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Daily State of the Markets Stocks roared out of the starting gate on Monday as the bulls began the year looking to make a statement. The message from the bull camp was clear from the first minute of trading here in the U.S.: The economy is improving around the globe, the Fed is on a mission, and just about everyone expects stocks in the U.S. to be THE place to be in 2011. As such, there was a rush to put money to work in stocks and the major indices broke to new highs for this bull market cycle. The impetus for the first joyride to the upside of the New Year appeared to be better-than-expected data both here at home and across the pond. Although many global markets were closed for holiday on Monday, U.S. futures responded nicely in the early going to the Eurozone Purchasing Managers Index, which came in above the consensus. While the fact that the manufacturing sector is growing in Europe is hardly a surprise at this stage of the game, the data seemed to put a nail in the coffin of those espousing the idea that global doom and gloom would emanate from the Eurozone. Closer to home, a similar theme rang true. While the ISM Manufacturing Index has been expanding for seventeen straight months now, the gain in December plus the impressive numbers from the New Orders and Inventories components made it hard to be overly negative on the outlook for the economy. And in short, the outlook for the economy is what the game is all about right now. While the glass-is-half-empty crowd will drone on about the housing market and the problems with debt in the Europe, unless either becomes a systemic issue, the stock market game is about the expectations of earnings down the road. So, with the economy improving and the Fed committed to keeping things moving forward, it looks like traders are in the process of once again discounting blue skies ahead. The problem is that Wall Street always overdoes everything – in both directions. For example, on March 9, 2009 the market was very worried about the fate of the global banking system and stock prices were discounting the end of the world. And on the flipside, although we don’t expect to see a repeat of the party seen in 1999, it does appear that the expectations for an improving economy and, in turn, continued earnings growth, could become self fulfilling in the near term. While I feel compelled to continue to throw out the caveats that (1) Ms. Market can and often does do whatever she can to frustrate the masses and (2) the current move is becoming extended, it is VERY hard to argue with the herd of stampeding bulls right now. Monday’s blast was a positive from a technical standpoint and unless the bears can get something going in a big hurry, we will argue that the second leg of the cyclical bull market that began on March 10, 2009 is underway and looking good. Turning to this morning… While the foreign markets that were closed Monday are playing catch-up this morning, the rest of the world seems to be leaning modestly positive in the early going. On the economic front… There is no data to review before the bell. However, we will get the report on Factory Orders at 10:00 am and then the FOMC Minutes at 2:00 pm. Thought for the day: Remember that happiness is a choice. What will you choose today? Pre-Game Indicators Here are the Pre-Market indicators we review each morning before the opening bell…
Wall Street Research Summary Upgrades: |
Amgen (AMGN) – BofA/Merrill Universal Health (UHS) – BofA/Merrill Amazon.com (AMZN) – Benchmark Co Polo Ralph Lauren (RL) – Citi Rockwell Automation (ROK) – Credit Suisse Carnival (CCL) – Deutsche Bank Walgreens (WAG) – Goldman Sachs Orient-Express (OEH) – JPMorgan SunTrust Banks (STI) – Keefe, Bruyette & Woods Toronto-Dominion Bank (TD) – Keefe, Bruyette & Woods Wynn Resorts (WYNN) – KeyBanc, Estimates increased at Soleil Las Vegas Sands (LVS) – Estimates increased at Soleil Monsanto (MON) – Soleil
Stericycle (SRCL) – BofA/Merrill JM Smucker (SJM) – Bernstein Safeway (SWY) – BMO Capital, Morgan Stanley Vitamin Shoppe (VSI) – BMO Capital Wolverine (WWW) – Citi LM Ericsson (ERIC) – Credit Suisse Emergency Medical Services (EMS) – Jefferies Affymetrix (AFFX) – JPMorgan Associated Bancorp (ASBC) – Keefe, Bruyette & Woods Supervalu (SVU) – Morgan Stanley Martin Marietta Materials (MLM) – UBS Vulcan Materials (VMC) – UBS T. Trowe Price (TROW) – Wells Fargo Ingersoll-Rand (IR) – Wells Fargo
Long positions in stocks mentioned: None
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