STOCK MARKET WATCH, Friday 23 January (#1)

[ozymandius]

Friday January 23, 2004

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 367
REICH-WING RUBBERSTAMP-Congress = DAY 000
DAYS SINCE DEMOCRACY DIED (12/12/00) 3 YEARS, 42 DAYS
WHERE'S OSAMA BIN-LADEN? 2 YEARS, 94 DAYS
WHERE ARE SADDAM'S WMD? - DAY 306
DAYS SINCE ENRON COLLAPSE = 790
Number of Enron Execs in handcuffs = 17
ENRON EXECS CONVICTED = 2
Other Arrests of Execs = 53

U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES-----------------------------S&P FUTURES




AT THE CLOSING BELL ON January 22, 2004

Dow... 10,623.18 -0.44 (-0.00%)
Nasdaq... 2,119.01 -23.44 (-1.09%)
S&P 500... 1,143.94 -3.68 (-0.32%)
10-Yr Bond... 3.97% -0.07 (-1.68%)
Gold future... 410.10 -1.10 (-0.27%)

DOW..........................NASDAQ.......................S&P

||


GOLD, EURO, YEN and Dollars


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PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

[ozymandius]

1. WrapUp by Martin Goldberg

"Corollary to the Peter Lynch Principle – Only Buy If You Can Explain a Big Loss to Your Wife"And, “There’s Always a Bull Market Somewhere”

With the market showing no signs of falling or even correcting in a meaningful way, it looks and feels like 1999 again. For those brave enough to have ignored general market fundamentals and intelligent enough to have bought technology and other speculative stocks based mainly on the short term technical charts, now is the time to enjoy the ride (with logically placed stop orders), assured that you are playing with the “house money”. Those investors who did not ignore fundamentals may feel left out in the cold. In my view, it would probably be wise to enjoy the technology mania show from the sidelines, and focus on the small and narrow pockets of the stock market where there still are fundamental reasons to buy. In this article, I will take a look at a stock market example that suggests that in some important ways, the current mania is well beyond the one that lasted through the 90’s until March of 2000. I will also take a technical look at a relatively small stock market sector where there is a real bull market occurring.

<cut>

As you can see, current “investors” are betting that Amazon.com will climb the same mania ladder that it briefly climbed in the winter of ’99-’00. Can it happen again? I suppose that anything is possible in today’s market. Reality and the chart above however, clearly suggest that in many ways, today’s mania is more illogical than at the ‘99-00 bubble. Why? In the late ‘90s, Amazon.com was still an unknown business. There was hope that they would build an impenetrable franchise and grow from that point, while expanding their margins. At that time, I’m sure that many institutional investors would have suggested that by 2004, Amazon would be able to post some significant and consistent profit by now. Yet in retrospect, they have failed so far. However, what has become apparent is that Amazon is a retail business with many of the characteristics of every other retail business. It is subject to competition, and has high cost of sales including the need to advertise in old economy venues like magazines, and pay for shipping. Broadband connections, once thought to be an advantage to Amazon, have become a double-edged sword. Now at practically the blink of an eye, shoppers can move from Amazon.com to Walmart.com, Buy.com, Sears.com, Overstocks.com, Barnes and Noble.com, or Anyretailer.com. Will Amazon.com become a successful and profitable company after they pay off all of their debt? May be. Will Amazon.com conquer the world of retail? Not a chance - there is too much competition, and the last 5-years have shown us that the competition will not go away. Amazon’s margins will constantly be compressed by price comparisons, and Amazon will never get enough leverage to expand their margins from the supply side. Is the Amazon.com business actually worth the same amount as the sum of Barnes and Noble (BKS), Borders (BGP), Sears (S), and JC Penny (JCP), even though its current sales are only 1/9th that of Sears? That’s how it is valued in today’s market. In the beginning of 1999, with Amazon at only one-half its current market cap, there were a lot of unknowns about the Amazon.com business. Now, the unknowns have become known, and yet Amazon trades (again) as if it were the “thing of the future”. Finally, the sales tax issue is out there for resolution. It amazes me how customers must pay state sales tax at Wal-mart.com, and other on-line retailers, and do not at Amazon.com. With state governments strapped for cash, I wonder how long that is going to last. My suspicion is that it will only last until shortly after presidential Election Day.

