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Daily State of the Markets Yesterday morning, we took time out to sing happy birthday to the bulls and looked back at the run for the roses that has occurred over the past year. Our excuse for waxing nostalgic was that the market really didn’t do all that much on Monday and as such, celebrating the impressive run by the bull camp made for a much more interesting report. So, with the Dow moving just 12 points on Tuesday, we thought we’d take a look back again this morning at another rather historic anniversary. Ten years ago today, all anybody could talk about was technology, the internet, IPO’s, and all the money they were making in the stock market. Ten years ago today, my “top stocks” model portfolio consisted of 32 semiconductor stocks. Ten years ago today, analysts were falling all over themselves trying to come up with new ways to justify monstrous valuations of companies that had yet to actually make any money. And ten years ago today, the NASDAQ peaked at 5,048.62. Since then, it’s been somewhat of a rough ride for the all-tech-all-the-time crowd. Some quick math shows that despite the +84% run over the last twelve months, the NASDAQ remains 54% below where it stood ten years ago. And for those of you keeping score at home, this means the “NAZ” will need to gain 2,708 points or +117.39% from here in order to return to where it stood ten years ago today. In short, THIS is what a “secular bear market” looks like. Therefore, on this not-so happy anniversary of what will likely turn out to be one of the greatest bubble peaks of all time, we thought we should spend a moment to remind ourselves of the environment we are dealing with. But enough about the past, let’s reel things in and get back to the present market. Although the Dow was able to put up a measly 12 points by the time the closing bell rang, this is not to say that there wasn’t some action to take note of during the session. While it was easy to miss, perhaps the most interesting aspect of the day was the action in the poster children of the credit crisis: namely Citi (C), AIG (AIG), Fannie (FNM), and Freddie (FRE). In short, it was an article in Fortune that got the party started for these bailed out companies. The article opined that some of those distressed assets we once worried so much about were starting to become more attractive. This kind of thinking was good enough for big pops in the beaten-down financials as Citi gained 7.3%, AIG jumped 12.6%, and Fannie and Freddie improved by 6% and 7.6% respectively. The idea that perhaps there is more than meets the eye in these companies helped push the Dow to a gain of 60 points in the afternoon before profit taking set in. And while the Dow and S&P diddn’t have much to show for their efforts at the end of the day, we will once again point out that the NASDAQ, Russell 2000, and Midcaps all continued their recent march higher. Turning to this morning, things are very quiet in the pre-market session. We don’t have any economic news to report, the earnings parade has all but stopped, and there are no global macro issues to deal with so far. Running through the rest of the pre-game indicators, the overseas markets are mixed, although Europe is improving a bit currently. Crude futures are up $0.20 to $81.69. On the interest rate front, we’ve got the yield on the 10-yr trading at 3.73%. Next, gold is moving up $2.60 to $1124.90 and the dollar is lower against the Yen and Euro, but higher against the Pound. Finally, with about 60 minutes before the bell, stock futures in the U.S. are pointing to a ever-so slightly higher open. The Dow futures are currently ahead by about 10 points; the S&P’s are up about a point, while the NASDAQ looks to be just about 3 points above fair value at the moment. Wall Street Research Summary Upgrades: |
Analog Devices (ADI) – Bernstein Baidu (BIDU) – Target increased at Citi YUM! Brands (YUM) – Estimates and target increased at Credit Suisse Goodrich (GR) – Added to Conviction Buy list at Goldman Evercore Partners (EVR) – Added to Conviction Buy list at Goldman Bucyrus (BUCY) – Added to Conviction Buy list at Goldman Edison (EIX) – Jefferies Lockheed Martin (LMT) – Macquarie Research Alaska Air (ALK) – Target increased at UBS American Airlines (AMR) – Target increased at UBS Continental (CAL) – Target increased at UBS JetBlue (JBLU) – Target increased at UBS US Airways (LCC) – Target increased at UBS Southwest (LUV) – Target increased at UBS United Airlines (UAUA) – Target increased at UBS
J Crew (JCG) – Citi Barclays (BCS) – FBR Capital Collective Brands (PSS) – Soleil Securities Comerica (CMA) – Soleil Securities Dicks Sporting Goods (DKS) – Serne, Agee AirTran (AAI) – Target reduced at UBS Vale SA (VALE) – UBS
Long positions in stocks mentioned: none
Make the decision to have a great day 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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