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To: Donald Wennerstrom who wrote (56095)4/28/2012 11:58:24 AM
From: Donald Wennerstrom
2 Recommendations   of 79676
This is the weekly update of the Group and SOXM(SOX) tables in terms of earnings estimates and price changes.

Both the Group and SOXM earnings estimates for both Curr Yr and Nxt Yr were down more than usual this week. For the Curr Yr this caused new interim lows to be set for both the Group and SOXM.

As noted last week, the SOX was down 3 weeks in a row, and that was a rare occurrence. This week, the bounce to a positive gain did occur ending the downward drift.

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To: Donald Wennerstrom who wrote (56096)4/28/2012 12:20:07 PM
From: Return to Sender
5 Recommendations   of 79676
Chart of the Day - Earnings Surge

With first-quarter earnings season well underway (over 65% of S&P 500 corporations have reported), today's chart provides some long-term perspective to the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart illustrates how earnings declined over 92% from its Q3 2007 peak to Q1 2009 low which brought inflation-adjusted earnings to near Great Depression lows. Since its Q1 2009 low, S&P 500 earnings have surged (up an inflation-adjusted 1120%) and currently come in at a level that is well above its dot-com bubble peak and fast approaching its credit bubble peak. It is interesting to note that the original run up in real earnings from Great Depression lows to dot-com highs took over 67 years. The current spike has taken 34 months. In the end, if corporate earnings were to continue to beat expectations (of those that reported so far this quarter, a relatively high 70% have beat expectations), then inflation-adjusted S&P 500 earnings could make new, all-time record highs this year -- a dramatic reversal from three short years ago.

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To: Return to Sender who wrote (56097)4/28/2012 2:20:42 PM
From: Donald Wennerstrom
   of 79676
An interesting chart. From the bottom to the peak has taken 34 months.

<<The current spike has taken 34 months.>>

It would be very interesting to read about the factors that have entered into that performance and contrast that with other segments of the economy that are still struggling.

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To: Donald Wennerstrom who wrote (56098)4/28/2012 2:54:39 PM
From: Return to Sender
3 Recommendations   of 79676
Don, I think it's somewhat obvious that those earnings come from more multinational companies than at any other time in history. In addition a stock like AAPL which has the highest weighting in the S&P 500 also has had huge earnings.

How long can AAPL continue to pile up earnings growth?

It will not last forever. Not that I am suggesting anyone short AAPL. Far from it. I just would not be buying long now. For the most part all I am saying is that S&P 500 earnings at or near all time highs has always proven to be unsustainable in the past.

Note that if you overlaid those high points in earnings in 1999/2000 and Q/3 top in 2007 you would also find past market tops:

For more on where the S&P 500 is now:
The S&P 500 has now bounced 3.05% from its April closing low on the 10th. The index now needs to gain 1.48% to take out its bull market closing high of 1,419.04. Below is an update of our trading range screen for the 30 largest stocks in the S&P 500. The dots indicate where the stock is currently trading, while the end of the tail shows where the stock was trading one week ago. A green dot means the stock has moved higher within its trading range over the last week, while a red dot means the stock has moved lower.

For each stock, the neutral (N) zone represents between one standard deviation above and below its 50-day moving average. The light red shading represents between one and two standard deviations above the 50-day, and vice versa for the light green shading. The dark red shading represents between two and three standard deviations above the 50-day, and vice versa for the dark green shading. Moves into the red shading are considered overbought, while moves into the green shading are considered oversold.

Just 5 of the stocks shown have moved lower within their trading ranges over the last week, while 25 have moved higher. Johnson & Johnson (JNJ), AT&T (T) and Verizon (VZ) have had the biggest moves higher since last Thursday's close.

At the moment, 8 of the 30 largest S&P 500 stocks are in overbought territory, while 4 are oversold. Four stocks are in extreme overbought territory -- AT&T (T), Pfizer (PFE), Coca-Cola (KO) and Verizon (VZ). The 4 oversold stocks are Wal-Mart (WMT) -- which was overbought last week, Cisco (CSCO), McDonald's (MCD) and ConocoPhillips (COP).

