Stock News Summary 09-24-10

Summing It Up

Stocks took off on decent Durable Goods Orders data, but you could have tuned the market out before noon, as trading leveled off from 10:00 AM forward. Once New Home Sales were reported, the wind was just sucked right out of the capital flow machine. Still, the Dow closed 1.9% higher on the day, and rescued a shaky week in the process. Enjoy your stock news summary below.

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Stock News Summary

Investing is often a game of guesswork, but by this questionable term, I mean the guesswork of forecasting how the investment community will react to market moving news. Yes, not only do you need to interpret data, but to forecast how your neighbor will.

You cannot read too much into the immediate direction of the broader market on news releases, because much of it simply reflects others' interpretation of how you and everyone else will view and trade on the data. It is basically trading off perception, and most of the traders doing this do not intend to hold on to their position longer than until just before the next data point release, if that long.

This morning, the market moved upwards on Durable Goods Orders, but by 10:00 AM, shares were questioning their new footing on another horrible New Home Sales data point. Investors need to see the bigger picture, while also factoring in the impact of short-term traders on prices of entry and exit, for the sake of maximizing profit.

If your investment horizon is long-term, what you need to pay attention to is how the next six months will shape out, not the next six minutes. But fret not dear day traders, as we can help you out here as well. Wrap up your day with a beer, cigar and your stock news summary from Wall Street Greek. It's our pleasure to serve you.

New Home Sales

Today we learned exactly why homebuilder sentiment was reported at record lows again in August. The latest report covering new home sales for the month, showed the annual pace of sales decelerating to a near stop, running now at a seasonally adjusted rate of 288K. This meager measure compares against July's upward raised mark of the same, up from 276K reported initially. The result was just 2K short of the economists' consensus. Still, the market took it as a reminder of how feeble the economy still is, and leveled off on the news. And oh by the way, the sales rate this August marked a 28.9% shortfall when matched against August of 2009. I don't know how many times I will have to say this over the next few months, but despite the then present housing tax incentive, last August was not the best of times. Thus, this much lower result is therefore staggering.

Durable Goods Orders

New Orders for Durable Goods fell 1.3%, missing the economists' consensus by three-tenths. Barron's reported expectations at -0.1%, and Bloomberg had the consensus at -1.0%. Clearly someone misprinted the information, but the drop of 1.3% represents bad news in its relative state nonetheless.

Durable goods orders have decreased three of the last four months, and this latest slide follows July's 0.7% drop. What enthused the market and economists, though, was that when excluding transportation, new orders increased by 2.0%. Transportation orders sway the overall result significantly, due to the general high-ticket price of transportation products like aircraft. Removing transportation and defense spending, which is often detached from the state of economic activity, allows for a more accurate reading of economic health. Leaving defense spending out this time around, left orders 1.2% lower.

The important metric here is that if we exclude defense and aircraft, capital goods orders increased 4.1%. This line item is considered a solid barometer of business spending. It reflects the confidence that businesses have in the economy, which offers insight into potential hiring activity as well. The rise in August compared against a 5.3% decline in July.

That said, there is much to be desired when it comes to the prescience of economic forecasting among purchasing managers and corporate types generally. I think the general incompetence that exists in the corporate environment is a product of being so far separated from the owner of the business. There's a certain disregard for making effort toward real value addition, as the employees view their employer as some large convoluted organization with vague ownership interests and seemingly disinterested management. It becomes a place to put your hours in, in order to collect a check every so often. Nobody really gives a damn anymore about making good for the boss. Instead, the modern corporation is full of people trying to make good face for their next review. Do you agree?

DC Doings

Chairman Bernanke discussed the lessons of the crisis today, which is linked to here. An FDA panel considered a mammogram device produced by Hologic (Nasdaq: HOLX).

Global Affairs

President Obama met with leaders of Southeast Asian nations just as tensions brewed between China, Japan, and North and South Korea. The U.N. Food and Agriculture Organization met to discuss the recent volatility in grain markets, due to Russia's ban on exports after a harsh drought and vast fires. Wheat prices are up sharply as a result.

Corporate Wire

Oracle (Nasdaq: ORCL) and Nordstrom (NYSE: JWN) met with analysts today. Shareholder meetings were held at National Semiconductor (NYSE: NSM), ConAgra Foods (NYSE: CAG), and Oxygen BioTherapeutics (Nasdaq: OXBT).

The Western New York Investors Conference highlighted presentations by Graham (AMEX: GHM), Ultralife (Nasdaq: ULBI), Astronics (Nasdaq: ATRO), Evans Bancorp (Nasdaq: EVBN), IEC Electronics (AMEX: IEC), Sovran Self Storage (NYSE: SSS), Columbus McKinnon (Nasdaq: CMCO), Computer Task Group (Nasdaq: CTGX), Gibralter Industries (Nasdaq: ROCK).

The Sidoti & Co., LLC Forum highlighted presentations by Diodes (Nasdaq: DIOD), OpenTable (Nasdaq: OPEN), United Online (Nasdaq: UNTD), Abaxis (Nasdaq: ABAX), Mercury Computer Systems (Nasdaq: MRCY), Stifel Financial (NYSE: SF), Simpson Manufacturing (NYSE: SSD), Allegiant Travel (Nasdaq: ALGT), Deluxe (NYSE: DLX), Microsemi (Nasdaq: MSCC), PLantronics (NYSE: PLT), Power Integrations (Nasdaq: POWI), Volterra Semiconductor (Nasdaq: VLTR), Hypercom (NYSE: HYC), Ixys (Nasdaq: IXYS), Quality Systems (Nasdaq: QSII), Coherent (Nasdaq: COHR), Hawaiian Holdings (Nasdaq: HA), Sirona Dental Systems (Nasdaq: SIRO), and Lydall (NYSE: LDL).

The short earnings schedule included EnviroStar (AMEX: EVI), Hypertension Diagnostics (Nasdaq: HDII), InSight Health Services (Nasdaq: ISGT), KB Home (NYSE: KBH) and PSB Holdings (Nasdaq: PSBH).



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