Monday Morning Quarterback
Good luck this week, Minyans!
Good morning and welcome back to the flickering ticks. With last week's round mound of reverse rebound, the Minx slinked and tickled the top of our previous breakout bands. Was the blip and dip a textbook retest of the new support (previous resistance) or was the breakout, in and of itself, another false promise of better times and higher prices? We won't have to wait long to find out, Minyans, for it's a new day in the land of play and the games are set to begin!
It was a relatively quiet weekend on the news front, and absent the SARS situation (and the epidemic's disruptive implications), the world was relatively benign. As we edge through the tail end of earning's season, the psychological metric should once again assume more of a leadership role in our trading mix. In other words, in a quiet market, will the path of least resistance continue to lead stocks higher?
That's a tricky question on a few fronts. First, the market, as a leading indicator, will generally price future news into the current prices. That's why we so often see the data the "worst" at bottoms and the "best" at tops. But is the news really the "best" right now? Earnings were surely solid relative to expectations, but many multinationals were helped by the weaker dollar and there's chatter of an "inventory build" in front of the war.
We'll get further insight as we edge through this coming week. Earnings will continue to roll as Altera (ALTR:Nasdaq), Alcatel (ALA:NYSE), Bristol-Myers Squibb (BMY:NYSE), Taiwan Semiconductor (TSM:NYSE), QLogic (QLGC:Nasdaq), JDS Uniphase (JDSU:Nasdaq), Clorox (CLX:NYSE), Chubb (CB:NYSE), Exxon Mobil (XOM:NYSE), and Disney (DIS:NYSE) (among others) all tell their tale. Beeks will be dropping off the employment cost index and consumer confidence (tomorrow), Chicago purchasing manager and Elmerfest (Wednesday) and a whole slew of economic releases on Thursday and Friday.
In morning research, JP Morgan downgraded Boeing (BA:NYSE); Smith Barney upped UnumProvident (UNM:NYSE) and dumped Riverstone Networks (RSTN:Nasdaq); Morgan Stanley dumped Canadian Pacific (CP:NYSE); CS First Boston upgraded Atlantic Coast Airlines (ACAI:Nasdaq) and SkyWest (SKYW:Nasdaq) while punting Weyerhaeuser (WY:NYSE) and First Albany downed Applied Materials (AMAT:Nasdaq). Technical levels include S&P 897 (March uptrend is around 880) and NDX 1080 as support and, on the other side of the coin, S&P 915-920, NDX 1115 and BKX 800 as resistance.
While the initial pullback may prove to be temporary respite in a larger thrust higher, I continue to feel that rallies are made to be sold. Despite the relative uptick in volatility at the end of last week, defined risk option paper offers an attractive alternative (ie stock replacement) as a stylistic methodology. Of couse, many of you aren't suited for option plays but for the pros among you, that's my read.
I would like to once again thank Jordan Farkas, Doug Kass, Tennessee Jed and Airborne Express for their superb effort on the charity guitar. Minyan Mark Conway won the trivia contest as he correctly identified the money managers that signed the funky Fender and we'll delve into that later. Suffice to say that The Ruby Peck Foundation for Children's Charity is going to raise a lot of money for the kids and that's AWESOME!
On a personal note, I would like to express my heartfelt condolences to the family of my friend, Michael Beier. Michael bravely battled A.L.S for years and finally succumbed to the horrible illness over the weekend. He was a hero in the truest sense of the word and he leaves the earth a better place for having been a part of it. Rest easy, brother -- you were an inspiration to us all.
Have a peaceful day.
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