Today's Closing Update: Slim Losses Barely Dent Week's Gains

4:10 PM, Sep 11, 2009 --

• NYSE down 6.98 (0.1%) to 6,843.83.
• DJIA down 22 (0.23%) to 9,605.
• S&P 500 down 1.41 (0.14%) to 1,043.
• Nasdaq down 3.12 (0.2%) to 2,081.

GLOBAL SENTIMENT

• Hang Seng up 0.44%
• Nikkei down 0.66%
• FTSE up 0.48%

UPSIDE MOVERS

(+) Quidel (QDEL) continued evening run seen after issuing outlook.

(+) Discovery Labs (DSCO) continued sharp extended-hours upside that followed news company has received written notification for SURFAXIN approval plans from FDA.

(+) Campbell Soup (CPB) beat with earnings.

(+) Garmin (GRMN) gets analyst upgrade

(+) News Corp. (NWS) gets analyst downgrade.

(+) Eli Lilly (LLY) traded mixed after saying Cymbalta study shows drug maintains statistically significant pain reduction for 41 weeks.

DOWNSIDE MOVERS

(-) Intel (INTC) turned lower with broader market decline despite analyst upgrade.

(-) Dr. Reddy's (RDY) gained then fell as founder denied interest in selling stake.

(-) Steel Dynamics (STLD) reversed modest evening upside that followed raised Q3 guidance.

(-) Cree (CREE) priced share offering.

(-) National Semi (NSM) reported sharp drop in profit though beat with Q1 EPS, guides for Q2 sales to beat.

(-) AIG (AIG) gets analyst downgrade.

(-) Allstate (ALL) gets analyst downgrade.

(-) CBS (CBS) gets analyst downgrade.

(-) RealNetworks (RNWK) gets analyst downgrade.

(-) Finisar (FNSR) matched with earnings in extended-hours release.

MARKET DIRECTION

Stock averages closed just in the red Friday, snapping a five-session string of advances. For the week, the DJIA is up 1.7% and the S&P 500 is up 2.6%. The Nasdaq Composite pushed ahead by more than 3%.

Early mixed trade turned decisively lower in afternoon action before the major averages clawed back into the upper end of the day's range. Bulls showed some fatigue after a five-day advance. That change in attitude was evident as stocks failed to get much traction from an upbeat consumer confidence reading issued earlier in the day.

The Reuters/University of Michigan index jumped in early September to 70.2 from 65.7 in August, with the rise significantly better than expected by many analysts.

Overseas markets and U.S. pre-market futures trading got a lift this morning from encouraging reports out of China. The latest data showed improvement in industrial output, investment, loans and retail sales.

Comments

[Bill L.:]

TLT as up this morning as well as the market, that was the intraday tell that we would finish lower. On a longer time frame, the TLT has been rallying for over 2 months with the stock market...

Sep 11 05:23 PM

[ko1:]

09/10/09 09/09/09 09/08/09 09/04/09
Spy Rtn 1.02% 0.77% 0.86% 1.40%
Momentum 71 19 18 -44
Strong Pflio Rtn 2.27% 1.18% 2.26% 1.45%
Weak Pflio Rtn 0.86% 0.80% 1.89% 2.32%
Strong Pflio Vol 6.8% 1.6% -0.8% -23.0%
Weak Pflio Vol -3.3% 1.4% -13.8% -22.1%
Strong:Weak Vol 10.1% 0.2% 13.0% -0.8%
Pattern TREND TREND TREND CONVRG

Sep 11 06:12 PM

[ko1:]

Momentum continues to be strong, with buying of recently strong stocks outweighing the buying of weak stocks; characteristic of the entry of "dumb money" from retail investors into the market. At least up until yesterday, the returns on a Strong Portfolio were greater than that of a weak one, and the volume was also greater in the Strong Portfolio; all again signifying buying of strong stocks over weaker ones.

Sep 11 06:15 PM

[David White:]

Bill L.: I started thinking the market should be retracing in June. I agree TLT rising should be a sign that there is fear in the equities markets. Ditto gold and silver rising. Evenutally that fear will turn into downward action. Some are speculating that the first 2-3 days of next week will be down days as a minor correction for the recent run up of the last 7 days. They may be correct.

