Dow Puts Up a Fight While Nasdaq Takes a Breather

By David Silver

After yesterday's freefall into the close, the market is acting a little better today, and we are roughly where we were before the market started to fall apart at approximately 3 PM yesterday. The Dow slipped below the psychologically important 10,000 level, and has been struggling most of the morning to stay above that level. The Dow is outperforming the other indices, as the S&P 500 is flat and the Nasdaq is in the red as the jump in initial jobless claims, falling oil, and a strengthening greenback pressure parts of the market. eBay (EBAY) posted a 29% drop in profit and released disappointing guidance for its fourth quarter, and those results are pressuring the Nasdaq this afternoon. After yesterday's shaky session, this morning has shaped up to be a defensive rally in the Dow.

I am a Philly boy so I have to give a little shout out to the Phillies who finished off the L.A. Dodgers last night in game 5 of the National League Championship Series. Game 5 of the American League Championship Series is tonight with the Yankees up three games to one over the Angels. There were plenty of seats empty throughout the year as many of the banks that were on the government's payroll (TARP) were unable to use the box tickets they purchased. I wonder, now that they are on the verge of the World Series, what happens to those tickets? There were a few empty seats along the base lines in games one and two.

Steve Rattner, the former "car czar," detailed what exactly happened in the restructuring of General Motors and Chrysler in the November 9 issue of Fortune Magazine. It was an interesting (albeit) dry piece into what actually was going on behind the scenes, but we don't see anything about if he agreed with it or if these companies will ever again be successful, not to mention if the more than $100 billion the American tax payers have loaned to the industry will ever be repaid. I think we will get a portion of it back, but it will most likely be when your children are looking into colleges for their children.

Windows 7, Officially Released

The all awaited release of Microsoft's (MSFT) Window 7 has arrived and is sure to mark the beginning of stronger PC sales as the holiday shopping season approaches. We believe this new operating system will surely serve as a catalyst to drive PC sales within the consumer markets and the enterprise market. This will certainly continue to give the entire tech industry a boost. We believe that consumers have been holding back from buying new computers, waiting for the new system to be released as they feared buying new systems with Windows Vista. Although most new systems have been shipping with a coupon to do the Windows 7 upgrade, there have been rumors that the upgrade from Windows Vista was not straight forward, and this has prevented consumers from getting into the new system with the older operating system.

The fact is that the reluctance to use Windows Vista has been so great that many consumers and corporations have chosen to use the older XP operating system. This will surely serve as a boost to sales of Windows 7. We also believe that the enterprise market is very near its upgrade cycle and will surely utilize some of their budgets to invest in new machines. This comes at a great time, and will serve to provide extra support for PC sales in early 2010. We believe this will be great for tech investors as it will surely provide support of the entire industry.

Economic Data

Leading Economic Indicators

Leading economic indicators increased by 1% in September versus the 0.9% consensus estimate. This is the sixth month in a row the index has improved, although the declines in the coincident and lagging components have been longer. Once again, it's hard not to ignore the fact that our outlook for the economy continues to improve these days, with very little in the way of actual improvement (see yesterday's Fed Beige Book report). Those green shoots continue to give people hope.

Comments

[Carousel:]

I like your final chart ... is it available (monthly updated) somewhere?

Makes me wonder, if leading indicators don't lead after 6 months of improvements, are they really leading indicators anymore?

Oct 23 10:49 AM

[cyclingscholar:]

Come on man show your REAL KNOWLEDGE about the Dow and markets, and address the issue of why the Transport stocks are performing far more poorly than the industrials in recent weeks. Didn't your mummy tell ya what happens when no one takes the little piggies to market?

Oct 23 01:18 PM

[Mayascribe:]

Charles, I am one extemely angry man at you. You TWICE sent me pamphlets about Susta sugar substitute NXT Nutritionals. I bought in and was way up. Then I take my mother to get a flu shot and in one hour the stock drops nearly 50%.

I was doing so well that I was considering signing up for your $495 investment service as my gains from (NXTH) were way, way more than that.

Either you, or someone you know HOUSED me. I will never ever ever ever use your service now. I demand an explanation!

Oct 27 03:07 PM

[Mayascribe:]

Charles: I want to change that the above statement to : Either you, or maybe someone you know HOUSED me. Maybe you got Housed, too. If that's the case, then let's work together and figure out what happened.

I called your office. The kind lady on the phone said, "...that you recommend holding (NXTH). Who would ever want to hold any stock that plumments 52% in about 90 minutes?

The kind lady took my name, my phone number, and my email address. She said I would be receiveng an email about your "hold" recommendation. I have yet to recieve one. I'm not letting go of this, Charles. I would greatly appreciate a phone call, as I want to get to the bottom of this.

Oct 27 03:57 PM