Closing Update: Streak Stretches Six

MARKET DIRECTION

Stocks clung to modest late-afternoon gains, closing higher and allowing the major averages to log their sixth consecutive winning week. It's the best streak since May 2007. The Dow Jones Industrial Average closes up 0.6% for the week and finishes at a two-month high. The S&P 500 is up 1.5% this week.

Stocks traded in choppy fashion earlier in the session as Wall Street couldn't get much traction after a mixed read on the economy and corporate balance sheets.

U.S. consumer sentiment improved in April, but still remained relatively poor, according to a survey released by the University of Michigan and Reuters. The consumer sentiment index rose to 61.9 from 57.3 in March, boosted by higher stock prices and hopes that the worst of the recession may be soon past. Economists were looking for an increase to 59.0. The index hit a 28-year low of 55.3 in November.

Meanwhile, General Electric (GE) failed to excite investors after reporting that its first-quarter earnings fell 36 percent, hurt by waning sales and a sharply lower profit at its ailing finance arm, GE Capital. But the results exceeded Wall Street's forecasts. GE closed up about 1%.

Also, Google (GOOG) shares are trading in a narrow range after its better-than-expected first-quarter earnings report was tempered by a cautious outlook for the current period.

Citigroup (C) shares gained initially but turned lower as the session progressed. The broader financial space gained today.

C said its first-quarter loss narrowed to $966 million, or 18 cents per share, from $5.19 billion, or $1.03, a year earlier. Analysts on average had expected a loss of 30 cents per share.

General Motors (GM) shares are flat after Chief Executive Fritz Henderson said in an update on its turnaround plan that the automaker would be forced to cut an unspecified number of jobs as part of its restructuring, and that the company was sticking with its four-brand strategy.

Henderson also said that it was "still feasible" to complete its turnaround outside of bankruptcy and that any word of additional federal funding was "premature." He added that the timetable on bond exchanges is "as soon as possible."

4:12 PM, Apr 17, 2009 -- NYSE up 26 (+0.5%) to 5,480.32

DJIA up 5.9 (0.1%) to 8,131.33

S&P 500 up 4.3 (0.5%) to 869.60

Nasdaq up 2.6 (0.2%) to 1,673.07

GLOBAL SENTIMENT

Nikkei +1.7%

Hang Seng +0.1%

FTSE +1.0%

DOWNSIDE MOVERS

(-) BIIB says sales of its MS drug disappointed in Q1.

(-) ELY guides for first-quarter below Street.

(-) C reports smaller-than-expected quarterly loss.

(-) PALM gets analyst downgrade.

(-) PETM gets analyst downgrade.

(-) SOHU gets analyst downgrade.

(-) MGM on report Carl Icahn is pushing for bankruptcy

UPSIDE MOVERS

(+) LOW added to conviction buy list at Goldman.

(+) GOOG beat with results but reported first sequential revenue
decline.

(+) GE beats by a nickel with EPS as revenue misses.

(+) MAT reports Q1 loss that's a penny deeper than Street view.

(+) DRYS raises funds in offering.

Comments

[E Nuff Sed:]

Most rational observers are coming around to the idea that the we have now decisively bounced off the bottom. My observation of previous market bottoms indicate that an indica is back to back rally lasting 4 - 7 weeks.
Here are my bear market charts.
docs.google.com/Presen...

On a fundamental basis the S&P is now trading on a forward PE of between 12 - 14. This is at the same level it was in 1989-1990 when the great bull of the 90's started.

Apr 17 07:47 PM

[Yamaka:]

When the 10 yr T is less than 3%, I would expect the P/E to expand as much as 20 (earnings yld 5%).

I expect the SP500 Index to reach 1100-1200 this year end.
As long as the T rate is very low, the market will keep slugging upwards!

No one should fight the tape and the Fed.
They are too powerful, and will pull us out of the downturn.

Cheers.


On Apr 17 07:47 PM E Nuff Sed wrote:

> Most rational observers are coming around to the idea that the we
> have now decisively bounced off the bottom. My observation of previous
> market bottoms indicate that an indica is back to back rally lasting
> 4 - 7 weeks.
> Here are my bear market charts.
> docs.google.com/Presen...;hl=en
>
>
> On a fundamental basis the S&P is now trading on a forward PE
> of between 12 - 14. This is at the same level it was in 1989-1990
> when the great bull of the 90's started.

Apr 17 08:48 PM

[sr9web:]

Ok, so your suggestion is that we keep bidding stocks up and up so as to advance a "bull market"?


