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MV Weather Report: Bulls Get Caught in Windstorm?


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

Have you ever had those days where you just lie around in bed all day? For me, these days typically happen after a long night of drinking. For the stock market, it happens after a huge Monday rally to new highs for the year.

Not a whole lot happened during the trading day today. The biggest story of the day was Pending Homes Sales, which came in better then expected at 6.7% compared to a consensus estimate of 0.5%. The market liked the news: It shot up on the number before settling back into a hangover.

Last night, we pointed to tech as an area to watch, and it was one of the winners today. Amazon (AMZN) led the group, but Google (GOOG) and Research in Motion (RIMM) also had nice up days.

The banks are doing there second round of equity financing to satisfy TARP. Last night it was JPMorgan (JPM) and American Express (AXP) raising capital; today, there was a report that Morgan Stanley (MS) would raise $2.2 billion. Most banks traded lower, but Bank of America (BAC) was up 1%. I find that quite interesting, especially since so many analysts believe the stock is worth $20.

The battle for S&P 950 is now officially on as today the market was stopped one point below at 949 before closing at 944. There are a couple of potential headwinds that I think could stop Hoofy in his tracks. The first is the jobs number on Friday; the second is the coming bond auctions.

Today on the Buzz and Banter, Professor Brendan Rife gave his thoughts on the bond market:

"The rise in rates (especially in the land of mortgages) is starting to cause a serious clog in the business world's pipeline, not to mention the government's refi / overall housing plan. This will have immediate economic consequences.

"Of course it doesn't matter…until it does. I suspect this will be what people focus on as justification for a slippery equity market when the time comes. As I mentioned on May 7th, the bond market fired a shot across the bow when the 30 year auction experienced a very fat basis point tail. Despite their attempts to influence and manipulate, government(s) ultimately cannot be bigger than the market. I cannot emphasize enough how important the upcoming Treasury Note & Bond auctions (June 10th & 11th) will be for medium-term equity market direction."

One final note: This will be the last Weather Report for the week. I'm heading back to California to see my family, celebrate my birthday (also Friday), and watch the Lakers. I'll be back on Monday.

Have a great one, Minyans!
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Position in BAC and AMZN

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