February 1, 2010
*****Earnings this Week
*****Jason Nails It
There’s no doubt that there are investors who believe that current valuations
for stocks and an improving economy offer money-making opportunity. It’s also
true that there are plenty of investors who feel the exact opposite and are
selling stock. And for the last three weeks, the sellers have been winning.
The fact that stocks couldn’t hold a 1% gain after a stellar 4Q
number on Friday is a little worrisome. That was a lay-up for the bulls, and
still, stocks finished the day with losses.
Volume has been stronger on the down days lately, and the S&P 500 is now well
below its 50-day moving average, a common measure of support. I expect we’ll see
stocks bounce before Dow 10,000 is breached to the downside.
But at the same time, there’s nothing magical about Dow 10K. Just because it
holds on the first test or two doesn’t make it an important line in the sand.
The Dow is just 30 stocks. Far more important is the S&P 500. And interestingly,
there is an important
support point at 1064 on the S&P 500. And 1064 actually
lines up with Dow 10,000 nicely.
*****There aren’t any
market-moving earnings reports today, but tomorrow we get UPS (NYSE:UPS),
Whirlpool (NYSE:WHR), News Corp (NYSE:NWS), DR Horton (NYSE:DHI), and British
Wednesday is a heavy day, with Black & Decker (NYSE:BDK), Cisco (Nasdaq:CSCO),
Honda Motors (NYSE:HMC); Pfizer (NYSE:PFE) and Visa (NYSE:V).
Thursday, it’s Chicago Mercantile Exchange (NYSE:CME), Deutsche Bank (NYSE:DB),
MasterCard (NYSE:MC), Starwood Hotels (NYSE:HOT) and Toyota (NYSE:TM).
on a light day Friday, we’ll hear from Beazer Homes (NYSE:BZH) and Aetna (NYSE:AET).
Of all the companies to report this week, Cisco may be the most important
because it’s the ultimate barometer of corporate spending. Cisco is one of the
best run companies around. CEO John Chambers runs a tight ship and it’s unlikely
Cisco will miss its numbers. An upside surprise, and more importantly, some
improved guidance and a little optimism going forward would be good news.
*****Another item to watch for is kind of tax credit for business that hire new
employees or expand their payroll. Politically, some kind of stimulus spending
to help unemployment will be easy to accomplish. And now that TARP investigator
Neil Barofsky is feeling better about how much TARP money the government will
recoup, we’ll probably see new stimulus measures sooner rather than later.
*****SmallCapInvestor PRO members just discovered a $3 U.S. based
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Chinese government has mandated that old silicon steel core transformers be
replaced by more efficient transformers, like the amorphous alloy core ones.
This isn’t earth-shaking news, but this little company is expanding capacity by
200% to meet the demand. I’ve got a $5.82 target for the stock, which is a 94%
gain from yesterday’s close. You can get the details when you
02-01-2010 11:50 AM