On Apr 17 07:47 PM E Nuff Sed wrote:

> Most rational observers are coming around to the idea that the we
> have now decisively bounced off the bottom. My observation of previous
> market bottoms indicate that an indica is back to back rally lasting
> 4 - 7 weeks.
> Here are my bear market charts.
> docs.google.com/Presen...;hl=en
>
>
> On a fundamental basis the S&P is now trading on a forward PE
> of between 12 - 14. This is at the same level it was in 1989-1990
> when the great bull of the 90's started.

Apr 17 09:32 PM

[MarkitWacha:]

One problem with the up, up, and away theory - CMBS. Commercial real estate will hit Chase hard. It's so bad, that a rational businessman/woman might want to close any real estate business and walk away from the mortgage. Anecdotal evidence suggests retail properties are down approx. 30%. Here's how I think it will play out:

* In 3 months, office occupancy rates will hit new lows.
* the retail story will linger, causing smaller retail bankruptcies as we drift further away from the 2008 Christmas season. 2009 Christmas will disappoint and we'll see strip malls turn into ghost barracks. The rebound will happen when unemployment drops to 6.5%, but no one's predicting that till 2012.
* the corresponding reduction in property taxes will stress quite a few municipalities into crisis.
* the muni bond market will deteriorate significantly.
* mayors, citing budget crises, will cut city staff across the board.
* Boeing will announce plans to leave Washington state. Microsoft will stop hiring in Washington in favor of Canada. Weyerhauser will split and report taxes like a REIT.
* The Solar photovoltaics businesses and wind power generation businesses will be shocked. Electricity generation will dramatically drop in cost via traditional methods to ~8 cents/kWh. This will sap up demand for alternates as if it were cocaine in the 80s. After some major bankruptcies, electricity prices will bounce upward with the recovery in late 2010, but too late for the big alternate energy producers that couldn't get bridge loans.
* California will threaten to default once on their bonds. The Federal reserve will bail them out, and politicians will jump in, trying to control Cali's budget from blackberrys in DC.

The data suggest that this rally is driven by quants. I'm saddened that it's taking in what's left from the typical 401k investor. I can just see people throwing good money after bad, risking their tax return, hoping it will double to cover another mortgage.

To take advantage of the second major bear market that's coming in this drama, short municipal bonds or municipal bond funds. Just in case the Fed becomes the backstop for munis, short the treasury bonds, via TBT, as well.

Apr 18 02:30 AM

[Rainmon:]

After more earnings come out in the new week, the market will start to decline when the realization that earninga will be worse next quarter, unemployment will continue to rise, consumer spending will continue to decline and housing sales will fall even further. Bankruptcies will increase with GM and General Growth Properties being the first major companies others will follow. Then people will will start to wake up and the artificial upturn in the market over the last 6 weeks will be revealed as so much hype and positive thinking non sense, say hello to the next depression.

Apr 18 03:14 AM

[$OMALIA:]

hmm

Apr 18 08:28 AM

[mrktcap:]

Just buy buy buy. This is history in the making. The bulls rule the market now. I am sure the press had all those 6 week rally articles published days ago. The government is involved and they want happy people spending money. Get in now before you miss the great financial rebound of 2009. Isn't this the sentiment I am hearing for the next couple weeks-months?

Apr 18 09:11 AM

[frosty:]

You forgot to mention WW IV.


On Apr 18 02:30 AM MarkitWacha wrote:

> One problem with the up, up, and away theory - CMBS. Commercial real
> estate will hit Chase hard. It's so bad, that a rational businessman/woman
> might want to close any real estate business and walk away from the
> mortgage. Anecdotal evidence suggests retail properties are down
> approx. 30%. Here's how I think it will play out:
>
> * In 3 months, office occupancy rates will hit new lows.
> * the retail story will linger, causing smaller retail bankruptcies
> as we drift further away from the 2008 Christmas season. 2009 Christmas
> will disappoint and we'll see strip malls turn into ghost barracks.
> The rebound will happen when unemployment drops to 6.5%, but no one's
> predicting that till 2012.
> * the corresponding reduction in property taxes will stress quite
> a few municipalities into crisis.
> * the muni bond market will deteriorate significantly.
> * mayors, citing budget crises, will cut city staff across the board.
>
> * Boeing will announce plans to leave Washington state. Microsoft
> will stop hiring in Washington in favor of Canada. Weyerhauser will
> split and report taxes like a REIT.
> * The Solar photovoltaics businesses and wind power generation businesses
> will be shocked. Electricity generation will dramatically drop in
> cost via traditional methods to ~8 cents/kWh. This will sap up demand
> for alternates as if it were cocaine in the 80s. After some major
> bankruptcies, electricity prices will bounce upward with the recovery
> in late 2010, but too late for the big alternate energy producers
> that couldn't get bridge loans.
> * California will threaten to default once on their bonds. The Federal
> reserve will bail them out, and politicians will jump in, trying
> to control Cali's budget from blackberrys in DC.
>
> The data suggest that this rally is driven by quants. I'm saddened
> that it's taking in what's left from the typical 401k investor. I
> can just see people throwing good money after bad, risking their
> tax return, hoping it will double to cover another mortgage.
>
> To take advantage of the second major bear market that's coming in
> this drama, short municipal bonds or municipal bond funds. Just in
> case the Fed becomes the backstop for munis, short the treasury bonds,
> via TBT, as well.
>
>
>
>
>