<cut>

Spousal Corollary to the Peter Lynch Principle – “Only buy stocks that you can explain to your wife (or husband) why you took a big loss.”

If I were to buy Amazon and lose money on it, I would have a lot of explaining to do! A good explanation would have to include something more fundamental and logical than the technical chart, and telling my wife that “Amazon was going up!” By the same logic, shorting Amazon would not be a good idea either. Losing money by shorting internet stocks is not a good way to solidify any marriage. There is simply too much risk. Imagine the peril of the poor guy who shorted Research in Motion a few weeks ago:

There’s Always a Bull Market Somewhere – Keeping Your Eye on the Ball

The re-inflation of the technology stock market bubble has caused many people to forget that there is always a real bull market somewhere. The magnitude and duration of the insanity in technology, semiconductors, and Internet stocks have put them back on center stage of many people’s attention. As a result, many investors have been distracted away from the fact that there is always a bull market somewhere. Let us look below at two long-term examples of what is a bull market and what is not a bull market.
(more...)

http://www.financialsense.com/Market/wrapup.htm

[54anickel]

4. Good morning Ozy - love that image of Greenspin in this article.

Sure seems to sum things up nicely. I'm still watching for that rally in the 68th week from the previous article.

[ozymandius]

6. Good morning 54anickel and everyone!

:donut: :donut: :donut: :donut: :donut: :donut:

Amazon is one of the most enigmatic companies I have ever seen. They opened about three years ago a huge distribution center south of Atlanta. Two years later, they just about close the place with layoffs. Despite the glitter on the company name and stock price, they have just managed to turn a profit after so many years in operation. How do they do it? I suspect the cult of personality weighs heavily here.

[54anickel]

8. "The unknowns have become knowns" that line sort of goes hand in

hand with Greenspans "irrational exuberance".

Someone posted a story on Annan in LBN. I love the man, but the article seems to say "irrational expectations" to me. JMHO

Here's the article

http://www.reuters.com/newsArticle.jhtml;jsessionid=0UPGUSSIGC03WCRBAEZSFFA?type=worldNews&storyID=4193827

snip>
Annan appealed directly to heads of the world's leading companies to use their influence with governments to bring about fairer trade and enhance security.

He said business must play a vital part in averting conflicts which were often related to struggles to control natural resources.

"Business efforts to promote transparency and fight corruption can be effective measures in preventing conflict from happening in the first place," he said.

On edit:

Here's the link to Ozy's original post

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=327036

[ozymandius]

11. Yeah, that was my post.

I agree with what he says but the will behind the mechanisms are not there. The irrational exuberance is akin to a land grab for natural resources. If its oil today, it will be water tomorrow. When corporation realize its value, there will be a charge to corner the market on clean air.

[54anickel]

12. Well, I feel foolish for not paying attention to the posters name! This

is early for me, only on my first cup of coffee.

[54anickel]

13. Between the oil drilling and logging posts, today is a very sad day.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=327120
Logging To Triple in the Sierra


http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=326981
Alaska land opened to drilling

[ozymandius]

2. Growth Set to Slow in Major Economies

DAVOS, Switzerland - Growth in the world's six biggest economies is slowing with the United States past its peak and consumer confidence in the euro area remaining low, the Organization for Economic Cooperation and Development said Thursday.

Seasonally adjusted growth in the United States, France, Germany, Italy, Britain and Japan is estimated at 1.1 percent in the final quarter of last year, falling to 1 percent this quarter, the OECD said.

<cut>

Growth in the United States is expected to slow to around 1.3 percent in the first part of 2004, said OECD chief economist Jean-Philippe Cotis, releasing estimates for the final quarter of 2003 and the first quarter of 2004.

story

[ozymandius]

3. Nasdaq Off, Dow Flat; Microsoft May Weigh (earnings posted after hours)

NEW YORK (Reuters) - The technology-laden Nasdaq fell for the second straight day on Thursday, dragged lower by weakness in software makers, while blue chips ended unchanged as investors pored over a flood of earnings reports.

After the close, Microsoft Corp. (Nasdaq:MSFT - news) shares sagged after the company said its quarterly profit shrank on large stock compensation costs, though revenue rose on rising corporate spending on technology.

