Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Stock Market Bulls Have Bears on the Run Despite Poor Unemployment Report

Stock-Markets / Stock Markets 2011 Jan 10, 2011 - 06:48 AM GMT

By: Money_Morning

Stock-Markets

Best Financial Markets Analysis ArticleJon D. Markman writes: Stocks survived a big test of the winter rally on Friday as they finished a positive week with mild losses.

The Friday session featured a report on non-farm payrolls that came in worse than expected, but not egregiously so. Energy, industrials and utilities fared the best, while financials and telecoms slipped the most. Treasuries blew higher across the board, showing again why we always say that the bonds love misery.


Earlier in the week, I forecast that a disappointing payroll number and a modestly negative reaction would be the best possible result for bulls for three reasons: a) it maintains pressure on the Federal Reserve to keep interest rates low and to continue buying assets; b) it keeps pressure on the new Congress to keep up the pace of fiscal spending; and c) it provides a mildly oversold technical condition that provides a better base from which to rally later in the month.

Large caps outside of tech had a hard time making progress against a number of headwinds, including a smash-up in retail following persistent reports that holiday sales were merely very good and not amazing.

Laggards in the week were telecom, energy, food and retail. There is no better display of the change of tone among consumer staples stocks than the recent four-day decline in auto parts retailer Autozone Inc. (NYSE: AZO), above, which had been performing incredibly well in the past several months. As you can see it has dropped out of its September to December uptrend at the start of 2011 so fast it looks like a transmission has fallen out of a car.

Initial unemployment claims took the focus on Thursday the start of the day because they showed a touch less progress in the labor market than many expected. Claims rose 18,000 to 409,000 in the week ended Jan. 1, reversing the big decline seen last week. The Labor Department did not specify any problems but most analysts suspect that the East Coast snowstorms were to blame.

Clearly change is afoot, as we can see in an updated chart of the U.S. dollar. The dollar had been repelled at its 120-day average in December, November and August last year, allowing the "risk trade" in commodities and emerging market to rip higher. The opposite happened on Thursday instead: Investors seeking safety barreled into the buck, and precious metals and emerging markets tumbled.

So is that a sure negative for risky assets on Friday and the rest of the month?

No, and here's why: This is where the market really shows its goofy side. When non-farm payrolls has come in at 25,000 less than estimates, or worse, over the past 20 years, the next two weeks were actually positive 64% of the time! We've talked about this many times: Investors tend to have a counterintuitive reaction to these payroll reports, and even more so now that bad numbers are expected to encourage the Federal Reserve to keep up its much loved quantitative easing program.

Bottom line: Bears are on the run again after a poor jobs report failed to ignite a sell-off. Although the December report was lukewarm, the reality is that investors realize that jobs are on track to grow throughout 2011, and my expectation is that by the end of the year the unemployment rate could fall as low as 9.0% -- weak, yes, but a big improvement.

CHIPS AHOY
Moving on, the other big story in the market this week was the slamming of retail in the wake of weak numbers from Target Corp. (NYSE: TGT). Thomson-Reuters same-store sales index logged a 3.1% comparison in December, versus the 3.4% expectation. And news service StreetAccount's beat/miss ratio slipped to 56%/44% from 77%/23% seen in November. Analysts observed that retailers lacked products with pizzazz. After hours, Liz Claiborne Inc. (NYSE: LIZ), which produces a lot of premium middle-market brands like Lucky jeans and Juicy Couture, reported a weak number and was slammed -20%.

But enough about the bad news, let's go to the good news. And that was in tech, where we have a lot of plays. Semiconductors, represented by our SPDR S&P Semiconductors ETF (NYSE: XSD) fund, ripped higher led by mobile graphics and telecom chip companies like Marvel Technology Group Ltd. (NASDAQ: MRVL), Nvidia Corp. (NASDAQ: NVDA), Cavium Networks Inc. (NASDAQ: CAVM), Qualcomm Inc. (NASDAQ: QCOM) and Texas Instruments Inc. (NYSE: TXN). Microsoft Corp. (NASDAQ: MSFT) also flew higher on excitement about its surprisingly strong offerings at the Consumer Electronics Show in Las Vegas, and even Google Inc. (NASDAQ: GOOG) shook off some cobwebs and rose two days in a rows.

