Closing Update for Friday, August 21: New Highs for 2009

4:11 PM, Aug 21, 2009 --

• DJIA up 155.91 (1.67%) to 9,505.96.
• S&P 500 up 18.76 (1.86%) to 1,026.13.
• Nasdaq up 31.68 (1.59%) to 2,020.90.

GLOBAL SENTIMENT

• Hang Seng down 0.64%
• Nikkei down 1.40%
• FTSE up 1.98%

DOWNSIDE MOVERS

(-) Hibbett Sporting Goods (HIBB) holds after-hours loss that followed Q2 miss, lowered outlook.

(-) Brocade Communications (BRCD) adds to downside after-hours range after revenue miss.

(-,+) AnnTaylor Stores (ANN) beats with EPS though sales miss, turns higher after early day declines.

(-) Intuit (INTU) sees continued downside after reporting quarterly miss in after-hours.

UPSIDE MOVERS

(+) Salesforce (CRM) adds to upside action that followed earnings beat, raised guidance.

(+) Caterpillar (CAT reportedly eyeing China truck JV with Navistar (NAV).

(+) AIG (AIG) firms as CEO reportedly said company expects to repay federal debt. Also gets a workers comp suit dismissed.

(+) JM Smucker (SJM) beats with Q1 and guides for FY EPS in line.

(+) Mentor Graphics (MENT) continues upside after easily beating with Q2 results reported Thursday evening.

MARKET DIRECTION

Stocks leaped higher in Friday's regular session as traders cheered comments from Fed Chairman Ben Bernanke in which he suggested the economy is on the mend. He peppered the rosier scenario with caution, however, noting that consumers are still the weak link in any recovery as they continue to face the dual headwinds of high unemployment and heavy debt. Sales of existing homes rose 7.2% to 5.24 million in July, up from 4.89 million in June and blowing out expectations of a rise to 5 million homes. The major indices touched fresh highs for 2009 as a result of the data, and oil surged as well, ticking up to a new 2009 top of $74.72 a barrel.

Bernanke said economic activity in both the U.S. and around the world appears to be "leveling out," and "the prospects for a return to growth in the near term appear good."

The rise in July home sales was the fourth straight monthly increase and the highest level of sales since August 2007.

Traders will try to keep the momentum rolling next week as earnings season thins out. On Tuesday, Borders Group (BGP), Burger King (BKC), Medtronics (MDT), Staples (SPLS) and J. Crew Group (JCG) are due with financials. On Wednesday, Coldwater Creek (CWTR), TiVo (TIVO) and Sina Corp. (SINA) are scheduled to report results. American Eagle Outfitters (AEO), Dell (DELL), Novel (NOVL) and Toll Brothers (TOL) are set to post numbers on Thursday. Tiffany & Co. (TIF) is expected with results on Friday.

On the economic front, durable orders, consumer confidence data and the S&P Case-Shiller Home Price Index will be released on Tuesday. On Wednesday, new home sales and crude inventories data are due. Initial claims and Q2 GDP numbers are slated for release on Thursday. Friday will see the release of personal income and spending data as well as the University of Michigan consument sentiment index.

Comments

[Bill L.:]

Multiple near high bullish readings in trader sentiment this past week make me very nervous...

Aug 21 04:47 PM

[debtacid:]

“Stocks leaped higher in Friday's regular session as traders cheered comments from Fed Chairman Ben Bernanke in which he suggested the economy is on the mend.”

Today was just a GS demo of what their market animation software can do on options expiration day.

Aug 21 05:03 PM

[User 395034:]

Me too!


On Aug 21 04:47 PM Bill L. wrote:

> Multiple near high bullish readings in trader sentiment this past
> week make me very nervous...

Aug 21 05:27 PM

[Mudduckk:]

I know. I know. All it does is just go up. Thanks.

Aug 21 06:39 PM

[ebworthen:]

Mr. Bernanke is cheerleading the economy because he has no choice; he has his own horse in the race even if it has a pulled hamstring and dispepsia.

He peppered his statements with cautious (Cover You A$$) comments so they will have less ammunition at the Congressional hearings, can't throw him in jail, or hang him from the nearest lamp post when the market crashes again (worse this round).

He knows what 1930-1932 looks like and it's the monster under his bed.

Aug 21 06:41 PM

[Windsun33:]

With the latest news about a $2 trillion higher deficit now expected ouit just after closing, expect some turmoil (as in tanking) on Monday.
www.nytimes.com/aponli...

Despite the market going up and up, I am still waiting to see any improvement in fundamentals. I pulled most out and went about 80% Cash just before close on Friday, taking some profits and a couple of losses just to get to the sidelines. I could be wrong, but I simply don't like the looks of things right now.

Aug 21 07:46 PM

[derryl:]

Despite no fundamental reason for it, I think this market is going to keep edging higher. If the market is being manipulated by GS with HFT then it's with the blessing of the Fed and administration who all want to see at least one asset class rebounding. I think there's a whole lot of weight behind the push up so if you can suspend your disbelief you can share in the gains.

