Friday, January 12, 2007

Morning Market Comment 1/12/2007

It looks as if tech land is off to a rocky start this morning following AMD's warning last night (Click here). AMD is down 7%, but collateral damage to Intel is limited to a 1% dip thus far.

There are fresh headlines from the Wall Street Journal that federal investigators are focusing on a number of former Apple underlings in the probe of backdated options grants to Steve Jobs. (Free Reuters summary here). (Wall Street Journal report here - subscription required). Apple is down 1.3%, again the run to $100 is delayed. The distinction is important, the Journal story, as I read it, focuses on the underlings not Jobs.

Stock futures are pointing to a lower open this morning on the tech weakness since tech has been providing much of the upside leadership in the market. Here's a chart of the S&P 500 going back to the start of December. The story is as simple for the bulls as it was for the bears. My criteria to enact a SPY put strategy was merely for a close under 1407 and it never came. I think the criteria to become a lot more bullish can be as simple - a close above 1432... not merely moving above 1432, but an actual closing above that level.

One thing is certain, and I've talked about this before, the bulls have something big on their side... global liquidity. Check out Zentrader's blog. He's got some interesting stats: on this situation.

Among the more interesting research reports out this morning... A Merrill analyst says GE may be getting ready to do an acquisition worth tens of billions of dollars to beef up its industrial unit. This would reduce reliance on earnings from financial services and could encompass an acquisition in areas including computing, internet and communications. Of course, no possible suitors mentioned.

The Chicago Tribune reports Mickey Dees may sell its Boston Market chain (Click Here).

The Dolan Family, or Cablevision fame, have upped their offer for the company from $27 to $30 a share.

Government retail sales figures for December were better than expected, though previous months were revised lower. Read it here.

Gold - up 80-cents. So what? Actually, pretty good performance, considering that the bottom fell out of crude yesterday and gold held its own, even as the dollar closed in on its 200 day basis DXY. For that matter, the dollar index is that close...Will the DXY and the various pairs hit a brick wall at the 200 day? Conventional wisdom would say 'highly likely'. But many things in the markets defy conventional wisdom these days. March EuroFX contract is up 10 points. The 10 yr treasury yield has risen to 4.767%.

Crude/nat gas - dead cat bounce. I actually think OPEC has been strangely quiet in the New Year as the price has crumbled. Crude as of this writing already off the highs and hovering just above $52. Natural gas tried to firm a bit overnight, but the writing has got to be on the wall for another run back down to test $6. Stephen Schork, who has got to be one of the smartest guys in the world when it comes to analyzing energy, has run the numbers six ways to Sunday on nat gas storage and there is just so much of it. Seems like we'll need a mini Ice Age from here to May to really salvage things for nat gas bulls.

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