Daily State of the Markets 02/01: No News Is Good News For Now

Good morning. Sometimes no news is good news and from our perspective, such was the case on Monday. Sellers who had fled the market en masse on Friday for fear of the headlines that might come out of Egypt over the weekend seemed to return to the game in a better mood. More accurately, it appeared that some of the shorts decided to run for cover on Monday in response to another batch of decent economic news and the fact that there was no real escalation of the situation in the Middle East.

Frankly, Monday's bounce higher was to be expected. Without the Middle East going up in flames or the wrong political faction forcibly taking over, those looking to avoid the weekend headline risk probably needed to either reverse their short positions or put some long positions back on. Therefore, the initial sigh-of-relief pop to the upside wasn't much of a surprise.

Another contributing factor to Friday's big decline was the implementation of those fancy computer programmed trades. And although the market indices finished higher on Monday, those same programs were seen at work again in the early going. Word is that the fast money types in hedgieland had seen enough of the day-in and day-out moves higher and came into Monday leaning to the dark side. So after the opening batch of green screens, the computers went to work.

Once again the bears got a hand from their friends over at the NASDAQ in the early going as the news that Intel had discovered a problem with one of their chipsets created another program-selling opportunity. Imagine the programs that were triggered when the words "Intel," "problem," "shares halted," and "reduced revenues" hit the tape. Even a beginner program trader probably knew what to do with that setup.

Thus, it wasn't long before the early rebound was erased and the indices were back in the red. But with the indices at the lows of the days and threatening to break down - an event that would likely have brought in another seller or two - the bulls somehow got it together and staged a rebound. And for a while at least, it looked like the computers had switched sides.

However, from a big-picture perspective, the bulls' effort was unconvincing at best. While there was a nice run into the close, it did not appear to possess the oomph required to put the market back on its one-way street. And as such we'll bet that that those same bears that were anxious to fade the open yesterday are still out there waiting for another opportunity.

Thus, the key thing to watch this week will be how the market acts once it returns to those big, round numbers that, up until Friday, were the focal point. In other words, it is one thing for the bulls to produce a bounce from an over-shorted, computer- and headline-driven Friday. But it is another thing entirely to break on through to the other side. It is a safe bet that if the bears are indeed still hanging around looking for an opportunity that they might find it at last week's lines in the sand.

To be sure, we are not convinced that the situation in Egypt is or will be a driver for the market action. But for now at least, no news appears to be good news.

Turning to this morning... The bulls are attempting to return to form this morning in response to solid the PMI reports out of Europe and green numbers from the major foreign markets.

On the Economic front... We don't have any economic news to review in the U.S. but we will ge reports on Construction Spending and the ISM Manufacturing at 10:00 am eastern.

Thought for the day: Are you feeling inspired today?

Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell...

* Major Foreign Markets:
o Australia: +0.04%
o Shanghai: +0.31%
o Hong Kong: +0.15%
o Japan: +0.36%
o France: +0.93%
o Germany: +0.91%
o London: +0.91%

* Crude Oil Futures: -$0.54 to $91.65
* Gold: +$5.80 to $1340.30
* Dollar: higher against the Yen, lower vs Pound and Euro
* 10-Year Bond Yield: Currently trading at 3.437%

* Stocks Futures Ahead of Open in U.S. (relative to fair value):
o S&P 500: +7.84
o Dow Jones Industrial Average: +50
o NASDAQ Composite: +15.20

Wall Street Research Summary

Upgrades:

* FMC Corp (NYSE: FMC) - BofA/Merrill
* Men's Wearhouse (NYSE: MW) - Cowen
* McKesson (NYSE: MCK) - Target increased at Deutsche Bank
* ProLogis (NYSE: PLD) - Jefferies
* Albemarle (NYSE: ALB) - JPMorgan
* Valero (NYSE: VLO) - Oppenheimer
* Advanced Micro (NYSE: AMD) - Sterne, Agee

Downgrades:

* JetBlue Airways (Nasdaq: JBLU) - Argus
* Discovery Communications (Nasdaq: DISCA) - Goldman
* Scripps Networks Interactive (NYSE: SNI) - Goldman
* Eagle Materials (NYSE: EXP) - Jefferies
* Petrohawk Energy (NYSE: HK) - Lazard
* Range Resources (NYSE: RRC) - Lazard
* Chesapeake Energy (NYSE: CHK) - Lazard
* Massey Enery (NYSE: MEE) - UBS
* Plum Creek (NYSE: PCL) - UBS

Yesterday's Earnings After the Bell

Anadarko Petroleum APC $0.29 $0.21
C.R. Bard BCR $1.54 $1.48
Baidu BIDU $0.52 $0.45
Eastman Chemical EMN $1.52 $1.19
Hologic HOLX $0.30 $0.28
McKesson MCK $1.12 $1.11
Novellus NOVL $1.03 $0.94
Plum Creek PCL $0.45 $0.44
Qiagen QGEN $0.26 $0.25
Earnings Before The Bell

Archer-Daniels ADM $1.14 $0.78
Biogen Idec BIIB $1.42 $1.23
Bemis BMS $0.49 $0.51
Cummins CMI $1.84 $1.72
Emerson EMR $0.63 $0.65
Lexmark LXK $1.29 $1.11
McGraw-Hill MHP $0.55 $0.53
NiSource NI $0.33 $0.34
Pfizer PFE $0.47 $0.46
UPS UPS $1.08 $1.05

* Report includes items that make comparisons to the consensus estimate questionable

Long positions in stocks mentioned: none

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