Today's Stock Market Report

[trip]

TweetFor those who have money in the market in 401k's or direct equities, ie, stock.

Presently the down is up around 150 pts., the nasdaq 35, and the s&p 500 15. These are extremely huge numbers, that are supported by very big volume, ie, buying.

What is going on and why did this happen, and most importantly why today?

Most big price and volume moves have three components or reasons for such moves.

1. Today, the Chicago Purchasing Managers Index was realesed, this number came in at 55.2. This is a measurement of what manufacturing purchase managers, ie, the folks who buy raw materials to make things are doing with their order books. Any number above 50 indicates expansion, below 50 contraction. For the last year this number has been up and down around 47-52 like a ping pong ball. Very very erratic and inconsistent, ie, leading to not alot of confidence.

This is very important for the economy, majority of manufacturing is in the mid-west, which is what this number reads, this number leads other manufacturing throughout us.

2. Finally business spending has also ticked up, ie, business's are investing capital into their business's, they do this because they either have to or they expect growth, along with this uptick came an increase in personal computers for business's, ie, they are replacing 1999 hardware they upgraded for y2k.

3. The overall market was on a tear since March, for the last six weeks it has pulled back and consolidated around the 50 day moving average line. This is the point where most mutual funds like to purchase stocks, ie, no one yells at them for buying here, it is a safe place, managers get upset if they over pay for stocks, and stocks trading below 50 day moving average are out of favor.
Kind of like that old saying, "no one ever got fired for buying IBM" well most money managers do not get fired when buying at the 50 day moving average.

Now, the good part about 3 is during the consolidation over last six weeks, no one was selling heavily, ie, people where holding onto stock waiting for it to go higher.


Now we also got a bonus report today, they expected jobless claims to rise by 14,000 and it actually came in at -3,000. This is the third report that indicated jobless claims are finally going down. This trend is still early and a lagging indicator, yet, like all of us we want people to find work and take care of their families, it makes all of us happier.

Where does that leave us now?

We finally have factual confirmation to support the run up in equities that started in March, again, very positive and much needed. This piece of the puzzle has to be in place.

Where shall it lead us?

Well, no one can predict the future, understanding that clearly it seems at this point the business cycle has fully bottomed and is beginning to complete a full stabilization cycle, which leads to the next stage of some much needed growth. ( disclaimer, this is a BEST GUESS statement , remember no one can predict the future )

Good Luck

[Morgan]

Tweettrip:

As someone who has gotten a huge chunk of his glutes handed to him last time around in the stock market

a quick question:

Noticed that interest rates are going up some and refinancings are edging down. Given that consumer spending has fueled this economy and accounted for approximately 2/3 of the spending, do you think that manufacturers' spending has enough legs to take over for the consumer when they run out of money?

And if the manufacturers are busy manufacturing, where do they sell to - overseas?

Sorry, I'm very much from Missouri on this right now, where am I going wrong? (in other words, I know I don't have a clue and I need some good info!!!!!)

[trip]

Tweet1. Interest rates going up. In general banks, not all banks, just most banks in general had anemic earnings growth, when interest rates went down, banks which hold a ton of bonds got whacked, since they have to make it up somewhere they are raising rates, so banks as a whole are raising rates. This is just business in general.

2. Refinancing, some folks have refinanced several times in the last 3 years, refinancing was at extremely high levels, which puts money into the hand of the consumers, the fact that it's backed off the high is not earth shattering, had to happen.

3. Overall Greenspan and the govt. want job growth, and more job growth, they will continue to keep interest rates low until people are back to work.

Also, in general as you know 2/3 of economy is consumer spending, they will spend as long as they feel good and secure, and alot of that feeling comes from the atmosphere, or tone, at your job every day, if the boss is happy cause making money, every one's little happier.

Lot's of stuff can happen, just now we have confirmation with facts that business cycle has bottomed, when at the bottom, most likely place is up.

Good Luck

[jipped genes]

Tweetis that good?
i know nothing of investing i let the folks at valec handle that.

[trip]

Tweet

Originally posted by jipped genes
is that good?
i know nothing of investing i let the folks at valec handle that.

Yes, it is the best news of the last 3 years!!!!!!!!!!!!!!!!!!!!

At the bottom of the business cycle the next stage is growth.

And with growth comes all good things in life, just like a flower, tree, baby, a good cycle, lol.

[MidnightRider]

TweetDefense spending is driving the CPM and GDP up. It is also responsible for lowering unemployment. This is the largest defense build up since the Koren war and will not continue at this pace. The NASDAQ is trading at very high multiple that is not justified when demand for technology is low. There are still some buys in the DOW, but the over all, buyer beware.

[jipped genes]

Tweet

Originally posted by trip
Yes, it is the best news of the last 3 years!!!!!!!!!!!!!!!!!!!!

At the bottom of the business cycle the next stage is growth.

And with growth comes all good things in life, just like a flower, tree, baby, a good cycle, lol.

does that mean that all the $ i lost will come back? i am glad because i am putting so much in and its not growing like it was when i started my job befoe the market crashed. i did move my stuff into moderate risk accounts after 9/11. i didnt loose as much as some.

[trip]

Tweetjipped,

Again, can't predict the future, so hard to say if money lost will come back.

Only saying, that the economic tailspin of last 3 years is over, that is what the facts are saying.

The next phase of business cycle is growth. What will this growth be like?

