BOTTOM LINE: The Portfolio is about even into the final hour as gains in my Computer longs and Energy-related shorts are offsetting losses in my Networking longs. I added back IWM and QQQQ shorts today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, sector performance is mixed and volume is heavy. The AAII percentage of Bulls fell to 33.73% this week from 45.36% the prior week. This reading is now at below average levels. The AAII percentage of Bears jumped to 40.83% this week from 27.84% the prior week. This reading is now at above average levels. Considering the major averages are approaching six-year highs, these numbers are somewhat stunning and bode well for further gains. I expect bullish sentiment to rise next week. I expect US stocks to trade mixed into the close from current levels as short-covering offsets profit-taking.
Thursday, April 20, 2006
Stocks Mixed into Final Hour as Commodity Decline is Offset by Healthcare Rise
Today's Headlines
Bloomberg:
- Russia today rejected a call from the US to halt construction of a nuclear plant in Iran.
- Hedge funds around the world pulled in a net $24 billion during the first quarter as investors flocked to companies such as Convexity Capital Management LP, owned by former Harvard Univ. endowment manager Jack Meyer.
- The US will crack down on companies that hire undocumented immigrants, Homeland Security Secretary Chertoff pledged today, telling businesses to expect stepped-up raids and criminal sanctions against executives.
- Manufacturing in the Philadelphia area strengthened this month as companies geared up in response to rising domestic and overseas demand, a Fed survey showed.
Wall Street Journal:
- A Goldman Sachs Group(GS) hedge fund led by ex-academics using techniques developed at the Univ. of Chicago was a big contributor in a group of alternative investments increasing profit at the NYC-based brokerage.
- Scott McNealy, Sun Microsystems’(SUNW) chairman and CEO, hasn’t hitherto enjoyed the best of relationships with Wall Street, but that may be changing.
- Weyerhaeuser(WY), the world’s biggest lumber company, said it will realign its wood, paper and pulp units as part of a broader reorganization the company expects will allow the businesses to respond more quickly to market demand.
- The US Office of the Director of National Intelligence will make safeguarding individual privacy rights a top priority.
NY Times:
- Strong demand for super-sized tires used by earthmover machines has caused a shortage, and spurred companies such as France’s Michelin & Cie. to build new plants to keep up with up with customers’ orders.
USA Today:
- Construction of the US Embassy in Iraq is on schedule and within budget.
Peninsula:
- Qatar plans to raise oil production capacity at its Shaheen field by 54% to 525,000 barrels a day in 2009 to account for half the country’s total output.
- Russia today rejected a call from the US to halt construction of a nuclear plant in Iran.
- Hedge funds around the world pulled in a net $24 billion during the first quarter as investors flocked to companies such as Convexity Capital Management LP, owned by former Harvard Univ. endowment manager Jack Meyer.
- The US will crack down on companies that hire undocumented immigrants, Homeland Security Secretary Chertoff pledged today, telling businesses to expect stepped-up raids and criminal sanctions against executives.
- Manufacturing in the Philadelphia area strengthened this month as companies geared up in response to rising domestic and overseas demand, a Fed survey showed.
Wall Street Journal:
- A Goldman Sachs Group(GS) hedge fund led by ex-academics using techniques developed at the Univ. of Chicago was a big contributor in a group of alternative investments increasing profit at the NYC-based brokerage.
- Scott McNealy, Sun Microsystems’(SUNW) chairman and CEO, hasn’t hitherto enjoyed the best of relationships with Wall Street, but that may be changing.
- Weyerhaeuser(WY), the world’s biggest lumber company, said it will realign its wood, paper and pulp units as part of a broader reorganization the company expects will allow the businesses to respond more quickly to market demand.
- The US Office of the Director of National Intelligence will make safeguarding individual privacy rights a top priority.
NY Times:
- Strong demand for super-sized tires used by earthmover machines has caused a shortage, and spurred companies such as France’s Michelin & Cie. to build new plants to keep up with up with customers’ orders.
USA Today:
- Construction of the US Embassy in Iraq is on schedule and within budget.
Peninsula:
- Qatar plans to raise oil production capacity at its Shaheen field by 54% to 525,000 barrels a day in 2009 to account for half the country’s total output.
Job Market Healthy, Leading Indicators Forecast Slower Growth
- Initial Jobless Claims fell to 303K last week versus estimates of 309K and 313K the prior week.
- Continuing Claims rose to 2439K versus estimates of 2440K and 2421K prior.
- Leading Indicators for March fell .1% versus estimates of unchanged and a downwardly revised .5% decline in February.
- Continuing Claims rose to 2439K versus estimates of 2440K and 2421K prior.
- Leading Indicators for March fell .1% versus estimates of unchanged and a downwardly revised .5% decline in February.
