The Obstacles Are Getting Worse By Rev Shark RealMoney.com Contributor 1/14/2009 7:38 AM EST
It still holds true that man is most uniquely human when he turns obstacles into opportunities. -- Eric Hoffer
The market continues to be greeted each morning with news that confirms the fact that we are mired in the worst economic environment since the 1920s. Most everyone knows that already, but it may not really hit us until we are forced to confront this daily diet of negativity. Talking about how bad things are is quite different than actually having to deal with them day after day.
The news flow this morning continues to be quite dire. Ireland's prime minister commented that his country may need help from the International Monetary Fund; Deutsche Bank (DB) anticipates a loss of 4.8 billion euros, more than previously expected; and Citigroup (C) plans to cut its size by about one-third. We have retail sales numbers for December coming up, which are unlikely to be very cheerful, and we even have a couple of bankruptcies filed by Goody's and Nortel (NT) .
It is unrelentingly negative, and it is taking a toll on those who have been a bit too sanguine about how easily the market might price it all in. We heard quite often back in December that banks in particular had pretty much announced the worst and would begin to heal. That has certainly changed in the last week or so as Band of America (BAC) and Citi have been battered.
The question for us now is whether this series of obstacles we are seeing lately is going to be discounted by the market and help us find at least some temporary support. The positive aspect of this is that investors are so hungry for any positive that it doesn't take much to spark a little bit of a bounce.
Finding a bottom when there is as much extreme negative sentiment as there is now is not easy. So often, negativity is viewed subjectively -- folks want to believe a turn is near simply because they are tired and worn out by how bad the market has been. That isn't very scientific and can easily backfire.
If you are going to try to use sentiment to try to catch a market turn, it is important to also consider the technical conditions of the indices. The good news is that the major indices are still holding above the late-December lows. The S&P 500 can fall to around 850 and still be OK. It certainly will be a precarious pattern with risk to the downside, but with the level of negativity and the degree to which we are oversold, it may be supportive of some sort of bounce.
Unfortunately, a bounce at this point doesn't do much to improve the longer-term picture. We are still in an ugly bear market. If your time frames aren't that short, you should simply respect that fact and stand aside. We'll have some countertrend trade opportunities, but this is for the very active short-term trader -- not for those who are looking to rebuild longer-term portfolios. The time for that is a ways down the road.
Better-than-expected mortgage refis have helped perk us up a little bit, but I suspect retail sales are going to be chilling. ------------------------------ Ülespoole avaneavad:
In reaction to strong earnings/guidance: AEPI +15.6% and EXFO +13.7% (very light volume)... Other news: EROC +26.6% (announces hedge transactions and its intention to maintain its current distribution level of $1.64 per unit on an annual basis), YHOO +3.2% (confirms Carol Bartz Joins as Chief Executive Officer), LEN +2.9% (CNBC reports that LEN is filing a lawsuit against Barry Minkow alleging libel and extortion), DNDN +2.8% (still checking), SQNM +2.8% (Sequenom, The Immune Tolerance Institute and the UCSF to develop advanced diagnostic test for severe combined immunodeficiency in newborns)... Analyst comments: STEM +6.7% (initiated with Speculative Buy at Dawson James), SOHU +2.0% (assumes coverage and upgrades to Outperform at Oppenheimer).
Allapoole avanevad:
In reaction to disappointing earnings/guidance: STSA -22.5%, UA -18.0%, DB -10.8%, BG -9.7%, RACK -7.4%, TIF -6.8%, FNB -4.8%, LLTC -3.8%, KCP -3.4%... Select financial related names trading lower: BCS -14.4% ( says 2,100 jobs at risk in UK unit - DJ), CS -7.1%, RBS -7.1% (sells Bank of China shares for GBP1.6 bln - DJ), AIB -6.3%, C -5.8% (Citigroup and Morgan Stanley confirm they will form wealth management business through joint venture), HBC -5.7% (trades lower in Europe on $30 billion capital raising worry - Reuters.com), STD -5.5% (downgraded to Sell at UBS), UBS -4.8%, AXP -3.6%, ABB -3.5%, USB -3.1%, JPM -2.5%, WFC -2.4%, BAC -1.4% (ests cut at Ladenburg), GS -1.3%, MS -1.2% (Citigroup and Morgan Stanley confirm they will form wealth management business through joint venture)... Select agriculture related names trading lower following disappointing BG guidance: ADM -4.1%, POT -3.6%, CF -3.5%, MOS -3.1%, AGU -3.0%... Select metals/mining names showing weakness despite higher spot prices: RTP -6.9% (announces that Jim Leng will be appointed as Chairman of the Boards - Reuters), AAUK -4.5% (downgraded to Hold at Citigroup), BBL -3.5%, RIO -2.0%... Select oil/gas related names trading lower: NOV -3.8% (downgraded to Underweight at JPMorgan), RDS.A -3.7%, RIG -3.4% (downgraded to Neutral at JPMorgan), TOT -2.9%, PBR -2.4%, BP -2.2%, XOM -1.0%... Other news: NT -75.0% (files for Chapter 11 Bankruptcy in Delaware - DJ), CLF -7.8% (provides '08 North American Iron Ore sales volume update; pre-tax earnings in '08 would be lower by approx $50 mln), SUSS -4.6% (provides fourth quarter and full year 2008 operating results update and initial 2009), NOK -4.1% and PHG -3.9% (still checking), SAP -2.8% (still checking for anything specific), FORM -1.8% (announces cost reduction plan; to reduce workforce by 22%)... Analyst comments: SI -8.8% (downgraded to Neutral at BofA/Merrill), PCU -4.7% (downgraded to Sell at UBS), STX -4.4% (downgraded to Hold at Argus), SII -3.8% (downgraded to Neutral at JPMorgan), BX -3.6% (downgraded to Underweight at Barclays), STP -2.8% (downgraded to Underperform at Friedman Billings and downgraded to Neutral at AmTech), CAT -2.7% (Hearing Tier 1 out cautious on CAT), EBAY -2.3% (initiated with Sell at Collins Stewart), HNZ -1.4% (downgraded to Market Perform at Bernstein), INTC -1.2% (initiated with a Sell at Auriga U.S.A; tgt $10).
Goodyear Tire & Rubber Co. (GT)-le osteti eelmine nädal 11.7k lepingut 7.5 calle, hetkeks on hind kukkunud juba $5.64 peale. Siit võib tulla üsna huvitav liikumine üles. GT Jan 09 7.5 calls are seeing heavy interest with earnings expected some time in mid-Jan (volume: 11.7K, open int: 3080, implied vol: ~100%, prev day implied vol: 90%);
Fed's Stern says Economic 'Improvement Is Not Too Far Off'; Future Recovery Will Be Modest In Its Pace Fed's Stern says Recession To Last At Least Two More Quarters
Fed's Stern says early stages of US economic recovery to be subdued - Reuters 'Ample time' to withdraw excess liquidity, Fed firmly committed to long-run price stability.
Beige Book says lending activity down; lending conditions tighter Fed's Beige book: Layoffs Continue In Most Districts;Wages Contained Beige Book says retail sales weak over holiday season Fed's Beige Book: Credit quality remains a concern
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