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Daily State of the Markets The major indices did a little backing-and-filling yesterday as it appeared traders were trying to get comfortable with Monday’s massive gains. There was something for both teams to crow about Tuesday as stocks initially plunged on worries about – what else – European debt, then rallied smartly, only to fall back into the red by the time the closing bell rang. But the bottom line to Tuesday’s session is traders appear to be keying on the currencies again with the Euro getting most, if not all, of the attention. There has been an awful lot of talk amongst the commodity trading types that the Euro is in trouble – big trouble. The thinking is that despite the latest bailout attempt, the overall economic picture isn’t pretty for the Eurozone. Those seeing the glass as half empty argue that there is simply too much debt and without the ability for these countries to ‘spend their way out’ of recession, the austerity measures being imposed will simply lead to a prolonged depression in the region. Thus, the bears argue that the Euro may not survive. For those without access to the currency markets, you can put up the symbol FXE on your screens in order to watch the action in the Euro. The FXE is the CurrencyShares Euro Trust ETF, which is designed to mirror the action in the EU currency. While the big-picture outlook for Europe may be less than rosy, the EU/IMF bailout package does appear to have taken the panic out of the markets. So, with our friends across the pond looking like they would live to fight another day, traders turned their attention back to the economic prospects here at home for a while. And with yet another economic report showing signs of improvement, it wasn’t long before stocks were back in rally mode. The bulls could be heard arguing that the move by the indices back above the 50-day moving averages was a positive and that the buying represented follow-through to Monday’s blast. However, as the Euro began to sink again in the afternoon, the bulls were simply unable to hold their ground and succumbed to selling into the close. So where does this leave us? In short, a period of backing-and-filling would be normal right about now. And if the bulls can somehow avoid giving up a big chunk of Monday’s gains, they might have a shot at recapturing their lost mojo in the near-term. Turning to this morning… The government reported that the U.S. Trade Deficit widened a bit in March to $40.4 billion, which was just below the consensus estimate for a deficit of $40.5 billion. For reference purposes, the February reading was $39.4 billion. Also note that traders will be watching this afternoon’s auction of $24 billion in 10-year notes – scheduled for 1:00 pm eastern. Finally, make the decision to have a great day… Pre-Game Indicators Here are the important indicators we review each morning before the opening bell…
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Dow Jones Industrial Average: +35 NASDAQ Composite: +6
Wall Street Research Summary
Upgrades:
Tellabs (TLAB) – BofA/Merrill Ruby Tuesday (RT) – Credit Suisse Murphy Oil (MUR) – Deutsche Bank JC Penney (JCP) – Deutsche Bank Constellation Brands (STZ) – Deutsche Bank McKesson (MCK) – Goldman Sachs Adobe (ADBE) – Mentioned positively at Goldman Sachs Salesforce.com (CRM) – Mentioned positively at Goldman Sachs Nalco Holdings (NLC) – JPMorgan Huntington Bancshares (HBAN) – Morgan Stanley Williams Companies (WMB) – RBC Capital Charles River Laboratories (CRL) – RW Baird Infosys (INFY) – RW Baird
SVB Financial (SIVB) – Morgan Stanley NewAlliance Bancshares (NAL) – Morgan Stanley Anadarko Petroleum (APC) – Oppenheimer Semiconductor Sector – Mentioned cautiously at UBS
Long positions in stocks mentioned: APC
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