Tuesday, October 04, 2005

Warning season begins

"There are two things to aim at in life: first, to get what you want; and, after that, to enjoy it. Only the wisest of mankind achieve the second." - Logan Pearsall Smith

Morning News of Note:
  • Homebuilders: Home Builders' Stock Sales: Diversifying or Bailing Out? Home builders have never had it so good. Low interest rates and creative financing have caused a frenetic pace of new-home construction across the country. Builders are reporting blistering earnings and their shares are trading at or near record highs. (Full Story) NY Times
  • RRI: Reliant Plans to Raise Electricity Prices in Houston Reliant Energy Inc. said it is raising its electricity prices for Houston-area customers by 14% as soon as possible and could implement an additional increase of about 10% in January, making its prices among the highest in the nation. The Reliant move comes as electricity prices in many markets around the country are rising because of the surging price of natural gas. (Full Story) WSJ
  • US Economy: Atlanta Fed Pres Jack Guynn said Fed will cont to raise interest rates; concernd higher energy prices will spill into consumer prices -- Reuters
  • Weight Control: Majority of Americans Are Expected To Become Overweight, Study Says A new study that followed Americans for three decades suggests that over the long haul, nine out of 10 men and seven out of 10 women will become overweight. Even if an American is one of the lucky few who made it to middle age without getting fat, they can't congratulate themselves -- they need to keep watching that waistline. (Full Story) WSJ

Market Comments: It looks like earnings preannouncement season has begun, and the first two casualties are pretty nasty. LXK and AMSG both warned this morning, and the stocks are getting whacked for -17% to -25% losses so far. The market opened on an uptick, but has since slipped into negative territory. But the S&P has held the 1225 level, so the technical picture is still in good shape.

Healthcare stocks have really been making moves lately. From the insurers, to generic drugmakers, biotech, and specialty healthcare, there is widespread strength in the sector. I think this is a good place to look for strong stocks, in addition to some tech names that remain strong as well. Retail stocks have really lagged, and I think it might be time to nibble there, maybe after this month's sales figures come out.


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