Thursday, February 1, 2007

Morning Market Comment 2/1/07

The $64 question du jour is whether the bulls can build, I mean really build, upon yesterday's so called Fed relief rally? This chart shows the Dow is pinned again at the top of the upward channel - it's almost uncanny:

Surely the President's visit to the NYSE and the market's surge were a coincidence (although some are suggesting that it wasn't and I have to agree that the fix may have been in to make sure Bush wouldn't be walking into the NYSE on a red day). A key ingredient to yesterday's bull-o-rama was a slump in bond market yields. The 10 year this morning is up a tick and the yield holding at 4.816%. Zen's Market Insights uses a great analogy - the beach ball analogy, which begs the question, once the market pops up to the surface, is anyone there to carry it to meaningfully higher (out of the channel) levels?

Dell may give the techs a bit of a lift now that Michael Dell is coming back from his 3 year vacation to re assume control of the company he founded. Dell is up 5% this morning.

Google has been choppy and volatile but trying to rise. Perhaps there is some hope for my Feb500 calls. JP Morgan lifted its target on the stock to $580 this morning and is telling clients to buy more GOOG. ok. Needham also upped its target from $590 to $537. Citi says GOOG remains its #1 long idea because of the revenue beat, but also blasted the EPS beat as being largely due to the lower tax rate. Goldmine Sachs upped its target to $620 from $595.

Gold - rallying w/April up to as high as $665. Recent dollar weakness has given the metal a boost. Gold has also benefited from talk that the IMF wants to change accounting rules to make it tougher for central banks manipulate the price of gold. And with headlines out of Iraq about Iranian forces taking down U.S. forces, well - overseas investors have been buying gold fearing the U.S. will soon go to war with Iran. Traffic coming through this blog has been heavier than ever. New readers should also check out for a full education on why gold has rallied.

Energy - crude is holding at just above $58. The 50 day moving average is $58.91. IF we're able to cross the 50 dma, I think this is where it's going to get tough for the bulls. They will next have to plow through $60 where crude will find itself almost in the midrange of September to December 2006 "box" between $58 and $64. Given supply, it seems there will be a decent fight at $60, let alone beaking above $64.

ExxonMobil earnings down from the year before, but at $1.69 a share, still well above estimates. The stock is up 22-cents. Royal Dutch reported a 21% jump in earnings.

What's going on in China? Stocks nudged lower last night after the free fall the day before China Markets Read Here. Economist Nouriel Roubini has had some interesting thoughts on why that market has run into trouble;

After yesterday's dollar surge, the buck is taking a breather. Kevin's Market Blog has some interesting thoughts about the dollar:

I found this disturbing blog called "I am Facing". It's written by a California dude who bought millions in real estate with no money down and now finds he can't flip the houses he bought. Apparently the blogger is a former disciple of Robert Kyosaki, or for whatever reason Kyosaki's name is frequently mentioned. Lots of fun reading.

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