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Daily State of the Markets |
After a three-day hiatus, which, by the way, did not include the oft-discussed but rarely sighted downside correction, the indices returned to their winning ways on Tuesday. And although it was hardly a table-pounding affair, the bulls do get to point to the fact that they scored yet another new-cycle high.
Okay, we will have to admit that you needed a magnifying glass to determine whether or not the Dow and S&P 500 moved to a new 11-month high. And we can’t help but notice the similarity between the current almost-sideways action and that of early June, early August, and late August. If you will recall, on each occasion, the market appeared to stall out for several days before encountering a relatively brief bout of selling and then promptly returning to new highs.
And for those of you keeping score at home, Dow 10,000 is now just 170.13 points away from Tuesday’s close. So, dig out those hats, round up the noisemakers, and get ready to party like it’s 1999 again (the first time the Dow crossed the magic threshold), because the talk of the town these days is that the Dow will indeed return to the 10K level before anything bad happens.
Yesterday’s 50-point jaunt to the upside was rather uneventful as traders appeared to be focused on the outcome of the two-day Fed meeting which concludes this afternoon. The Fed is widely expected to leave rates alone, thus keeping interest rates at a record low of next-to-nothing. However, as has been the trend lately, the market rallied yesterday in anticipation of the Fed’s updated outlook on the economy.
Although a handful of economists may be looking for Bernanke & Co. to provide some insight as to the Fed’s exit strategy, which, by the way, is still a long ways off, the bulls will be looking for Gentle Ben to confirm that the recession has ended. With most indicators, including this week’s LEI’s and Richmond Fed Index showing that the economy is on the mend, the markets are now hoping for a reassuring pat on the back telling them that everything is going to be okay.
As we’ve mentioned recently, it is the expectation that the economy is actually starting to improve that is continuing to drag money kicking and screaming into this market. And the way things have been going for the last two and one-half months, it would appear that the buy-the-dip – any dip – game is still in play.
Turing to this morning, we don’t have any economic data to review before the bell, or at all today, for that matter. However, don’t forget to listen for the Fed Announcement at 2:15 pm eastern.
Running through the rest of the pre-game indicators, the foreign markets are mixed, but Europe is slightly higher across the board. Crude futures are moving lower with the latest quote showing oil trading down by $0.44 to $71.32. On the interest rate front, we’ve got the yield on the 10-yr trading at 3.50%, while the yield on the 3-month T-Bill is currently at 0.09%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a slightly higher open. The Dow futures are currently ahead by about 10 points; the S&P’s are up about 2 points, while the NASDAQ looks to be about 6 points above fair value at the moment.
Today’s Earnings Before the Bell:
AutoZone (AZO) – Reported $4.43 vs. $4.45 General Mills (GIS) – Reported $1.28 vs. $1.03, Raises 2010 guidance Upgrades/Downgrades/Brokerage Research: Southwest Air (LUV) – Upgraded at Argus Research Amazon.com (AMZN) – Estimates and target increased at Bernstein Royal Caribbean (RCL) – Target increased at Citi Yahoo! (YHOO) – Mentioned positively at Citi Verizon (VZ) – Estimates and target reduced at Citi Burlington Northern (BNI) – Upgraded at Citi Seagate Technology (STX) – Upgraded at Deutsche Bank, Thomas Weisel BlackRock (BLK) – Upgraded at Deutsche Bank CarMax (KMX) – Upgraded at Goldman Jarden (JAH) – Added to Conviction Buy at Goldman Alberto-Culver (ACV) – Downgraded at Goldman Portugal Telecom (PT) – Upgraded at HSBC FedEx (FDX) – Estimates increased at Morgan Stanley Unum (UNM) – Downgraded at Morgan Stanley Prudential (PRU) – Downgraded at Morgan Stanley Riverbed Technologies (RVBD) – Estimates increased at Oppenheimer Juniper Networks (JNPR) – Downgraded at RW Baird Tellabs (TLAB) – Downgraded at RW Baird Alcatel-Lucent (ALU) – Downgraded at RW Baird Dell (DELL) – Target increased at Thomas Weisel Steel Dynamics (STLD) – Top pick in steel at UBS Stryker (SYK) – Downgraded at Wells Fargo
Long positions in stocks mentioned: GS, BLK
Remember to think positive and until next time, “may the bulls be with you!”
David D. Moenning
Founder TopStockPortfolios.com
For more “top stock” portfolios and research, visit TopStockPortfolios.com
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