Looking at year to date performance, the biggest stock in the S&P 500 (and in the world) -- Apple (AAPL) -- is up the most out of all the stocks listed with a gain of 50.54%. Bank of America (BAC) ranks a close second with a YTD gain of 49.19%, followed by JP Morgan (JPM), Citigroup (C), Microsoft (MSFT) and Wells Fargo (WFC). Google (GOOG) has been the biggest loser out of the 30 biggest stocks so far this year with a decline of 4.44%. McDonald's (MCD) -- which was one of the best performing stocks in 2011 -- is down the second most at -4.43%.


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To: Return to Sender who wrote (56099)4/28/2012 3:33:24 PM
   of 79676
Apple TV coming for this holiday season...

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From: Return to Sender4/28/2012 6:15:34 PM
3 Recommendations   of 79676
Business Cycle & Stock Performance

Because sector funds have a narrow focus, you should be familiar with the factors that may affect the industry in question.

Based on a comprehensive analysis of the relevant facts, you may arrive at a judgment as to what the industry's performance will be like going forward. One technique commonly used by is to monitor the business cycle for clues as to what may be happening in the market.

Business Cycle Basics

By examining empirical evidence, the investor can attempt to create a framework for viewing present and future events as they unfold. There are two key questions the investor may want to ask:

1. Will the historic pattern hold, or will it be altered? To answer that, you'll need to ascertain whether the factors driving today's market are fundamentally unchanged, or whether the situation has evolved incrementally or even been radically changed.

2. Has the market already taken the anticipated future events into account? If the factors driving the industry are the traditional cyclical ones, the market usually will have taken them into account, because they are expected. If the factors represent a new element in the equation, then the market may not be expecting them and may not have adjusted accordingly.

Business Cycle and Relative Stock Performance

The following chart shows a typical business cycle and the points at which various economic sectors tend to outperform the broader market. Click any number in the chart to learn about the cyclical characteristics of a particular industry. Note that at this time the Consumer Non Cyclicals(Staples) and Healthcare Sectors are outperforming. This may be a sign of investor worry or an impending Bear Market. RtS

The chart above shows a typical business cycle and the points at which various economic sectors tend to outperform the broader market. Please note that the chart should be used for illustrative purposes only. The chart is a historical representation of stock performance movements relative to the business cycle and is not intended to convey any current or future economic outlook. Choose a Sector for a detail description of its role in the business cycle.

Source: 2000, Standard and Poor's, a division of McGraw-Hill Companies, based on a study analyzing the differences in market returns of 90 Industries vs the S&P 500 during 10 complete economic cycles from December 1945 - December 1995.

Consumer Non-Cyclicals

Stocks in consumer non-cyclicals (food) and consumer growth industries (cosmetics, tobacco, beverages) tend to experience fairly steady demand and are less sensitive to changes in the business cycle. These stocks typically attract investors when the economic cycle or bull market has matured, or is in the early stages of contraction.

I will use the BP Indices and some of the older Amex Industry Holder ETF's to show these relationships. RtS

Consumer Cyclicals (durable & non-durable)

Stocks in this category include durables and non-durables that are sensitive to interest rates as well as the business cycle. Investors typically seek them out when the economy is in the late stages of contraction.


In general, stocks in this sector move similarly to consumer non-cyclicals. This sector is considered defensive, meaning companies in this sector are generally unaffected by economic fluctuations. The healthcare industry consists of pharmaceutical firms, HMOs, biotechnology firms and medical equipment suppliers. Pharmaceutical companies are affected by competitive market shares, the pace of FDA approvals, patent lives, and the strength of the R&D pipelines. Many biotechnology firms are still in the development stage with their fortunes largely determined by investor perceptions of the relative merits of their R&D pipelines. With future new financing likely to be more difficult to obtain than in the past, strategic alliances between major drug companies and biotech firms are expected to increase.


