Tuesday, December 04, 2007
Stocks Lower into Final Hour on Weakness in Financials, Homebuilders
BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Medical longs and Retail longs. I have not traded today, thus leaving the Portfolio 75% net long. The overall tone of the market is negative today as the advance/decline line is lower, sector performance is mostly negative and volume is around average. Investor anxiety is above average. Today’s overall market action is mildly bearish. Oil is falling again today despite dollar weakness. It is interesting to note that OPEC said today that production only fell by 125,000 bpd in November despite a 400,000 bpd cut by the UAE due to maintenance. Saudi production rose 125,000 bpd last month. Weekly retail same-store-sales rose 2.4% versus 2.4% the prior week and up from 1.4% in July. Today’s report that CEOs have become more optimistic of late corresponds with the recent surge in insider stock buying. There is now a 48% chance for a 50 basis point cut at the Fed meeting next week and a 52% chance for a 25 basis point cut. I am currently leaning towards a 50, depending on this Friday’s jobs report. A 50 basis point cut and likely better economic data over the next few weeks should lead to another surge in stocks, especially the more economically sensitive ones. I expect US
Today's Headlines
Bloomberg:
- Abby Joseph Cohen, the Goldman Sachs Group strategist, predicted the S&P 500 will rise 14% by the end of next year.
- Dell Inc.(DELL) will resume its stock-buyback program this week with a $10 billion repurchase, the first since it restated four years of earnings.
- AutoZone(AZO), the largest
- Legg Mason’s Bill Miller said financial stocks are the cheapest since 1990 and that consumer stocks are very cheap.
- Prudential Financial(PRU) rose in NY trading after saying its subprime holdings will keep their value and the company will repurchase at least $3.5 billion of stock in both 2009 and 2010.
- Crude oil is falling more than $1/bbl. on speculation OPEC may increase production at its meeting tomorrow and worries over decelerating global demand.
- The Canadian dollar fell to a 10-week low after the central bank unexpectedly cut interest rates to support an economic expansion threatened by slowing exports and a decline in the availability of credit.
- Markit Group, the data provider that bought the iTraxx and CDX credit-default swap index owners last month, has agreed to buy electronic trade processor SwapsWire.
USAToday.com:
- Hillary Rodham Clinton and Rudy Giuliani lost support among US Democrats and Republicans, respectively, during the past month while retaining their lead over political rivals, a USA Today/Gallup Poll found.
Reuters:
- CEOs take brighter view of economy: survey.
Financial Times:
- Lennar’s(LEN) sale of an 80% in 11,000 houses to Morgan Stanley at a low price may be a sign that the housing slump is heading toward resolution.
Bear Radar
Style Underperformer:
Small-cap Value (-.98%)
Sector Underperformers:
Oil Tankers (-2.59%), I-Banks (-2.49%) and REITs (-2.06%)
Stocks Falling on Unusual Volume:
Bull Radar
Style Outperformer:
Large-cap Growth (-.31%)
Sector Outperformers:
Computer Hardware (+.94%), Utilities (+.53%) and Computer Services (+.44%)
Stocks Rising on Unusual Volume:
Links of Interest
Market Snapshot Commentary
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WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
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