Aug 21 08:49 PM

[Belome:]

The student becomes the teacher.... wax on ..wax off..
Jack off of all trades master of none....
Bubble II will be exploding in a theater near you Q1 2010

Aug 21 09:08 PM

[David White:]

Bill L: I agree. Plus the AP just announced that the US Budget deficit for 2010-2019 is now supposed to be $9T instead of the former $7T figure. Apparently a good portion of this was due to loss of tax revenues that had previously been expected. Also the job data was bad on Thursday. People seemed to ignore that on Friday.

On the flip side of the coin, the market just broke though a big technical resistance point. One might think it could continue upward for a while after that. Possibly it will just fall back to the line (and go under it). I really don't see the fundamental upside yet, especially with the Swine Flu predictions that I have been hearing lately. W.H.O. is now estimating that there could be up to 2 billion swine flu cases worldwide this fall. Anyone who doesn't think that will have an economic effect is kidding themselves.

Aug 21 09:31 PM

[David White:]

Apparently the UK had 110,000 new Swine Flu cases in the last week of July alone. We are just getting started on that. The Health Minister had predicted a month ago that the UK might have up to 100,000 new cases per day by the end of August. This sounds like it is on track to become true. Other areas are being hit hard too.

Aug 21 09:35 PM

[marketman54:]

Lets just recap the year to date:

-Mortgage defaults at an all time high and gaining every month.
-Toxic assets still on the books of the banks.
-Credit dirivitive swaps still on the books of the banks.
-Credit card defaults on the rise.
-Auto payment defaults on the rise.
-Commercial real estate collapse coming.
-Unemployment still going up every month and NO JOB CREATION.
-Auto industry in the toilet.
-Retail sales in the toilet.
-Consumers not consuming to drive the economy.
-Oil spiking.
-$2 trillion dollars worth of new debt and rising.
-Basically everything is doing poorly or out of business.

SOMEONE TELL ME WHAT IS GETTING BETTER?????
-

Aug 21 10:49 PM

[MarvinMBA:]

When the new deficit numbers come out next week, WATCH OUT BELOW is all I have to say...MarvinMBA

Aug 22 01:32 AM

[MarvinMBA:]

PS I should say I'm out of the market except for SLV holdings.


On Aug 22 01:32 AM MarvinMBA wrote:

> When the new deficit numbers come out next week, WATCH OUT BELOW
> is all I have to say...MarvinMBA

Aug 22 01:37 AM

[Holm:]

Numbers are meaningless right now guys....Market psychology is what makes you money....P/E ratios ROT etc etc...mean nothing.....The trend is your friend for swing trading.....You can't fight the market....just go with it....up or down who cares....make money both ways....

Aug 22 07:12 AM

[John Bowman:]

Well, the BS index is climbing higher every day.


On Aug 21 10:49 PM marketman54 wrote:

SOMEONE TELL ME WHAT IS GETTING BETTER?????

Aug 22 07:53 AM

[Windsun33:]

The problem as I see it right now is that the market seems to be trading more on hope and hype than on fundamentals. This is made much worse by the very low volume of trading, where even small trades can have an out of proportion effect.

That drives the market up right now, but on the downside a few large holders dumping stock could drive the market down quite a bit. One shot of any really bad news (as opposed to the usual "it could be worse news") could drive the market down 10-15% in a couple of days.

Aug 22 11:45 AM

[whidbey:]

We all must feel the Friday rally was desperation in motion.

Ben B is fighting to show Obama things are getting better under his hand. Very probable since he has spared no dollars.

The Need for a strong setup for the fall months is obvious. Go in fat and see if you can weather the fall storms.

The lack of final demand for goods and services is never the basis for a major expansion of multiples. We have a sheet in the wind and our growth, GDP, may look better for a while, but without jobs just expect nothing to last. More stimulus by late fall and so the sick man limps into the winter looking for an honest recovery.

Aug 22 04:46 PM

[enigmaman:]

Im one of the the market rally doubters to my own financial peril, found to many reason why I shouldnt and not enough reason why I should believe this rally was worth my money,

" A mind all logic is like a knife all blade, it makes the hand bleed that uses it"

Sometimes its true 2+2 doesn't always equal 4

Aug 22 05:37 PM

[samretlew:]

Hi Holm, I'm with you. Fundamentals often do play a role, but sometimes they don't, and it may take a long time for the market to become "normal"again. I got out at the end of December 2007 and back in in mid March. I have made over 30 % and expect to make a good deal more. However, I'm watching my signals and am ready to exit any time. The trick is to let your winners run and to cut your losses short quickly. In 2000/2001, I got burned horribly but learned from my mistakes. True enigmaman, you shouldn't trust this rally (or any rally for this matter); therefore, you need a strategy, one that gets you in when a trend starts and that gets you out when a trend falters. Good luck to everyone of you out there.

Aug 22 07:12 PM

[alwi:]

The market has a way of going against the concensus. Now, I believe that the world is full of people that are really kicking themselves hard for missing this march rally. And how do I know that? Have a look at all the comment ratings in this article as well as all others that are posted in seeking alpha. This my barometer. You consistently get positive ratings for bearish comments and vice versa. This is why, we will see much higher prices.

Aug 22 11:13 PM