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2009-06-24 09:45

CLEAR SKIES MAY BE THE ANSWER

NEW YORK, NY I need help...that new State Street commercial where one dog works hard to cheer up his/her buddy, I love it. Does anyone know the name of that song? Thanks! "It's much too late to save myself from falling I took a chance and changed your way of life but you misread my meaning when I met you Closed the door and left me blinded by the light"- Elton John I know there are many things that move the market and even more things that people believe move the market. Occasionally, there is a trend that seems to correlate perfectly with the action in the stock market...the weather. The weather broke very early in the East this year and as temperatures soared so, too, did the stock market. Since June the weather across the nation, especially in the East, has been very depressing. You could say that it's a coincidence but since the monsoon season kicked in, where it felt like it rained non-stop, the market lost traction and became more vulnerable. I guess it's silly but I think that there is more to it than many would like to admit. If there is an intangible part of the market that is moved via emotions then it stands to reason there are few things that influence how people feel day to day than how nice it is outside. The temperatures dropped and the sun went down on us and the market hasn't been able to save itself from falling. Temperature and the Dow Jones Industrial Average (blue dots are rain) Weather Outlook Rest of Week So, now that we know the real culprit for derailing the rally, all we need is a stretch of days without rain and dropping temperatures Unfortunately, it doesn't look like it's going to happen anytime soon. Of course, the only thing harder than picking weather day to day is picking the market so there is a good chance the sun will shine on our faces and the stock market before the week concludes. Today's Session The Fed can't go any lower with rates but it can keep up with its quantitative easing, which hasn't done much except pressure the dollar. The Street will be all ears as the Fed is in a delicate position of having to justify radical actions while also suggesting the economy is doing better. It's an act that is wearing thin to be sure. Tidbits and Observations Yesterday's press conference saw the President face tougher questions which may explain why there were several responses that were more candid. Yet, the determination to stay the course was as cemented as ever. * It's not time for a second stimulus yet. * Unemployment will hit 10.0% because of the trend but it may not be bad news because it's a lagging indicator. Tell that to those without a j-o-b. * Private health insurers should be able to compete with the government, which will have unlimited access to taxpayer money and work in a "non-profit" manner. All I can say is if there was a private company the size of the United States government it would be broken up through anti-trust laws. Economic Data Durable Goods Orders As a matter of principle we are going to refrain from referencing plants in describing this morning's durable goods order data. There was an actual surprise in the data set, and to boot, positive numbers showed up. This runs counter to the underpinnings of the rally from the March low, which was on "less bad" economic data. For May, headline durable goods advanced 1.8% (consensus: -0.9%). Excluding transportation, durable goods improved 1.1% (consensus: -0.5%). Non-defense capital goods orders surged 10.0% (we note surge as any increase in this area from where we were coming from in the economy is eye opening). The futures reacted positively to the news, an appropriate action to be sure. Combined with the better than expected guidance from Oracle (ORCL) last night, there is reason to believe the economy is past its low point and is at least slowly heading in the right direction.

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Disclaimer: Securities Operations Forum is providing this research to assist investors in determining when to buy and when to sell. All investment decisions are yours and as a result you could make or lose money. Securities Operations Forum, its employees and/or its affiliates and family members may from time to time take positions in the open market or otherwise with respect to the securities discussed, but not have stock ownership equal to or greater than 1% of the outstanding stock of the covered company nor does any employee of Securities Operations Forum sit on the Board of Directors of any covered company. The statements made herein include information obtained from sources believed to be reliable, but no independent verification has been made and we do not guarantee its accuracy or completeness. The statements made herein contain general information and do not constitute an offer to buy or sell any security.