Replies to post #98067 on Biotech Values

[AlpineBV_Miller]

Yup. Seeing lots of signs we're closing in on a bottom. Would rather see this in August given typical seasonal pressures.

[DragonBits]

I think we are close to a new golden age of stock pickers. For the last 20 years, mutual funds and ETFs have ruled. Right now 78% of stocks move with the indexes.

Everyone in these articles owns a mutual fund or an index, I don't think those are going to give any gains for the next 5 years. And I think during the next five years will we have a serious bear market that comes close to the old lows. Funds can't cherry pick a few winners, they have to be in many stocks. Most individuals have no real ability to pick winners.

Can we have a 3% rally in July, no doubt, we are close to oversold. Is it going to last long, I don't think it will. Can we go lower than 1040 on the SP500, I think we will.

I didn't track articles in Nov - Dec of 2008, I am sure there were a lot of calls that was the bottom.

Cyclical bear markets last a long time, and the usually test the bottoms at some point in time. This rally from the 2009 lows looks more like a bear market rally brought on by Gov stimulus. The Gov cannot afford another round of stimulus.

[bladerunner1717]

All DOW theorists are now bearish




Dow Theory sell signal at Wednesday's close

ANNANDALE, Va. (MarketWatch) -- It's now official.



At least according to some interpretations of the venerable Dow Theory, a bear-market signal was generated at Wednesday's close, when both the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 9,774, -96.28, -0.98%) and the Dow Jones Transportation Average /quotes/comstock/10w!i:djt (DJT 4,008, -33.65, -0.83%) closed below their previous correction lows of early June.

This interpretation appears to be the one favored by two of the Dow Theorists tracked by the Hulbert Financial Digest: Jack Schannep, from TheDowTheory.com, and Richard Moroney, of Dow Theory Forecasts.

The third Dow Theorist that the Hulbert Financial Digest identified as having already turned bearish, and so today's action is mere confirmation of that bearish trend. He is Richard Russell, editor of Dow Theory Letters.

In addition to previously concluding that the Dow Theory was bearish, Russell also has indicated that he would view a Dow close below 9,800 as being bearish according to another technical analysis formation: the so-called head and shoulders. That occurred Wednesday, of course, with the Dow closing at the 9,774 level.

Earlier this week, Russell wrote that the breaking of the head-and-shoulders formation would have very bearish consequences: "All previous plans, scenarios and strategies will hit a stone wall. Wall Street and public sentiment will turn black-bearish. Consumers will head for the storm cellars, and, once in, they'll shut the door above them and lock it."

-- Mark Hulbert




Bladerunner

[Mpower]

I fully concur. A close friend of mine who got back into the market 2 months ago told me that they panicked and called their broker this afternoon to get them out of the market and into cash. I see much gloom and doom around us. Makes you wonder who is left long in the stock market ... they must be crazy! :)

p.s. I'm now officially a DNDN long!

[DewDiligence]

Market Has Best Week of 2010

http://online.wsj.com/article/SB10001424052748704075604575356533981465758.html

›JULY 9, 2010, 6:49 P.M. ET
By DONNA KARDOS YESALAVICH

Stocks climbed Friday, capping their best week in nearly 12 months, as optimism about second-quarter corporate profits powered a rebound from the market's worst levels this year.

The Dow Jones Industrial Average climbed 511.55 points, or 5.3%, for the week, its strongest performance since the week ended July 17, 2009. The gains came after a bruising end to the second quarter, with the Dow falling 10% and the Standard & Poor's 500-stock index sliding 12% as concerns about the possibility of a slowdown in U.S. growth accelerated.

The bounce-back has largely come in the absence of fresh upbeat economic or corporate news and represents more a tempering of some of the pessimism that marked the end of the quarter. A lack of negative news out of Europe—along with more details about the stress tests of European banks—also buoyed stocks.

Alcoa was the Dow's best performer of the week, gaining 9.4% ahead of its second-quarter earnings report Monday, which marks the official start of the reporting season. Other stocks closely tied to the global growth cycle also fared well, with Caterpillar up 9.3% for the week.

Second-quarter profits are expected to increase 27% from a year ago, according to Thomson Reuters. [I’m not sure if this refers to the S&P 500 or some other universe of stocks—it’s probably the former.] The S&P 500 is expected to post 9% revenue growth year-on-year, after a 11.2% increase in the first quarter.

"My hope is the earnings will improve the psyche of the individual investor," said Roy Williams, chief executive of Prestige Wealth Management. "We do face challenges, and we're going to have a lot of volatility, but ... the economy is continuing to grow."

The S&P 500 added 7.71 points or 0.7% [on Friday] to close at 1077.96. The index also gained over 5% for the week, its strongest performance in nearly a year with all of its sectors in the black.

The Nasdaq Composite added 21.05, or 0.97%, to 2196.45, bolstered by a 2.4% jump in Google after the Chinese government renewed a license it needed to continue using its Chinese Web address.

