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Can The Bears Get Back In The Game

Daily State of the Markets 
Monday Morning - April 11, 2011

Publishing Note: Dave has an early committment this morning, but we've got you covered on the important news, happenings, and market-drivers in his absence.

The stock market finished lower on Friday as volatility struck in the final two hours of the session and the dip-buyers decided to take the day off. The primary drivers of the action included worries over what appeared at the time to be a looming government shutdown, some more hawkish commentary out of Fed governors, trepidation in front of the upcoming earnings season, and oil prices surging to new highs.

The trend in the market over the past few months has been for traders to shake off any and all bad news as new money has consistently flowed into the market. This has kept the bears largely on the sidelines and the bulls in charge. However, given the uncertainty over the potential of a government shutdown, the potential impact of higher oil on earnings, and the fact that this is an options expiration week, the buyers appeared to go home early on Friday. Thus, for the first time since the early-March pullback ended, the bears were able to get things going their way for more than a couple of hours.

On a chart basis, the market remains in an intermediate-term uptrend but the near-term outlook has become more clouded as a result of the sloppy action seen over the past week or so. The bear camp argues that the uptrend is looking tired while the bulls contend that their counterparts have been unable to do anything with their opportunities. Objectively speaking, a pullback to 1320 would be logical and a break 1300 would put the bears back in charge of the game.

Turning to this morning... Another earthquake rocked Japan and shook buildings overnight. Asian makres were mostly lower as a result. European markets opened mixed to slightly lower as concerns about rising metal prices and mixed corporate results were pitted against continuing M&A activity and reports Libyian leader had agreed to a ceasefire proposal from the African-Union. Closer to home, stock futures have been higher in the early going but have been fading in the last few minutes and currently point to flat open.

On the Economic front... There are no entries on the economic calendar today.

Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell...


  • Major Foreign Markets:
    • Australia: +0.56%
    • Shanghai: -0.25%
    • Hong Kong: -0.38%
    • Japan: -0.50%
    • France: -0.57%
    • Germany: +0.01%
    • London: +0.13%

  • Crude Oil Futures: -$1.04 (May contract) to $111.75
  • Gold: -$0.70 to $1476.10
  • Dollar: higher against the Yen, higher vs. Euro and Pound
  • 10-Year Bond Yield: Currently trading at 3.596%
  • Stocks Futures Ahead of Open in U.S. (relative to fair value):
    • S&P 500: +0.13
    • Dow Jones Industrial Average: +8
    • NASDAQ Composite: +3.18


Wall Street Research Summary


  • Columbia Sportswear (NASDAQ:COLM) - BAC/ML
  • Spirit Aero Systems (SRO) - Cowen
  • Chicago Bridge (NYSE:CBI) - Credit Suisse
  • Monsanto (NYSE:MON) - Deutsche Bank
  • Hershey (NYSE:HSY) - Goldman Sachs
  • Transocean (NYSE:RIG) - Morgan Stanley
  • Ensco (NYSE:ESV) - Morgan Stanley
  • Noble Corp (NYSE:NE) - Morgan Stanley
  • Symantec (NASDAQ:SYMC) - RBC Capital
  • Beazer Homes (NYSE:BZH) - UBS
  • Janus Capital (NYSE:JNS) - Wells Fargo
  • Medtronic (NYSE:MDT) - Wells Fargo



  • HeartWare (NASDAQ:HTWR) - Auriga
  • CareFusion (NYSE:CFN) - BAC/ML
  • Advance Auto Parts (NYSE:AAP) - BB&T Capital Markets
  • Arch Chemical (NYSE:ARJ) - BB&T Capital Markets
  • AutoZone (NYSE:AZO) - BB&T Capital Markets
  • IBM (NYSE:IBM) - Canaccord Genuity
  • Cooper Industries (CBE) - Citi
  • Jack In The Box (NASDAQ:JACK) - Credit Suisse
  • National Semiconductor (NYSE:NSM) - Deutsche Bank
  • Affiliated Managers Group (NYSE:AMG) - Goldman Sachs
  • Blackstone Group (NYSE:BX) - Goldman Sachs
  • Dr. Pepper Snapple (DPS) - Goldman Sachs
  • Navistar (NYSE:NAV) - Morgan Stanley
  • Rowan Companies (NYSE:RDC) - Morgan Stanley
  • Google (NASDAQ:GOOG) - Estimates reduced at Oppenheimer
  • Energizer (NYSE:ENR) - UBS


    Long positions in stocks mentioned: RIG

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