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From Briefing.com: 6:10PM Swing Trader : -- Technical -- Markets managed to gap higher this morning, but the upward momentum was short-lived and wound up reversing within the first 1/2 hour of the session. What followed was a slow and steady downtrend that didn't stabilize until the final hour of trading. Market Breadth was negative as Decliners outpaced Advancers about 1.9 to 1 and New Lows exceeded New Highs. Energy - Oil related names were the strongest group today, extending their upward momentum for a 3rd consecutive session....(Continued)

4:45PM Weekly Wrap: The stock market held steady this past week, but the action was ultimately disappointing.

A rally in the bond market over the past week provided some fundamental support to the stock market. The 10-year yield ended last week at 4.58% and rallied to 4.45% by the end of this week. That shouldn't have been a huge boost to stocks, but it was enough to bring forth some occasional bargain hunting.

Apart from that, there wasn't a lot of good fundamental news. At times, there was some latent demand that burst through as the market hit the lower end of its three month trading range.

This was evidenced by the big rally on Wednesday. The S&P leapt 16 points that day. Early in the day, oil was down $1.50 a barrel, and every article about the market cited that as the cause of the rally. But oil ended down only $0.25 on the day, and more than reversed that decline the next day without any impact on the stock market. There was some money sitting on the sidelines looking for an opportunity to get back into the market, but there really wasn't any change in the fundamentals.

This suggests that there may not be strong followthrough to any near-term rallies.

Further supporting this conclusion was the action on Friday. The S&P futures were up strongly ahead of the employment release that morning. The data was disappointing. Nonfarm payrolls were up just 110,000 compared to expectations of a 220,000 gain. Average hourly earnings were up 0.3% compared to an expected 0.2% increase. Thus, growth was less than expected while the inflationary factor was up more than expected. That is not good news for stocks.

Yet, the stock market opened up strongly even after the data. The market was prepared to continue its mini-rally. The gains quickly faded, however, as the day progressed, and the S&P closed down almost 8 points on Friday. There was no followthrough even on a daily basis.

The rest of the data this past week was slightly bearish. Oil prices rose to $57.27 from a close of $54.84 last week.

There were very few earnings reports this week and none that impacted the broad market. First quarter earnings reports will start in earnest in a couple of weeks.

There were a small number of earnings warnings, as is typical at this time of the month. Cardinal Health, Best Buy, Biogen, Navistar, Cognos, Parket-Hannifin, and AmeriSource Bergen were among those saying this or next quarter's earnings would be lower than Wall Street forecasts.

There was little economic data this week of note, other than the payrolls data. Fourth quarter real GDP was unrevised at a 3.8% annual rate. The March ISM manufacturing index was as expected at 55.2, and the March ISM services survey was accidentally released on Friday (it was due on Tuesday) at a strong 63.1. The data was by no means all that disappointing, and it won't change economic expectations of continued strong growth, but it didn't provide any additional reason to buy stocks either.

As to sectors, the S&P was up marginally this week, but the technology heavy Nasdaq was down again. Oil, homebuilding, and steel were strong sectors. Those are not typically sectors that can lead the broad market higher. Key sectors such as insurance, computers, retailers (Wal-Mart) were weak.

Thus, although there were sporadic signs of resurgent demand this past week, it ultimately was yet another disappointing week for the stock market. It will take a renewed focus on a positive fundamental factor, such as good first quarter earnings report, to create a more sustainable boost to the market.

 
 Index       Started Week  Ended Week  Change  %Change  YTD  
 DJIA          10442.87     10404.30   -38.57   -0.4 % -3.5 %  
 Nasdaq         1991.06      1984.81    -6.25   -0.3 % -8.8 %  
 S&P 500        1171.42      1172.92     1.50    0.1 % -3.2 %  
 Russell 2000    615.27       611.55    -3.72   -0.6 % -6.1 %

9:16AM Gapping Down : TASR -12% (guides below consensus), BBY -3.2% (reports in line, guides MayQ below consensus), NATI -12% (guides lower), VISG -11% (JP Morgan downgrade), INFT -9.3% (continues recent slide), PGNX -6.6% (prices offering below current price), BKHM -6% (profit taking after 97% move yesterday).... Under $3: XYBR -48% (receives SEC subpoena; delays 10-K filing again), VCMP -9.3% (reports Q4), IPIX -5.2% (reports Q4).

