Monday the stock market had a sideways day following Friday's
news-driven rally due to lower-than-expected unemployment. That
news, like other recent favorable reports, was almost forgotten
yesterday as both buyers and sellers were hard to find, and the
NYSE reported the second-lowest volume of the year.
Today is the one-year anniversary of the bear market bottom.
Since then the Dow Jones Industrial Average (
) is up about 61%, the S&P (
) is up 68%, and the Nasdaq (
) is up 83%. But with limited economic news and Q4 earnings now
history, traders opined that there seems little that will move
stocks to a convincing break of the January highs.
But there was some positive news for individual stocks. Cisco
) rallied on an expectation that on Thursday the company will
announce ways to help companies boost their Internet speeds. The
stock rose 3.7%, and this drove Sprint Nextel (
) up 3.7%, and Verizon (
) and AT&T (
) to gains of more than 1%.
However, Hewlett-Packard (
) issued a downward earnings revision, and the stock fell 30 cents
Research In Motion (
) was the Nasdaq's big winner, up $3.89 following an upgrade by
analysts. The Nasdaq gained fractionally as a result of the
positive impact of this and the CSCO announcement on technology
Overall, it was a very slow day with the Dow off 14 points to
10,553, the S&P 500 breakeven at 1,139, and the Nasdaq up 6
points to 2,332.
The NYSE traded 907 million shares with advancers over decliners
by 11-to-8. The Nasdaq crossed 599 million shares with advancers
ahead by 7-to-6.
April crude oil gained 37 cents to an eight-week high and closed
at $81.87 a barrel. The Energy Select Sector SPDR (
) fell 9 cents to $58.06.
March Gold fell $11.20 to $1,123.60 on profit-taking, and the
PHLX Gold/Silver Sector Index (
) dropped 1.6 points to 169.21.
What the Markets Are Saying
, I noted that mutual funds have only a 3.65% cash position
following a period of "burning through cash at the fastest record
in 18 years." It is so important that investors consider the
implications of this that I am repeating it again.
It is like taking your car on a 500-mile trip and starting at a
maximum speed of 130 mph. The car is moving fast, but gobbling up
gasoline at a rate of 10 miles per gallon (
) while it was designed to travel at 60 mph and deliver 25 mpg. The
result is that you will run out of gas before you reach your
But some would say, "That's no problem. There are plenty of gas
stations along the way." For investors that means pools of cash.
Under normal circumstances that would be true, but now the pumps
As stated above, in just one year the Dow is up about 61%, the
S&P is up 68%, and the Nasdaq is up 83%. The fuel has been
spent and cash is below 4%. In other words, the stations are
Other conditions to consider: There are few economic and
earnings reports this week to boost the market, the European
financial crisis with Greece has not been solved, speculative
stocks on Nasdaq and Russell 2000 (
) are grossly overbought, and the week before the quarter's
triple-witching expiration (next week) tends to be negative.
The recurring pattern of low volume, low volatility seems likely
to result in a failure to make a significant move above the highs
I've been noting the possibility of a reversal for several
weeks, but the spike up Friday resulting from the
better-than-expected unemployment report could have been a
short-term buying climax.
This all adds up to a strong possibility of a reversal occurring
sometime this week.
If a minor reversal takes prices back to 50% of the run from the
January low of Dow 9,823 (Feb. 5) to the high of 10,587 (Friday),
the downside target is about 10,200. But note that it is possible
that the market could make a deeper correction, and that could lead
to a longer period of consolidation caused by a lack of buying
power, i.e., cash -- the fuel of the market.
Today's Trading Landscape
Earnings to be reported before the opening
Bronco Drilling, Caliper Life Sciences, China Real Estate Info,
Compass Group, Dick's Sporting Goods, E-House China, Exelixis,
Gulfport Energy, Kroger, LMI Aerospace, Northgate Minerals, Stage
Stores, Superior Well Services and Tasty Baking.
Earnings to be reported after the close include:
A123 Systems, AeroVironment, Analogic, Bidz.com, Boston Beer Co.,
Collective Brands, Dexcom, ExlService, Flow, ICF International, J.
Crew, Navistar, Salix Pharmaceuticals, Verisk Analytics and
Economic reports due:
ICSC-Goldman Sachs store sales and Redbook.
$4 China Stock to Hit $8
China is on the verge of a real estate bull market the likes of
which we've never seen before, and the biggest profit-taker of all
will be this little-known $4 stock.
Get the full story here, plus three more top-rated
China stocks set to double.