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A Good, Bad Day?

Daily State of the Markets 
Wednesday Morning – July 28, 2010

Good morning. Tuesday was the type of session that market commentators dread. In short, nothing happened as even the HFT boyz appeared to be on the golf course. Sure, there were some news items, a wee bit of volatility, and a couple of stories. But I swore many years ago that this daily missive on the state of the stock market would not morph into an AP-like rehash of the news, which, by the way can be found just about anywhere.

So, what can we take away from a day in which the DJIA finished up a less-than inspiring 12 points, while the S&P 500 gave up a point, and the NASDAQ lost -0.4%? For starters, don't let the Dow's green on the screen fool you - Tuesday was a down day. However, as down days go, this was indeed a good one.

Before you click on the delete button or throw your cup of coffee into the screen, give me another 15 seconds to explain. You see, stocks came into Tuesday's session looking like they were "set up" to pull back. The market had become overbought after a quick jaunt of 400 Dow points and all the indices, save the DJIA, were bumping into very important resistance levels. And with the two teams still arguing vehemently about the direction of the next move, a pullback would not have surprised anyone.

Thus, the glass-is-half-full gang will suggest that it was actually a good thing that stocks didn't go down. Our heroes on horns contend that the long-lost dip buyers returned into the early morning bout of selling, meaning that there is finally something besides computer programs in the market. The bulls also point to the strong demand for Spain's auction, the better-than-expected reading from the German sentiment data, and an upbeat report on retail sales in the U.K.

On the other side of this particular discussion, our furry friends had the punk consumer confidence numbers in the U.S. and the usual uninspiring data on housing. Thus, the bears will tell anyone and everyone that it is only a matter of time before they return to prominence.

However, as a semi-objective observer (for the record, I am a card-carrying member of the glass-is-half-full club), I'm going to award the bulls a moral victory for Tuesday's effort. While we could still see a pullback, the evidence of some buying was modestly encouraging. So, for now at least, the bulls appear to have the advantage.

Turning to this morning... Orders for long-lasting goods fell in June. The Commerce Department reported that Durable Goods orders declined -1.0% during the month, which was well below the consensus expectations for an increase of +1.0%. When you strip out the volatile orders for transportation, orders also fell by -0.6%, which was below the consensus for +0.5%. Stock futures have moved a little lower in response to the report.

Finally, regardless of the colors on the screens, make the decision to have a great day...

Pre-Game Indicators

Here are the important indicators we review each morning before the opening bell...

  • Major Foreign Markets:
    • Australia: +0.62%
       
    • Shanghai: +2.26%
       
    • Hong Kong: +0.56%
       
    • Japan: +2.70%
       
    • France: +0.51%
       
    • Germany: -0.51%
       
    • London: -0.33%

     

  • Crude Oil Futures: - $0.20 to $77.30
     
  • Gold: + $3.20 to $1161.20
     
  • Dollar: higher against Yen, Euro and Pound
     
  • 10-Year Bond Yield: Currently trading lhigher at 3.04%

     

  • Stocks Futures Ahead of Open in U.S. (relative to fair value):
    • S&P 500: -2.69
       
    • Dow Jones Industrial Average: -27
       
    • NASDAQ Composite: -4.5

       

Wall Street Research Summary

Upgrades:

  • Liberty Global (NASDAQ:LBTYA) - Initiated Buy at BofA/Merrill
     
  • CH Robinsin (NASDAQ:CHRW) - BB&T Capital Markets
     
  • Carrizo Oil & Gas (NASDAQ:CRZO) - BMO Capital
     
  • Rowan Companies (NYSE:RDC) - Morgan Stanley
     
  • PACCAR (NASDAQ:PCAR) - RW Baird
     
  • BE Aerospace (BEAV) - Societe Generale
     
  • Sohu.com (NASDAQ:SOHU) - UBS

     

    Downgrades:

  • Patriot Coal (PCX) - BMO Capital
     
  • Range Resources (NYSE:RRC) - Canaccord Genuity
     
  • Global Payment (NYSE:GPN) - Janney Capital, Morgan Stanley
     
  • Websense (NASDAQ:WBSN) - JPMorgan
     
  • Ensco PLC (NYSE:ESV) - Morgan Stanley
     
  • Noble Corp (NYSE:NE) - Morgan Stanley
     
  • Pride Intl (NYSE:PDE) - Morgan Stanley
     
  • Spectra Energy (NYSE:SEP) - UBS

     

    Yesterday's Earnings After the Bell

    Company

    Symbol

    EPS
    Reuters
    Estimate
    Aetna AET $0.75 $0.73
    Aflac AFL $1.35 $1.33
    Broadcom BRCM $0.52* $0.61
    Boston Properties BXP $1.12 $0.99
    CB Richard Ellis CBG $0.18 $0.09
    Cephalon CEPH $2.05 $1.77
    C.H. Robinson CHRW $0.59 $0.55
    Fiserv FISV $1.00 $0.96
    International Game Technology IGT $0.21 $0.21
    Illumina ILMN $0.26 $0.22
    Kimco Realty KIM $0.31 $0.27
    Massey Energy MEE -$0.88 $0.33
    Nabors Industries NBR $0.19 $0.18
    Norfolk Southern NSC $1.04 $0.98

    Earnings Before The Bell

    Company

    Symbol

    EPS
    Reuters
    Estimate
    Allegheny Technologies ATI $0.36 $0.37
    Boeing BA $1.06 $1.01
    Coca-Cola Enterprises CCE $0.79 $0.70
    Constellation Energy CEG $0.71 $0.75
    Comcast CMCSA $0.33 $0.32
    CMS Energy CMS $0.26 $0.27
    CVS Caremark CVS $0.65 $0.67
    Dominion D $0.72 $0.66
    Eastman Kodak EK -$0.51 -$0.31
    General Dynamics GD $1.68 $1.61
    Corning GLW $0.58 $0.53
    Hess Corp HES $1.15 $1.13
    Hospira HSP $0.85 $0.79
    International Paper IP $0.42 $0.40
    Meadwestvaco MWV $0.35 $0.32
    Newmont Mining NEM $0.77 $0.86
    Praxair PX $1.19 $1.14
    Rockwell Automation ROK $0.83 $0.79
    Sprint Nextel S -$0.25 -$0.19
    Sealed Air SEE $0.35 $0.36
    Southern Co SO $0.62 $0.58
    Waters WAT $0.93 $0.90
    WellPoint Health WLP $1.67 $1.55
    Wyndham Worldwide WYN $0.51 $0.41

    * Report includes items that make comparisons to the consensus estimate questionable

    Long positions in stocks mentioned: WYN

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Disclosure: WYN