The Deflation and the correction downward in GDP from Japan would have to be viewed as negative. Plus the news from China was worrisome at best. The industrial production increased by 12.3% year over year. However, exports were down 23%, and the trade surplus was down 45% year over year. This means China has ramped up to making much more, but it is selling much less externally. The Chinese stimulus package has helped supply internal demand temporarily. However, Roubini contends that the long term behavior of the Chinese consumer is unchanged. This means that China will soon have much increased production without anywhere to sell the products. This is a scenario for Chinese deflation. It means the Chinese may need more stimulus if Japan, Europe, the US, and India do not recover quickly. It means the Chinese will not have enough demand for their new production capability. They may try dumping their products in the US and Europe. This will be bad for US and European businesses. Alternatively , the Chinese industrial complex may have to slow or stop its growth, if their export market is shrinking (or stagnant) instead of growing. This would hardly be leading the world out of a recession.

The Chinese are now starting to open up China to outside investment. Is this because they know the investments will be a lot riskier than they have been in the past? Do they want outside banks taking these higher risks? If the Chinese keep growing at 10+% per year, what will happen when the US, Europe, and Japan are hardly growing at all? Where will all of the extra production go? The US is only supposed to grow at about a 1% rate in 2010 and 2011 according to Roubini. Meredith Whitney was actually painting a bleaker picture recently. Something has to give. It's a good thing the US is a good food manufacturer. At least we can still eat reasonably well.

Sep 11 06:36 PM

[adan:]

regarding, from the article:

"...reports out of China. The latest data showed improvement in industrial output, investment, loans and retail sales...." -

if the data is suspect, then the impact is muted -

though most of what i've read is that the data is too skewed and applied to be indicative of the growth levels shown, i'd welcome any veriviable data supporting or disproving the chinese data...

actually, i'd like the same regarding our own stats here in our own country ;-)

Sep 11 06:40 PM

[dracula99:]

Please give me a break my UAE friend. Is this some sort of fear tactic? Ww are going to have wars sporadically all the time on this planet. This is human nature. What kind of stategy do you have?

Sep 11 07:02 PM

[vman650:]

Can someone please explain this to me
Over the last month the nasdaq has been rising like a rocket ship but when you look at the advance decline numbers they are not nearly as good. Today Sept 11, 1107 stocks rose and 1588 declined but the nasdaq only dropped 3 points. There have been numerous days when declines led advancing stocks, but the nasdaq was big time positive. I am at a loss to explain this and if anyone has an answer I would very much appreciate it. I find it hard to believe the numbers that I am seeing.
Thanks

Sep 11 07:33 PM

[tripleblack:]

Quality balance sheets are attracting a disproportionate portion of the new money flowing into the markets. Losers may outnumber winners, but the aggregate result may be that the winning numbers outweigh the losers, ie, the winners are winning big enough to absorb the negatives from the losers, leaving an "advance".

We are not seeing huge volume, either way. This may be a paper tiger market unless much more of the money sitting on the sidelines makes a move.

Sep 11 10:46 PM

[Bill L.:]

The Nasdaq is market capitalization weight. So if the most money is flowing into the few stocks with the largest market caps, overall their can be more companies declining than advancing, and the index can still be positive. Divergences in breadth can be very telling regarding a trends strength, so keep watching... Breadth divergences, along with changes in momentum, sentiment, and volume can lead to high probability turns in the market.


On Sep 11 07:33 PM vman650 wrote:

> Can someone please explain this to me
> Over the last month the nasdaq has been rising like a rocket ship
> but when you look at the advance decline numbers they are not nearly
> as good. Today Sept 11, 1107 stocks rose and 1588 declined but the
> nasdaq only dropped 3 points. There have been numerous days when
> declines led advancing stocks, but the nasdaq was big time positive.
> I am at a loss to explain this and if anyone has an answer I would
> very much appreciate it. I find it hard to believe the numbers that
> I am seeing.
> Thanks

Sep 12 01:27 AM

[rick12345:]

Pension funds are adding to their portfolio while retail investors are still risk averse, simple. People are still waiting for this market to crash, based on what fundamentals, I don't know. If you look at the NASDAQ it becomes clear that investors were buying defensive stocks such as telecom's and transport. Also, being September 11 there was probably a bit more fear than usual.
Most of the charts for NASDAQ averages show we are still at 2005 levels, so how and when the market could have raced ahead of itself is unclear to me; In the case of the DJIA the markets are back to 2003.
To the best of my knowledge there is no correlation which proves that unemployment and budget deficits cause stock markets to crash. As it stands, unemployment begins to decline about 6 months after the bottom of a market trough is reached. This indicates that we have probably reached the peak right now and the rate should start to fall from here.
The situation at present shows that technically the stock market is in a bull phase; Whether the bears choose to miss this opportunity is irrelevant, since research has shown that retail investors rarely predict markets with any accuracy. Thence, I wouldn't be paying too much attention to some of the rubbish out there, particularly journalists.

Sep 12 07:26 AM