There are signs however, of a lack of conviction in the rally with continued concerns about whether companies can grow revenue as well as profits and drive [?—this looks like a copy-editing goof].

New York Stock Exchange Composite volume Friday was the lowest of the year, while volume for the week was lower than average. Turnover on days of large declines in the market tends to be accompanied by much higher volume.‹

[DewDiligence]

Broad Rally Caps Fourth Consecutive Up Week

http://online.wsj.com/article/SB10001424052748704523604575511423909581314.html

›SEPTEMBER 24, 2010, 5:13 P.M. ET
By DONNA KARDOS YESALAVICH

U.S. stocks rose sharply, ending their fourth-straight positive week on a strong note as signs of stabilization in durable goods and housing boosted investors' appetite for risk.

The Dow Jones Industrial Average advanced 197.84 points, or 1.9%, to 10860.26, its biggest one-day rise since Sept. 1. All 30 of the measure's components rose, led by a 4.6% jump in Caterpillar, a 3.9% climb in Alcoa and a 3.3% increase in Bank of America. The increase in Caterpillar alone accounted for 26 points, or 13%, of the Dow's gain.

The Dow rose 2.4% this week, extending its winning streak to a fourth week. The measure hasn't had such a long weekly positive run since an eight-week advance that ended in April.

In addition, the Dow is up 8.4% for the month, on pace for its biggest September gain since 1939 and the fifth-best September in the Dow's history. The measure is now trading at its highest point since May.

The Nasdaq Composite added 54.14, or 2.3%, to 2381.22. The Standard & Poor's 500-stock index rose 23.84, or 2.1%, to 1148.67, with all sectors in positive territory. The industrial and financial sectors led the gains.

Stocks have sprung back into rally mode, as investors look at revisions to summer data suggesting August's concerns may have been overblown. Also, gold crosses the $1,300 threshold. Donna Kardos Yesalavich, Anna Raff and Paul Vigna discuss.

New-home sales were unchanged from July and the lack of a drop, combined with other readings on housing this week that topped expectations, provided relief to investors who had been fearful of further deterioration. The durable-goods data showed gains in machinery, computers and fabricated-metal products, while a barometer of capital spending by businesses rose.

"That's telling you the industrial activity here in the U.S. is continuing to be strong, we're not falling off a cliff," said Gary Flam, portfolio manager at Bel Air Investment Advisors. "That's been true of a lot of the data we've been getting in September, it's telling us August was a moderation, not a complete reversal of the trend."

Overseas, the market was boosted by an unexpected rise in the Ifo index in Germany, a gauge of business sentiment. That helped ease near-term worries over a possible growth slowdown in Europe's biggest economy.

The euro climbed against the dollar in response, rising to $1.3492. The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, fell 0.9%. Crude-oil futures advanced above $76 a barrel, and gold futures traded at a fresh record high above $1,300 an ounce before settling slightly below that threshold.

The shift toward riskier assets such as stocks and commodities coincided with a move out of the safety of Treasurys, lifting the yield on the 10-year note to 2.61%.

"So many people were moving their money into bonds that it's a natural when you get too much excitement about one asset class the other asset class will start to run," said Barry James, president and portfolio manager at the James Advantage funds. "It can really push the market a good deal."

Among stocks in focus, KB Home gained 3.4%. The home builder's fiscal third-quarter loss narrowed significantly on sharply lower write-downs, while orders declined again following the expiration of a federal tax credit. Deliveries rose, as did the average selling price of a home.‹

[DewDiligence]

S&P 500 Edges Higher; DJIA Tops 11K

http://online.wsj.com/article/SB10001424052748704657304575539592465679482.html

›By STEVEN RUSSOLILLO
OCTOBER 8, 2010, 4:19 P.M. ET

NEW YORK—The Dow Jones Industrial Average closed above 11000 on Friday for the first time since May as a bleak jobs report boosted expectations that the Federal Reserve will move to stimulate economic growth.

The blue-chip index closed up 58 points, or 0.5%, to 11006, closing above the 11000 level for the first time since May 3, just days before the May 6 "flash crash." The Dow gained 1.6% this week and is now up 5.5% year-to-date.

Alcoa was the Dow's biggest gainer, surging 5.7% after kicking off earnings season late Thursday with results that exceeded analysts' expectations. The company also lifted its forecast for global aluminum demand in 2010. Caterpillar jumped 2.1%, Walt Disney rose 1.8% and Procter & Gamble gained 1.7% to help power the Dow's gains.

The technology-heavy Nasdaq Composite rose 0.8% to 2402, adding 1.3% this week. The Standard & Poor's 500-stock index gained 0.6% to 1165, with the materials and consumer discretionary sectors leading the way. The S&P 500 rose 1.7% this week and is now up 4.5% for 2010.

