Friday, May 13, 2005
Issue Contents:
| 09:26 | The Day Ahead Economic releases and news |
| 12:40 | A Tale of Two Markets |
| 16:15 | TrendVue Trader Talk Today's transcript. |
| 20:59 | Swing Scanner Results Friday May 13th closing data |
| 21:00 | Market Statistics For Friday May 13, 2005 |
| 22:58 | The Friday File |
Good morning, its Friday May 13th, the 133rd day of 2005.
The increase in Business Inventories came in slightly lower than concensus and at the low end of the expected range at 0.4%. Import prices for April came in higher than expected, at the top end of the expected range at 0.8%.
“Excluding petroleum it is only up 4 tenths (of a percentage point), so really it’s the same old-same old story. Petroleum and industrial supplies seem to have been the main culprits,” said Patrick Fearon, senior economist at A.G. Edwards & Sons in St. Louis.
One indicator suggests a little slowing, one suggests a little inflation. Markets will probably ignore both and wait for the PPI and CPI reports to be released next week.
Before the bell crude is trading up somewhat:
“Clearly, North American inventories have been building up and that’s something people have been focusing on, but the overall situation remains that the market is extremely tight,” said Ian Henderson of JP Morgan Fleming. “I, for choice, believe that any period of weakness is probably a buying rather than a selling opportunity.”2
The USD continues its rally following the technical breakouts against many key currencies; no doubt Gold will be hit anew today.
US Market Calendar
- 8:30 am: Trade Price Indices – April1
- 8:30 am: Business Inventories – March
- 9:45 am: University of Michigan Consumer Sentiment Index – May Preliminary
Canadian Market Calendar
- 8:30 am: Manufacturing Shipments & Orders – Mar.
Earnings and the Federal Reserve
For earnings highlights, please see today's WSJ Earnings Calendar.
For a list of upcoming speeches, congressional testimony, Federal Open Market Committee material, and statistical releases, please visit the What's Next page of The Federal Reserve Board website. Recently released Federal Reserve Board material, including market moving FOMC decisions and speeches by members, will be found on their What's New page.
1 Import prices rise by twice forecast
2 Oil up, funds look beyond supply glut
Its a very interesting market we have here, putting on a fine show and exhibiting a huge divergence between the NYSE and Nasdaq. Just look at this chart and think:
Key features to note:
- Massive expansion in new 52 week highs on Nasdaq today (green histogram, circled on right) Talk about outperforming from low expectations, so many have been beaten down.
- Advancing/Declining volume – (second panel from bottom, a rising a/d vol line (red) means that declining volume is rising). NYSE names are still seeing an increase in selling despite the “rally”. Cyclicals are being hit hard. Other areas may get infected too.
Clearly the rotation to technology that we’ve been discussing is being taken to extremes today, but what we don’t know is if concerns over the economy (evidence is weak performance in cyclicals) will infect tech with a similar sickness. DELL is not that influential a stock to prop the entire market up, not even the tech market up, for long.
Sometimes a big bounce is just the right time to lighten the load…
Today's transcript.
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Friday May 13th closing data
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Statistics for Friday May 13, 2005
Note: Statistics are compiled based on our custom symbol universe of the most heavily traded stocks.
| Symbols in Up Swings | 249 |
|---|---|
| Symbols in Down Swings | 498 |
| Up/Down Swing Ratio | 0.5 : 1 |
| Advancers | 34% |
| Decliners | 64% |
| Unchanged | 3% |
| Up Bars | 20% |
| Down Bars | 63% |
| Inside Bars | 7% |
| Outside Bars | 5% |
| Close > 20EMA | 34% |
| Close > 50SMA | 34% |
| Close > 200SMA | 45% |
| 20EMA > 50SMA > 200SMA (trend up) | 22% |
| 20EMA < 50SMA < 200SMA (trend down) | 31% |
PC Industry pundit Robert X. Cringely comments on Microsoft’s xBox news – excerpt:
It’s an expression made popular in Silicon Valley years ago by Andy Grove of Intel: “inflection point.” It’s that abrupt elbow in a graph of growth or decline when the new technology or paradigm truly kicks in, and suddenly there is no going back. From that moment, the new stuff takes off and the old stuff goes into rapid decline, whether it is a new standard of modem, a new video game, a new microprocessor family, or just a new idea. I think we’ve just hit such an inflection point and—though most of us still don’t realize it—the personal computer, video game, and electronic entertainment businesses will never be the same.
There are three pieces to this puzzle. First, as I noted last week, Bill Gates deliberately blabbed some details about the next xBox game system, which is to be officially announced this week. This gaffe, which I don’t believe was a gaffe at all, came for specific reasons that are still not clear, but the implications of Gates’ remarks ARE clear—that xBox 360 will perform many functions that currently require a home computer. Not only will xBox 360 play video games, it will play music and movies, surf the web and probably even offer a non-PC platform for voice-over-IP.
What message does this send to Microsoft’s hardware OEM customers that make home computers? What is Microsoft saying to Dell, HP, Gateway, and others? For all the customer bullying we saw proof of in the Department of Justice’s anti- trust case against Microsoft, one thing the kids in Redmond never did was propose to undercut their hardware OEMs by building a Microsoft PC. But now that’s precisely what Gates has proposed, and it is coming in time for this Christmas.
I don’t know why Microsoft would make this move at this time. Maybe the game business has become more important to them than home PCs, maybe some particular advantage over the PlayStation3 just has to be touted, Maybe Microsoft feels at a disadvantage to Apple’s upcoming movie service. Whatever the reason, there is no going back now: Microsoft is in direct competition with its own customers. Full article >
We can answer the “why” question with a number of different answers, all pointing to the same problem: commoditization, open source and other alternatives (Apple, anyone?) – but the bottom line is making good with shareholders is their mission and its not a battle they’ve been winning lately.
Microsoft isn’t and hasn’t been a growth company for some time. Going after your customer’s business is one strategy for injecting some growth back into the business, at the expense of independent software makers and OEM hardware vendors everywhere.
Who benefits? Those that supply and build hardware for Microsoft, among others. Certainly ATYT was an example today.
I still think they are in the fight of their lives, but perhaps Microsoft has decided that consumers, rather the information technology professionals, is the big growth area and that’s one battle they may well have a sustainable edge at winning.