Veel verhalen op de vloer vrijdag, de dollar stijgt weer wat en de inflatie komt veel hoger uit dan verwacht. De markt was volop in beweging.
Weekoverzicht en markt vrijdag:
The week ended with numbers almost identical to the prior two weeks. The S&P 500 and the Dow were little changed, but the Nasdaq was decidedly lower. This was the fifth straight down week for the Nasdaq. The theme is thus also the same: market momentum is slowing, with rotation continuing out of high flying tech stocks into more conservative stocks, as well as cyclicals.Tuesday started the holiday-shortened week with the only up day.
The announcement that Cingular, a joint venture of SBC Communications (SBC) and BellSouth (BLS), had made an aggressive bid of $15 cash for AT&T Wireless (AWE) had the market feeling exuberant. A strong gain of 0.8% in January Industrial Production as well as record reading on the NY Empire State index of manufacturing, added to the good cheer. Virtually every sector was up on Tuesday.
Then came the rest of the week. The major indices were down Wednesday, Thursday, and Friday. The news was not all that bad. In fact, earnings reports were good. Deere (DE) had an excellent report, as did Applied Materials (AMAT) and Nordstrom (JWN). Broadcom (BRCM) guided revenue estimates significantly higher for the current quarter. Wal-Mart (WMT) and Hewlett-Packard (HPQ) had solid if not spectacular reports. DaimlerChrysler (DCX) made some disappointing comments about their profit outlook, but that didn't really surprise anyone.
The economic numbers were mixed. January Housing Starts dipped due in part due to the severe weather. New Claims for unemployment showed an encouraging drop. The Leading Indicators Index was up a solid 0.5%. The Philadelphia Fed Index for February was a very strong 31.4, even though it was below expectations. The most negative number was the surprising jump in January CPI of 0.5% reported Friday. A surge of 4.7% in energy prices was a major factor, but the core rate (excluding food and energy) was up a larger-than-expected 0.2%. Most analysts blew off inflation concerns, but the bond market wasn't so sure, and the 10-year note fell significantly on Friday, pushing the yield to 4.09%. That was up a bit from 4.04% at the start of the week.
For the week, energy, consumer staples, and materials were strong sectors. Gold, technology, telecom, and utilities were all weak. The weakness in the technology sector is somewhat troubling, and many analysts believe the charts suggest a correction may be imminent. Underlying valuation concerns in that sector have many suggesting a move into more conservative positions. Briefing.com has been advocating such a posture for several weeks now.
The calendar for the week ahead is light. Durable Goods New Orders on Thursday and a revision to fourth quarter GDP on Friday are the only major economic releases. Earnings reports slow down considerably, with retailers highlighting the calendar. Light news days may leave the market subject to chart considerations. A quick look at the charts shows that is a bit worrisome. The Nasdaq is slipping, and a breakdown is possible. The S&P and Dow are barely holding up. Briefing.com does not expect any major shift in these conditions change near term, and continues to advocate a cautious, patient approach.