The jobs report illustrates a vulnerable economy, and that will weigh on Fed officials mulling intervention. Meanwhile, currencies will definitely be a topic when the IMF meets this weekend. Eduardo Kaplan, John Shipman and Paul Vigna discuss.

The stock market's gains came after the closely watched nonfarm-payrolls report showed a net 95,000 workers lost their jobs in September, a steeper-than-expected decline. The private sector added 64,000 jobs, while the unemployment rate, which is calculated with a separate household survey, remained unchanged at 9.6% in September.

Friday's jobs report served as another reminder that the U.S. labor market remains in the doldrums 15 months after the recession officially ended. But investors hoped Friday that increases the odds that the Fed will take new steps to jumpstart the economy at its next meeting on Nov. 3 by purchasing more Treasurys, known as quantitative easing or "QE2."

"It always makes me a little nervous when it seems like the market gets focused on one variable," said John Apruzzese, chief investment officer of Evercore Wealth Management. "It seems to be completely focused on QE2, so negative news is good because it makes it more likely the Fed will do it." That's a bit concerning, he said.

"Looking longer term, the QE is not a panacea—if it doesn't work, then we're going to be in serious trouble."

St. Louis Federal Reserve Bank President James Bullard said Friday that the Fed would face a difficult decision on whether to begin another round of asset purchases. "The economy has slowed, but it hasn't slowed so much," he said, adding that he would go into the meeting "with an open mind."

Treasurys surged, with the yield on the benchmark 10-year note sinking to 2.39%. Gold rose, while oil registered modest gains.

The dollar weakened against its major rivals. It fell to a series of 15-year lows against the yen, weakening as far as 81.72 yen. The U.S. Dollar Index, which measures the greenback against a basket of six currencies, fell 0.2%.‹

[DewDiligence]

[OT]—Today may have been the best day ever in the aggregate for
the names in the My Stocks list of my iHub profile page. A partial list:

BBL +7%
CLB +3%
CLF +5%
CUB +4%
HES +4%
MNTA +4%
MON +6%
PCL +4%
VALE +4%
WFMI +15% (earnings rpt yesterday)

[DewDiligence]

Stocks Attain Highest Level Since Lehman Collapse

[The June 2010 front-page story in #msg-51844154 was a great contrary indicator.]

http://online.wsj.com/article/SB10001424052748703805704575593970264417474.html

›NOVEMBER 4, 2010, 4:23 P.M. ET
By STEVEN RUSSOLILLO

NEW YORK—Stocks rallied Thursday to their highest level since September 2008 as investors applauded the Federal Reserve's latest effort to stimulate the struggling economy.

From stocks to bonds to gold to cotton, assets are spiking higher on the heels of the Fed's $600 billion Treasury-buying binge. But the program has one big blind spot: the jobs market. Deborah Blumberg, Kathleen Madigan and Paul Vigna report.

The Dow Jones Industrial Average closed up 219.71 points, or 1.96%, to 11434.84, its highest closing level since just before Lehman Brothers collapsed. Dow components Bank of America, JPMorgan and Caterpillar fueled the blue chips higher.

The Standard & Poor's 500-stock index jumped 23.09 points, or 1.93%, to 1221.05. Financials were the S&P 500's biggest gaining sector after The Wall Street Journal reported the Federal Reserve is expected soon to start allowing healthy banks with strong capital levels to increase their dividend payments.

The technology-heavy Nasdaq Composite gained 37.07 points, or 1.46%, to 2577.34.

Investors pushed stocks higher as they digested the Fed's plans, announced on Wednesday, to purchase an additional $600 billion of longer-term Treasury securities by June in a second round of quantitative easing, dubbed QE2. The central bank also will keep reinvesting principal payments from its securities holdings.

"I'm a little surprised that there wasn't a 'sell the news' reaction, but people are clearly relieved at the size of the quantitative easing package," said Ben Halliburton, chief investment officer at Tradition Capital Management. "Although [quantitative easing] is good for asset prices, the reality is it will likely have little impact on the employment picture. Basically we've had a recovery in stocks and corporate profits, but it still hasn't trickled into jobs or small businesses."

On the employment front, initial jobless claims jumped back above the 450,000 level, suggesting continued weakness in the labor market. But U.S. productivity bounced back in the third quarter, rising at a 1.9% annual rate, exceeding economists' expectations.

Investors are gearing up for the October nonfarm payrolls report, due Friday morning. But market participants don't expect the monthly jobs report to have a major effect on the market.

"Unless it's something bizarre I just don't see the jobs report having a major impact one way or the other," said Barry James, president and portfolio manager at the James Advantage funds.

In the aftermath of the Fed's announcement, investors rushed into a plethora of asset classes while the dollar continued sinking. Demand for U.S. Treasurys rose, pushing the yields for the two-year and five-year notes down to record lows. The yield on the benchmark 10-year note dropped to 2.48%.