Stocks in housing-related industries tend to respond well to falling interest rates and are often targeted by investors in the mid to late stages of an economic contraction. Non-mortgage-dependent banks are generally driven by commercial and consumer loan growth, and tend to be favored by investors during the middle of the cycle.


Technology stocks can be cyclical to the degree that they depend on capital spending and business or consumer demand. However, they may also have long-term growth potential as technological products find broader applications and as new technologies are developed. Technology stocks are usually popular during early to mid stages of an economic expansion.

Basic Industry

Profits of basic industries are driven by high utilization of capacity and strong market demand for products. Therefore, their stocks tend to be popular with investors late in an economic expansion. For basic material companies, the global economic picture and supply/demand equation also affect stock price movements.

Capital Goods

Capital spending tends to increase midway through the business cycle, as the economy is heating up and higher demand for products leads companies to expand their production capacity. Demand in global export markets is key for agricultural equipment, industrial machinery, and machine tools.


Railroads and other surface carriers tend to react early to a pickup in the economy. Airlines are subject to cyclical fuel costs, usage versus capacity, and competitive pressures on airfares.


This category includes large integrated international companies, domestic exploration companies, and energy services companies. Each industry has its own dynamics, but ultimately all are driven by the supply and demand picture for energy worldwide. Political events have historically had a major impact on these industries. Stocks tend to be popular with investors late in the business cycle.


Electric companies have historically been very sensitive to interest rates because of the large debt financing costs they must incur in order to build their infrastructures. These stocks tend to perform well in an environment of declining interest rates. Telephone companies may offer attractive long-term growth opportunities, as they diversify and compete in recently deregulated telecommunications markets.

Precious Metals

Precious metals and the stocks of companies that mine and process them can be affected by industrial and consumer demand, but the largest factor contributing to volatility in this category is generally inflationary pressure. Investors often flock to this category late in the expansion cycle.

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From: Return to Sender4/28/2012 6:37:43 PM
2 Recommendations   of 79676
From Weekly Recap - Week ending 27-Apr-12Dow +23.69 at 13228.31, Nasdaq +18.59 at 3069.20, S&P +3.38 at 1403.36

Trade this week started on a soft note, but stocks were able to rebound for four consecutive gains that too, the S&P 500 back above 1400 for a 1.8% weekly gain. That stands as the best weekly performance for the broad market measure in six weeks.

Overall action was relatively quiet on Friday as market participants shrugged off news that analysts at S&P issued another downgrade of Spain's debt, which now sits at BBB+. There was also a relatively muted response to an advance reading of first quarter GDP that suggested the economy grew 2.2%, which is less than the 2.5% rate that had been expected, on average, among economists polled by Some pundits point out that even though the growth rate was weaker than what had been widely anticipated, it wasn't so poor as to rekindle calls for further quantitative easing, although the dollar did lose ground against competing currencies today.

Consumer Discretionary stocks led for virtually the entire day. The sector's 1.3% gain today came with help from (AMZN 226.85, +30.86), which rallied to a 2012 high in response to earnings that easily exceeded what had been widely expected. A handful of analyst upgrades helped the case for shares of the internet-based retailer. Expedia (EXPE 40.31, +7.68) benefited from a similar response on the back of its better-than-expected report. For the week, Consumer Discretionary advanced 2.8%.

Typical leaders Tech, Financials, and Energy all lagged. As such, they finished the session at the flat line. For the week, Tech advanced 2.4%. Although it was hampered on Friday by a sharp drop in shares of Western Digital (WDC 37.93, -6.17), which plunged when disappointing commentary from management cast a pall of what was otherwise a strong quarterly report, earlier in the week shares of Apple (AAPL 603.00, -4.70) rallied hard to lift the Tech sector after the company had reported another thoroughly impressive quarterly report. Interestingly, shares of AAPL had suffered in the prior session because of concern about a decline in the number of products it has had hooked up to data networks. Meanwhile, both Financials and Energy booked weekly gains on the order of 2%. On Friday Energy giant Chevron (CVX 106.20, -0.02) reported earnings that exceeded what had been expected, contrasting the earnings miss that Exxon Mobil (XOM 86.08, +0.01) posted earlier in the week.

