Keeping Score of the Market

Keeping Score of the Market
by Sam Collins 04/30/08

There is a consensus that the Federal Open Market Committee will cut interest rates today by 25 basis points. But since this may be the last cut of the current cycle, uncertainty as to the impact of this decision kept investors away from yesterday's markets. As a result, one of the best days for corporate earnings was virtually ignored as the shift from earnings to economics got in full swing.

Nevertheless, here are some of the reports that looked best: In its earnings debut, Visa (V) beat estimates by 17% and MasterCard (MA) shattered its by 30%. Archer-Daniels Midland (ADM), Avon Products (AVN), Burlington Northern (BNI), Corning (GLW), MedcoHealth Solutions (MHS), Office Depot (ODP), BP (BP) and Royal Dutch Shell (RDS) all beat estimates.

However, Dow member Merck (MRK) had a key drug rejected by the Food and Drug Administration, and it fell 10.4%, which majorly impacted the Dow Jones Industrial Average (DJI).

The U.S. dollar rose against other major currencies in anticipation of the Fed cutting rates again. But since it may be the last, crude oil prices, gold prices and other commodities took a tumble.

In economic news, the Conference Board reported that April consumer confidence fell to 62.3 for April from March's 65.9 -- the lowest level since March 2003.

At the close yesterday, the Dow Jones Industrial Average (DJI) fell 40 points to 12,832, the S&P 500 (SPX) was down five points to 1,391, and the Nasdaq (NASD) gained two points and closed at 2,426.

In advance of the Fed meeting, volume declined to just 1.3 billion shares traded on the New York Stock Exchange and only 754 million traded on the Nasdaq (NASD). Breadth on both exchanges was negative, with about three sellers for every two buyers.

June crude oil prices fell $3.12 to $115.63 a barrel, and the Amex Energy Index (XLE) dropped to $81.15, off $1.59. But gold was the real loser yesterday with the June contract being whacked for $18.70 and closing at $876.80 per troy ounce. The PHLX Gold/Silver Index (XAU) broke its bullish support line, as well as the 200-day moving average by falling $8.05 and closing at $166.01.

What the Markets Are Saying

There isn't much we can say about yesterday's action except that in almost every regard it was, well, decidedly neutral.

In the past two, days the Dow (DJI) was down, losing a grand total of 60 points. The S&P 500 (SPX) was down during one of the two sessions for a total loss of four points, and the Nasdaq (NASD) was up both days for a total gain of three points -- yawn.

All of the internal indicators are overbought (stochastic, Moving Average Convergence/Divergence, momentum and the Relative Strength Index), and the sentiment indicators offset each other with both the CBOE Volatility Index (VIX) and CBOE Nasdaq Volatility Index (VXN) showing bullish trends.

The American Association of Individual Investors' (AAII) sentiment numbers are also bearish (short-term), and letter-writers mildly bearish. Insider buying is still bullish but has turned down slightly in the last week. Standard & Poor's indicators are neutral in the short term, and mildly bearish in the intermediate and longer term.

<>So there we have it: no runs, no hits and no errors. But the Fed is the umpire and today's rate decision and, even more importantly, any hint in its discussion of future action may tell us the real score.

Today's Trading Landscape

Here are some (that's right, just some) of the companies reporting earnings today:

Advanced Semiconductor Engineering (ASX), AGL Resources (ATG), Akamai Technologies (AKAM), Alcatel-Lucent (ALU), Alexander & Baldwin (ALEX), Alexion Pharmaceuticals (ALXN), Allegheny Energy (AYE), Alliance Imaging (AIQ), Allied Waste Industries (AW), Allscripts (MDRX), Amedisys (AMED), Ashford Hospitality Trust (AHT), Aspen Insurance Holdings (AHL), Atlas Energy Resources (ATN), Atmel Corp. (ATML), AvalonBay Communities (AVB), Avigen (AVGN), Avista Corp. (AVA) and AXT (AXTI).

B&G Foods (BGS), Beckman Coulter (BEC), Best Energy Services (BEYS), BG Group (BG), Big 5 Sporting Goods (BGFV), BioMed Realty Trust (BMR), Blount Int'l (BLT), Brandywine Realty Trust (BDN), Brink's (BCO), British Sky (BSY) and Brookfield Asset Management (BAM).

Cabot (CBT), Cabot Oil & Gas (COG), CACI Int'l (CAI), CAI Int'l (CAP), Cal Dive Int'l (DVR), CBL & Associates Properties (CBL), CDI Corp. (CDI), CenterPoint Energy (CNP), Centex Corp. (CTX), Central Pacific Financial Corp. (CPF), Chicago Bridge & Iron (CBI), Cincinnati Bell (CBB), Cincinnati Financial Corp. (CINF), Colgate-Palmolive (CL), Constellation Energy Group (CEG), Corinthian Colleges (COCO) and Cummins (CMI).