Commodities also posted strong gains as the dollar weakened, continuing a trend seen over the last few months. Gold prices set a fresh record Thursday as investors flocked to the safety of the precious metal amid escalating inflation and currency worries. Meanwhile, crude oil touched a fresh six-month high and settled above $86 a barrel.

"The Fed has signaled this move for some time now and no one wants to get on the wrong side of the Fed," said Rex Macey, chief investment officer at Wilmington Trust.

In contrast, the greenback slumped against its major rivals. The U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, fell 0.7%. The euro gained strength against the dollar, trading recently at $1.4212, up from $1.4121 late Wednesday in New York.

Investors analyzed a mixed bag of October same-store sales reports. Retailers last month set the stage for a fiercely competitive Christmas, with price wars, promotions and competitive positioning spurring most of the sales gains.

Macy's, Saks and Nordstrom posted same-store sales figures that exceeded analysts expectations. But Aeropostale, Big Lots, Hot Topic registered disappointing results. Macy's jumped $1.59, or 6.6%, to $25.56, while Big Lots slumped $2.15, or 6.8%, to $29.26.

Among other stocks in focus, Potash Corp. of Saskatchewan fell 2.6% after the Canadian government rejected BHP Billiton's $38.6 billion hostile bid for it, but gave the Anglo-Australian miner another 30 days to try to convince the government of its case.

Time Warner Cable's third-quarter earnings rose 34%, beating analysts' estimates, as revenue increased, but the company lost subscribers. Shares hit a fresh 52-week high and finished up $2.67, or 4.5%, to $62.33.

DirecTV Group's third-quarter earnings jumped 31% from a year ago as revenue rose and the company added more subscribers than a year earlier. Earnings were in line with analysts expectations, but shares fell $1.59, or 3.6%, to $42.59.‹

[DewDiligence]

It’s a Good Time to Overweight Stocks

[This is nominally an interview of Federated Investors’ CIO, Stephen Auth, by Forbes magazine, but it’s more like a monologue since the interviewer contributes nothing of consequence. Auth is bullish on multinational companies that are beneficiaries of The Global Demographic Tailwind, although he doesn’t say so in so many words.]

http://www.forbes.com/2010/11/23/steve-auth-brazil-mcdonalds-dupont-intelligent-investing.html

›11.23.10

Stephen Auth: At Federated, we're still optimistic on equities. We've been recommending equity overweights since the spring of '09. And we think the forces are still in place for equities to climb the wall of worry higher. We have a 12 to 18 month target of 1,350 on the S&P.

…In terms of the economic backdrop, we're firmly in the camp that we're in a soft patch, not a double dip. We think the soft patch in what had been a pretty strong recovery to that point, had to do with some of the natural forces that occur after an initial inventory rebuilding cycle.

And then, combined with that, a lot of environmental uncertainty that kind of coalesced together in the spring and summer 2010. They caused flares in the economy causing investors to hit the pause button. The things that we would point to are the Euro crisis making people feel like, "Oh my God, is this Lehman Two happening?" Also, the political backdrop in Washington got pretty negative.

You had three very large sectors of the U.S. economy all simultaneously threatened with some sort of regulatory overhaul. I'm referring to energy with cap and trade and the Gulf oil crisis, health care with the health care bill, and financial services with the financial services bill. So you had up to 40% of our economy just sort of go on pause, waiting to see what the new landscape was going to be.

And then we decided not to pass any forward tax legislation. Everyone had expected the resolution of the Bush tax cuts would have been achieved sometime around midyear, 2010. So, a lot of small businesses that are affected by those high bracket tax rates, even if they weren't in health care, energy, or financial services, also hit the pause button, because they weren't sure what their future after tax returns would be.

And then you had the election coming up. You had a lot of big capitalist businesses being bashed by the Obama administration as a way of perhaps garnering votes, or whatever. So, a very, very negative backdrop for equities. That said, we think we're through the worst of all that. Our view on the election is that it was an exclamation point from the American people that they don't want a government-led solution to running the economy.

They've kind of firmly voted for capitalism, if you will. So the general tendency or direction of the economy, which had been leaning almost socialist by midsummer, seems to be heading back towards a more investor/business-friendly environment. We think that's important as a general matter of tone.

The health care bill, at least we know what it is. Some of the worst aspects of it are likely to get rolled back now, with the Republican majorities in the House. The financial services regulation, we now knows what the landscape is. Cap and trade is pretty much off the table post the election. And it looks like some compromise on the tax bill is likely. And that that's likely to result in a full extension, which I think people will take positively.

The political backdrop is not all clear right now. But it's gotten a lot better. On top of that, you have the Fed announcing a second round of quantitative easing. We're in the minority on this in terms of feeling that that's a positive thing.

We look out at the economy after what's really been a three-year recession. We had called the recession as having started back in the fourth quarter of '07. At the time, people didn't understand what we were talking about. But, we've been sort of in this recession for three years now. We think we're coming out of it now.

As we look at it, we haven't really built a house in three years in this country. We're running auto production at 10 million units, which is basically just barely replacing 4% of the fleet or so--the cars that simply stop working or are totaled each year. We haven't really built any new autos for discretionary purchase. In corporate America, investment has been very, very low for an extended period. Cash is piling up on corporate balance sheets. Jobs have been severely cut back. There is significant pent up hiring out there. Consumers haven't spent a dime in three years and are starting to get anxious about spending again. We're seeing some signs of that now.

And the de-leveraging process, which is still going on, we think is about half over. In other de-leveraging situations, on average the economy starts to grow again once you hit the halfway point. So we think there's a lot of dry tinder out on the forest floor, if you will. We sort of have this image of the Fed, with QE2 sort of tossing lit matches into that tinder. And they pretty much told us, they're going to keep tossing lit matches until the tinder lights. So, I'm kind of thinking the tinder's going to light.

…on top of that, you've got equity valuations that are very attractive on an historic basis, especially relative to bonds. Sentiment, on a short-term basis, has gotten more positive--although that's all turned negative in the last week anyway. And the long-term sentiment is very negative. As a contrarian signal, this is positive.

All in all, it's a very attractive backdrop for investing in equities here. So we've been recommending to our clients a significant equity overweight relative to whatever their neutral point is. In our models, we're telling people to be 80% of max overweight equities, whatever your max position is. So we're pretty bullish.

Forbes: What specific equities are you looking at?

Auth: Well, we think in the U.S. that there's still room on the cyclical side of the economy, point one. So something more cyclical, sort of the industrial names, even discretionary stocks. We certainly like big, U.S. companies with large international positions, because we see international growth as being significantly better than U.S. growth. The S&P 500 as a total has over 40% of its earnings from overseas.

…We also like companies with high dividend yields, because we think investors, as they come back into the market, are going to be looking for companies where they can get some of the return in the form of a dividend.

Forbes: So what specific names do you think are places to play this as an individual investor?

Auth: Well, I picked five names here which would represent a nice diversified portfolio that meets a lot of these themes. These are names that at least one of our equity teams at Federated like and are invested in. Of course, I need to caveat that we are running active portfolios and our views on any given name can change as news and fundamentals shift over time.

The first is McDonald's. This big U.S. company is one of the most well managed restaurant businesses in the world. It's got over a 3% dividend yield on it. We think it's got solid growth ahead. It's trading at about a 15 times multiple, which we think is very reasonable. It's got about two thirds of its profits coming from overseas. So McDonald's is sort of almost like an international company, but with a U.S. management team. And so you know, as long as you have an okay environment here in the U.S., we think they can continue to put up some pretty good numbers, and with a nice, stable return.

Forbes: Sounds like it combines a number of things that make you positive in your outlook.

Auth: Yeah, it's very consistent with that theme. Another stock we like is JPMorgan. This is probably the most successful U.S. financial services company. It's got one of the best balances sheets amongst all the banks. It's got about a 9.5% tier one ratio. And that's probably somewhat understated because they came into the crisis so strong. They actually probably have over-reserved for losses.

And as the economy gets better, some of those reserves should get released back into the balance sheet. Importantly, during the crisis, because they were in a strong position, they were able to buy a lot of assets on the cheap. You know, Bear Stearns and WaMu, basically for nothing. And those assets, in the recovery, should generate earnings. That could bring JPMorgan to earn above what it made in the last cycle, maybe as high as $6 a share, eventually. The current valuation of stock is at about six and a half times that. So we think it's a very attractive situation. By the way, it's got about a third of its deposits outside the U.S. We think it'll be one of the first U.S. banks to initiate a dividend sometime next year. So you'll have that play working for you also. We think that's a nice, solid situation.

The third one I have is DuPont. This is a little more of a cyclical story. But we think the economy's strength, especially globally, is underappreciated. Not all of their products are ones where their competitive position is unique where they have strong pricing power, but they're certainly moving in that direction.

Their R&D effort is very seriously targeted at things like fossil fuels and food--agriculture. They've been gaining market share in the agricultural area particularly against Monsanto. We think it's important to have exposure in these areas because a byproduct of QE2 is likely to be some inflation in the commodity space. DuPont gives you exposure to that space with products that we think are competitive enough that they can enjoy the price rises, should inflation rear its ugly head. You want to have some inflation hedge in your portfolio, and I think DuPont is one of those. It's also got 30% of its revenues from emerging markets. So, we like that.

Two other stocks I have are international names. I don't know if you like international names or not, but one is Hypermarcas. It's a big Brazilian consumer goods company. It's sort of a combination of Proctor and Gamble and Johnson and Johnson in Brazil 20 years ago.

Forbes: How is it purchased? Has it got ADRs or what?

Auth: The ADR is HYPMY… Brazil is one of those economies that's really growing great guns right now. It's got a lot of things going for it, a very young population, consumption is improving dramatically. The U.S. consumer may have gone ex-growth, but the Brazilian consumer is sort of where the U.S. consumer was 20 years ago. And this is a big consumer products company. Investors could also buy a Brazilian ETF, which would give them exposure there. We like Brazil.

The other stock you may have a similar issue with but I'll just mention it quickly, HSBC, which is one of the largest banks in the world. It's got 50% of its earnings in Asia. And that's trading at 1.2 times price to book. We think it's very, very attractive, and it's got growth in front of it because of the big Asian exposure. So we think that's sort of like the JPMorgan of Asia, if you will.‹

[DewDiligence]

S&P 500 Gains 13% in 2010

[The S&P 500’s cumulative gain since the Mar 2009 low is a whopping 88%, but the healthcare sector has been a laggard.]

http://online.wsj.com/article/SB10001424052748704543604576053433868839842.html

›DECEMBER 31, 2010, 4:19 P.M. ET
By DONNA KARDOS YESALAVICH

NEW YORK—U.S. stocks ended 2010 with a small gain after failing to find the strength to set a new closing high for the year.

The Dow Jones Industrial Average edged up a preliminary 7.80 points, or 0.1%, to 11577.51, leaving it shy of 11585.38, its highest close since August 2008. Even so, it was the blue-chip's second straight annual increase, with almost half of the 2010 climb having come this month.

The Nasdaq Composite shed 10.11 points to 2652.87 but ended the year up 17%. The Standard & Poor's 500 index shed 1.06 points to 1256.82 but ended the year up 13%.

While 2010 was ultimately positive for stocks, it was anything but smooth as investors were spooked by events such as the May 6 "flash crash" and ongoing worries over the financial health of several euro-zone governments that resulted in rescues for Greece and Ireland. A new $600 billion stimulus plan from the Federal Reserve and improving economic data helped the market recover from a summer slump, with stocks ultimately reaching highs not seen since before the fall of Lehman Brothers in 2008.

"The year, it was kind of like a long road trip," said Lawrence Creatura, manager of the Federated Clover Small Value Fund. "It wasn't always comfortable, but the destination was worth it."

The consumer-discretionary sector was the best-performing category in the S&P 500, and the healthcare and utilities sectors lagged with gains of around 1% each. [The energy and “materials” sectors also had good years.] Small-capitalization stocks handily outperformed large-cap stocks.‹

[DewDiligence]

Russell 2000 Closes at 4-Year High

http://online.wsj.com/article/SB10001424052748703806304576232232489611802.html

›Deal Optimism Boosts Stocks

MARCH 30, 2011, 4:21 P.M. ET
By BRENDAN CONWAY And KRISTINA PETERSON

NEW YORK—Telecommunications stocks led U.S. indexes higher Wednesday, as optimism over deal activity added to confidence jobs data would continue pointing to a strengthening labor market.

The Dow Jones Industrial Average gained 71.60 points, or 0.6%, to 12350.61, its eighth gain in ten trading days. The measure was led by AT&T, which gained 2.2% after Chief Executive Randall Stephenson said he expects some divestitures as his company pursues a $39 billion buyout of T-Mobile USA from Deutsche Telekom.

The Standard & Poor's 500-stock index rose 8.82, or 0.7%, to 1328.26 [just a hair below the 2011 high]. The Nasdaq Composite gained 19.90, or 0.7%, to 2776.79.

The Russell 2000 small-capitalization index finished at its highest close of the year and its highest since October 2007, gaining 10.88, or 1.3%, to finish at 840.37.

"The evidence continues to mount that the economy is in recovery mode," said Jack McPherson, portfolio manager at Eagle Small Cap Core Value Fund, noting that small-cap stocks tend to outperform their larger counterparts coming out of a recession.

Investors taking their money out of fixed income to wade into stocks may also be boosting small-caps, he said. Still, at a time of global fragility, it is somewhat surprising people are willing to invest in riskier assets, he said. With their lower cash reserves and higher volatility, small-cap stocks are generally considered riskier than their larger counterparts.

"Given the geopolitical backdrop, given what's going on in Europe, you'd think aversion to risk might be higher," Mr. McPherson said.

Stocks continue to break through technical levels as central banks continue to pour money into the economy. Also, ADP sees strong U.S. jobs growth in March. Mike Casey, John Shipman and Paul Vigna report.

In other deal news, Valeant Pharmaceuticals made a $5.7 billion bid for biopharmaceutical group Cephalon. Valeant CEO J. Michael Pearson said on a conference call that he was open to giving a "bump" to the offer if the due-diligence process reveals more value. Cephalon's stock surged 28%, and Valeant's rose 13%. [It’s somewhat surprising that VRX was up so much.]

Investors said the market was also looking ahead with more confidence to Friday's key government jobs report, following encouraging data Wednesday morning.

Automatic Data Processing said U.S. private-sector payrolls increased by 201,000 jobs in March, just below the expected 205,000. Half the gains in the ADP report came from small businesses. The figure was "consistent with a gradual if uneven decline in the employment rate," the report said.

"The market's showing its hand very clearly here: They want this number Friday to be through the roof," plus revisions to previous figures, Todd Colvin, vice president at MF Global said. "The jobs number is really what's driving the trade here."

Among stocks in focus, Visa added 2.8% and Mastercard gained 0.8% as expectations grew that rules limiting debit-card swipe fees will be delayed. Federal Reserve Chairman Ben Bernanke sent a letter to Congress on Tuesday acknowledging the Fed was unlikely to meet an April 21 deadline to set final rules for the fees.

Mattress maker Sealy sank 3.6% after swinging to a fiscal first-quarter loss; the result fell short of expectations. The company also reported lower sales volumes and prices on Posturepedic products ahead of the launch of a new line.

Oxford Industries jumped 34% after the apparel company's fiscal fourth-quarter earnings rose sharply. The company also announced an 18% increase to its quarterly dividend.

BlackRock is slated to replace Genzyme in the S&P 500 index, as the biotechnology company is set to be acquired, Standard & Poor's said Tuesday. Shares in the money manager, the world's biggest, rose 6.6%.

Salesforce.com jumped 5.6% after agreeing to buy monitoring firm Radian6 for about $326 million in stock and cash in its largest deal ever, continuing an aggressive push to keep its software platform apace with social-media trends.

MicroStrategy Inc. added 8.7% after saying it has been selected by Groupon to analyze the company's daily deals, examining the types of goods and services purchased, discounts offered, locations and purchaser demographics.‹

[DewDiligence]

Broad Rally Lifts Stocks

[The S&P 500 is just 1% below its 2011 high reached in February and is 16% below its all-time high in Oct 2007.]

http://online.wsj.com/article/SB10001424052748704658704576274492176602176.html

›APRIL 20, 2011, 7:59 P.M. ET
By JONATHAN CHENG

Strong earnings from the technology sector and a bigger-than-expected rise in existing-home sales sent the Dow Jones Industrial Average to a nearly three-year high Wednesday. Joe Bel Bruno has details.

Investors again demonstrated the power of positive thinking on Wednesday, driving U.S. stocks near three-year highs and snapping up growth-sensitive assets like copper and the Australian dollar.

After a shaky start to the week, when Standard & Poor's issued a warning on the U.S. credit rating, stocks have rebounded. The Dow Jones Industrial Average soared 186.79 points, or 1.52%, to finish at 12453.54, its highest close in nearly three years. The blue-chip index is now 12% from its all-time high.

Stocks were also up in Europe and Asia. Much of the optimism on Wednesday was driven by strong earnings from U.S. companies including Intel and Yahoo. That helped refocus investors away from worries about the U.S. debt burden. As well, gold again rose above $1,500 an ounce before drifting back to close at a new record $1,498.30. Oil rose 2.9% and the Australian dollar reached a fresh record, trading at $1.0646 late Wednesday.

Investors have grown increasingly confident in the global economic recovery, despite a series of market-rattling events that has tested investors' nerves. The gains have defied skeptics, who have for months been declaring a correction is nigh.

"In the background, there's a strong tide at work," said David Kelly, chief market strategist for J.P. Morgan Funds. "Two years ago, there was an overreaction to the crisis—companies were laying off too many workers, investors were moving too much into cash and bonds. Now, there's a growing belief the U.S. economy is on the mend, and a lot of people need to reposition back to normal."

On Wednesday, investors sold safe-haven assets including Treasury bonds and the dollar, which sank to new multiyear lows against its rivals. The euro posted its biggest one-day gain in three months, rising to $1.4511, a 15-month high. The U.S. Dollar Index, which measures the greenback against a basket of six other currencies, is now at its lowest point since November 2009.

First-quarter corporate earnings on average are on track to beat analysts' estimates, following a pattern of the past several quarters.

Intel, the largest maker of computer chips, late on Tuesday issued a strong forecast, pushing its stock up 7.8%. [INTC said it had the “best product mix” in many quarters due to robust growth in emerging markets (#msg-62251110).] The earnings helped lift technology stocks globally, helping South Korean stocks reach a fresh record. The Nasdaq Composite posted its biggest one-day point gain since September, gaining 57.54 points, or 2.1%, to 2802.51.

After the market close on Wednesday, Apple released earnings that topped analysts' revenue and profit estimates. The stock jumped 4.2% in after-hours trading, adding to the day's 1.4% advance.

Many multinationals, including Johnson & Johnson and Citigroup, reported robust gains in their international markets.

"There's been an enormous increase in global consumer spending—you can see that in Intel's business, Citigroup's business and Johnson & Johnson's business," said Burt White, chief investment officer at LPL Financial in Boston. It's been off-the-chart good."

The specter of rising commodity prices hasn't factored prominently in corporate outlooks, providing further solace to investors concerned about input-price pressures and profit margins.

Global giants in manufacturing and heavy industry fared particularly well on Wednesday. Caterpillar surged 2.5%, Boeing added 2.6%, 3M gained 2.1% and United Technologies rose 4.3%.

Major U.S. stock indexes are now in positive territory for the week and the month. On Monday, the Dow fell nearly 250 points in intraday trading after S&P lowered its outlook on U.S. government debt, underscoring Washington's fiscal bind.

"So far this week, the best investment has been a neck brace," said Alan Gayle, senior investment strategist with RidgeWorth Investments.

Both Tuesday and Wednesday, however, saw strong data points from the U.S. housing sector, a moribund corner of the economy that many investors had already written off.

"When I think about what's really holding the U.S. economy back, it's confidence—and housing is absolutely the center of that," said Mr. Kelly of J.P. Morgan. "In the past two days, we've had better-than-expected numbers on housing starts and existing home sales, and that's why people are feeling better about growth in the U.S."

Mr. Gayle of RidgeWorth said the S&P debt warning is hurting the dollar, which in turn has boosted prices for commodities like copper, silver, gold and oil—all of which are priced in dollars.

Amid optimism about global growth, crude oil mounted its biggest one-day advance since the escalation of Libyan hostilities last month, finishing 2.9% higher at $111.45 a barrel. The surge lifted oil producers, which saw their stocks soar.

Copper jumped 2.6% and silver reached a new 31-year high.‹

[DewDiligence]

Russell 2000 Closes at All-Time High

[Moreover, the S&P 500 is up 104% from its Mar 2009 low. (Has anyone heard from Noriel Roubini lately?)]

http://online.wsj.com/article/SB10001424052748704187604576288702683581090.html

›APRIL 27, 2011, 4:17 P.M. ET
By BRENDAN CONWAY

NEW YORK—Stock indexes surged to fresh multiyear highs after Federal Reserve Chairman Ben Bernanke said the central bank would continue to reinvest proceeds from maturing securities and added that there was no specific time frame to begin tightening interest rates.

The Dow Jones Industrial Average leapt 95.59 points, or 0.8%, to 12690.96, while the Standard & Poor's 500-stock index gained 8.42 points, or 0.6%, to 1355.66. The Nasdaq Composite added 22.34 points, or 0.8%, to 2869.88. The small-capitalization Russell 2000 stock index closed at an all-time high as it rose 0.6% to 858.31.

Investors said the Federal Reserve chairman's remarks revealed the goal of keeping policy easing steady and interest rates accommodative. Stocks spent the morning in a holding pattern until the Federal Reserve said midday that it would end its $600 billion program of bond buying, known as quantitative easing, on schedule at the end of June. The central bank also signaled it was in no rush to raise interest rates. Stocks pushed higher.

"Bernanke made it really clear that the extraordinary monetary stimulus is not ending with [the latest bond buying], because the size of the Fed's balance sheet is going to remain constant," said Stephen Cucchiaro, chief investment officer of Windhaven Investment Management. "The markets are loving these clarifications."

In deal news, Johnson & Johnson added 1% after the company said it was buying Swiss medical-device maker Synthes for $21.3 billion in cash and stock. CenturyLink shed 0.4% after pushing further into cloud computing with an agreement to buy Savvis for $2.5 billion. Savvis's stock rose 8.8%.

Among companies reporting earnings, a jump in first-quarter profit at ratings firm Moody's helped the company beat analyst expectations handily. Shares gained 6.7%.

Corning rose 2.2% after the company's sales increased more than analysts had expected, and first-quarter earnings dropped less than anticipated.

Ericsson's U.S.-listed shares jumped 13% after the world's largest maker of network equipment posted stronger-than-expected gains in sales and profits.

In economic data, stocks got some support from a broad-based surge in U.S. durable-goods orders during March, signaling economic strength in the face of rising oil prices.‹

[DewDiligence]

These kinds of headlines in the WSJ (and other mainstream publications) make me somewhat more confident that the bull market in stocks will continue:

http://online.wsj.com/article/SB10000872396390443890304578010500821461868.html

Despite Gains, Many Flee Stock Market

Even as stock indexes have doubled in value since the market low in March 2009, investors have yanked a net $138 billion from mutual funds and exchange-traded funds that invest in U.S. stocks, according to the Investment Company Institute, a mutual-fund trade group. Investors over the same period put $1 trillion into bond funds, a traditionally lower yielding but safer investment.
It marks the first time since 1981 that investors have pulled money from U.S.-stock funds for more than a year at a time.

Compare the above to the article from 2010 in #msg-51844154.