VerySmartInvesting: Lower markets on weaker bank earnings

Wednesday, January 19, 2011

Lower markets on weaker bank earnings

Stocks were under water all day. Dow finished down 12, decliners over advancers better than 3-1 & NAZ fell a very big 40. Soggy earnings from banks & disappointing housing data were too much for the bulls. The Financial Index had one of its worst days in a long time. As a way of comparison, a daily change of 5 is major.

S&P 500 FINANCIALS INDEX

Value	218.76
Change	-4.92 (-2.2%)

The MLP index fell a very big 4½ to the 367s, but is still close to recent 373 record. The REIT index fell 3+ to 224, remaining sideways longer term. Junk bond funds were lower, typically off about 1%. Treasuries rose. The yield on the 10 year Treasury bond fell 3 basis points to 3.34%.

Treasury Yields:

U.S. 3-month		0.15
U.S. 2-year		0.56
U.S. 10-year		3.34

Aleiran MLP Index --- 2 months

Dow Jones REIT Index --- 2 months

10-Year Treasury Yield Index --- 2 months

Oil continued lower during & gold was about even as traders were not sure what to make of sideways moves in Treasury rates. A chart for the current gold contract gold is shown below. It's still near the recent record high, not many stocks can say that.

CLG11.NYM

...Crude Oil Feb 11

...90.84

...

0.54 (0.59%)

GCF11.CMX

...Gold Jan 11

......1,368.10

.......0.00 (0.00%)

$$ Gold Super Cycle $$

Click Here

Gold contract Jan 2011 - 2 months

Shares Set Record as Analysts Say Stock May Reach $175

Photo: Bloomberg

IBM (IBM), a Dow stock, climbed to its 3rd consecutive daily record as analysts raised price targets for the stock on increasing spending by corps. IBM posted sales & profit that topped estimates. Many analysts increased their price targets, some predicting $175. IBM reported sales growth in every division, as well as a bump in services contracts, the first in a year, & said it is on track to hit a goal of almost doubling operating earnings to $20 or more by 2015. The company has boosted per-share profit for more than 30 straight qtrs. The world’s largest computer-services provider, which has its 100th anniversary this year, is also benefiting as corps resume spending after the recession. Q4 sales climbed 6.6% to $29B, with hardware revenue rising more than 20%, a mainframe computer introduced in Jul helped boost sales in that category. Sales from the software division, accounting more than 40% of profits, climbed 7% to $7B. IBM forecast that operating earnings, which exclude acquisition & some retirement costs, will increase 11% to $13 a share in 2011. The stock rose 5 to the 155s.

IBM Shares Rise to Record as Analysts Say Stock May Hit $175 Within a Year

IBM --- 1 year

Apple (AAPL), with the 2nd largest market cap in the world, had another blowout qtr. Below are what popular analysts think about AAPL. Today the stock dropped about 2 to the 338s, a great price for those who follow these guys:

Price target raised to $483 from $438
Price target raised to $450 from $400
Price target raised to $450, from $420
Price target raised to $415 from $390
Price target raised to $425 from $400
Maintaining a $400 price target
Price target raised to $420 from $355
Price target raised to $400 from $355

Apple --- 1 year

Stocks tried to extend their advance but couldn't overcome disappointing numbers by the big banks. However the Dow chart below looks quite strong, with only one minor hiccup (at the end of Nov). The chart for the MLP index above is similar, although it suffered a major drop today (probably from routine profit taking after a very long run to record levels). All those guys raising estimates for AAPL has me worried. I've seen that before & their predictions did not work out!

Dow Jones Industrials --- 2 months