Sensing a Stock Market Rally 09-09-10

Morning Greek
Greek Factor: +1

I'm sensing the start of something here folks. Mark down the date. It's just a sense at this point, without much to explain it, but the data this morning is also supportive. It's the first supportive data though, mind you. Weekly Jobless Claims again moderated, but remain at a troubled state, and are at risk of significant revision. The International Trade Deficit narrowed sharply, and that bodes well for Q3 GDP, or at least the trade impact to it. The "Greek Factor" ranges from +3 to -3, and is a subjective measure of The Greek's view of the market impact of individual and aggregate news and the day's scheduled events.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ, NYSE: MCD, NYSE: TXN, NYSE: UBS, NYSE: YUM, NYSE: EMR, NYSE: NSM, NYSE: CHP, NYSE: KFY, Nasdaq: OPTT, Nasdaq: OXBT, Nasdaq: SWHC, Nasdaq: HOFT, Nasdaq: IRET, Nasdaq: MYRX, Nasdaq: PPHM, NYSE: PNY, Nasdaq: GAME, Nasdaq: SNDA, NYSE: SPA, Nasdaq: STEI, Nasdaq: DSGX, Nasdaq: ULCM)

Investing prowess requires both science and art, and my artistic side is nudging at me this morning. Expectations have been tamed, and so there is little friction to keep stocks from rising on any catalyst of solid good news. Capitulation seems to have occurred at this point, in my view, despite the lack of a dramatic single day drop. I'm feeling a positive tone emerging on the streets, and believe better data might help stocks easily rise higher in this environment.

That said, we are in a period hot with the possibility of terrorist attack. So, you might want to keep your finger on the trigger, and hope nothing happens, but buy if it does. I would be buying a bit here anyhow, though, while saving cash for the possibility of a deeper discount too.

Weekly Jobless Claims
Greek Factor: +1

The latest Weekly Jobless Claims figures showed another decrease to 451K in the week ended September 4, down 27K from the prior week's revised figure of 478K (478K the week before that too). The four-week moving average also gave way, dropping 9,250, to 477,750. Insured unemployment was unchanged at 3.5% for the August 28 period. Today's labor data is clearly good news, and that should be reflected in trading. However, a weekly shed of 450K+ is nothing to celebrate; it's just that it is better than last week. Also, 9 states had to estimate data this week, due to the Labor Day holiday, and they included California. Thus, there is risk for a major revision next week. However, I believe the states' estimates are probably close enough to reality, which would make this a solid positive factor this morning. If we can break lower, in terms of claims, we might have something finally developing in the job market. Keep your eye out for this, as it should spark a swift rally eventually.

International Trade
Greek Factor: +2

International Trade data for July was released this morning. Trade corrected in July, after a weird divergence occurred in June. July's deficit narrowed dramatically to $42.8 billion, down from $49.9 billion. The move was so surprising, it left the economists' consensus hanging high and dry at -$46.8 billion. This is good news folks, and offers reason for hope for Q3 GDP, at least as far as the trade component is concerned.

Bank of England Decision
Greek Factor: +1

The Bank of England (BOE) made its latest monetary policy decision today and acted as expected. The BOE kept its key lending rate at record low 0.5%, while maintaining its bond buying program at 200 billion pounds ($309 billion equivalent).

Russia's Global Political Forum

Russian President Dmitry Medvedev holds his global political forum; this should be interesting. We wonder if there might be some more new world order type speak coming from here as well.

Oil & Gas Data

The EIA will report on Petroleum and Natural Gas on the same day this week, due to the holiday. Look for the Natural Gas report first at 10:30. Last week's data covering the period ended August 27 showed natural gas inventory increased by 54 Bcf, to 3,106 Bcf. The level stood 208 Bcf less than last year at this time and 169 Bcf above the 5-year average of 2,937 Bcf. The August 27 period Petroleum Status Report is due for 11:00 AM release. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.4 million barrels from the previous week. At 361.7 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 0.2 million barrels last week, and are above the upper limit of the average range.

Corporate Wire

The corporate wire highlights McDonald's (NYSE: MCD) August sales results release and an update from Texas Instruments (NYSE: TXN). Australian regulators will decide on National Australia Bank's $12 billion bid for Axa Asia Pacific. The UBS – Best of Americas Conference highlights a report from Yum! Brands (NYSE: YUM). Emerson Electric (NYSE: EMR) holds a conference call to discuss its Chloride Group Acquisition.

Reporting EPS, look for National Semiconductor (NYSE: NSM), C&D Technologies (NYSE: CHP), Korn Ferry International (NYSE: KFY), Ocean Power Technologies (Nasdaq: OPTT), Oxygen Biotherapeutics (Nasdaq: OXBT), Smith & Wesson (Nasdaq: SWHC), Hooker Furniture (Nasdaq: HOFT), Investors Real Estate (Nasdaq: IRET), Myrexis (Nasdaq: MYRX), Peregrine Pharmaceuticals (Nasdaq: PPHM), Piedmont Natural Gas (NYSE: PNY), Shanda Games (Nasdaq: GAME), Shanda Interactive Entertainment (Nasdaq: SNDA), Sparton (NYSE: SPA), Stewart Enterprises (Nasdaq: STEI), The Descartes Systems Group (Nasdaq: DSGX) and Ulticom (Nasdaq: ULCM).



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