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Need to Know
MARCH 21, 2013
7 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
Cyprus may serve as a grave reminder of the global economy's
tenuous grip on stability, but U.S. investors have shown a willingness to
overlook it as a blip, a passing tremor that the media and some pundits are
blowing way out of proportion.
Is it really the kind of thing that will derail an economic recovery in the
States, or get in the way of this rollicking equity rally? The market's
behavior tells us no. In fact, stocks were up nicely yesterday, hitting a
new intraday high on the Dow in the process.
Trading Deck contributor Michael Gayed calls it the
honey-badger rally .
But Oracle's unsettling share decline hits much closer home, made all the
more sobering in light of the red flags waved by bellwethers FedEx
and Caterpillar earlier Wednesday. Yet here we go again, stocks
premarket are holding tight to the prior session's gains and ignoring what,
during more skittish times, would be enough for the bears to don their
bibs.
Key market gauges: Futures on the Dow and the S&P
are barely budging, seemingly looking for a reason to move higher
rather than the alternative. In Asia , the Nikkei got back to work
with a 1.4% advance while Europe can't find its footing with broad
declines weighing down regional markets. Check out Indications .
Gold is also worth watching after Societe Generale said prices are in bubble territory and will
continue trending lower in 2014, eventually dropping below $1,400 an
ounce. Read about gold's first loss in five sessions yesterday
.
The economy: The number of people applying for new
unemployment benefits edged up by 2,000 to 336,000 but remained stuck near
a five-year low. Economists were looking for claims to rise to a seasonally
adjusted 340,000. The average of new claims over the past month, which
irons out weekly volatility, dropped by 7,500 to 339,750, the lowest level
since February 2008. Initial claims from two weeks ago, meanwhile, were
revised up slightly to 334,000 from an original reading of 332,000, based
on more complete data collected at the state level.
Later, the Markit Flash PMI is expected to show modest expansion on the
manufacturing front and the FHFA home price index for January will tell us
whether the trend of strong sales and demand is intact. Read: Spotlight on economy .
Earnings: Investors are sifting through what Lululemon had to
say about its quarter this morning. The company has been getting pinched
this year, with a recall the latest bit of news to
hurt shareholders. But Lulu posted a 48% profit improvement
today, and the stock is up 1%. Rhino from iBankCoin
was short and feeling lucky ahead of the
report. We'll see if the gains stick in regular trading. Nike and
Micron Technology will also report quarterly results.
Lululemon recalls chicks' yoga pants for being too see-through; my chances
of eventually getting around to trying yoga plummet from 4% to 2%
— My Quite (@THEmikewhite) March 19, 2013
The buzz: Oracle has been quietly chugging higher
in the past year, bouncing off its low of $25.33 to top out at $36.43 just
a few days ago. It looks like much of that rally will be undone in today's
session as the stock was knocked down as much as 8%
in extended trade. Oracle hasn't taken that kind of hit since Dec. 2011.
Read more on Oracle's "conversion conundrum" and
check out this report claiming that Mark Hurd
might be courted to take over the top job at Dell . (Disclosure:
Mrs. Langlois works at Oracle and owns shares).
It's not all gloomy in tech-land. Yahoo is grabbing clicks after an upgrade is helping to push the
stock up almost 2% ahead of the bell.
Top business stories on Google, aside from Oracle, come from AstraZeneca ,
which is in the midst of a wrenching overhaul , and Lufthansa ,
reeling from a strike that's led to the cancellation of almost 700 flights .
Obagi shares rallied 28% on word of a buyout yesterday, and that's
enough to keep the ticker among the top trenders on Market IQ. Others
include Guess Inc. and Isis Pharma . See the full
list on Market IQ .
The chart of the day: A major divergence between net new
highs and broader equity performance is signaling a downturn , according to
Michael Arold. He looked back 10 years, pointing to seven similar set-ups
that resulted in "at least minor corrections." The green lines
are where the indicator worked on the opposite side.
The
call of the day: Not too often we read about
love for AIG , but that's what we're getting from Seeking Alpha's Alex Cho.
"Ultimately this is the best insurance company investors could ever
hope to own," he wrote, pointing to many factors such as growing
demand for cars and homes in the U.S. and increasing exposure in China. Cho
is looking for a rally to $47.43 by the end of the year with a potential
300%-plus return through 2018. Read more on his outlook .
Random reads: Billabong shares plunged, triggering
a trading halt and investigation . Let's
try to remember Billabong during
its brighter days .
While some of us slackers were surfing and taking our freedom for granted,
here's one girl telling the story of her escape from North Korea . If she were a
J.C. Penney executive, she could have just commuted on the corporate jet .
Shifting to another point on the axis of evil, here's an excerpt from an
upcoming book about "how the Secret Service almost shot Mahmoud
Ahmadinejad."
Twitter welcomes Chancellor of the Exchequer George Osborne
.
And finally, happy billionth monthly user day ,
Youtube! (Warning: This link contains a disturbing Korean rap video that
may haunt your dreams, if it doesn't already).
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