BOTTOM LINE: First-time claims for US unemployment benefits fell more than forecast last week and the number of Americans on jobless rolls stayed close to a five-year low, signaling a strengthening labor market, Bloomberg said. The 4-week moving average of continuing claims fell to 2.44 million, the lowest since Feb. 3, 2001. The unemployment rate among those eligible to receive benefits, which tracks the US unemployment rate, remained at 1.9%. I continue to expect the labor market to remain healthy without generating substantial unit labor cost increases.
An index of US leading indicators fell for a second month in March, suggesting the slowdown in housing and record energy prices will chip away at economic growth,
Bloomberg said. This is the first back-to-back decline since February and March 2001. Leading Indicators historically forecast economic activity about 3-6 months out. The coincident indicators component, a measure of current economic activity, rose .2% for the month. I continue to believe US economic growth peaked for the year during the first quarter and will head back to average levels through year-end.
Wednesday, April 19, 2006
Thursday Watch
Late-Night Headlines
Bloomberg:
- Reliance Industries Ltd., whose shares have gained 8% in two days, plans to announce an oil discovery at the Krishna Godavari exploration area off India’s east coast.
- Carlos Slim Domit, the son of Mexico’s richest man, bought $288 million of Univision Communications stock(UVN) after the company put itself up for sale.
- China’s government said the surge in investment that drove the fastest economic growth in more than a year is a “problem,” increasing pressure on the central bank to restrict lending.
London-based Times:
- NYSE Group(NYX) may hire Goldman Sachs(GS) to advise it on a possible bid for London Stock Exchange or Euronext NV.
Late Buy/Sell Recommendations
Wachovia:
- Rated CVH and HUM Outperform.
Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated -.08%.
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
- (MO)/1.28
- (DOX)/.42
- (AH)/1.09
- (BAC)/1.00
- (BAX)/.40
- (BLS)/.53
- (BGG)/1.28
- (BRCM)/.34
- (COF)/2.06
- (CERN)/.27
- (CPS)/.45
- (LLY)/.75
- (EMC)/.14
- (FFIV)/.50
- (FDC)/.49
- (GM)/-.44
- (GOOG)/1.97
- (HSY)/.50
- (ITW)/1.25
- (IGT)/.30
- (MAR)/.72
- (MRK)/.72
- (NEM)/.32
- (NUE)/2.33
- (RYL)/1.72
- (SNDK)/.44
- (SGP)/.14
- (LUV)/.07
- (UPS)/.88
Upcoming Splits
- (GGB) 3-for-2
Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to fall to 308K versus 313K the prior week.
- Continuing Claims are estimated to rise to 2439K versus 2424K prior.
10:00 am EST
- Leading Indicators for March is estimated to remain unchanged versus a .2% decline in February.
12:00 pm EST
- Philadelphia Fed for April is estimated to rise to 14.0 versus a reading of 12.3 in March.
Bloomberg:
- Reliance Industries Ltd., whose shares have gained 8% in two days, plans to announce an oil discovery at the Krishna Godavari exploration area off India’s east coast.
- Carlos Slim Domit, the son of Mexico’s richest man, bought $288 million of Univision Communications stock(UVN) after the company put itself up for sale.
- China’s government said the surge in investment that drove the fastest economic growth in more than a year is a “problem,” increasing pressure on the central bank to restrict lending.
London-based Times:
- NYSE Group(NYX) may hire Goldman Sachs(GS) to advise it on a possible bid for London Stock Exchange or Euronext NV.
Late Buy/Sell Recommendations
Wachovia:
- Rated CVH and HUM Outperform.
Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated -.08%.
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
- (MO)/1.28
- (DOX)/.42
- (AH)/1.09
- (BAC)/1.00
- (BAX)/.40
- (BLS)/.53
- (BGG)/1.28
- (BRCM)/.34
- (COF)/2.06
- (CERN)/.27
- (CPS)/.45
- (LLY)/.75
- (EMC)/.14
- (FFIV)/.50
- (FDC)/.49
- (GM)/-.44
- (GOOG)/1.97
- (HSY)/.50
- (ITW)/1.25
- (IGT)/.30
- (MAR)/.72
- (MRK)/.72
- (NEM)/.32
- (NUE)/2.33
- (RYL)/1.72
- (SNDK)/.44
- (SGP)/.14
- (LUV)/.07
- (UPS)/.88
Upcoming Splits
- (GGB) 3-for-2
Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to fall to 308K versus 313K the prior week.
- Continuing Claims are estimated to rise to 2439K versus 2424K prior.
10:00 am EST
- Leading Indicators for March is estimated to remain unchanged versus a .2% decline in February.
12:00 pm EST
- Philadelphia Fed for April is estimated to rise to 14.0 versus a reading of 12.3 in March.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology stocks in the region. I expect US equities to open mixed and to rally modestly into the afternoon. The Portfolio is 100% net long heading into the day.
