Friday, April 24, 2009

More Solid Earnings Reports, Housing Data Boost Stocks

The market is off to a strong start after another batch of strong earnings reports, as well as some data on new home sales that came in better than expected.

Among the companies that beat earnings expectations were: AMZN, SLB, AXP, and F. MSFT matched consensus estimates, and MMM missed estimates, but both of those stocks are joining the first group in moving nicely higher. The market is in a forgiving mood this morning.

Oil is moving higher this morning, above $51, which along with Schlumberger's earnings are really boosting the energy stocks. SLB is up +8.7%, despite management saying that Q1 results will be difficult to duplicate due to the deteriorating business environment.

Amex is up +13.7% despite their comments that the company is increasing its provisions to protect against deteriorating credit. There were also comments recently by Obama aimed at reigning in interest rate hikes by the credit card companies. But these factors aren't holding back the stock, which is probably getting a boost by short-covering.

New home sales for March reached 356,000, above estimates. But investors really like the inventory number, which showed the supply of homes on the market fell to 10.7 months, from 11.2 last month. The homebuilder index (XHB) is the leading industry so far this morning (+4.0%).

Later today we will hear from the govt. regarding its methodology for conducting the "stress tests" on the leading US banks. The actual results won't be released until May 4th, but this news could still move the market later today.

Asian markets were mixed overnight; the dollar is lower again, boosting gold and commodity prices; the 10-year yield is higher to 2.97%; and the VIX is lower again to 36.58.

Trading comment: The only trade I made yesterday was adding HANS to our aggressive accounts. The stock staged a strong breakout on a huge increase in volume. The surge in volume is a good indicator that the move has some legs to it. We shall see.

This market sure doesn't want to pull back, but it hasn't run away to the upside either. Last week's high was SPX 875, which we are still below. The market also remains overbought, so some continued sideways consolidation would be a bullish solution for working off that overbought condition.

long HANS


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