Thursday, March 22, 2007

Morning Market Comment

Stock futures aren't indicating a continuation of the explosive upside action we experienced following the surprise move by the Fed to move away from its tightening bias, but futures are still on the plus side.

Economic data today: Jobless Claims slipped last week 4,000.

How real was yesterday's rise? Well, I've talked about the liquidity injections and perhaps being 'real' doesn't have to matter in the near term if all it takes is some well placed futures trades to push the market up. But assuming that T/A still means something - 'realness' would become more apparent if the Nasdaq 100 gap can be filled.

Will the bulls get trapped in between? If NDX can make its way to 1820 in short order, then look out above.

While Motorola's after the bell warning is primarily a Motorola-esque (MOT) problem (stock down 4%), it's a reminder that earnings season and other pre-announcements loom large over the next three weeks. Some analysts are saying it take up to a year for Motorola to improve.

Palm (PALM) is down 4% as longs there are freaking out. It's Thursday morning and the buyout that everyone thought was supposed to be here isn't Many had placed bets on Motorola on being the suitor. I had asked the other day why folks were buying those May 22-1/2 calls based on doubt about the takeover premium that would be involved - not even a scenario where MOT would fall flat on its face. PALM now faces the prospect of confessing earnings this evening without a takeover prop. Wow, it's a debacle.

Also, after the bell, H&R Block's Option One (HRB) subprime unit received a renewed credit line from Bank of America, but the line was cut in half. The decline in Block's stock after hours was less than a buck yesterday, but it sparked to renewed questions over whether the company will deliver on its goal to sell Option One for over a billion-dollars by month's end.

Senator Christopher Dodd will hold his subprime hearing today. He's going to grill banking regulators among others before the Senate Banking Committee.

Funds of hedge funds are growing in popularity, Hedge Fund News reports The Londinium JPM Emerging Markets Fund has been launched after six months of study.

The dollar selling has settled down a bit this morning, but the damage has been done there. This morning Euro futures hit a brick wall in the $1.34 neck of the woods, but $1.37 is surely in the cards now. Yen futures are down 31-points. Front month gold has also been taking a breather at the $664 mark this morning.

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