12/21/2006 Morning Market Comment

Stock futures are flat and since we're going into the Christmas homestretch trading is likely to become even duller than it was yesterday. The chart below of the S&P 500 shows the ongoing upward channel, and so long as the downward range of that channel isn't broken in the 1400 area (very clear to see) it will likely be more of the same for the rest of the year - range bound action. But as noted in recent posts about factors like low stock put to call ratio and the lowest volatility in 13 years, or even the post yesterday about the divergence between the Dow30 and the Dow Transports, or even the wayward movement of the Nasdaq Composite away from its upward channel - the New Year promises to be interesting for the stock market.

It's been interesting to see corporate earnings in recent days in the retailing and retailing related space. NKE numbers good, but not great enough to get the stock to go meaningfully higher this morning. CIBC summed it well with an increase in its stock target, but also noting that the stock will likely take a breather for a few months after its big run. These things don't go higher for ever. What I want to know was who bought at the AH high yesterday of $100.75?

Bed Bath and Beyond - one analyst calls it "Best of Breed", and I think that's accurate. But charts don't lie, and as noted yesterday, it was not able to pierce $42 on two runs recently. This morning on a miss it's down to $38.77. Of course, we know what happened earlier in the week to Circuit City.

Some of these corporate results and subsequent guidance are starting to have a topish feel to them. Granted, nothing is collapsing, or crashing, but many stocks which have had mega runs to multi year or lifetime highs are suddenly in holding patterns. Even Goldman Sachs after wildly beating Street has seen its stock stuck at the $200 mark. It again goes back to basics like the troubles emerging in the transportation stocks and growing questions over what's going to happen in the economy in '07 - soft, or hard landing? The Buy High - Sell Higher Camp may be running into some trouble. What will the high flyers of '06 do for an encore in '07? The latest 3rd quarter growth estimate shows GDP at 2% annual rate as the housing market continues to take a toll on the overall economy. That's a 2% pace in Q3 compared to 5.6% in Q1. Can't wait to see how 4th quarter GDP is shaping up.

The big earnings report due after the bell today is RIMM - talk about a flyer and raging debate over that one. Pearl is the keyword with RIMM. Has it saved the day? Did they ship out enough, or has it cannibalized other RIMM business. If only I had the definitive answers. But I will take a look at the charts and options on that a little later even as I dash out later for more holiday prep.

Iran is finding there's an economic cost to developing nukes... it's having trouble developing oil projects.

The knives are drawn in the BP succession battle (Click here)