- 15:51 ET Events for the week of Feb 23rd-27th : Monday Feb 23rd: R.R. Donnelley Shareholders Meeting, Andarko Petroleum Investors Meeting, Boston Scientific Annual Analyst Meeting....Tuesday Feb 24th: Fed's Greenspan testifies on Gov't Sponsored Enterprises, Kulicke and Soffa Semiconductor Business Update....Wednesday Feb 25th: Fed's Greenspan testifies on Economic Outlook and Fiscal Issues, Conexant Systems Shareholders Meeting, Symantec Annual Analyst Day....Thursday Feb 26th: National Instruments New York Investor Conference, Avaya Shareholders Meeting, SanDisk Analyst Meeting, Fed's Bernanke speaks on the "Euro at Five"
- 15:48 ET Bond Market Summary : Treasuries fell off sharply today on higher than expected inflation data and a rally in the dollar pushing yields on the 10-year to weekly intra-day highs of 4.106. Currency fluctuations again produced large moves in the treasuries as the dollar rallied +2.0700 against the yen and the euro weakened -0.0166 against the dollar. The dollar's strength kept Treasuries in the red for most of the day on the assumption that foreign central bank intervention would diminish, out of lack of necessity, due to the dollar's apparent recovery. In addition,
Poole , Greenspan and Bernanke all spoke in agreement today that the job market is poised for strong growth this year sending the 10-year into the close just off its lows of the day. The ten-years are currently -16/32nds, yielding 4.094%, the five-years are -11/32nds, yielding 3.075% while the 30-years are -29/32nds, yielding 4.953%. - 14:35 ET USB: Hearing market chatter that Wells Fargo may make bid for US Bancorp 27.84 +0.19:
- 14:32 ET Floor Talk: Intraday bounce : Intraday recovery being attributed by some to Greenspan comments (see 13:47 comment). While this may have provided some support for the market, the real story here is short-covering in an extremely thin, almost holiday-like market. Seeing best action in stocks that managed to hold ground near important moving averages (see 12:55 MRVL, 11:41 NFLX, 10:59 SNPS, 10:55 DRIV and 10:51 VECO comments for examples), as well as heavily shorted names such as VAPH +9.34, TASR +5.30, PGTV +2.00, LSCP +1.64.
- 14:16 ET Gold plummets on Dollar rally : The currency markets are in an uproar this week as the Dollar rallies off an all-time low against the Yen/Dollar. After notching an all-time high at 1.2907 on Wednesday, the Euro has sharply reversed against the Dollar down 5 cents to
1.2497 in the last 3 sessions. Suspected selling of Yen by the Bank of Japan this week has resulted in the Dollar rallying from 105.50 to a high of 109.32. - Wednesday's Swing Trader as set ups on the short-side, noting that stocks should decline as Dollar makes reversal off all-time lows against the Euro.
- 13:47 ET Greenspan says labor market improving, expects to keep picking up :
- 13:07 ET Floor Talk: Market extends losses, Poole picked as goat : -- Update -- The few institutional traders who are still around today are highlighting several factors for extension of afternoon losses: 1) technical deterioration (Nasdaq broke 50-day avg, see 10:05 comment), 2) selling into a thin market, 3) comments made by St. Louis Federal Reserve President Poole suggesting the Fed is more likely to raise than to lower rates (obviously point 3 has long been known, but market simply not in the mood to hear it today)... see 11:26 and 10:47 updates for related commentary
- 11:26 ET Fed's
Poole : Inflation risk more to the upside than downside -- Dow Jones : - 11:08 ET Floor Talk: Technicals Own the Day : Guess someone forgot to inform us of the holiday today. Desks already seem to be shutting down as traders decide to use expected quiet day as an excuse to duck out early. May notice that we've posted a fair number of technical comments today. It's not because the desks are quiet, rather its due to recent pullback carrying many of the most actively traded names to key support levels. Traders will be paying close attention to performance around these levels. Failure to demonstrate the "bounce-back" type of action seen in recent months would likely push a good number of traders into the bear camp.
- 10:47 ET Floor Talk: Market Action : Early decline being attributed to 1) volatility related to options expiration, 2) resumption of yesterday's late decline, which occurred on institutional/retail profit-taking into an extremely thin market. As noted earlier this week, we are hearing very little excitement from the buy-side with respect to valuations and the immediate need to add positions. With buyers on sidelines, the extremely light volume we've seen this week has magnified the pullbacks.
- 10:29 ET Floor Talk : A rumor came to our attention from one trading desk of a "tanker attack" being reported by an online rumor service. However, further inquiries into this rumor suggest it is completely false. It appears the US Coast Guard has closed a portion of lower
Mississippi - 09:34 ET
Japan raises Terror Alert -- AP : AP reports thatJapan
Guy Boscart,