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Larry Swing is the President of the popular day and swing trading site www.mrswing.com a place where you can find free daily articles and videos covering education, market analysis and picks from Larry and other well known traders in the industry.
Mar 24, 2008
- The European markets are closed today for Easter Monday. Asian stocks were mostly higher...
U.S. Preview
The European markets are closed today for Easter Monday. Asian stocks were mostly higher, led by Taiwan after Ma Ying-jeou's presidential election victory boosted prospects of more trade with China. Japan's Nikkei Index closed -0.02%, Taiwan +3.99%, Singapore +3.64%, South Korea +0.62%, China -4.48%, Bombay +1.96%.
JPMorgan Chase may quintuple its takeover offer for Bear Stearns, according to the New York Times. JPMorgan is in talks to raise its all-stock bid more than $1 billion to $10 a share from $2 a share in an effort to win support from employees and shareholders opposed to the deal.
This week’s US economic calendar is fairly busy although market attention will continue to focus mainly on any fresh fall-out from the credit crunch. Today brings Feb existing home sales. Tuesday brings the Jan home price index, March US consumer confidence, and the March Richmond Fed manufacturing index. Wednesday brings Feb durable goods orders, Feb new home sales, and the 2-year T-note auction. Thursday brings weekly unemployment claims, the final Q4-2007 GDP revision (expected unrevised from last estimate of +0.6%), and the 5-year T-note auction. Friday brings Feb personal income/consumption and the Feb core PCE deflator (expected unchanged at +2.2% y/y), and the final-March US consumer confidence index from the University of Michigan.
Fed policy – Last week was a busy one for US central bankers as they cut the discount rate March 16th in a rare Sunday night move by 25 bp to 3.25% and opened up the discount window lending to non-bank government securities dealers and firms in the mortgage securitization channel. Then last Tuesday the FOMC lowered the funds rate by 75 bp to 2.25% and also cut the discount rate 75 bp to 2.50%. CME fed funds futures are now discounting about a 60% chance of a 50 bp rate cut to 1.75% at the next FOMC meeting on April 29-30.
US existing home sales – Today’s US Feb existing home sales report is expected to fall –0.8% to 4.85 mln. In January, the existing home sales series fell –0.4% to 4.89 mln, which was a record low for the series that has history going back to January 1999. US existing home sales are extremely depressed as potential home buyers stay away due to falling home prices, the difficulty of getting a mortgage, and worries about the US economy and labor market. The home sales market is not likely to see any major pickup in buying, despite low mortgage rates, until potential home buyers get a sense that the economy is stabilizing and that home prices have bottomed out. The supply of existing homes available for sale is currently at 10.1 months, which is just slightly below the 20-year high of 10.2 months recently posted in October 2007. The big supply of new homes on the market is putting significant pressure on home sellers to slash home prices to get the homes sold
Overnight U.S. Stock News
June S&Ps this morning are trading +7.40 points higher. The US stock market last Thursday moved higher throughout the day (Dow +2.16%, S&P 500 +2.39%, Nasdaq Composite +2.18%). For the week the S&P 500 Index gained 3.2%. Bullish factors for stock prices last Thursday included (1) the 5.3% gain in General Electric after the world's 3rd largest company by market value was raised to "buy" from "neutral" at Merrill Lynch, (2) the 11.7% rise in Fannie Mae and 9% gain in Freddie Mac after both companies were upgraded to "outperform" from "market perform" at Keefe, Bruyette & Woods, citing the government's actions to increase the companies involvement "in stabilizing the mortgage market" by lowering their surplus capital requirements, (3) the surge in banks and brokerages after an analyst at Punk Ziegel & Co. said "the financial crisis is over" and it is a "once in a generation opportunity to buy," and (4) the 8.8% rally in Nike as the world's largest athletic shoemaker sai d Q3 profit rose to 92 cents a share on higher sales in China and Europe, exceeding analysts estimates of 79 cents a share. Bearish factors for stock prices last Thursday included (1) the larger than expected gain in weekly unemployment claims, (2) the 17% plunge in CIT Group as the largest independent US commercial finance company had to draw on its $7.3 billion emergency line of credit after being shut out of short-term debt markets, and (3) the 29% drop in Borders Group as the 2nd largest US bookstore chain suspended its dividend and announced the company may sell itself after losing market share to Wal-Mart and online retailers.
Bank of America (BOA) may be active to the downside this morning after an analyst at Punk Ziegler and Co. predicted the 2nd biggest US bank by assets may take a record $6.5 billion provision in Q1 to cover possible future losses in its home equity and mortgage portfolios.
Bankrate Inc. (RATE) may be active this morning as an article in Barron's over the weekend cited a Needham & Co. analyst predicting the conpany's stock price may rise as much as 25% to $60 in the next year as consumers seek lower interest rates.
Best Buy (BBY) may be active this morning as an article in Barron's over the weekend said the stock may rise 23% to $52 once investors overcome fears of how the company would fare in a recession.
HCP Inc. (HCP) rallied 3.6% in after-hours trading last Thursday after the largest US health-care real-estate investment trust will replace Commerce Bancorp in the S&P 500 Index.
