5 Gut Checks

Need to Know JULY 02, 2013 5 gut checks before the stock market's opening bell By Shawn Langlois   Rex Features Good morning. There's a heat wave blistering across the southwestern U.S. , and stocks are in rally mode. Coincidence? Yeah, probably. But there may be more to it, according to some data crunched in our "chart of the day" gut check. Abundant sunshine isn't doing much for Greece, where lenders are getting testy again, or for Bill Gross and Newport Beach-based Pimco, whose lionized lineup of fixed-income funds is getting slapped around  by rising interest rates. Meanwhile, commodities have been about as well-received as Snowden's growing number of asylum requests , yet contrarians are banding together, as they tend to do, convinced that sunnier days lie ahead. The puffery, in this case, isn't focused on gold -- those prolific bugs can always be counted on for chirping ridiculous predictions -- rather, coal is getting some much-needed love (more on that below). Key market gauges: The Nikkei  moved back above the 14,000 level with a 1.8% pop, but the rest of Asia  was mostly mixed. Europe  is down across the board in midday trading. Athens  is also moving lower, with Greece facing a three-day ultimatum . Futures on the Dow  and the S&P  are pointing to a positive start in the U.S. Gold  and silver  are gaining ground en route to what could be a double for both from these lowly levels, if these indicators don't lie. Take gold, for instance. The recent mauling marks the fifth-biggest drop since 1938. In all four other cases, gold stocks bounced back by at least 164%. The buzz: Apple  turned in its best day in four months while Netflix  surged 6.3%. Both are still trending ahead of the opening bell. Best Buy , the best performer in the S&P 500 during the first half of the year, tops the StockTwits ticker list this morning after notching another big gain on Monday The Winklevoss twins are popping up on Google's business pages after they filed to register a one-million-share bitcoin trust . From January to April, the value of the cyber-currency jumped from $15 to $260. Since then, it has dropped below $100. Perfect for those still upset that Furbies never went public. "Winklevoss twins file for Bitcoin IPO http://t.co/NZBCFzJrkN — Jeff Macke (@JeffMacke) July 2, 2013 Keep an eye on Ford  and GM , too, with June car sales due. Analysts are predicting the best month since November 2012 thanks to some modest improvement in the U.S. economy. Read: Stocks to watch . Zynga  is an early winner, with its stock up another 5% premarket after yesterday's 10.4% rally.  Clearly, investors are stoked at the prospects of the former Microsoft  Xbox boss running the show . The chart of the day: Sunny days and the good mood that accompanies them deliver stronger stock returns -- that's the theory behind this chart from Gus Gordon on the Quantopian blog . To determine this, he created an algorithm, inspired by this paper , that goes long on New York days forecast to be sunny or mostly sunny, and goes short every other day. It always buys or shorts the most possible shares given the current cash position. The chart illustrates how the algorithm has returned 53.75% from 2007 until now. The S&P, on the other hand, has risen less than 10%. Quantopian The call of the day: Besmirched coal stocks present an "historic, contrarian opportunity", but investors are too smitten with the likes of Amazon , LinkedIn , Tesla , and solar stocks to realize it, according to Seeking Alpha contributor William Koldus . He says the market caps of First Solar , Solar City , SunPower  and SunEdison  eclipse the entire market cap of the U.S. coal sector, "even when coal compromises over 40% (and growing) of the world's electricity generation, while solar contributes 1% (and growing)." Arch Coal  and Alpha Natural Resources  are two of the cheapest names in the sector and stand to capitalize on what he sees as an imminent bounce. In fact, Koldus is calling a June 27 bottom for the group. Judging from the busy comments section, his prediction has plenty of backers Random reads: Irish bookmaker Paddy Power's marketing campaign ahead of the royal baby's arrival has taken an odd, and disturbing, turn . Alexandra, at 4-to-1, is still the odds-on favorite  for the name. Fergie and Kai, not so much. Japan is spending $500 million in hopes of being cool . Some 51 years after The Beatles first recorded at Abbey Road Studios, here's a poeticized look at one of London's quirky tourist attractions. "This warehouse represents a future of shopping that does to brick-and-mortar retail what it has already done to the coal mine that used to thrive in its place: Bury it without filling the hole it left behind." Read more about Amazon's fulfillment center . AltaVista is shutting down . Wait, didn't that happen, like, 15 years ago? Of Argo, Jerry Maguire and ghosts ... a Twitter spat . Need to Know starts early and is updated as needed until the opening bell, but sign up here  to get it delivered once to your e-mail box. Be sure to check the Need to Know item. The e-mailed version will be sent out at approximately 8:45 a.m. Eastern. Follow @slangwise  on Twitter. Get the latest news on our mobile site: http://www.marketwatch.com/m MarketWatch has sent you this newsletter because you signed up to receive it. To ensure you receive this newsletter in the future, please add marketwatchmail.com to your list of approved senders. 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