9:08AM Gapping Up : Gapping up on strong earnings/guidance: RHAT +5.4% (also Baird upgrade), SIMC +38%, HTCH +2.8%.... Other News: SPPI +8.7% (started with a Buy at Wells Fargo; tgt $10), VSEC +7.4% (fuel tanker support contract), MKTX +6% (Bear Stearns upgrade), VIAC +5.2% (files 10-K), MTSN +3.2% (added to JP Morgan's Focus List; tgt $11), ANTP +2.7% (recent momentum), NOVL +2.7% (JMP Sec upgrade), NGPS +2.4%, ELN +2.2% (bounces after 54% drop yesterday), RIMM +1.4% (introduces BlackBerry in Poland; positive SG Cowen comments).... Under $3: INTD +34% (to be acquired by CORI), TMTA +15% (new President & CEO; announces agreement with Sony), CIEN +6% (settles patent litigation).

7:17AM Biogen Idec says investors should no longer rely on Feb 7 guidance (BIIB) : Co discloses in today's 8-K that: "As a result of the voluntary suspension of the marketing of Tysabri (natalizumab) by Biogen Idec and Elan Corp, as announced in a press release issued on Feb 28, 2005... investors should no longer rely upon the financial guidance that the co announced in a press release issued on Feb 7, 2005." Co issued FY05 guidance on Feb 7 of EPS of $1.60 through the low $1.70's.

6:30AM ATI Tech chosen by Samsung for DLP HDTV (ATYT) 17.29: ATYT announced today that Samsung has selected ATYT's Xilleon and Theater chips in their series of mainstream to premium HDTVs for the worldwide market, as a continuation of the cooperative alliance established in 2003.

12:43PM Trading Call of the Week -- Oppenheimer's Sosnick on JCP, also likes KSS

Trading Call of the Week goes to Bernard Sosnick at Oppenheimer, who was among the first to explain the appeal of JC Penney's financial restructuring, ahead of the stock's more than 8-point run peak-to-trough run over seven sessions that was aided by rumors that improving financials make JCP a buyout candidate.

Back on March 21, Sosnick was touting JCP shares, saying the company has potential to exceed estimates for '05 and '06, and trade in the $50 to $60 range, based on its ability to leverage earnings growth. He also noted at the time that JCP shares traded at only 13x his firm's '06 earnings estimate - a discount to others in its group.

On Wednesday, Sosnick followed up with a note explaining that JCP shares were starting to run on speculation that it was the target of a leveraged buyout. Sosnick noted that talk is often cheap, but said the speculation was being raised in the first place because of JCP's unusually favorable restructuring, as well as plans to buy back up to $6 bln of shares.

The following day, ahead of the stock's run to 5 1/2-year high of $53.44, Sosnick further explained the company's long-term operating margin potential could push EPS to the $5.50 to $6.00 range by 2008. He said that level of potential earnings would support a bid price of about $65 a share from an acquirer - above the high-end of his estimate range.

Amid a lot of takeover speculation among retailers, we wanted to know if there was ANOTHER retail stock Sosnick liked in the short-term. We thought he might give us another potential retail takeover candidate, given that the sector is suddenly rife with speculation. Instead, he told us he like's Kohl's (KSS), retail's one-time darling that has recently become a bit of a turnaround story.

Kohl's was perhaps the hottest retail stock from 1995 to 2000, outperforming even Wal-Mart (WMT) on a percentage basis in those years. Sosnick said the company had grown accustomed to posting 5% comp sales numbers on a monthly basis, and the company continued to buy accordingly - even when the economy slowed. But he says the company has made strides recently to carry the right amount of inventory. He adds that Kohl's is doing a better job with its advertising, and continues to expand outside of malls, taking market share from other department stores.

"And when the warmer weather comes, Kohl's is positioned with the right inventories in the right quantities, and will resume its status as one of the leading companies in retail," Sosnick told us, adding that it was a good sign for the April quarter that the company didn't have to undertake hefty winter clearances in February. His Q1 estimate is $0.40, vs. consensus of $0.37, based on the potential for stronger sales in April.

Sosnick recently told clients he sees KSS moving toward $60, from its current price of about $50. We note, however, that there has been some near-term technical weakness in KSS; we would NOT be willing to hold the stock below near-term support in the $50 area. We would even consider waiting until AFTER the company reports March comps to wade into the name. One additional note for traders is that there is near-term resistance for KSS in the $53 to $54 range.-- Mike Tarsala, [e-mail].


11:37AM April Fools: Historical Trends In April Now that the market is essentially flat today, after having run up a little bit this morning, we paused to look into the Stock Trader's Almanac to see if prior history showed any major trends for April Fools Day and the month of April. It does - and it is usually good on both counts.

