Swing Trading Strategies & Stock Picks Since 2003

Overnight Global News

• The European DJ Stoxx 50 this morning is trading +0.71%. UK stocks received some underlying support today after Bank of England Governor Mervyn King said that the BOE is "certainly prepared to cut the bank rate if that proves to be necessary." The BOE just slashed the base rate by 150 bp last Thursday. European stocks are also being helped by better-than-expected earnings results from Unicredit (Italy's largest bank) and French-power-utility Electricite de France. Asian-Pacific stocks today closed mostly lower due to yesterday's sell-off in the US stock market: Japan -1.29%, Hong Kong -0.73%, China +1.15%, Taiwan -0.50%, Australia -0.85%, Singapore -1.27%, South Korea -0.27%, Bombay -3.08%.

Overnight U.S. Stock News

• December S&Ps this morning are trading +8.10 points on some short-covering after yesterday's sell-off and on some support from higher UK and European stocks. The US stock market yesterday sold-off for a second day and finished the day at a 2-week low (Dow -1.99%, S&P 500 -2.20%, Nasdaq Composite -2.22%).
• Bearish factors for stock prices yesterday included (1) the 13% sell-off in General Motors, its fifth straight loss, to a 65-year low as the automaker slips closer to bankruptcy, (2) Goldman Sachs' downgrade of the US life insurance sector to "cautious" from "neutral" with sell ratings on Prudential Financial, Linclon National, Principal Financial and Hartford on concern the companies will need to raise more capital and that their credit ratings may be cut, (3) the 6.6% loss in American Express after Oppenheimer analyst Meredith Whitney predicted worsening credit losses will continue to plague the largest US credit-card company by purchases, (4) Credit Suisse's cut in its mid-2009 forecast for the S&P 500 Index by 13% to 1.050 and its forecast that global GDP next year may expand at its slowest pace since 1982, and (5) the World Bank's cut in its forecast for growth in developing countries to 4.5% for 2009 from a June forecast of 6.4% due to financial turmoil, slower export growth and weaker commodity prices.
• Bullish factors for stock prices yesterday included (1) the sell-off in crude oil prices to a 19-month low and the plunge in gasoline prices to a 3-3/4 year nearest-futures low, (2) the bigger-than-expected rise in the Nov IBD/TIPP economic optimism index, (3) the 7.3% rally in Legg Mason after the asset manager said it has enough capital to support its money funds after it set aside $2.7 billion to cushion against losses on mortgage securities, and (4) the proposed plan by Citigroup to modify $20 billion in mortgages in order to stem rising foreclosures.
• GM is up 16% in European trading this morning after House Speaker Nancy Pelosi called for "immediate action" to give US automakers financial assistance. Ford is up +2.2% this morning in European trading.
• American Express is up +1.5% after the Wall Street Journal reported that American Express is asking the US government for about $3.5 billion in support

Today's U.S. Market Focus

• December 10-year T-notes this morning are trading -6 ticks on the higher trade in S&Ps and European stocks. The US bond market was closed yesterday for Veterans Day. December T-note prices Monday overcame early weakness and closed +15 ticks. Bullish factors for T-note prices yesterday included (1) flight-to-safety after the stock market on Monday sold-off sharply from early gains, (2) stronger-than-expected demand for Monday's $25 billion 3-year T-note auction, (3) dovish comments from ECB President Trichet that receding inflation may allow central banks to further reduce interest rates, and (4) Fitch Ratings' cut in its debt ratings for four Eastern European emerging market countries and downgrade for the credit outlooks for Russia, South Korea and Mexico on concern the global financial crisis is making it more difficult for emerging economies to attract foreign capital. Bearish factors for T-note prices on Monday included (1) China's announcement of a $586 billion economic stimulus plan, potentially helping the global economy and reducing demand for the safety of Treasuries, and (2) supply pressures with the ongoing quarterly refunding as the Treasury auctions $20 billion in 10-year T-notes today and $10 billion in 30-year T-bonds tomorrow.
• The dollar this morning is trading lower with the dollar/yen down -0.06 cents and the euro/dollar up +0.56 cents. The dollar index yesterday rallied to a 2-week high. Bullish factors for the dollar yesterday included (1) comments from ECB Council member Quaden that he expectes the ECB to reduce its forecasts for economic growth and inflation "substantally" next month, increasing the chances for further ECB interest rate cuts, (2) flight to dollars as the Russian ruble tumbled after the Russian central bank scaled back its defense of the ruble, increasing the chances of a run on Russian banks, and (3) weakness in the British pound after UK home sales in Q3 fell to a 30-year low. Bearish factors for the dollar yesterday included (1) the unexpected gain in the Nov German ZEW economic sentiment survey, and (2) strength in the yen as investors unwound their yen carry trades due to the slumping global equity markets.

• December crude oil prices this morning are trading -$1.17 a barrel and December gasoline is trading -1.69 cents a gallon on continued concern about slumping demand. December crude oil prices yesterday closed -$3.08 a barrel at a 19-month low and December gasoline closed -6.10 cents a gallon at a 3-3/4 year nearest-futures low. Bearish factors for crude oil prices yesterday included (1) speculation that the IEA will cut its 2009 oil-demand forecast for a third straight month because of slowing economic growth, (2) the rally in the dollar index to a 2-week high, (3) the fact that the crude oil market is in contango, where oil priced for future delivery is more expensive than near-month prices, encouraging refiners to increase stockpiles of crude, (4) the prediction by Goldman Sachs that economic weakness and credit constraints will continue to put downward pressure on oil prices, and (5) the sell-off in global equity markets. Expectations for tomorrow's weekly DOE inventory report are for a +750,000 bbl gain in crude oil inventories, a +200,000 bbl increase in gasoline stockpiles, a +1.0 million bbl rise in distillate inventories and a +0.2 increase in the refinery capacity rate to 85.5%

Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): TRI-Thomson Reuters (BEST earnings consensus $0.38 per share), AMAT-Applied MAterials (0.15), CSC-Computer Sciences (0.75), M-Macy's (-0.18), NTAP-Netapp (0.27), CFFN-Capitol Federal Financial (0.21), ACM-Aecom Technology (0.37), TTEK-Tetra Tech (0.29)

Global Financial Calendar