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MV Weather Report: Tech Stocks on Fire This Summer?

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

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The main story of the day was GM's (GM) bankruptcy filing. Unfortunately, this isn't exactly news; we've known for sometime that General Motors would file for Chapter 11 bankruptcy protection. The bigger news: Cisco (CSCO) will replace General Motors in the DJIA; Travelers (TRV) will replace Citigroup (C).

Bigger still was the rally in the stock market. The S&P 500 closed above its 200 DMA for the first time since December 26, 2007. Today was a powerful move, spurred by positive economic data: Personal Income and ISM Index came in better the analyst's expectations. See Professor Jack Lavery's take on the data in Construction Spending: Don't Let the Headline Fool You.

Professor Jeff Cooper laid out his thoughts on the S&P 500:

"The 3-month chart on the S&P is poised to turn up this morning on trade over the May high of 930.15.

"Off the March 2003 test low, the 3 month chart also turned up in June of '03.

"This will be the first time the 3 month chart has been up since June/July 2007 which was the orthodox peak in the market.

"There are many market observers who believe the market is/was in a similar position to the bear market bottom of 2002/2003 this Spring. The behavior on the turn up of this 3 month chart should give us a lot of information on the market going forward. Since it is a monthly chart, behavior means this weekly bar.

"Note that when the 3 month chart turned up in June of '03, the SP continued to creep higher. See monthly chart of the SP from 2002 through 2003 below.


Click to enlarge


"That being said, the first kiss of the overhead 200 dma for the first time in a long while is almost always a spot that marks a reaction. "

The big winners of today were the technology names: Google (GOOG), Apple (AAPL), Bidu (BIDU), Amazon (AMZN), and Research in Motion (RIMM) all made new highs for the year today, with the exception of Amazon. I would urge Minyans to read Minyan James Kostohryz's article today about why stock prices keep climbing.

Here's Professor Sean Udall's take on Apple:

"More scuttlebutt from the Apple front. A Verizon (VZ) deal would be quite positive, as I have postulated previously. Frankly, given the strength of the market since March, I'm surprised AAPL hasn't risen materially more. Many catalysts wait in the wings, and the next major move should be through the $170s.

Moreover, evidence is starting to mount on the possibility of first derivative change in the economy. I wouldn't be surprised to see Q2 GDP something close to positive. I have not seen too many consensus estimates lately, but I wouldn't be surprised if consensus is anywhere close to zero."


Notable laggards today were the banks; at 3:59 PM, we found out why they were limping: JPMorgan (JPM) priced a $5 billion equity offering to satisfy the conditions of TARP, which will probably be seen as a great opportunity by the bulls. Shortly after the close, American Express (AXP) also announced a $500 million common stock offering.

Heads up on Turnaround Tuesday! Have a great night!
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No positions in stocks mentioned.

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