<cut>

Solid corporate earnings and signs of a strengthening economy have pushed up stocks in recent sessions to their highest levels in about two years. But many investors are worried that stocks, particularly some technology issues, have not delivered sufficiently positive guidance to justify their steep run-up in prices.

story

[54anickel]

5. The Kodak piece in this seems such a sad commentary of what's going

on these days. A 12.7 gain "reward" for 15,000 layoffs on one hand, but then the markets aren't happy when the UE numbers are too high. What a vicious cycle.

[ozymandius]

7. I call these buyers "vultures".

They show interest in a stock when the company cuts thousands of workers. Less payroll to meet means more profit under the company name. Buyers appear to follow the model mentioned in your sig, like corporations - they cannot be ethical when profit is at stake.

It also doesn't hurt to have a plan - as Kodak does - to become a powerhouse in the digital arena while maintaining dominance in the traditional film market.

[54anickel]

9. But can they compete successfully in the digital arena? They are late

comers to the area. To me, this would be like investing in a new company. Would a new company be able to command such a high price for its stock? Again, JMHO.

[ozymandius]

14. I bought a Kodak DC210plus digital camera four years ago.

It was a great camera at a great price. Of course, the technology has advanced largely since then - that my old camera looks like a bulky antique. But it still works great.

This line was one of their early digital successes.

I believe that a new company would be able to command just as high a price for its stock. As is often the case with unproven IPOs. Kodak has built-in advantages such as utter dominance in the traditional photochemical market. To gain better traction in the new digital world, they will probably use the stock values and other cost cutting measures to ally themselves with another company boasting advantages that they, Kodak, lack.

[54anickel]

16. You can tell that my investment experience is NULL. If it weren't for

401Ks, I would have probably never gotten interested in the Stock Market. It has always been, and still is, very mysterious to me. Same for many others that I know. 401Ks and mutual funds have introduced a whole new group of sheep to provide wool to the markets. We end up trusting the judgement of fund managers, a position I, personally, am not very comfortable with.

I learn so much from all of the Marketeers here.

[JNelson6563]

10. Mornin' Marketeers!

Looks like things are shaping up to be a rather uneventful day on the Street. Of course there is no telling what might happen.

The CNBC supply-siders are trying to dog Sen. Conrad who is kicking their ignorant asses.

Much running around to do today with a big fundraiser event tomorrow. Bitter cold and tons of snow. Would rather crawl back into warm, cozy bed. :-)

Will check back later.

Julie

[ozymandius]

15. Good morning Julie!

:donut: :donut: :donut: :donut: :donut: :donut:

Thanks for all that you're doing to save democracy! As for Sen. Conrad - sometimes I wish that I had TV again to see what everyone talks about here. But your comments make me wonder if being a supply sider is a pre-requisite for TV punditry.

[ozymandius]

17. Casino's open

9:33
Dow 10,633.84 +10.66 (+0.10%)
Nasdaq 2,125.76 +6.75 (+0.32%)
S&P 500 1,146.50 +2.56 (+0.22%)
10-Yr Bond 3.960% -0.009

[UpInArms]

18. daily dollar watch

http://quotes.ino.com/chart/?s=NYBOT_DXY0

Last trade 86.09 Change +0.27 (+0.31%)

looks like the Davos meeting is causing some lift in the dollar

here are some related articles

http://www.forbes.com/business/newswire/2004/01/23/rtr1224147.html

Saudi says targets $25 OPEC crude basket

DAVOS, Jan 23 (Reuters) - Leading OPEC producer Saudi Arabia said on Friday it was targeting $25 a barrel for a basket of cartel crudes, well below current prices of more than $30.

"I think a price of $25 a barrel for the OPEC basket is the right price," Saudi Oil Minister Ali al-Naimi told delegates to the World Economic Forum in Davos.

<snip>

Naimi's comments appear to signal a change of policy from late last year when he said higher oil prices were warranted by the fall in the U.S. dollar, the currency of international oil trade, against other major currencies.

and

http://www.forbes.com/markets/newswire/2004/01/22/rtr1223547.html

Senior China banker calls for wider currency band

DAVOS, Switzerland, Jan 22 (Reuters) - A senior Chinese banker on Thursday said shock therapy to revalue the Chinese currency and redress a huge trade gap with the United States was not appropriate, but China should gradually float its currency instead.

Zhu Min, general manager and advisor to the president for the Bank of China, said the renminbi could, as a first step, trade in a band of 0.3 to 2.5 percent against the U.S. dollar. It is now pegged near 8.28 to the dollar.