Apr 18 11:20 AM

[Suncatcher:]

Alright already, the economic world is coming to an end...wait a minute... the next bull market is unfolding...MAMA MIA. I don't know if I should hang myself or party like I was in college! Please everyone disclose your success rate for predictions when you make these stupendous statements. If not, I will continue to enjoy them but I will have to discount them as highly fictional. In the spirit of disclosure: I bought into Y2K and still have dried commodities in my garage.How stupid was I? I bought gold at $300.00 and sold it two years later for $310 to help pay to build my house. My house was briefly worth alot of money, now it's worth half that. I recently bought gold (again) and silver...which means that in six months gold and silver will no longer be considered precious metals. Just wanted to give all you nice folks fair notice. I am considering publishing an inverse investment newsletter so that when I go long on anything the subscriber can short it. I have a solid record here so this is the only way I can think of to profit from it. In order to compete with all the other financial services I will need a top-of-the-line hype copy writer. Any takers (this seems like as good as any place to start looking). Please list your creds with postings!


On Apr 18 02:30 AM MarkitWacha wrote:

> One problem with the up, up, and away theory - CMBS. Commercial
> real estate will hit Chase hard. It's so bad, that a rational businessman/woman
> might want to close any real estate business and walk away from the
> mortgage. Anecdotal evidence suggests retail properties are down
> approx. 30%. Here's how I think it will play out:
>
> * In 3 months, office occupancy rates will hit new lows.
> * the retail story will linger, causing smaller retail bankruptcies
> as we drift further away from the 2008 Christmas season. 2009 Christmas
> will disappoint and we'll see strip malls turn into ghost barracks.
> The rebound will happen when unemployment drops to 6.5%, but no one's
> predicting that till 2012.
> * the corresponding reduction in property taxes will stress quite
> a few municipalities into crisis.
> * the muni bond market will deteriorate significantly.
> * mayors, citing budget crises, will cut city staff across the board.
>
> * Boeing will announce plans to leave Washington state. Microsoft
> will stop hiring in Washington in favor of Canada. Weyerhauser will
> split and report taxes like a REIT.
> * The Solar photovoltaics businesses and wind power generation businesses
> will be shocked. Electricity generation will dramatically drop in
> cost via traditional methods to ~8 cents/kWh. This will sap up demand
> for alternates as if it were cocaine in the 80s. After some major
> bankruptcies, electricity prices will bounce upward with the recovery
> in late 2010, but too late for the big alternate energy producers
> that couldn't get bridge loans.
> * California will threaten to default once on their bonds. The Federal
> reserve will bail them out, and politicians will jump in, trying
> to control Cali's budget from blackberrys in DC.
>
> The data suggest that this rally is driven by quants. I'm saddened
> that it's taking in what's left from the typical 401k investor.
> I can just see people throwing good money after bad, risking their
> tax return, hoping it will double to cover another mortgage.
>
> To take advantage of the second major bear market that's coming in
> this drama, short municipal bonds or municipal bond funds. Just
> in case the Fed becomes the backstop for munis, short the treasury
> bonds, via TBT, as well.
>
>
>
>
>

Apr 18 01:32 PM

[GJROCKET:]

Time to short EVERYTHING!

Apr 18 05:43 PM

[E Nuff Sed:]

No - just be rational. Fear like greed can overshoot -- as denizens of seeking alpha are showing.

You can pick up wide moat companies like NVS at PE of 10, P/CF of 8 and yeild of 4.9%. NVS has almost no debt and has one of the most diversified healthcare franchise in the world. It probably selling at half its intrinsic value.

On Apr 17 09:32 PM sr9web wrote:

> Ok, so your suggestion is that we keep bidding stocks up and up so
> as to advance a "bull market"?

Apr 18 09:06 PM