Friday's Closing Update: Limping to the Close

4:04 PM, May 15, 2009 --

• DJIA down 62.68 (0.7%) to 8,268.64
• S&P 500 down 10.20 (1.1%) to 882.87
• Nasdaq down 9.0 (0.5%) to 1,680.14

GLOBAL SENTIMENT

• Nikkei +1.9%
• Hang Seng +1.5%
• FTSE -0.3%

DOWNSIDE MOVERS

(-) GM closing 1,100 dealerships

(-) AIG IDR downgraded by Fitch

(-) OSIP issues update on OSI-906.

(-) FIG pricing shares.

(-) ANF swings to loss.

(-) ITW backs wide Q2 EPS guidance range.

UPSIDE MOVERS

(+) ZLC Upgraded to 'Buy' at BofA

(+) AA Rated 'Buy' at Goldman Sachs

(+) YGE in supplier pact with AES Solar.

(+) EXEL reports positive brain cancer treatment study.

(+) FUQI tops earnings expectations.

MARKET DIRECTION

The major U.S. averages closed the regular session in the red, ending the day near their lows as traders found little inspiration in a raft of government data that continued to suggest the economy may have finally bottomed. Consumer sentiment spiked to an eight-month high, consumer prices were as-expected flat in April, and New York-based manufacturing data contracted less than expected. Traders are now looking further out, looking for signs of actual growth that could spur the next leg up in the markets. While some are keen on forecasting potential improvement in the second-half of 2009, other market-watchers are pinning their hopes on a first-half 2010 recovery.

With an eye toward next week, earnings season continues, but the number of companies reporting is thinning out. Among the top names due with quarterly numbers are: Lowe's (LOW), ADI (ADI), Hewlett-Packard (HPQ), Home Depot (HD), JA Solar (JASO), Medtronic (MDT), Saks (SKS), Vodafone (VOD), BJ's Wholesale (BJ), Intuit (INTU), NetApp (NTAP), Synospys (SNPS), Target (TGT), Autodesk (ADSK), Brocade (BRCD), GameStop (GME), LDK Solar (LDK) and Tech Data (TECD).

On the economic front, housing starts and building permits will be issued on Tuesday. Crude inventories are due out on Wednesday, and initial claims, leading indicators and the Philadelphia Fed are set to be disclosed on Thursday.

In today's market, General Motors (GM) declined after it said it will close about 1,100 underperforming and very small sales volume U.S. dealers as it moves to reduce its dealer network from 5,969 stores today to approximately 3,600 by the end of 2010.

Crude dropped about 2.5% to near $56 per barrel, continuing a slide since touching a recent high of $60.

Insurers were a strong force in today's pre-market, posting healthy gains after the federal government offered life insurers up to $22 billion of taxpayer money. AllState (ALL), Hartford Financial (HIG), Ameriprise Financial Inc. (AMP), Lincoln National Corp. (LNC), Principal Financial Group Inc. (PFG) and Prudential Financial Inc. (PRU) are the six insurers the Treasury has given preliminary approval to receive funds. While most of these issues saw gains early in the day they gave up the bulk of those advances and the majority of the stocks closed lower.

Nordstrom (JWN) provided some support to the retail space as the luxury department-store chain was up after it reported first-quarter profit excluding some items of 31 cents a share, beating analyst estimates. The company also boosted its full- year forecast.

Tech issues were a rare bright spot in today's trade, edging modestly higher on the back of strength in Yahoo (YHOO). The search giant saw a decent bounce after it was highlighted by Jim Cramer on his Mad Money CNBC show.

Comments

[Missing_Link:]

So strange. Cetin Haklimoglu promised us all on Monday evening that the market would recover on Tuesday and continue upward for the rest of the week. He also said the rally was unstoppable.

Who'd have thunk it?

May 15 04:57 PM

[Stone Fox C...:]

The rally was overdue for a pause. Needed a down week at least. Might be in a range from 870 to 930 for a while though a breakout is possible. A breakdown seems unlikely b/c everybody expects it but the market held up pretty well this week.

May 15 05:08 PM

[Screwloose:]

Whatever happened to the now "usual" last-gasp spike to post a higher week-ending print?

Have the PPT taken the day off - or has the hollow rally [holo-rally?] now served it's purpose and been abandoned to it's fate...?

The gold manipulators are strangely AWOL this week as well - come on lads; show a bit of consistency please...


On May 15 04:57 PM Missing_Link wrote:

> Who'd have thunk it?

May 15 07:43 PM

[Missing_Link:]

On May 15 05:08 PM Stone Fox Capital wrote:
> A breakdown seems unlikely b/c everybody expects it
> but the market held up pretty well this week.

I am not sure I follow your logic. I don't deny that the market is unpredictable, but is it always reliably contrarian?

If "everybody" expects a breakdown, somebody needs to call CNBC and the other major mainstream media finance commentators and tell them to get on the bandwagon ...

May 15 08:23 PM

[Matt Miller:]

I'm shorting the market and especially financials. Volumes are abysmal and I think GS and the Fed are done pumping and getting ready for the dumping. What crooks both.

May 15 08:47 PM

[chleoku:]

I am shorting the market too by buy SRS and SKF ETFs. It's very clear that market fundamentals are not here yet and it's time for the market to enter another bear correction this May:

www.wealthalchemist.co.../

May 16 03:45 AM

[marketman54:]

I am shorting on a daily basis also. I think it will all come tumbling down, not because it is oversold but because it is really friggin bleak out here.

Chrysler and GM going into bankruptcy and gutting the auto industry and manufacturing across the country; mortgage defaults climbing astronomically as unemployment climbs; home sales/ auto sales/ retail sales/ travel.........NON-EXI... Commercial real estate rolling down the street like a tsunami. Heavy machinery sales and virtually the sale of anything, DISMAL.

Consumers are not consuming, banks are not lending, we are in a deep, wide, dark ever expanding black hole.

May 16 03:31 PM

[bartpr:]

short you must. remember that this rally revealed upside momentum far in excess of the prior rally that lead to the mar lows.

a correction has indeed started but be wry of its decline, beause of the storng upward bias.

remember also that even in this secular bear market stocks have known to rally more than 100% before the next leg down. go back to the 1933 through 1937 period of the depression. people made money then even though in a long term bear mkt.

May 17 01:46 PM

[Al-USA:]

The market held the breakout point at SPX (S&P 500) 875 so that is bullish. In fact, if the bulls are going to make a stand and get the rally going again, it is at 875, so, its better to be long although setting a stop either direction will stop you out if you get it wrong.

Good luck to all.

May 17 08:04 PM