The Nikkei is up moderately (90 pts is moderate for them) and the Chinese markets are closed for their new year. Europe is flat to down a bit so there is certainly money that can head this way if it was meant to.
The market of the year should be India, the government is pushing very hard at Davos and around the world to be counted among the world leaders and a lot of the other Asian investors are seeing India as the value play of the region.
There is too much going on data-wise this week for the US market to be able to do much today. As long as the Dow holds 10,900 today I have no reason to sell.
Today we have Personal Income and the more important Personal Spending Reports. Both should be up a bit from last month (reflecting Christmas season).
On Tuesday we get 3 major reports, the Employment Cost Index (ECI), the Chicago PMI (which needs to be above 60) and the Consumer Confidence Report which needs to grow from last month’s 104 (which is a very good number and tough to beat). Even more important is the 2:15 FOMC Meeting where we will finally get to hear the rate decision buried in the tea leaves of Greenspan’s final statement.
I am begging Mr. Greenspan one more time to pause and let the markets fly free!
Tuesday will be capped off in the evening by the State of the Union address which does make me a little nervous as I doubt Mr. Bush has any real plan that will give the markets confidence. No matter what Bush says, all that people will be talking about on Wednesday morning is Google!
On Wednesday we will have our usual Crude Inventories but we also have the ISM Index which needs to at least remain above 54 or we will start worrying about those GDP numbers we ignored on Friday. Also by Wednesday we should have a sense of what OPEC is doing in their meeting this week – my guess is for a nice drop after an uneventful meeting and another round of builds in inventory.
Thursday will be a day off from data with just Jobless Claims but Friday is a very big day with Non-farm Payrolls (that needs to get back over 200K), the Unemployment Rate, Hourly Earnings, Average Work Week, Consumer Sentiment Index and the ISM Services Index which all come by 10:00 so by 11am on Friday we should have a clear picture of next week.
Oil is also directionless this morning and the Ministers will be hitting the town by the time the markets open so we have cleared day 1 without any shocking news! With January over, the oil traders are really stretching their delusion that it will get cold this winter (but there is no greenhouse effect). Moscow looks like it will hit peak cold tomorrow at -6 and finally begin to warm up next week. The severe winter in Russia has been the only thing keeping a legitimate draw on global supplies.
Gold is above $560 but I’d like to see it hold it today – the world situation certainly can’t look worse so the fear premium is maxing in gold. While there is a long-term demand picture, the short term price can still be driven down at random. Over $565 would give me confidence in buying more gold stocks. BVN is still the most likely to run up and I would take profit on NAK on any pullback at this point (up to $7 from our initial buy of $3.85).
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YHOO is getting some credit today with another upgrade to a buy. We are in on the Jan $30s for $7 back when we called the bottom on the 20th but they are still a reasonable deal at $8.20, especially as you can sell the March $37.50s for .70!
Google is going to open down today which is very bad as a Citibank analyst worked very hard to convince people to buy it last week, laying out a whole litany of ways that they should be able to beat their earnings numbers tomorrow.
EBAY should get some good panic selling today as Tiffany is initiating precedent setting legal procedures trying to hold them accountable for facilitating counterfeit operations. This goes to the core of Ebay’s whole policy of see no evil (“we are a simple web site” they like to say) but I think a sell-off will be overblown. That being said, I do like the $42.50 puts for a day trade at .75 looking for an even dollar to get out.
XOM made a stunning amount of money, as predicted, so much so that they are running apologies in the newspapers! I will be loving my $62.50 calls today which I actually ended up getting for just .85 on Friday…
Cannon and TDK had 34% profit gains this quarter, EK reported a narrowing loss and has a conference call at 1pm so I will be looking for an early pullback to give me an opportunity for a day trade. The $25s will be most sensitive and getting them for close to $1 would be a great discount but this is a very dangerous short-term trade!
CP is the next rail company up for earnings tomorrow, a good report from them will give BNI it’s next leg up.
HMC is getting no respect and I think they will have great earnings tomorrow, the March $30 options are a great gamble at .35. GM got a huge boost from Ford’s news last week but Honda didn’t move, if earnings come in above target there could be a big reaction!
http://finance.yahoo.com/q/bc?s=HMC&t=5d&l=on&z=m&q=l&c=gm
I’ll be taking some PFE off the table today as a bad report from MRK tomorrow will probably affect them too.
PD will be tomorrow’s most interesting report. This one could go either way as expectations are high but the price of copper is higher. I’ll be trading PCU on the tandem rather than trying to guess which way PD will go unless a good spread play presents itself today.
RIMM got a major patent victory in Germany so look for the stock to fly up early today.
VLO is under pressure to report a blow-out record quarter, fully 30% higher than their best previous quarter. I think they will miss the earnings number enough to take a chance (a big chance btw) on the $60 puts if I can pick them up for less than $2. This is a pure contrarian play based on what I believe are overly optimistic expectations.
The market is far too risky this week (at least until tomorrow) to have a lot of money on positions. If Wednesday is an up day with good Google results we will be buying with abandon but there are so many wild cards in the deck that things can go very, very bad.
My number one indicator of lack of consumer confidence is the continued weakness of Apple as it dips below its 50 dma for just the 3rd time all year. If a company growing at close to 100% can drop over 20% after beating estimates then this is not a real bull market.