Stocks Finish Near Session Highs on Earnings Optimism
Indices
S&P 500 1,309.93 +.17%
DJIA 11,278.77 +.09%
NASDAQ 2,370.88 +.63%
Russell 2000 778.42 +1.12%
Wilshire 5000 13,278.62 +.36%
S&P Barra Growth 612.63 +.19%
S&P Barra Value 694.63 +.16%
Morgan Stanley Consumer 603.30 unch.
Morgan Stanley Cyclical 853.96 +.59%
Morgan Stanley Technology 557.26 +.36%
Transports 4,725.01 +.53%
Utilities 393.29 +.31%
Put/Call .67 -1.47%
NYSE Arms .88 +126.31%
Volatility(VIX) 11.32 -.70%
ISE Sentiment 148.00 +8.82%
US Dollar 87.77 -.53%
CRB 357.29 +.68%
Futures Spot Prices
Crude Oil 72.08 -.12%
Unleaded Gasoline 223.94 +.70%
Natural Gas 8.19 -.02%
Heating Oil 205.80 -.21%
Gold 645.40 +1.48%
Base Metals 204.43 -.86%
Copper 297.00 +.35%
10-year US Treasury Yield 5.02% +.75%
Leading Sectors
Internet +3.36%
Gold & Silver +3.36%
Oil Service +2.58%
Lagging Sectors
Disk Drives -1.03%
Wireless -1.03%
Telecom -1.05%
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:
- The US death rate for 2004 fell to the lowest level ever recorded, and life expectancy at birth rose to a new high.
- A UN report that cites Iran’s support for the Lebanese Shiite Muslim group Hezbollah is recognition that “Iran is financing terrorist groups in Lebanon and Syria,” US Ambassador Bolton said.
- Qualcomm Inc.(QCOM) said second-quarter profit rose 11% on higher sales of handsets that surf the Internet and take pictures.
- Intel(INTC) said first-quarter earnings sank 38% as the world’s biggest computer-chip maker lost market share to Advanced Micro Devices(AMD).
- Apple Computer(AAPL) said second-quarter profit rose 41% even after iPod and Macintosh shipments fell from a record holiday season.
- eBay(EBAY) said first-quarter profit fell 3.1% because of stock option expenses.
Nikkei English News:
- Toyota Motor(TM) plans to spend $11.9 billion in capital expenditures in fiscal 2006.
S&P 500 1,309.93 +.17%
DJIA 11,278.77 +.09%
NASDAQ 2,370.88 +.63%
Russell 2000 778.42 +1.12%
Wilshire 5000 13,278.62 +.36%
S&P Barra Growth 612.63 +.19%
S&P Barra Value 694.63 +.16%
Morgan Stanley Consumer 603.30 unch.
Morgan Stanley Cyclical 853.96 +.59%
Morgan Stanley Technology 557.26 +.36%
Transports 4,725.01 +.53%
Utilities 393.29 +.31%
Put/Call .67 -1.47%
NYSE Arms .88 +126.31%
Volatility(VIX) 11.32 -.70%
ISE Sentiment 148.00 +8.82%
US Dollar 87.77 -.53%
CRB 357.29 +.68%
Futures Spot Prices
Crude Oil 72.08 -.12%
Unleaded Gasoline 223.94 +.70%
Natural Gas 8.19 -.02%
Heating Oil 205.80 -.21%
Gold 645.40 +1.48%
Base Metals 204.43 -.86%
Copper 297.00 +.35%
10-year US Treasury Yield 5.02% +.75%
Leading Sectors
Internet +3.36%
Gold & Silver +3.36%
Oil Service +2.58%
Lagging Sectors
Disk Drives -1.03%
Wireless -1.03%
Telecom -1.05%
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:
- The US death rate for 2004 fell to the lowest level ever recorded, and life expectancy at birth rose to a new high.
- A UN report that cites Iran’s support for the Lebanese Shiite Muslim group Hezbollah is recognition that “Iran is financing terrorist groups in Lebanon and Syria,” US Ambassador Bolton said.
- Qualcomm Inc.(QCOM) said second-quarter profit rose 11% on higher sales of handsets that surf the Internet and take pictures.
- Intel(INTC) said first-quarter earnings sank 38% as the world’s biggest computer-chip maker lost market share to Advanced Micro Devices(AMD).
- Apple Computer(AAPL) said second-quarter profit rose 41% even after iPod and Macintosh shipments fell from a record holiday season.
- eBay(EBAY) said first-quarter profit fell 3.1% because of stock option expenses.
Nikkei English News:
- Toyota Motor(TM) plans to spend $11.9 billion in capital expenditures in fiscal 2006.
BOTTOM LINE: The Portfolio finished higher today on gains in my Semi longs, Internet longs and Biotech longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished higher, sector performance was mixed and volume was above average. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was bullish considering yesterday’s sharp gains and today’s headwinds. I sense that many shorts are trapped after yesterday's advance and are hoping for poor earnings reports to bail them out tonight.
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