According to data compiled by the Stock Trader's Almanac, the first trading day of April (whether it is actually April 1 or not) usually shows an up day for the Dow, with 8 of the past 10 years showing a positive close. In the year 2000, in fact, the first trading day in April was April 3, and the Dow showed a 300 point, or 3% rise. Most of the other years showed a rise or fall of less than 1%, which makes them "ordinary" trading days.

The month of April, however, is branded by the Stock Trader's Almanac as the best month for Dow historically. The average rise, since 1950, is 1.9%, with 34 up years and 21 down years. While the average percentage rise in April for the S&P 500 index, at 1.3%, is not the highest average monthly rise (November and December both average 1.7%), April is the second most consistent up month for the S&P 500. In 37 of the last 55 years, the S&P index has been up. Only December has been up more months, at 42 up months and just 13 down months.

If April does prove to be an up month, it means that the Dow would close above 10,503, the Nasdaq would close above 1998, and the S&P 500 would close above 1,181. If this happens, all three indexes would then be above the levels they had on November 1, 2004. Such an event would be yet another confirmation of the old adage on Wall Street, "the Dow from November 'til May, then go away."

This adage describes the strategy of investing in the market only from November 1 through April 30, and being entirely in cash for the May 1 to October 31 period. The Nov-Apr period has only had 12 down periods since 1950, while the May-Oct time period has had 22. Furthermore, the hypothetical back-tested portfolio calculated in the Almanac shows that $10,000 initial investment in the Dow during the Nov-Apr time periods only, would today be worth $492,060, while a $10,000 initial investment in the May-Oct time period would be just $9,682. (In each scenario, taxes are ignored and the value of the index at the end of the period is reinvested fully at the start of the next six month time period.)

Since the beginning of the composition of this Story Stock, the market indexes have all gone negative, reversing their early gains of the day. Whether this turns out to be the final direction of the overall market is, of course, uncertain currently. (For more on the Stock Trader's Almanace, see the Ahead of the Curve column of December 7, 2004.)

Whatever today's levels wind up being, however, it is worth remembering the other old adage in the market, "past performance is no guarantee of future performance." In fact, the only reliable historic trend in the market is that a reliance on historical trends can sometimes have disastrous consequences. If the market teaches anything over time, it is that there is never certainty at any time for the market's direction. Even when the market does wind up doing exactly what you predicted it would, it is risky to start believing that you have "figured it out" with certainty. When that happens, the market usually finds a way - eventually - to illustrate the foolishness of such strong faith in yourself. Happy April Fools Day. - Robert V. Green

9:08AM Page One - Stocks Were Ready to Rally : Stock futures suggest an up open. Frankly, this surprises us given that the payroll data is worse than expected in two key areas.

The March nonfarm payrolls rose 110,000. A gain of 220,000 was expected. This is obviously disappointing, but frankly, there is no reason to believe that labor market conditions fundamentally worsened in March. Payrolls have risen an average of about 200,000 over the past year. The March number indicates that a surge in employment is not occurring, but there is no reason to suspect that a new, slower trend has emerged.

More worrisome, in our opinion, is the 0.3% gain in average hourly earnings. This follows a modest 0.1% (revised) gain in February, but there has been a firming trend in recent months. If this cost factor continues to rise at a higher rate, it creates cost pressures that can lead to higher inflation rates. The market is showing little concern about this today, but another month or two of bad numbers and it could become important.

The bond market is rallying on the weak jobs number. The 10-year is up 15/32 and the yield has dropped to 4.42%. This is supporting the stock market, which continues to look at a solid up open. In our opinion, this is surprising. The jobs numbers is not greatly disturbing from a longer-term aspect, but it is always better for the economy to have more growth, so this one has to be defined as disappointing. It is not bullish. The gain in average hourly earnings is also clearly not bullish.

In fact, with the February payrolls release, the exact opposite in data was presented. The market understandably rallied big time. That month, payrolls were reported up 262,000 and average hourly earnings were (since revised) at unchanged. Payrolls were strong and earnings weak. That is bullish. This month payrolls were weak and earnings strong. These reversed conditions do not strike us as bullish, but the market is looking up today.

The market's response reflects the trading range nature of the market. Stocks rallied Wednesday, supposedly on a drop in oil prices. That decline has been more than reversed, but stocks did not reverse. Stocks had dropped enough that they simply needed a spark. The same is perhaps true today. Stocks were ready to rally, and the data isn't about to stand in the way. It remains very much a trading range market. Dick Green, Briefing.com