Lehman Brothers (LEH) may be active this morning as the brokerage was cut to "perform" from "outperform" at Oppenheimer citing a "protracted challenging capital markets enviroment.
Today's U.S. Market Focus
June 10-year T-notes this morning are trading -15.5 ticks lower on the higher US equity market. June T-notes last Thursday moved higher and closed the abbreviated session up +6.5 ticks at a contract high settlement. Bullish factors for T-note prices last Thursday included (1) the larger than expectd increase in weekly initial unemployment claims (+22,000 to 378,000 versus expectations of +4,000 to 357,000 and continuing claims +32,000 to a 3-1/2 year high of 2.865 mln), (2) concerns that the credit crunch is deepening as CIT Group, the largest independent US commercial finance company, fell victim to the freeze in short-term credit markets and had to draw on its $7.3 billion of emergency credit lines after credit-rating downgrades left it unable to finance itself with commercial paper and its CEO said the "protracted disruption" may force the company to sell assets, and (3) the flattening of the yield curve as investors are betting on lower inflation as the economy sl ows and moving further out on the curve in search of yield.
The dollar this morning is trading at a 1-week high with the dollar/yen +0.27 yen and the euro/dollar -0.01 cent. The dollar index last Thursday settled with decent gains. Bullish factors for the dollar last Thursday included (1) the dollar's strength against the world's commodity currencies i.e., Canada, Australia, South Africa, as prices of commodities tumbled on world-wide liquidation late last week of long commodity positions on speculation the global economy is slowing, and (2) the slightly better than expected manufacturing index for Mar in the Philadelphia area. Bearish factors for the dollar last Thursday included (1) the larger than expected jump in weekly unemployment claims, and (2) the rise in German producer prices in Feb to a 14-month high.
May crude oil prices this morning are trading down -$0.71 a barrel and May gasoline is trading -0.73 cents a gallon. May crude oil prices last Thursday continued last Wednesday's sell-off and closed down -$0.70 a barrel at a 2-week low although May gasoline closed up +3.68 cents a gallon. May crude has now sold-off -$11.70 (-10%) from last Monday's contract high of $110.35 a barrel. Bearish factors for crude oil prices last Thursday included (1) the rally in the dollar, (2) overall commodity price weakness as most commodities sold-off last Wednesday and Thursday on fund profit-taking and on fears a global economic slowdown will crimp demand for most commodities, and (3) the prediction by Goldman Sachs that crude oil prices are likely to fall toward $90 a barrel this spring as commodities are underging "cyclical weakness" and fundamentals will reach their "weakest point" in April as economic conditions and high prices weigh on demand. Bullish factors for crude oil pr ices last Thursday included (1) a possible strike by oil workers in Nigeria which would threaten Nigerian production of 2.04 mln bbl of crude oil per day, and (2) the rise in gasoline prices after gasoline inventories in the latest DOE inventory report declined for the 1st time in 19 weeks
Today's U.S. Earnings Reports
Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): WAG-Walgreen (BEST earnings consensus $0.67 per share), AMB-AMB Property (.54), TIF-Tiffany & Co. (1.21), SONC-Sonic Corp. (.15)
insert.a.chart.WAG
Global Financial Calendar
Monday 3/24/2008
United States
1000 ET
Feb existing home sales expected –0.8% to 4.85 mln, Jan –0.4% to 4.89 mln.
1000 ET
Fed TAF auction of $50 bln.
1300 ET
Weekly 3-mo and 6-mo T-Bill auctions.
n/a
Treasury announces amounts of 2-yr and 5-yr T-notes to be auctioned (previous $26 bln 2-yr and $16 bln 5-yr).
...thanks
for the trust you've shown in me and my business.
by Larry Swing larry@mrswing.com May the swing be with you...
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Disclaimer:
Please note
that charts and commentary provided by the moderator are for educational
purposes only. Any trades placed upon reliance on the moderator’s
charts or information is taken at your own risk for your own account.
Past performance is no guarantee of future results. While there is great
potential for reward trading stocks, futures and options, there is also
substantial risk of loss and you must decide your own suitability to trade.
Future trading results can never be guaranteed. This is not an offer to
buy or sell stock, futures, options or commodity interests.
Most trading
systems are based on historical formulas which have worked in the past.
However, what has happened before may or may not happen again. You can
lose all your money trading stocks, futures, and options and you must
decide your own suitability as to whether or not to trade. Only trade
with true risk capital you can afford to lose. Only trade markets you
can properly afford to trade. Properly funded trading accounts typically
perform better than those that are not. Never risk more than 2-3% of your
account on any one trade. Always define your risk before entering a trade
and place a stop to limit your risk.
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discipline and the ability to follow rules and trade through any tough
periods during a system’s draw downs. If you are looking for a guarantee,
trading is probably not for you. Most people lose money trading. One of
the reasons is that they lack discipline and are unable to be consistent.
A system can help you become consistent. Ironically, worrying about the
monetary aspect of trading can contribute to and cause a trader to make
trading errors. Therefore, it is important to only trade with true risk
capital.
