Today's prudentbear! -->
Market Summary June 05, 2001
Posted Daily Between 5 and 6:30 PM EST
by Lance Lewis
No News Is Good News, For The Moment
Asia was mixed last night as Japan lost a percent and briefly
broke back below 13,000 on worries over her banks again while
Hong Kong managed to rally 2 percent. Europe was up a
percent this morning, and the US futures were bid up as usual
both before and after it was announced that productivity had a
big downward revision. We were slow getting out of the gate until
we got the bad news from the services NAPM out of the way (it hit
a new record low for its short history.) From there, it was time to
party as prices marched slowly higher all day. The last 30
minutes saw a bit of a giveback to send us out just off the highs.
Volume picked up a little (1.1 bil on the NYSE and 1.8 bil on the
NASDAQ.) Breadth was just shy of 2 to 1 positive on both
exchanges.
XLNX slapped up a one page, 5-line mid-quarter update on their
website and failed to warn again within those 5 lines (keep in
mind that a big chunk of their business comes in the last month
of the quarter.) That was enough to spark a huge rally in the chip
stocks and drag everything else up along with them. XLNX didn’t
say anything earth shattering. It was more a no news is good
news type event. The point there is basically that the market
simply wanted to rally, so it did. The SOX had another barnburner
of a day, up 7 percent. MSFT finally managed to punch through
72. If you’re bullish, you have to like that, but we’ll have to watch
and make sure it doesn’t reverse back down in the next couple
days and fail. Anybody buying MSFT based on an impending
announcement of a settlement with the government may be a little
disappointed about the way the market reacts since I think it’s
been pretty well discounted already. AMZN fell 3 percent after its
analyst meeting where its CFO said he was “highly confident”
that they could achieve a Q4 profit on a pro forma basis. Well, I’d
certainly hope so since pro forma is kind of “made-up”
accounting. After all, if you can’t have even have “fake” profits,
how can you ever hope to have real ones as defined by GAAP?
The biotech index rose 5 percent and hit a new high for the move.
So, if you didn’t know already, it’s obvious that rampant
speculation is still alive and well. Financials were a little higher
as well. The BKX rose a hair, and the XBD was up 2 percent. GE,
however, never could get up the courage to join the rally and
actually slipped a percent.
Oil rose 11 cents after OPEC left output unchanged. The XOI and
OSX both rose a hair. Gold rose 60 cents, and lease rates were
flat again. The HUI started the day weaker but rallied sharply late
in the day to end up a percent. The US dollar index slipped a hair,
as the zero managed to climb back above 85 cents. Treasuries
were higher on the day as the yield on the 10yr fell to 5.26%.
Today’s rally looked pretty strong. There’s no argument there.
Either this bounce probably peaks out in euphoria tomorrow
morning (or did this afternoon?) or people may be clinging tighter
to hope than last week made it appear. If the market can ignore
HWP, NSM, and INTC later this week, perhaps it can ignore all of
the preannouncements coming out of the second quarter? In
which case, the gravity of reality might not take over till Q3
guidance begins in July? I don’t place this out of the realm of
possibility, but with the VIX collapsing to a new low for the move
today time is running out on “hope.” We’ll just have to see, but
we can only rally for so long on the myth of a second half
recovery. Pretty soon, we need to see some results or at least
some hints of results as the second half draws nearer to
beginning (just 25 days away now.) |