IMHO, there are always tried and true economic principles that don't change, ie, the value of a business grows as it's growth in sales and growth in earnings moves positively forward. And this is what should happen to many business's now.

The distinct changes IMHO, is the internet opens up a world of knowledge to all business's, how that knowledge is applied profitably will determine lots of business's growth.

An example would be, if you manufacture candles. Well, before you might have bought your wax from half a dozen local folks, now you have access to thousands of wax manufactureres. The positive is that you can lower wax cost, yet, quality and speed of delivery now become issues when dealing with let's say a supplier in china.

Also, realize terrorism is now a legitimate threat.

Once the mind is expanded it can never go back.

Before terrorist use to sit around camp fire and think, hmmmm, how do we blow up embassy.

Now they sit around and think, how can we kill 10,000 people at once.

The bar has been raised for terrorist. Which is one of reason Bush and administration is so adamant about war against terrorism, they know this is true.

Again, overall saying, facts say we have bottomed, after bottoming next phase is growth.

Hoped That Helped
Trip

[tony_canuck]

Tweetgood info, but like you said you no one can tell the future. The problem with the war is that the US economy is running huge deficits. To finance this they are issuing huge amounts of bonds to bring in some cash. This increase in supply is a major force to be dealt with, and a reason why the bonds bounced so hard.

If I was a foreign investor (and a HUGE portion of our debt is held overseas) you have to really believe in this economy, and that it will turn around. I hope to God it will in the 4th quarter, but as of yet, business spending is not ramping up, and neither is jobs. Until we see more proof, i am trading this market only.

How long can the consumer keep spending when there are no new jobs created? Manufacturing is still being hit very hard. I heard that 80% of products in Walmart is made in China. No wonder, why pay someone 40 grand a year when you can pay them 1 grand for the same thing.....

Technically SP500 has a key level of 965 to bounce off, and of course we need to see a move through 1010 again, maybe getting up to 1030. Otherwise we'll just be bouncing between these levels.

[trip]

TweetHere's a montly update gang.

Market is way up in the last month.

Some more good news.

1. Intel raised guidance numbers twice,....they don't do this unless they know they will make it, other wise they would get slaughtered. Like I said folks are replacing PC's, they have too.

2. ISM, manufacturing index jumped up again, manufactures are not only building more things they are doing it with less workers which means more profit.

3. Jobs came in a little worse than expected, yet, productivity is so high, not much you can do, workers we have with better technology are blowing and going.

4. People are NOT SELLING STOCK. This is very key, if no one sells, the only direction market can go is sideways or up, and big money says we are going up up up up. Money flow into mutual funds is coming in in droves, money from overseas is coming back into market, folks in bonds ( big huge investors ) are switching from bonds to equities.

Good Luck to all, and may the market gods bless.

Trip

[pudgy]

Tweetstupid blue chips

[trip]

Tweet

Originally posted by pudgy
stupid blue chips

High probability they will do well here.

With money flowing back into the market, most fund managers will be a tad conservative after the devastation of the last three years, blue chips will most likely be bought, thus blue chips will go up.

In general though chips have no intelligence, just a ton of fat calories and sodium.......in the nature of full disclosure.

[trip]

TweetWell here's one for are trading friend tony canuck

S&P 500 closed at 1029 +14 pts.
Nazzydaq 1887 +41 pts.
Blue Chippers Dow 9565 +116 pts.

Today, fed greenspan said interest rates will stay the same, ie at 40 year lows, for forseeable future........meaning it's going to stay there until the end of the year.

The market is definitely a little frothy here, yet, hang tough, there are some things going on that are good.

No. 1 - The selling of stock is at five year lows........again no one is selling stock, believing prices will go higher

Thusly unless something crazy happens, the most likely scenario is that the prices of stocks will continue to rise

No. 2 - Money is coming back into mutual funds and these fund managers have to put this money to work, ie, they will buy, and since many fund managers missed the bull rally that started in March they will chase high beta, ie, risky stocks, hoping to pump up their returns, plus many many bears out their folks who sold stock believing they could buy it back cheaper, have to cover those shorts and thus, we get a vicious circle of chasing stocks higher, which is good for us

No. 3 - Manpower, who in the nature of full disclosure I worked for one summer 25 years ago, lol, said 22% of companies surveyed plan to hire in the new year, up from last survey of 15%, which is good, and in general when looking at jobs you have too realize what technology has done for efficiency of productivity, plus many jobs are now gone lost too overseas, these folks have to be retrained, companies will not rehire now until the last moment with a good supply of labor out their
Again, unless jobless claims start too rise through the roof, we will just have too work this off in an orderly fashion through time, ie, several months, the good news is that claims have now stabilized, stopped the trend of rising, next turn is usually down, this will take some time though this time

Hope All Is Well
Don't Worry Be Happy

[trip]

TweetExcellent jobs report this am, all stock indexes are making new highs on good volume.

Hmmmm, no one's selling stock, wonder what the market will do?

[trip]

TweetOkay folks, last report was 9-18-03, yesterday got a huge bump back near highs in the market.

It's about jobs. They expected to lose 25k jobs in Sept., they actually GAINED 57K, this is a huge turn of 85k.

Plus, they though we lost 150K jobs in August when revised only lost 90K.

This is how the numbers play out. They will go + & - before they turn decidely positive for good in next 3-4 months is best guess.

Good Luck