STOCK MARKET WATCH, WEDNESDAY OCT 22....(#1)

"Mid-Month Charts with a Long-Term View"

Quite often we lose clarity of thought due to the short-term gyrations of the market. Thus, I find it important to regularly examine the markets from a long-term point of view, even when our intention is to trade on a short-term basis.

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The charts are telling us, that from a short-term point of view, investors may be able to squeeze a few more gains out of the market, because there is still room to the upside by about 5%-7%, depending on which index we're looking at. However, from a longer-term point of view, the markets are approaching significant resistance without having experienced even one meaningful pullback in eight months. Thus, the odds of a significant pullback (8%-15%) in the next 2-3 months are rather high.

Investors' preference for risk is as robust as ever! Short-term, this is positive for the market, because it indicates that investors find it in their best interest to be risk takers, thus they are net buyers of stocks (markets don't go down when there is a plethora of buyers!) It is when the volatility ratios begin to come down that signify a change in investors' preference, meaning they find it in their best interest to be risk averse, and become net sellers of stocks (markets do go down, when there is a plethora of sellers!)

Mr. Iossif likes using charts and one-sentence analysis - so you can fill in the rest yourself

Great toon! Love it.

Well futures are looking a bit dark at this point. Those cheerleaders better get to work. Good quarterly reports don't seem to be doing it so, let's start manufacturing reasons as to why the "bulls are here to stay" and "this rally has staying power" and all the other crap they'd have us believe. Oy!

BTW all, last night, first concert of the season for my daughter--great stuff. The (older) high school orchestra played too, one boy up front stole the show. Really into it, fabulous violinsts but moved quite a bit. Easy to see he "feels" the music, doesn't just play. After the show my daughter tells me he's the foreign exchange student from France she was telling me about the other day. I knew it!! He had way too much panache to be an American. He was just delightful! Vive la France! Great concert, lots of talent. Kids are great. I recommend everyone go see such a concert put on by their local schools.

More later, time to get the little virtuoso up for school.

Julie

It sounds to me like the concert was fabulous - even with the dramatics of the French violinist. To me, enthusiastic playing matters little as long as it is not affected. I recall seeing William Preucil, former concert master of the Atlanta Symphony Orchestra, in performance. He had a very "individual" sound even when he was in the orchestra. (Later, he left and became first violinist of the Cleveland Quartet, now defunct.) He moves in a grandiose, sweeping fashion when "feeling" a piece of music. His eyes are also very expressive. Others like him have crossed my path. If the gesticulation is real, you know it.

As for this boy, France should really cherish him if good violinists are as endangered as good pianists. About four years ago, pianist Jean-Yves Thibaudet was asked to consult with the Paris Conservatory to help solve the national crisis in a shortage of world class pianists. I do not know what ever came of this. I do know, however, that it takes more than four years to turn soulful hearts and keen minds into pianists like Mr. Thibaudet.

*ahem*
Back on topic:
Keep an eye out for unemployment figures this week. GE has announced layoffs in two states. (GE will probably get a vulture's bounce because of this.) Pharmaceutical companies have also announced layoffs. GM too.

Stock prices in these major sectors can experience that vulture's bounce as payroll cuts amount to higher dividends. This is sickening. But I expect to see some "moral relativism" reflected in market numbers - especially the Dow.

Now, for my final 'goodbye' - goodbye.

all things good,
Ozymandius

It is time for me to get to work. Enjoy the spinning of the roulette wheel!

Or "how's the afternoon, ozy?" since you've already hit the work trail...

:donut::donut::donut:

Thought I'd bring in a "mainstream" warning voice on fuzzy math...

Earnings without the bad stuff
Once again companies are relying on 'pro forma' results to make their numbers.
October 21, 2003: 5:01 PM EDT
By Justin Lahart, CNN/Money Senior Writer
NEW YORK (CNN/Money) - Thought companies' dependence on funny numbers was long gone? In the spirit of Halloween, the use of pro forma earnings is staging a return from the grave that even Michael Myers would be proud of.
After just a couple of quarters of good behavior, companies are once again asking analysts and investors to ignore certain expenses on the grounds that they are one-time charges -- events that are so far out of the bounds of their normal business environment that they'll probably never, ever happen again.
Forget about that money we sank into research and development on that one product area -- it didn't pan out. Forget about the costs we incurred when we mothballed that plant, or when we fired those people. <more>

Ouch! Ugly stuff and things aren't even open yet.

