MV Weather Report: Bulls Make It Rain, Rain, Rain

By Matt Theal  MAY 04, 2009 5:05 PM

Rain or shine, we review the day's biggest stock stories.


The market stopped going up -- but that’s only because the closing bell just rang. That’s the only thing that could stop the bulls today. The S&P 500 shot above 902.99, which was where it opened for the year, closing today at 907.24. Truly amazing.

The reason for the strong day was the better-than-expected economic data. But the strength that lifted the S&P 500 3.39% was truly across the board: Baidu (BIDU), Apple (AAPL), and First Solar (FSLR) were just a few tech names that gained on the day.

The commodities stocks also had big up days, including Potash (POT), Transocean (RIG), Arch Coal (ACI), and Dryships (DRYS). The real winners of the day were the banks, which shrugged off news that Bank of America (BAC), Citigroup (C) and most likely Wells Fargo (WFC) would need more capital according to the stress tests.

Here's a Buzz from Minyan Peter.

“For decades bank executives and regulators have somehow found a way to keep regulatory exam results confidential and yet these same folks somehow can't seem to keep stress test results quiet for all of a week.

“And judging by the headlines it looks like the leaks are now coming from both sides.

“Given the surreal nature of this whole "transparent" Stress Test thing, might I recommend that they just settle things WWF style: Like "Tiny Tim" Geithner in the ring with Vikram "The Bandit", or maybe Sheila "Don't call me Teddy" Bair tag teaming with Ken "Please Still Call Me Chairman" Lewis.

“The whole thing is just that bizarre. And how it all gets tied up in a bow by Thursday night confounds me.”

Minyan Peter’s Buzz is both funny and incisive. I think it’s a little strange that the stress-test results keep getting leaked - and yet the market keeps going higher. Is this the market's way of saying the stress tests are a joke?

As for tomorrow, it’s Turnaround Tuesday. Earnings have really slowed down, there will be a 10:00 ISM Services announcement. Below is a preview of the announcement from Jack Lavery’s weekly report.

“We expect the non-manufacturing ISM to rise modestly to 42.5 in April, up from 40.8 in March. This expectation would be slightly stronger, actually less weak, than the consensus call of 42.0. There are negative seasonal adjustment factors constraining the April reading. ISM is also a diffusion index, so readings below 50.0 denote contraction. At 42.5, our expectation is one of continued contraction, albeit above the recent low point of 37.4 reached in November 2008. Improved consumer confidence and the latest read from the Economic Cycle Research Institute (ECRI) are encouraging. The ECRI measure, while still in recession territory and down 17.4% on a year-over-year (YoY) basis, is at its highest reading in 13 weeks. The preceding weekly observation had shown an 18.6% decline YoY.”

It’s really hard to buy the market, given where it is now - but Minyans should keep S&P 943 on their radar. It’s the high for the year.

Have a great night!
No positions in stocks mentioned.

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