"The end-goal is to make the renminbi flexible and floatable. The goal is not a one-off shock adjustment. The solution is to build a system," he said, speaking at the annual World Economic Forum in the Swiss ski resort of Davos.

<snip>

A bipartisan group of U.S. senators has asked Vice President Dick Cheney to use his trip to Davos to press China to float its currency.

Some foreign investment banks have said China is likely to revalue its currency by introducing a wider trading band, now between 8.2760 and 8.2800 to the dollar, later this year.

<snip>

But the United States is benefiting from China using its trade surplus with the United States to buy U.S. Treasuries as a reserve currency, along with other Asian nations. In the long run, Zhu said, this was not sustainable.

"All the Asian countries hold dollars for security reasons, but at some point this has to end," said the U.S. educated economist. "There is a love affair. But everybody knows that this love affair has to end."

...more...

and in the "for what it's worth" column

http://www.alertnet.org/thenews/newsdesk/L23167149.htm

U.S. denies empire bid, Annan warns of jungle law

DAVOS, Switzerland, Jan 23 (Reuters) - The United States' top law officer denied on Friday that Washington was greedy for empire and stressed it needed partners to prevail in the war on terror.

Attorney-General John Ashcroft was forced to defend the conduct of the war in the face of criticism at a major world summit. "If you look at the United States and its performance, and where it is in the world and what it does in the world, it's not an aggressor," Ashcroft told the World Economic Forum in Davos, Switzerland.

"The United States doesn't seek to consume territory or to acquire an empire," he told the gathering, at which Washington has at times faced criticism over its security policies and the war in Iraq.

<snip>

Ashcroft, addressing a later session, went out of his way to stress that the United States did not seek to "go it alone" in the war on terror.

"We know in no uncertain terms that we are incapable of having the kind of success alone that we could have working together," he said.

"The United States needs, in a very significant way, the wholehearted cooperation of our friends and freedom-loving colleagues around the world, and we seek to improve our level."

Ashcroft also acknowledged that Washington needed to communicate better with Muslims both in the United States and around the world, to dispel the perception that the war on terror was directed against Islam.

...more...

Sorry I'm so late to the party this morning. Have a relapse in my cold going on :(

Thanks for saving me a seat at the table! :toast:

Hope all you marketeers have a great day!

[UpInArms]

19. another article regarding the dollar

http://www.forbes.com/markets/newswire/2004/01/23/rtr1224223.html

Euro dips, investors monitor euro zone comments

LONDON, Jan 23 (Reuters) - The euro dipped from one-week peaks against the dollar on Friday as profit- taking ate into this week's gains made after relatively mild comments on euro strength by euro zone policymakers.

The dollar, meanwhile, edged towards three-year lows against a broadly-firmer yen as the market tested the resolve of Japan to curb its currency's strength.

<snip>

"The ECB haven't really given any clue that they could cut rates or intervene. People don't see them intervening before $1.30 so they're calling their bluff," said Peter Fontaine, currency strategist at KBC in Brussels.

"People are wondering when the Bank of Japan will step in buying dollars."

Issing and ECB President Jean- Claude Trichet are both due to speak in Davos again later on Friday.

<snip>

"The big question is whether the BOJ will refrain from intervention ahead of the G7 meeting," said Niels Christensen, currency strategist at Societe Generale in Paris.

...more...

[54anickel]

21. Good morning UIA. Sorry to hear about the cold relapse.

Interesting articles again today. Oil at $25? Hmmm, do they know something about a future rise in the dollar that we aren't privy to?

China is interesting as well. I did not think they would jump into allowing the yuan to appreciate too much at once. Sacry about the weakening ability to continue buy dollar assets.

I do love Ashcroft being put on the defensive a bit as well.

Once again, all I can say is these are interesting times indeed.

Hope you are feeling better again soon.

[ozymandius]

20. 10:29 numbers

Dow 10,639.25 +16.07 (+0.15%)
Nasdaq 2,137.29 +18.28 (+0.86%)
S&P 500 1,149.75 +5.81 (+0.51%)
0-Yr Bond 3.939% -0.030

[ozymandius]

22. Bye bye

My son and I are going out for the duration. have a wonderful day everyone! :hi:

Ozy

[jamesinca]

23. In some respects it looks good right now

Gold is coming back to earth and the Euro is digging up from its subterranean dwelling. Next hour different story.

