Woo hoo! Let's party.
Why are we partying? I don't know (IBM earnings, I guess) but it's Monday and we love our Monday parties don't we? Last Monday we opened 80 points higher at 12,883 and I pointed out the market was simply in the manic end of its manic-depressive cycle but we had reasons to be depressed last week and the economy was still in Denial and Anger (blaming pretty much everyone for this mess) stages of grief. We had a healthy round of Bargaining as we waited for Bush, Paulson and then Bernanke to save us but, when that didn't happen we went straight for Depression (very healthy) and this weekend we spent in Acceptance, the final stage of grief.
Is the market really ready to put this loss behind itself and get back out there? No, but at least it's making the effort and that's a good sign that we've really bottomed out. I am not as skeptical of this rally as we thought the drop was forced on Friday but let's remember that we opened Friday as 12,850 (already off from Thursday's high of 12,930) so PLEASE don't be all impressed at 12,750, which is our must hold point for the day if we are going to call this a recovery, pathetic though it may be…
This is our first big earnings week and IBM is getting us off with a bang and the Dow is a BUYBUYBUY is we begin to see follow-through on IBM's theme of International exposure offsetting US weakness. Other earnings of note scheduled for this week are C (got ‘em), INTC (got ‘em, need more), JPM, SGR. many airlines, most of the regional banks, JCI, some of the brokers, STJ (need ‘em), SLM, KMP (need ‘em), XLNX, GE (got ‘em) and SLB. I originally posted this group 12 days ago and please note IBM was a "need 'em" at the time so don't say I didn't tell you so!
We took advantage of last week's dip to roll our IBM Jan '09 $110s down to the $100s but, unfortunately, we covered with the $100s so this will be a bittersweet victory if they really fly but just perfect if they stay around $105. Aside from the earnings this week we have tons of economic data starting with Retail Sales and PPI tomorrow at 8:30 followed by Business Inventories at 10. Wednesday we get hit with the CPI, Net Foreign Purchases (way down I think), Industrial Production and Cap Utilization pre-market with the Beige Book at 2 pm. Thursday gives us (Oh No!) Housing Starts and Building Permits, which actually may not be awful as the weather has been mild in the Northeast (yay global warming!) along with Initial Jobless claims pre market. After the bell on Thursday we get day-late crude inventories and the Philly Fed and we wrap up the week with a look at our Leading Indicators and the Michigan Consumer Sentiment Survey. Michigan has the primary tomorrow so this survey will be taken while a dozen candidates are telling people what a mess the country is so let's not have high hopes for that one!
Speaking of high hopes – I want that flying car! They're auctioning off the prototype Boeing flying car (circa 1985) that may be just the thing to tide me over until I get my production model.
Asia was well off this morning but they didn't know about IBM so who cares what they thought. LPL beat and raised guidance as LCD spending is through the roof. Just like my flying car and the IPhone, give the people something exciting to buy and they'll buy it but changing the bumpers on the F150 just isn't going to cut it anymore… The Detroit Auto Show is this weekend and will be the antithesis of my flying car as Detroit would actually be better off going back to 1985 for ideas (and we thought those cars were lame!).
R&D is so dead in this country that a Delorean (1981) still looks like the car of the future and the people at Porsche should just be taken out and shot for numerous crimes against design that led them to come out with an SUV that looks like every other SUV. As the markets struggle to find footing this year, we need to get behind the innovators because, as I said on the weekend, the future is now yet too many of our great American corporations continue to live in the past.
Europe's morning is much improved since IBM announced and, seriously, there is nothing interesting in the news there at all. Lots of interesting things at home on the SEC blotter as they examine whether firms (shocking) make trades on stocks before M&A deals are announced and MER is being probed for improperly placing trades in their accounts while ahead of filling clients' orders, something we were just discussing in comments last week as an unsavory tactic to look out for with certain brokers.
Speaking of unsavory, CFC is under fire for their business practices and SOV gave a profit warning as did SHLD, who are down 10% pre-market.
Don't take this rally too seriously today, it's literally 12,750 or bust so we roll up the index puts and keep our eyes open for who remains weak in this rally. I WILL get that Big Chart up tonight, hopefully with some new levels for the year