DayStar Technologies (DSTI), Dean Foods (DF), Diebold (DBD), DTE Energy Co. (DTE), Duke Realty Corp. (DRE), Edgewater Technology (EDGW), Equity Residential (EQR), Essex Property Trust (ESS), First Solar (FSLR), Fiserv (FISV), Forrester Research (FORR), FPL Group (FPL) and Furniture Brands (FBN).

Garmin Ltd. (GRMN), General Maritime Corp. (GMR), General Motors Corp. (GM), Genesis Lease Ltd. (GLS), Granite City Food & Brewery Ltd. (GCFB), Granite Construction (GVA), Grey Wolf (GW), Haverty Furniture (HVT), Hawaiian Holdings (HA), Headwaters (HW), Health Net (HNT), Helix Energy Solutions Group (HLX), Hess Corp. (HES), HickoryTech (HTCO) and Horace Mann Educators Corp. (HMN).

InterActiveCorp (IACI), ILOG (ILOG), InfoSpace (INSP), Ingersoll-Rand Co. (IR), Intellon Corp. (ITLN), International Paper (IP), ITC Holdings Corp. (ITC), Itron (ITRI), JDS Uniphase (JDSU), Jones Apparel Group (JNY), Kellogg Co. (K), Kraft Foods (KFT), K-Sea Transportation Partners (KSP), Las Vegas Sands Corp. (LVS), LoopNet (LOOP) and LTC Properties (LTC).

ManTech Int'l Corp. (MANT), MeadWestvaco (MWV), MFA Mortgage Investments (MFA), Millipore Corp. (MIL), MIPS Technologies (MIPS), Morton's Restaurant Group (MRT), MPS Group (MPS), MRV Communications (MRVC) and Murphy Oil Corp (MUR).

NACCO Industries (NC), Nalco (NLC), National Oilwell Varco (NOV), Navteq (NVT), Network Equipment Technologies (NWK), New Jersey Resources (NJR), Newport Corp. (NEWP), Novo Nordisk (NV) and NTELOS Holdings (NTLS).

Och-Ziff Capital Management Group (OZM), OfficeMax (OMX), ONEOK (OKE), Oppenheimer Holdings (OPY), Plains All American Pipeline (PAA), Proctor & Gamble (PNG), Prudential Financial (PRU) and Psychiatric Solutions (PSYS).

Questcor Pharmaceuticals (QSC), Realty Income Corp. (O), Reddy Ice (FRZ), RehabCare Group (RHB), Reynolds American (RAI), RightNow (RNOW) and Rogers Corp. (ROG).

Sangamo BioSciences (SGMO), Sanofi-Aventis (SNY), SAP AG (SAP), Sealed Air (SEE), Shutterfly (SLFY), Siemens AG (SI), Silicon Labs (LABS), Silver State Bancorp (SSBX), SJW Corp. (SJW), Southern Company (SO), Sovran Self Storage (SSS), SPX Corp. (SPW), Stewart Information Services (STC), Strayer Education (STRA), Sunoco (SUN), Symantec (SYMC) and Symyx Technologies (SMMX).

Talisman Energy (TLM), Tanger Factory Outlet Centers (SKT), Tasty Baking Co. (TSTY), Tetra Tech (TTI), The Timken Co. (TKR), Thomas & Betts (TNB), Time Warner Cable (TWC), Time Warner (TWX), Tollgrade Communications (TLGD), Trinity Industries (TRN), Tronox (TRX) and TRW Auto (TRW).

UGI Corp. (UGI), Ultimate Software (ULTI), Unisys (UIS), United Microelectronics (UMC), Unum Group (UNM), Vectren Corp. (VVC), Visteon Corp. (VC) and Volcom (VLCM).

WABCO Holdings (WBC), WCA Waste Corp. (WCAA), West Marine (WMAR), Westpac Banking Corp. (WBK), Willis Group Holdings (WSH) and Wright Express Corp. (WSX).

The following economic reports due today are: the MBA Mortgage Refinancing Index, American Data Processing (ADP)/Macroeconomic Advisors Private Payrolls Forecast, first-quarter advance GDP estimates (the consensus expects positive 0.5%), the first-quarter Employment Cost Index, the April Chicago PMI (consensus expects 47.5) and, of course, the Federal Open Market Committee (FOMC) rate cut decision.

Time Warner's (TWX) Q1 net fell and missed estimates by 2 cents and the company will spin off 84% of Time Warner Cable (TWC) to its shareholders. Excluding charges, General Motors (GM) reported a loss of 62 cents versus estimates of a loss of $1.60. But earnings will take a back seat to the 2:15p.m. Eastern announcement by the Fed on interest rates.

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