[Maeve]

24. 12:53 update

Not been a happy day for the market since about 10:30. Busy day for me--this is a fly-by posting!

Dow 10,571.85 -51.33 (-0.48%)
Nasdaq 2,117.63 -1.38 (-0.07%)
S&P 500 1,142.25 -1.69 (-0.15%)
10-Yr Bond 4.028% +0.059

[54anickel]

25. Mom's Taxi service with a hit and run post. ;-) n/t

[UpInArms]

26. where's the PPT today?

Dow 10,543.26 -79.92 (-0.75%)
Nasdaq 2,112.22 -6.79 (-0.32%)
S&P 500 1,139.55 -4.39 (-0.38%)
10-Yr Bond 4.051% +0.082

[54anickel]

27. Possibly overwhelmed buying greenbacks?

[54anickel]

28. Treasuries Tank on Failure to Hit Target

http://news.moneycentral.msn.com/breaking/breakingnewsarticle.asp?feed=OBR&Date=20040123&ID=3315100

NEW YORK (Reuters) - Treasury prices swung lower on Friday as a burst of profit-taking caused a vicious reversal in market fortunes after three days of gains.

Traders said speculators bought early in hope of breaking major chart resistance at 3.90/3.91 percent in the 10-year yield and forcing distressed hedging from mortgage managers.

But the ploy failed at 3.92 percent and all the gains unraveled when European investors decided to book profits at the end of their trading day.

``The market tried so hard to break 3.90 (percent) but the Europeans threw in a curve ball,'' said Sadakichi Robbins, head of global fixed-income trading at Bank Julius Baer.

A sudden rise in the dollar may have contributed to the pullback, he added, since it suggested foreign central banks would have no immediate need to intervene.

snip>
The dollar bounced on Friday after a source told Reuters euro zone ministers attending a Group of Seven meeting next month will say further strength in the euro could cause the European Central Bank to cut interest rates.

The market was also roiled by a suggestion from the U.S. Treasury that it might replace future five- and 10-year issuance with a new 20-year inflation indexed note.

[54anickel]

31. Bit more on Treasuries - doesn't sound good

http://www.forbes.com/markets/currencies/newswire/2004/01/23/rtr1224988.html

[54anickel]

29. Looks like another Friday profit taking spree. Maybe next week will be

better. Meantime, "put another quarter in and try again".

http://www.forbes.com/markets/newswire/2004/01/23/rtr1224940.html

NEW YORK, Jan 23 (Reuters) - U.S. stocks sagged on Friday, as investors locked in gains from the market's recent run-up and braced for a torrent of earnings reports next week.

Technology stocks pared gains from the morning, although industry bellwether Microsoft Corp. (nasdaq: MSFT - news - people) shares rallied after it lifted its revenue forecast on Thursday.

Monday will kick off one of the busiest weeks in corporate America's quarterly reporting period. Though earnings reported so far have generally been strong, analysts say many companies have not delivered bullish enough forecasts to justify the steep rise in stock prices.

"People are primarily taking profits today. Some of the earnings guidance has not been as extraordinarily bullish as the recent earnings growth we have seen," said Cary Nordan, vice president and equity analyst at BB&T Asset Management in Raleigh, North Carolina.

more...

[54anickel]

30. US TREASURY OUTLOOK-New TIPS in the pipeline

http://www.forbes.com/markets/newswire/2004/01/23/rtr1225028.html

NEW YORK, Jan 23 (Reuters) - The U.S. debt market may be about to see the launch of the longest-dated government bond in three years if the Treasury Department's proposal to launch 20-year inflation-linked paper comes to fruition.

The Treasury Department said on Friday it wanted feedback from major Treasury securities dealers on the idea of increasing inflation-indexed debt supply in place of conventional debt, but said it had not made any decision yet.

"Treasury's current nominal issuance, if continued, would ultimately skew our debt portfolio toward 5- and 10-year notes. How has the increased supply of 5-year and 10-year notes affected the primary and secondary markets? What would be the effect of substituting a 20-year TIPS for nominal issuance?" the Treasury asked in its quarterly agenda for meetings with primary dealers.


more....

This is interesting in light of the discussion here on Monday or Tuesday regarding the CPI. How much adjustment for inflation would one really see on these new issues?