Softness at the start of the week came in response to news that China's latest manufacturing reading still pointed to tighter activity, despite its improvement from the prior month. Manufacturing readings from both Germany and France were also disappointing. France further stoked eurozone concerns because reports suggested that the country may experience a political shakeup, which could carry implications for fiscal and financial reform there. Additionally, failure by fellow eurozone member Netherlands to agree on a budget evoked the threat of a change in leadership there.

Things firmed up after the S&P 500 was able to find support at its monthly closing low of 1358, which is also only a single point above its monthly intraday low of 1357. Stocks began their rebound from there.

The Fed was busy this week as the FOMC surprised few by keeping its fed funds rate at 0.00% to 0.25%, and noting that it anticipates exceptionally low levels of the fed funds rate at least through late 2014. Although it was acknowledged that inflation has picked up somewhat, the outlook for inflation over the medium run remains subdued. In fact, the Fed forecasted that inflation for the next couple of years will not surpass 2.0%.

The Fed added 20 basis points to both ends of its forecast for 2012 real GDP so that the range is now from 2.4% and 2.9%, but the forecast for 2013 was trimmed by 10 basis points to range from 2.7% to 3.1%. Longer run growth is still expected to range from 2.3% to 2.6%.

In a follow-up to the FOMC statement and forecast, Fed Chairman Bernanke held a press conference, during which he stated that the FOMC is prepared to take additional actions, if necessary. That was widely regarded by many market participants as a tacit sign that further quantitative easing is not off of the table.

Leading up to the GDP report on Friday morning, participants digested several important pieces of data, including news that new home sales for March hit an annualized pace of 328,000, which is greater than the clip of 318,000 that had been broadly anticipated. Moreover, prior month numbers were revised upward to reflect an annualized pace of 353,000. Pending home sales reportedly spiked in March by 4.1%, which is far greater than the 0.5% increase that economists polled by had generally expected.

The Consumer Confidence Index for April eased back to 69.2 from 70.2 in the prior month, but on Friday it was reported that the final Consumer Sentiment Survey for April from the University of Michigan improved to 76.4 from the preliminary reading of 75.7.

Total durable goods orders dropped in Mach by 4.2%, which is steeper than the 1.7% decline that had been broadly expected. Prior month numbers were revised lower to reflect an increase of 1.9%. Excluding transportation items, durable goods orders declined in March by 1.1%, which comes in stark contrast with the 0.5% increase that had been broadly anticipated. Orders less transportation for the prior month had increased by an upwardly revised 1.9%.

Weekly initial jobless claims totaled 388,000, which is greater than the 373,000 claims that economists polled by had generally expected. The prior week tally was 389,000 claims.

..Nasdaq 100 +0.6%. ..S&P Midcap 400 +0.5%. ..Russell 2000 +0.9%.

Index Started Week Ended Week Change % Change YTD %
DJIA 13029.26 13228.31 199.05 1.5 8.3
Nasdaq 3000.45 3069.20 68.75 2.3 17.8
S&P 500 1378.53 1403.36 24.83 1.8 11.6
Russell 2000 804.05 825.47 21.42 2.7 11.4

7:42AM Nokia comments on Standard & Poor's credit rating downgrade: 'Nokia is in the middle of a transformation program' (NOK) 3.66 : Timo Ihamuotila, Nokia's Executive Vice President and CFO, comments on today's rating announcement from Standard & Poor's:

"As we have detailed in recent announcements, Nokia is in the middle of a transformation program which encompasses every aspect of our business. We are implementing a decisive action plan to position our company for future growth and success. The main focus of these actions is on lowering the company's costs, improving cash flow and maintaining a strong financial position, while bringing attractive new products to market."

As of March 31, 2012, Nokia had gross cash balances of EUR 9.8 bln, and a net cash position of EUR 4.9 bln.

