise to 2450K versus 2440K prior.
9:45 am EST
- The preliminary Univ. of Mich. Consumer Confidence reading for April is estimated to rise to 89.0 versus a reading of 88.9 in March.
10:00 am EST
- Business Inventories for February are estimated to rise .3% versus a .4% gain in January.
Bloomberg:
- SanDisk Corp.(SNDK) will replace Chiron Corp.(CHIR) in the S&P 500, S&P said.
- New Orleans may get $2.5 billion more to repair levees damaged by Hurricane Katrina, according to a federal official overseeing recovery efforts.
- Warren Buffett scored lowest in managing his own company’s pension assets, according to a study by consultant Milliman Inc.
- Tiger Woods apologized for using the term “spaz” to describe his putting during golf’s Masters Tournament, a remark that was criticized outside the US as insensitive.
- Americans want to maintain good economic relations with China and are less concerned about the near-record US trade deficit, according to a Bloomberg/LA Times Poll.
- Crude oil in New York fell for a second day after an Energy Dept. report showed US inventories rose to the highest in almost eight years.
China Securities Journal:
- China’s economy grew about 8.5% in the first quarter, slowing from 9.5% in the previous year, citing the investment dept. of the nation’s top economic planning body. For the year, the body expects China’s growth to slow to 7.5%.
BBC:
- At least 15,000 people in the New York area are being treated for illnesses stemming from the attacks on the World Trade Center in September 2001.
AP:
- A group of supporters of the Duke University lacrosse team hired President Bill Clinton’s former attorney as a spokesman in the wake of rape allegations against team members.
Nihon Keizai:
- Sony Corp.(SNE) may say its operating profit last business year was better than its most recent forecast, thanks to an increase in sales of liquid display televisions.
Late Buy/Sell Recommendations
Wachovia:
- Rated (LAD) Outperform.
Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated +.01%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (GE)/.39
- (HTLD)/.23
- (JBHT)/.31
- (MTG)/1.62
- (NYT)/.27
- (PII)/.26
- (RMBS)/.07
- (TRB)/.35
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Import Price Index for March is estimated to rise .2% versus a .5% fall in February.
- Advance Retail Sales for March are estimated to rise .4% versus a 1.4% decline in February.
- Retail Sales Less Autos for March are estimated to rise .5% versus a .6% decline in February.
- Initial Jobless Claims for last week are estimated to rise to 305K versus 299K the prior week.
- Continuing Claims are estimated to rise to 2450K versus 2440K prior.
9:45 am EST
- The preliminary Univ. of Mich. Consumer Confidence reading for April is estimated to rise to 89.0 versus a reading of 88.9 in March.
10:00 am EST
- Business Inventories for February are estimated to rise .3% versus a .4% gain in January.
BOTTOM LINE: Asian indices are mostly lower, weighed down by auto and financial stocks in the region. I expect US equities to open modestly lower and to trade modestly higher into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Stocks Finish Modestly Higher, Boosted by Small-cap Shares
Indices
S&P 500 1,288.12 +.12%
DJIA 11,129.97 +.36%
NASDAQ 2,314.68 +.19%
Russell 2000 747.77 +.76%
Wilshire 5000 13,016.55 +.17%
S&P Barra Growth 604.38 +.03%
S&P Barra Value 680.86 +.21%
Morgan Stanley Consumer 599.00 +.07%
Morgan Stanley Cyclical 827.93 +.61%
Morgan Stanley Technology 548.01 +.05%
Transports 4,630.64 +.25%
Utilities 384.91 +.13%
Put/Call .81 -19.0%
NYSE Arms .82 -36.94%
Volatility(VIX) 12.76 -1.85%
ISE Sentiment 135.00 -11.76%
US Dollar 89.60 +.18%
CRB 340.63 +.04%
Futures Spot Prices
Crude Oil 68.41 -.31%
Unleaded Gasoline 206.71 -1.15%
Natural Gas 6.76 -.69%
Heating Oil 196.57 -.45%
Gold 601.70 +.07%
Base Metals 196.47 +2.30%
Copper 276.70 -.16%
10-year US Treasury Yield 4.97% +1.18%
Leading Sectors
Gold & Silver +2.42%
HMOs +1.92%
Biotech +1.15%
Lagging Sectors
Oil Service -.78%
Homebuilders -1.03%
Oil Tankers -4.54%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
- None of note
Afternoon/Evening Headlines
Bloomberg:
- Sears Holdings(SHLD) Chairman Ed Lampert said he is committed to building the retailer and does not plan to sell large portions of real estate.
