MARKET COMMENT October 22, 2009 DRIVE-THRU SOUP KITCHEN 2009 So, what the hell was yesterday about anyway? It lends credence to the idea of heavy liquidations in Galleon’s hedge funds since there don’t appear any other credible ideas—but, I’m open to suggestions. The rally today was led by earnings from McDonalds, Travelers and 3M. The 2:15 PM Buy Program Express arrived on time to squeeze shorts from yesterday’s closing debacle. The buy programs were stimulated by little follow-though selling from yesterday and the LEI coming in “better than expected”. Ignored in the enthusiasm was a lowering of the previous LEI report. We finally got big volume today on an up-day with dip buying and earnings optimism. Breadth was quite positive. ...

MARKET COMMENT October 20, 2009 TAKING A BREAK It was a pretty strange day. Logic would argue for a big rally following earnings from Apple, Texas Instruments and Caterpillar; but no, instead investors focused on weaker than expected housing data and sold. It’s like I said at the end of last night’s commentary: “that’s why they play the game.” As this is written, the “better than expected” earnings are rolling in from the likes of Yahoo and SanDisk. Both stocks are bid higher in after hours trading. And volume is repeating the previous pattern of being heavier (although today’s volume was hardly “heavy”) on selling than buying. Breadth was negative. ...

October 13, 2009 EARNINGS WORRY WARTS I just have a spooky feeling but then I always do. Like the “Twilight Zone” episode above when William Shatner sees a frightening image, tries to warn the crew to no avail since only he sees it. Was it an illusion? We seem to never know. And despite this metaphorical image, today Mr. Market seems unconcerned. All bad news is brushed-off or spun positively and every dip bought. Now we focus on earnings and much reduced estimates are, to steal an Eagles line, “programmed to deceive”. That is to say, earnings estimates are low-balled and when beat are spun as “better than expected” despite being lousy. First in focus is INTC and as this is written their announcement came through beating consensus estimates. I’m shocked!!! Anyway, in anticipation of earnings announcements stock market ...

MARKET COMMENT October 8, 2009 GETTING SOME ALTITUDE SICKNESS YET? Follow through buying on Alcoa, “better than expected” Jobless Claims and Chain Store sales got bulls pumped-up early. But perhaps bulls aren’t getting enough oxygen from news and earnings season. In the meantime other trends, perhaps less welcomed, continue for commodities like gold and oil while the dollar is still in descent. One thing about earnings reports is the stripping away of losses to find some silver lining in core numbers as if the losses and write-downs don’t exist. From that view we have earnings news from Marriott that are being spun positively HERE. It’s a thing of wonder that any business can just pretend losses don’t exist since most business owners can’t get away doing this. Volume was average by recent measures while breadth was positive....

MARKET COMMENT October 2, 2009 REALITY BITES BULLS Economic reality is meeting bullish enthusiasm and the results are disappointing and upsetting. Bulls were expecting the economic recovery to continue and gain more steam. However, the reality is an economic recovery is going to take some time. Another negative we take away is stock prices are much too high. It would be interesting someday if the mainstream financial media would represent PE ratios on the basis of GAAP (Generally Accepted Accounting Principles) or reported earnings versus operating earnings. In the latter case operating earnings deflate PE ratios making stocks sound cheaper than they are. Volume today was higher again on selling than previously when buying. Breadth again was negative. ...

MARKET COMMENT October 1, 2009 NOT A PROMISING START When did everything get so predictable? October is supposed to be rough and this is not the kind of start bulls were hoping for. They’ll have to dust off that “buy ‘em in the fall, sell ‘em in the spring” maxim But, oh, that didn’t work great if March counted as spring. The green shoots turned to mold today as economic data again came in worse than expected and couldn’t be spun the other way. Let’s take a look. Volume was higher on selling (another replay of recent history) and breadth was negative enough to perhaps be a 10/90 day. ...

MARKET COMMENT September 25, 2009 TRIP, STUMBLE AND FALL? We’ve been due for this type of action for some time as conditions had gotten much overbought. Suddenly, “worse than expected” news is really just bad news not spun in another manner. We lose one of the Four Horsemen (RIMM) due to poorly received earnings; and Durable Goods and New Home Sales were in the bad news camp so the selling continued. Volume remains at a higher level with selling than previously with buying which isn’t good. Breadth today continues negative and that should embolden dip buyers and tape painters with the quarter and month end just a few trading days away. ...

MARKET COMMENT DON’T FADE THE BEARD? The old maxim, “the first move is the wrong move” was operable today regarding Fed announcements. This isn’t always the case clearly but I’ll pull it out of my “maxim quiver” today. The text below from today’s Fed announcement, with no dissent, is what got sellers motivated. Why? Because the statement has a hint the punchbowl may run dry in future. With markets much overbought and still forward looking, it gives investors a chance to take profits. “To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. The Committee will gradually slow the pace of these purchases in order to promote a ...

MARKET COMMENT September 1, 2009 You could feel it coming. The other day my image du jour was “running on empty” and that was the ominous warning we were sensing. Most trading systems don’t have a “feel” component and mine doesn’t either. The only logical thing which we’ve commented on repeatedly as have others is light volume and how the news hasn’t jived with reality. And, recently, investors have been selling good news versus buying bad news as before. Today good ISM and housing data failed to impress as the short sellers seized the tape. September’s are supposed to be the cruelest month but it’s never a sure thing. Today, hedge fund leaders Paul Tudor Jones and others jumped on the short side questioning the validity and viability of the current rally as reported well in this ...

MARKET COMMENT June 3, 2009 Some have predicted a “Zombie Summer” which might be right as investors await proof that a real economic recovery is in the offing. But, just when you thought they might break this camp job they’ve been working on we got the obligatory “stick save” into the close. Evidently job losses were “worse than expected” and some noted bulls thought the market was expensive which is pretty funny since most of the financial media still report PEs incorrectly. Bloomberg, which should know better, has PEs at 15 for the S&P 500 by using operating earnings which omits unusual items (losses and writedowns?) making stocks look cheaper than they are if just using GAAP trailing earnings. The latter would put PEs at astronomical levels greater than 30. So as things go it’s however TPTB want ...