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Need to Know
APRIL 02, 2013
6 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
Apple didn't need this. Fortunately, the rest of the market has learned to
ignore the iPhone maker's putrid performance since last September. Will any
of that change now that, as IvanTheK put it, Apple is an ex-con?
Probably not. Apple shares are losing some ground premarket after Goldman
Sachs made its conviction buy list an Apple-free zone . (More on that below).
Yet markets, again, don't seem to give two Shopes about it.
There's some historical reason for investors to be optimistic, even with so
many pundits instilling fear of overripe conditions. During the past 85
years, the S&P 500 has risen 10 out of 11 weeks only 23 times, per
InvesTech Research. That's where we're at now, and "it is not necessarily
a sign of imminent trouble ahead."
Three months after such a streak, the broad-market index has notched a
median gain of 4.9%. Six months later, that number jumps to 7%. A year
later, boom, all the way up to 12.6%. In other words, the
trend is your friend . And if you're into really, really, super
long-term trends, it might be reassuring to know that one dollar invested
in the stock market 188 years ago would be worth $4.2 million today .
Key market gauges: The Cyprus General Index opened up
with a thud this morning after being suspended for two weeks. But it could have been worse had a rescue
package not been agreed upon last week. Action across the rest of Europe
was much more upbeat, led by nice showings on the U.K.'s FTSE 100
and Germany's DAX .
U.S. stocks are poised to follow suit with futures on the Dow and the
S&P both moving higher premarket. Read Indications .
The economy: A hectic day of car sales is on tap, and both
General Motors and Ford Motor Co. are expected to have paced a
strong February. In fact, it could be the best month since May 2007 and
there "won't be any shortage of optimism." Read: Stocks to watch .
Separately, factory orders hit at 10 a.m. Eastern with analysts looking for
a rebound of 3% in February after January's 2% drop. There are also four
Fed speakers offering up their thoughts spread throughout the day. See: Spotlight on economy .
The rise in European stocks come even as PMI data shows a deeper euro-zone factory downturn
. The index dropped to a three-month low of 46.8 from 47.9 in February. A
reading of less than 50 indicates activity shrank.
The buzz: Apple is the clear lightning rod in
cyberspace after Goldman's bearish turn, which included cutting the price target
from $660 to $575. "The most recent product cycle has not driven the
market share and new user growth we had anticipated, and we believe Apple
may find it difficult to hit consensus expectations in the March and June
quarters," analyst Bill Shope wrote in a note to clients. He stood by
his buy rating, though, and the stock, down fractionally, is holding up
fairly well heading into the open. Goldman is also trending.
So what was Goldman doing as the stock was spiraling from $700 to $428?
"Well, it was telling its clients to buy," Zero Hedge answers the question he posed to himself.
"And not just buy, but buy with conviction."
Tesla Motors shares had a huge rally Monday on the back of some optimistic profit targets , and they
don't look to give up the spotlight anytime soon. The electric car maker
later this afternoon will shed some light on the "exciting"
development that founder Elon Musk said in a recent
tweet "is arguably more important" than the news that
drove yesterday's 16% rally.
Glencore , the biggest publicly traded commodities supplier, is one of the top stories on Google this
morning after the company extended, for the fourth time, its deadline to
close its $32 billion takeover of Xstrata .
Also drawing clicks, American Airlines lawsuit settlement against Orbitz
and Boeing's Dreamliner saga.
The chart of the day: Eight of the 50 most active stocks
on Twitter are warning that they could be setting up for a pullback, according to Downside Hedge . That's the
highest level so far this year. Cisco Systems , which has been in an nice
uptrend since last summer, is one of the stocks waving a yellow flag.
Here's a chart showing how the shares, despite some minor blips, have
mostly continued to move north amid a big drop in Twitter sentiment.
Downside Hedge says a negative divergence and a break of a confirming trend
line signals a potential consolidation.
The call of the day: Jack Bogle says he sees a brutal
decade ahead. In fact, the founder and chairman of the Vanguard Group
mutual fund behemoth says we should be prepared for not one, but at least
two equity haircuts of up to 50%. The multimillionaire doesn't seem
to be sweating it too much, though. "They come and they go. The market
goes up and the market goes done, and it's never failed to recover from one
of those 50% declines." So, that's something. Watch the full video .
Random reads: Felix Salmon tells Pimco to walk the walk .
The New Yorker's take on how whether "a disgraced Wall Street analyst"
can cut it as a journalist. But Henry Blodget, the journalist in question,
using an "old survival habit from the dotcom
days," won't be reading the profile.
Bigger is better, index funds still beat the active managers, growth is
better than value and more conclusions from a recent round of number crunching at Nerd Wallet .
Ariana Huffington "partied so hard in her rented Chelsea loft that it
looked like a scene from Animal House after a rowdy frat party." So she's getting sued . Bloodied mattresses?
Angela Merkel probably sheds no tears after this caption contest .
Need to Know starts early and is updated as needed until the opening
bell, but sign up here to get it delivered
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e-mailed version will be sent out at approximately 8:45 a.m. Eastern. Follow @slangwise
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