Market Soapbox 05/09/05

Resistance: DJIA 10400; SP500 1180; Nasdaq 1980; NDX 1465
Support: DJIA 9900 ; SP500 1125 ; Nasdaq 1870; NDX 1375
Positive: Everything else
Weak: Materials, B2B Internet, Tobacco
52 Week HiLo: NYSE 90/19; Nasdaq 45/38; Amex 30/20
A/D Volume: NYSE 1313/380, Nasdaq 906/469, Amex 118/24
Volume: NYSE 1.711B, Nasdaq 1.434B

Upcoming Notable reports:
WEN: Treasury Budget & Trade Balance (Feb -61B, est. -61.2B)
THUR: Initial Claims, Retail Sales, (ex-auto)
FRI: Business Inventory, Export Prices(ex-ag), Import Prices(ex-oil), Michigan Sentiment Prelim

Wholesale Inventory +0.4% (Feb. 0.6%, est. +1.0%) this means wholesale inventories are depleting.

European (DAX -0.43%) & Asian markets (Nikkei 225 -0.19%) were down. Dollar split vs. Yen/Euro, gold unch, bonds & materials down, oil & commodities up. 10 year note -4 ticks, yield +.016 @ 4.28%. Contra action: Bonds down & 30 year bond up.

Oil whipsaw continues: late day surge pushed futures prices +2.10% @ 52.03.

Today's Sooey Pig Pig!! award goes to Raymond James for upgrading CDWC from outperform to strong buy. CDW is a direct distributor of computer products with decelerating revenue and EPS last 2 Qtr's and YoY.

Stock Price - 9.5% in 12 months; Institutional Ownership 76.1%. Any economic slowdown or tightening of consumer discretionary spending will cut their already low profit margins to nill. Stock up 3.5% today. Oink, Oink.

Last Fri, two rumours, the RMB revalue and a big corporate bond deal (Sungard) , Tues, the FOMC omission, Thurs, GM & Ford debt downgraded to Junk. Fri, a large non farms payroll increase.

Wens. the big kahuna was the rumor of the 30 year bond coming back in 2006. We have posted our opinion on the situation.

The market drifted sideways and turned up late on lower volume. 9 of 10 sectors up. The small caps outperformed.

90% of the S&P is in with 66% above, 20% below and 14% on the number. Earnings are in the 18-20%, rather than the 8-10% growth rate expected. High end rates have decreased, while short end increased for the period.

This Qtr. a record amount of M&A and stock buyback activity, signifying a battening of the hatches for Q2 and the remainder of the year. So far, da money is not going toward CapEx & hiring, and they are sitting on barrels of it.

As high end rates increase, the question is have they borrowed against future earnings in this quarters results? We shall see.

The markets have gained for 3 weeks now, the last seven trading days, performance has improved, internals appear to be on the mend, biotech is getting a bid for the 8th consecutive day.

The indices are bouncing off resistance. They have been attempting to break these levels on a closing basis for several days.

Should they fail, the perfect storm awaits, higher oil, higher interest rates, treasury auction, options unwind. The coup de gra will be the turbulence from Tues Treasury Budget & Trade Deficit and Wens retail sales reports.

Max pain on options: SPX @ 1150-1155, hit 1178 today, a move to 1200 puts a bunch of calls in bigger money. DIA @ 101-102, hit 103.75 today, a move to 104 puts a large number of calls in the money.

QQQQ @ 35 - 36, 1980 Nasdaq and 1463 NDX. Q's hit 36 today, a rise to 37 would move 400,000 positions from worthless to in the money. Me thinks this is the ceiling till after options expire May 20th.

We should see some upwards action through mid day Tues when the auction starts, then it could start getting bumpy. Wen. seems to be this weeks setup for consolidation. Just my opinion, I could be wrong.