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Need to Know
MAY 07, 2013
7 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
Didn't we all agree to rubbish the whole "sell in May" thing
until at least this time next year, or was that just the margaritas playing
tricks? Apparently the latter, judging from today's burst of headlines.
SocGen got into the act early with its note "U.S. payrolls annihilate
'sell in May,'" while J.P. Morgan laid out its case against the seasonal selloff .
Then, of course, there's the Stock Trader's Almanac , which isn't
going to let a few up days derail the fact that "selling in May
has avoided summer weakness three years in a row."
Cam Hui of the Humble Student of the Markets blog has been wrestling with
what to do with this theory in today's climate. His latest interpretation:
We're in a secular bear market , primarily due to
the fact that Baby Boomers are sucking money out of stocks at a rate that
outpaces the savings of their children. That should shift in 2017, but it
could be a tough slog for awhile as "long-term valuations don't appear
compelling."
Regardless, stocks keep busting through new highs -- make that nine
all-time highs knocked out already this year. And number 10 could be
on tap today with stocks setting up for a rally after Japan's insane
scramble higher. Another key economic report and several earnings will
probably shape where we go from here.
While you fill out your shopping list, you might want to think twice before
buying into Groupon and gold (John Paulson, who reportedly lost 27% in his gold fund last
month, surely wishes he did). More on both below.
Key market gauges: Give Japanese investors a long weekend and
look what they come back with. Boom! A 3.6% explosion to the upside that
brought the Nikkei to its highest level since June 2008 .
Meanwhile, the rest of Asia didn't log nearly the extent of the gains
felt in Japan, and Shanghai barely breached positive territory. Read Asia Markets .
In Australia, stocks closed lower but bounced back off session lows after
the Reserve Bank of Australia made a surprise cut to interest rates ,
citing soft economic growth, tame inflation, "subdued"
credit demand, and a historically high level for the Australian dollar .
With European markets heading higher in midday trading, futures on
the Dow and the S&P are pointing to a strong start. Read: Stock futures slightly higher after Aussie move
.
The economy: Following last week's April jobs report, we'll back
to March jobs openings, which are due at 10 a.m. Eastern. Fed
Vice Chair Janet Yellen has said the hiring rate is an important indicator
she'll mull when determining if the jobs market has gotten healthy enough
for the central banks to stop the money flow. Later in the day, the Fed
will issue the March consumer credit report. Read: Spotlight on the economy .
Earnings: Walt Disney reports after the bell, along
with Whole Foods Market , Symantec and Electronic Arts . Before that,
investors absorb numbers from OfficeMax , DirecTV and Molson Coors
Brewing Co. before the open. Investors have been embracing stocks
more than usual after results this quarter, according to Bespoke Investment Group ,
which pointed out that the average one-day performance so far is up 0.77%.
That easily outperforms the 0.12% average posted over the past 10 years.
The buzz: Tesla is drawing big clicks on StockTwits
this morning, with bullish sentiment running high ahead of this week's
quarterly report. The heavily-shorted stock has shareholders licking their
chops over the prospects of a continued squeeze. The stock has
doubled in the past six months, with most of that happening in April. Read
about Tesla's latest high-profile hire .
On MarketIQ
, Sysco and Tyson Foods top the trending list after both stocks
slipped in the wake of disappointing earnings reports yesterday.
I'm guessing not too many tears are being shed for Microsoft , which came
clean on the shortcomings of Windows 8 . Its
launch was seen as a "bet-the-company" move. The stock is moving
slightly lower premarket.
Those Google Glasses look cool but I'll wait for the Microsoft Monocle.
— Peter Serafinowicz (@serafinowicz) May 6, 2013
Warren Buffett is never too far away from the spotlight, especially in the
days surrounding Berkshire's annual meeting circus. If you missed
some of the fun, here's a comprehensive roundup from "Jeff Matthews is not making this up."
The chart of the day: Gold is setting up like a
"textbook-like short entry," according to Michael Arold, who says
he's about to pull the trigger on the trade.
He's also considering betting against a rally in Junior Gold Miners .
Here's the lip-licking setup that has Arold, like Peter Brandt , calling for gold to
retest recent lows.
The
call of the day: Get out of online
coupon peddler Groupon , like, yesterday, warns IPO
Playbook editor Tom Taulli. Merchants are saying Groupon-generated
customers aren't loyal, and Groupon users are suffering daily-deal fatigue,
he writes. But putting some of the bigger issues aside, Taulli says
Groupon's "history of bumbling and stumbling" during its earnings
season is enough of a reason to get out ahead of Wednesday's report. Read
more about "the mess Groupon has made at the earnings
confessional" since going public.
Random reads: After spending last weekend in Berlin and
trying to convince my kids history is interesting, this Nazi arrest , some 70 years later,
resonates a bit more.
Hey Jedidiah, consider going with Jed if you got eyes on the C-suite .
"I knew something was wrong when a little pretty white girl runs into
a black man's arm. A dead giveaway" -- Charles Ramsey, hero and latest Internet meme to take his
place among the Antoine Dodsons and Kais of the world. Video is good, but the post-McDonald's 911 call might elevate
him to legendary status.
While Ace of Base fans struggle with their favorite band's neo-Nazi underbelly
, other Swedish rock groupies are treated to the first permanent ABBA museum .
"Why do Ned Stark's kids all have different accents?"
Gawker nitpicks the "Game of Thrones."
I wonder if the writer would approve of my use, as an ex-pat
American, of "rubbish" as a verb in the lead to this story.
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