Futures:

Dow -65.00
Nasdaq: -13.00
S&P: -6.40

But, but, but everything's so good!! We're in a recovery! Q3 is great! All that bad news kept hidden, for nothing??

Julie

Nasty stuff. Wanna see a horror movie? Watch CNBC today.

Reuters
Stocks Poised to Drop; Amazon Falls
Wednesday October 22, 8:03 am ET
By Denise Duclaux


NEW YORK (Reuters) - Stocks are set to fall at Wednesday's open after companies like online retailer Amazon.com Inc. (NasdaqNM:AMZN - News) posted earnings that were higher but not enough to sustain the hefty run-up in share prices.

"We begin the day with a couple of disappointments on the bottom line," said Larry Wachtel, market analyst at Wachovia Securities LLC. "Amazon has tripled in value this year. So they come in with a good quarter, but what do they have to offer beyond that? It's the old 'sell on the news' psychology."

Amazon.com reported its first quarterly profit outside the holiday season as free shipping incentives and a new sporting goods store boosted revenue. The company said sales in its current quarter could top expectations but forecast 2004 revenue roughly in line with analyst forecasts.

Shares of Amazon, which have more than tripled this year in a rally some analysts warn has left the company overvalued, skidded to $57.55 before the bell after closing at $59.35

http://biz.yahoo.com/rb/031022/markets_stocks_2.html

Futures continue to drop.

Julie

and it looks like we slid from the rut to the ditch

http://quotes.ino.com/chart/?s=NYBOT_DXY0

Last trade 91.95 Change -0.42 (-0.45%)

Dow: 9686.67 -60.96
NAS: 1917.21 -23.43
SP: -8.55 (CNBC didn't show the current value)

There's a big gap there just waiting to be filled, but today may be a turning point.

Ral-ly! Ral-ly!!

10:20:

Dow 9,661.28 -86.36 (-0.89%)
Nasdaq 1,914.31 -26.59 (-1.37%)
S&P 500 1,036.34 -9.68 (-0.93%)
10-Yr Bond 4.289% -0.077


Lookin' good over in Treasuries. :-)

Julie

Hello everyone,

Odd reading today. It is REPEATING (which we have seen before lately)changing to PROMOTION (which we just saw on Monday!) Here is the changing line from REPEATING, "It is much easier to do the right thing when you are in good company. Following good examples will lead you to success." And here is another quote from PROMOTION, "You will be able to skillfully influence and support others. It would be wise, however, to address yourself to the concerns of those around you, thus consolidating your position."

Once again, this doesn't seem to be addressing today's market much. Ching just doesn't seem interested lately.

Well, take care everyone. It looks like it may be a pretty brutal day.

Thanks for checking in, Ching is obviously disinterested in market doings. ;-)

I, on the other hand, am interested. Here's what's of interest for the moment (12:03):

Dow 9,633.79 -113.85 (-1.17%)
Nasdaq 1,909.05 -31.85 (-1.64%)
S&P 500 1,033.29 -12.73 (-1.22%)
10-Yr Bond 4.282% -0.084

Have some blather with that:

CBS MarketWatch
Triple-digit losses for U.S. stocks
Wednesday October 22, 11:39 am ET
By Susan Lerner


NEW YORK (CBS.MW) - Disappointment with the latest batch of earnings reports, including blue chips Merck, J.P. Morgan and DuPont led to a broadbased sell-off in stocks Wednesday.
Drugmakers were taking some of the biggest hits as a handful of other pharmaceutical companies also failed to impress.

The Dow Jones Industrial Average (CBOT:^DJI - News) was last down 115 points, or 1.2 percent, to 9,632 while the Nasdaq Composite Index (NasdaqSC:^IXIC - News) slid 33 points, or 1.7 percent, to 1,908 and the S&P 500 (CBOE:^SPX - News) slumped 13 points, or 1.3 percent, to 1,033.

Yet, Richard Nash, chief market strategist at Victory Capital Management, wasn't worried about the backoff.

"The pullback is pretty modest given the run-up heading into earnings," Nash said, adding that from a technical standpoint many wouldn't mind seeing pullbacks from perceived overvalued levels so stocks can advance to healthier levels.

As for the reactions to earnings this season, Nash said the consensus was for about 15 to 16 percent growth but he believes the real hope was for 20 percent growth. So, "unless companies really knocked the cover over the ball," there's been a negative reaction to the numbers, he said.

http://biz.yahoo.com/cbsm-top/031022/debeb6deeb4f72d1d78724a310861b59_1.html

Hope everybody took cover when the storm was moving in! ;-)

Julie

Dow 9,620.39 -127.25 (-1.31%)
Nasdaq 1,907.29 -33.61 (-1.73%)
S&P 500 1,032.12 -13.90 (-1.33%)
10-Yr Bond 4.269% -0.097

Wow! I heard on the radio the markets were laying eggs this morning on the way in to work, but not this badly.

Yahoo Finance Analysis:
"12:30PM: The major averages are drifting sideways near their respective session lows... All eyes are on today's earnings reports, which have been mostly better than expected, but overshadowed by even the slightest disappointments in the earnings or guidance, which have weighed heavily on the market... Five of the Dow's components reported earnings this morning: Eastman Kodak (EK 23.28 -0.36), McDonald's (MCD 23.94 +0.20), DuPont (DD 39.23 -1.72), JP Morgan (JPM 35.08 -1.59), and Merck (MRK 45.70 -3.21)...
MRK was the only company of the five to disappoint on the bottom-line and as much is reflected in the slide of its stock price... JPM is lower due to its top-line number checking in at $8.22 bln, below the consensus of $8.64 bln... DD and EK, though, are lower despite reporting better than anticipated top- and bottom- line results, reflecting the selling on the news that aptly describes much of today's market action..."

An hour later, and a bit lower:

Dow 9,591.05 -156.59 (-1.61%)
Nasdaq 1,900.24 -40.66 (-2.09%)
S&P 500 1,029.42 -16.61 (-1.59%)
10-Yr Bond 4.267% -0.099

Yahoo Fi Analysis:
"1:30PM: Unable to make much headway to the upside, the major averages moved to fresh session lows as news of class action legislation being blocked by the U.S. Senate surfaced... As a result, the bulk of the influential sectors are showing losses in excess of 1% now, with exceptions including the banking, housing, utility, and gold groups, with the latter two in positive territory... Although in the red, the relative outperformance of the housing sector is notable... Its leadership is rooted in today's decline in interest rates, associated with the pullback in equities...
Specifically, the 10-year note is up +18/32, bringing its yield down to 4.27%, boding well for the housing market.."

Hmmm...Democrats in the Senate are beating that ridiculous Class Action legislation so Wall Street is deciding to punish us all for it.

Weasels. Money grubbing weasels.

(on edit - typo)

Getting beaten badly still. I wonder if we will see some end-of-the-day bargain hunting. I see Bob Pissani doing his darnedest on CNBC to cheer-lead. "Modest sell-off" and "cautious" used often. ;-)

2:03

Dow 9,594.53 -153.11 (-1.57%)
Nasdaq 1,901.16 -39.74 (-2.05%)
S&P 500 1,029.91 -16.12 (-1.54%)
10-Yr Bond 4.260% -0.106

Nice rally in Treasuries.

Julie

According to CNBC: Analyst Michael Belkin called the bubble, the crash and the rally. Now he's telling his clients to bail. Here are his long and short strategies for a December downturn.

<snip>

In an interview last week, Belkin said that everything that made him bullish last November now makes him bearish. His forecasting model, which consists of a non-linear set of probability distributions, shows equity markets in every developed country around the world “wanting to turn down.” At the same time, he sees emerging markets such as Brazil, Chile and China, “turning up in parabolic fashion.”

The way Belkin sees it, we’re “at the end of a liquidity bubble.” Liquidity is analyst-speak for money, particularly dollars that the Federal Reserve prints and pushes into banks in a variety of ways for a variety of economic, political and social purposes. (“When the Fed makes new money, it’s like counterfeiting, only it’s legal,” he quips.) He long ago learned that it made sense to buy into a liquidity bubble while it’s happening, such as the one that preceded January 2000, but that you needed to be able to identify its final days and get out a little early.

http://moneycentral.msn.com/content/P62345.asp

The smart people are getting out now it seems.

I've been the pessimist and refusing to believe there is true support under this rally so far, now I have reason to remain adamant until January, so there!

I would love to be proved wrong, but I'm really afraid I won't be....:scared:

Dow 9,587.65 -159.99 (-1.64%)
Nasdaq 1,901.20 -39.70 (-2.05%)
S&P 500 1,029.05 -16.97 (-1.62%)
10-Yr Bond 4.278% -0.088

Finance Quiz
Q. For 1927-1998, during which kind of U.S. presidential administration did the stock market perform best?
Democratic
Republican
About the same

For 1927-1998, during which kind of U.S. presidential administration did the stock market perform best?

How respondents have answered:

166281 votes to date
Democratic 55% 91878 votes
Republican 24% 40955 votes
About the same 20% 33448 votes

The correct answer is:
Democratic

--------------------------------------------------------------------------------
<A 2003 paper looked seriously at the presidential administrations from 1927-1998 and showed that in fact Democratic administrations are associated with better stock market performance.1
The authors did not just tally up stock market returns by administration period--by that analysis, Democratic administrations are associated with about a 5% performance advantage for the stock market. But that could be the effect of more favorable economic conditions (inherited or otherwise) during Democratic administrations.>

Link to poll:

http://finance.yahoo.com/?u

:dem:

The sheep are beginning to awaken ... how much more must they lose first?

:kick:

Looks like things are up on some discount hunting.

Dow 9,614.39 -133.25 (-1.37%)
Nasdaq 1,906.72 -34.18 (-1.76%)
S&P 500 1,032.12 -13.91 (-1.33%)
10-Yr Bond 4.277% -0.089


That 10 year is getting beaten up pretty badly. Whatever happened to the "flight to quality" on a day like this, hmm?

Dow 9,592.39 -155.25 (-1.59%)
Nasdaq 1,902.42 -38.48 (-1.98%)
S&P 500 1,030.05 -15.97 (-1.53%)
10-Yr Bond 4.273% -0.093

I am glad to see $$ pouring into Treasuries, I think gold is seeing some inflow too.

Julie

Yahoo Fi:
"Close: It's been a disappointing day for the bulls, as the major averages spent the entirety of the session sliding lower, with buyers, for the most part, sticking to the sidelines... The sell-off occurred on moderate volume on the Nasdaq, but heavier than recently witnessed volume on the NYSE, signaling a certain degree of conviction on the part of traders to the move lower... The weakness was broad-based, with the bulk of the sectors participating and declining in excess of 1%...
Among the biggest laggards were the semiconductor, software, disk drive, biotech, drug, brokerage, and airline sectors, all of which declined more than 2%... The disk drive sector was especially weak and retreated 7.0%, as indicated by the DDX index... The gold sector was the sole winner of note and its strength coincided with a $4.80 increase in the price of gold to $386.80/oz, which was incited by the precious metal's increased safe-haven appeal in the face of the declining equities and the weaker dollar against the euro and the yen...

The negative bias was rooted in a combination of factors, which included sell on the news reactions, valuation concerns, and disappointment with worse than anticipated earnings/guidance in several cases... With regard to the latter, Merck (MRK 45.80 -3.11) is one of the best examples as the company missed consensus estimate of $0.85 by $0.02 and proceeded to lower its FY03 guidance... The market was unforgiving and MRK proved to be among the biggest laggard in the Dow and the drug sector..."

CNN/Money:
"There are some genuinely problematic reports out today, like Merck, but there's a lot of good stuff, too, and people are taking some pretty decent earnings and focusing on the negative," Long added.

Year-to-date as of Tuesday's close, the Nasdaq was up 45.3 percent, the S&P 500 was up 17.3 percent, and the Dow was up 16.9 percent, leaving the major indexes vulnerable to some profit taking Wednesday, analysts said.

"I think traders are quick to take profits right now, because what else is there that stocks can do for an encore in the short term?" said Peter Green, a market analyst at MKM Partners. "We're still in an uptrend, but the probability right now, from a technical standpoint, is that we're going to have a little more selling."

Selling may also have been accelerated Wednesday by an early afternoon decision by the Senate to refuse to consider a bill aimed at limiting class action lawsuits. The decision was seen as a major negative for Corporate America."

My analysis: It was a good day for the bears :evigrin:

I'll see everyone here tomorrow.