The connection: The mobile internet. I know you're probably tired of hearing me rave about it, but there's no getting around the fact that accessing the web and social connections via handheld devices is the hottest thing in consumerism. When you look at the weak results of a Target and Liz Claiborne and compare them to Cavium, Nvidia, Apple Inc. (NASDAQ: AAPL) and Verizon Communications Inc. (NYSE: VZ) you realize that people would rather stop buying new jeans or kids toys than give up their web-connected mobiles.

This a major social and economic development that has been unfolding slowly over the past two years, but now appears poised to accelerate. Make sure your portfolio is prepared.

BANK ON IT
Money-center banks, credit card issuers and network-centric techs were among the most impressive players of the week, with the Bank Index (INDXDJX: $BKX) up another 3% in the week despite a mild sell-off on legal developments Friday. Yowza, this is intense! It's bulls' dream come true to get the banks off the mat and in the mix. It's like Elvis and Amelia Earhart reappearing from the dead and striking a pose like they never left -- a combination of crazy wish and impossible dream.

Seriously, a rehabilitated Bank of America Corp. (NYSE: BAC) is just what the doctor ordered. Just look at its chart. It was killed, quartered and left bleeding in the field in September through December while the rest of the market was rallying. Bears thought they this one-time general was toast. But its pact with Fannie Mae (OTC: FNMA) on broken bond deals has pumped it full of adrenaline and opportunistic value investors have applied CPR and mouth-to-mouth.

I mentioned in my 2011 outlooks that BAC could shock the world by regaining $20 this year, and it is on the way. Most of its competitors are trading at a level that would be the equivalent of $35, which would be more than a double from here.

The good news goes deeper than the Fannie Mae deal. Brokerages keep raising their earnings expectations for all banks, which is driving the companies' price/earnings multiple up. Remember that P/E multiples are the hidden levers that make stock prices move higher. For every unit of earnings, a rising P/E means that investors are willing to pay more. And now if the banks actually deliver on those expectations, expect prices to move even more. It can be a virtuous cycle on the way up in 2011-2012 just as it was a vicious cycle on the way down in 2008-2009.

Biggest winners in the financial space this week were not banks, though, but credit card companies such as Capital One Financial Corp. (NYSE: COF), Discovery Financial Services (NYSE: DFS) and American Express Co. (NYSE: AXP), +2.9%. Payment networks Visa Inc. (NYSE: V) and Mastercard Inc. (NYSE: MA) -- which are deeply, incredibly undervalued due to the underserved spanking they took from klutzes in Congress -- were also higher. These should continue to improve in value.

My subscribers are participating in the banking revival in the RiskSeeker portfolio through the SPDR KBW Capital Markets ETF (NYSE: KCE), which focuses on brokerages like State Street Corp. (NYSE: STT), Goldman Sachs Group Inc. (NYSE: GS) Morgan Stanley (NYSE: MS) and The Charles Schwab Corp. (NASDAQ: SCHW), which jumped 4% on Wednesday alone. These should all work back to their 2007 highs over the rest of 2011 as trading volumes rise.

[Editor's Note: Money Morning Contributing Writer Jon D. Markman has a unique view of both the world economy and the global financial markets. With uncertainty the watchword and volatility the norm in today's markets, low-risk/high-profit investments will be tougher than ever to find.

It will take a seasoned guide to uncover those opportunities.

Markman is that guide.

In the face of what's been the toughest market for investors since the Great Depression, it's time to sweep away the uncertainty and eradicate the worry. That's why investors subscribe to Markman's Strategic Advantage newsletter every week: He can see opportunity when other investors are blinded by worry.

Subscribe to Strategic Advantage and hire Markman to be your guide. For more information, please click here.]

Source : http://moneymorning.com/2011/01/10/...

Money Morning/The Money Map Report

©2010 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules