The Market Today

The rally continues. Now we know what to do whenever the market stalls—just indict another Bushie. First, it was the Scooter Frogmarch Rally, and now it’s the fellow who dresses like a mafia don. What’s Ed Meese up to these days?
Today, the S&P 500 rose 0.37% and our Buy List added 0.71%. Finally. I was getting tired of trailing the market. Of course, the big news today was that the Dow cracked 11000. This was the first time since before 9/11. According to Bloomberg, the index “had risen above that level a total of 19 separate occasions, all between 1999 and 2001, remaining there an average of 6.7 days before retreating. The longest the Dow stayed above 11,000 was for a period of 24 days starting in August 2000, while it’s held for only one day on five occasions.” Today ends 302 consecutive closes between 10000 and 11000. If USC could fall, so can Dow 11K.
My concern is that some of the Dow’s strength recently has come from General Motors (GM), and that just ain’t gonna last. The real strength in the market today was in the smaller stocks. The Russell 2000 (^RUT)surged over 700 to close at a new all-time high. The S&P 400 Mid-Cap Index (^MID) rose 0.78%, and the Small-Cap 600 Index (^SML) rose 1.11%. Good news for the little guys.
The market’s shift away from mega-caps is one of the most persistent trends of the last few years. Since the S&P 500’s highest close nearly six years ago, the index is down 15.5%. But the S&P 100 (^OEX), the top 100 stocks in the S&P 500, is off by 29.5%. I wouldn’t be surprised if the non-100 of the S&P 500 is at an all-time high. I’ll see if I can find some numbers on that.
What I liked about today’s market is that it was led by financials and consumer goods stocks. Before today, approximately 98.4% of the rally was solely due to Google and gold. OK, I made that number up, but damn…it sure seems that way.
Sixteen of our 20 stocks went up today. The big winner was Respironics (RESP) which added over 4.2%. The stock had slowly drifted lower during much of December, so it was nice to see some gains there. Did anyone notice that Dell (DELL) is back above $31? Good, me too. The stock got to $33ish, pulled back and then bounced off $30. If I was a technician, I would probably have seen it coming. In any event, I still think it’s an excellent buy . Also, Medtronic (MDT) hit a new high today. In October, this was the stock that raised its estimate for 2006, 2007 and 2008. That impresses me.
Tomorrow, Genentech (DNA) will report its earnings. The Street has gone nuts for this stock. Now, it’s at that stage where people may start to cast some doubt its way. For the last several quarters, Genentech has destroyed the Street’s estimate. The current estimate is for 34 cents a share, which is a joke. That’s way too low. There’s no question they’ll beat, but by how much?
I wouldn’t be surprised to Genetech beat by two or three cents a share, and still fall after the earnings report.

Posted by on January 9th, 2006 at 6:52 pm


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