- China is concerned about Iran’s decision to accelerate uranium enrichment and wants the government in Tehran to heed international criticism of the move, China’s ambassador to the UN said.
- Google(GOOG) may buy companies in China to expand in the world’s second-largest online market.
- Advanced Micro Devices(AMD) posted its biggest profit in more than five years in the first quarter after taking sales from Intel Corp.(INTC).
- US Treasuries fell on speculation government reports this week will add to evidence the economy is growing fast enough for the Federal Reserve to keep raising interest rates.
- Crude oil fell after an Energy Department report showed that US Gulf oil inventories surged to the highest since record-keeping began in 1990 and overall US supplies hit an 8 year high.
S&P 500 1,288.12 +.12%
DJIA 11,129.97 +.36%
NASDAQ 2,314.68 +.19%
Russell 2000 747.77 +.76%
Wilshire 5000 13,016.55 +.17%
S&P Barra Growth 604.38 +.03%
S&P Barra Value 680.86 +.21%
Morgan Stanley Consumer 599.00 +.07%
Morgan Stanley Cyclical 827.93 +.61%
Morgan Stanley Technology 548.01 +.05%
Transports 4,630.64 +.25%
Utilities 384.91 +.13%
Put/Call .81 -19.0%
NYSE Arms .82 -36.94%
Volatility(VIX) 12.76 -1.85%
ISE Sentiment 135.00 -11.76%
US Dollar 89.60 +.18%
CRB 340.63 +.04%
Futures Spot Prices
Crude Oil 68.41 -.31%
Unleaded Gasoline 206.71 -1.15%
Natural Gas 6.76 -.69%
Heating Oil 196.57 -.45%
Gold 601.70 +.07%
Base Metals 196.47 +2.30%
Copper 276.70 -.16%
10-year US Treasury Yield 4.97% +1.18%
Leading Sectors
Gold & Silver +2.42%
HMOs +1.92%
Biotech +1.15%
Lagging Sectors
Oil Service -.78%
Homebuilders -1.03%
Oil Tankers -4.54%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
- None of note
Afternoon/Evening Headlines
Bloomberg:
- Sears Holdings(SHLD) Chairman Ed Lampert said he is committed to building the retailer and does not plan to sell large portions of real estate.
- China is concerned about Iran’s decision to accelerate uranium enrichment and wants the government in Tehran to heed international criticism of the move, China’s ambassador to the UN said.
- Google(GOOG) may buy companies in China to expand in the world’s second-largest online market.
- Advanced Micro Devices(AMD) posted its biggest profit in more than five years in the first quarter after taking sales from Intel Corp.(INTC).
- US Treasuries fell on speculation government reports this week will add to evidence the economy is growing fast enough for the Federal Reserve to keep raising interest rates.
- Crude oil fell after an Energy Department report showed that US Gulf oil inventories surged to the highest since record-keeping began in 1990 and overall US supplies hit an 8 year high.
BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Networking longs, Biotech longs and Energy-related shorts. I did not trade in the final hour, thus leaving the Portfolio 50% net long. The tone of the market was modestly positive today as the advance/decline line finished slightly higher, sector performance was mostly positive and volume was very light. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was mildly bullish. The fact that stocks rose at all given another jump in long rates and oil still near $70 per barrel is impressive. The rise in the 10-year yield without much market-moving news likely foreshadows higher rates in the near-term. I want to see the market's reaction to tomorrow's economic data before shifting market exposure.
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