10:12 am Technology sector trading lower along with broader market

The tech sector is trading lower today, along with losses in the broader market. Semiconductors are showing relative weakness with the Philly Semi Index trading 0.7% lower. KLAC (-5.9%) is under pressure, while NXPI (+4.3%) is a notable leader in that chip index. Among other major indices, the SPY is trading 0.2% lower today, while the QQQ is trading 0.1% higher and the NASDAQ is trading 0.1% lower on the session. Among tech bellwethers, ORCL (+0.9%) is showing notable strength.

In earnings last night, WDC (-12.8%) posted a quarterly beat with upside guidance, but offered cautious commentary during the call. Elsewhere, FIO (-8.7%) and SKWS (+9.0%) posted beats with upside guidance, while ZNGA (-6.3%) and KLAC (-6.1%) reported beats with inline guidance. In news, there are reports out overnight discussing ongoing investigations into GOOG (-0.6%).

Among notable analyst upgrades this morning, SNDK (-0.6%) was upgraded to Buy from Hold at Jefferies, ZNGA (-6.3%) was upgraded at JP Morgan and BofA/Merrill, SLAB (+0.6%) was upgraded at Lazard and Citigroup. While in downgrades, AMCC (-10.9%) was downgraded to Hold at Wunderlich, STX (-8.3%) was downgraded at BofA/Merrill and Craig Hallum, PCS (-1.3%) was downgraded at Deutsche Bank, Argus, Canaccord and Wells Fargo, CTCT (-15.2%) was downgraded at William Blair and Janney and WDC (-12.8%) was downgraded to Neutral at BofA/Merrill.

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To: Return to Sender who wrote (56101)4/28/2012 10:20:20 PM
From: pcyhuang
1 Recommendation   of 79676
Cyclical Recovery of Home Construction

RTS, one industry you have missed mentioning is Home Contruction. Just look at the chart below:

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To: pcyhuang who wrote (56103)4/28/2012 11:51:41 PM
From: Return to Sender
4 Recommendations   of 79676
It's my belief that while this recovery has been extremely impressive these last 34 months that it is hardly without concerns at this point. We can certainly go on to new highs for the Dow and S&P 500 before it ends but we already seeing fewer and fewer stocks hitting new highs. We are not early in this cyclical recovery. It's closer to the end than the beginning.

Anyway, what's so impressive about the recovery in home construction? This chart shows the ITB roughly 1/4 its all time highs. Can it keep going up? Of course but it will probably be another decade or more before it ever hits a new all time high.


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To: Return to Sender who wrote (56104)4/29/2012 4:18:42 AM
From: pcyhuang
   of 79676
>Anyway, what's so impressive about the recovery in home construction?

SPDR S&P Homebuilders ETF (NYSEArca: XHB) and iShares Dow Jones US Home Construction (NYSEArca: ITB) added about 2% in morning trade. ITB is up 24.6% year to date, compared with an 11.3% gain for the S&P 500, according to Morningstar. Housing ETFs are outperforming on hopes the U.S. residential real estate market is finally on the mend.

In homebuilder earnings, Pulte reported a smaller first-quarter loss while orders for new homes increased 15% from the year-earlier period. Revenue was better than expected “primarily driven by increased sales into the move-up market, translating into a 5% increase in average selling prices,” Williams Financial Group said in a note.

Separately, Ryland said new orders increased about 46% from the year-ago quarter.

The builder “missed on revenue but delivered slightly better than expected earnings per share, with solid growth across all reporting segments in orders, backlog and deliveries,” Williams said.

Ryland shares rallied 9% while Pulte added 7% at last check after the companies announced their quarterly results.

Meanwhile, mortgage rates remain attractive. “Mortgage rates remained near record lows in the week ending April 26, with the 30-year fixed-rate mortgage average declining to 3.88% from 3.90% in the prior week, Freddie Mac said Thursday in its weekly report,” MarketWatch said.

SPDR S&P Homebuilders ETF


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