Morning Coffee with TradingMarkets

  • January 7, 2008
  • David Penn

Good Morning!

Earnings Season Begins…Feldstein: Recession Odds Top 50/50…Goldman’s Cohen Sees S&P 500 Up 14% in 2008…Congress Looks to Provide Growth Incentives…Oil, Gold Pulling Back…GM Anticipates 75% of Sales from Outside U.S….Businesses Opt for More Part-Time Workforce…Motorola’s Massive Job Cuts…Warner Prefers Blu-Ray…

Asian markets were lower. European markets were higher. The dollar slightly higher against the yen, steady against the Euro. The futures are trending higher in the hour before the bell…Stocks were hammered on Friday as the correction that began in October 2007 continued. Technically, the Friday sell-off makes a retest of the fall lows all the more possible–insofar as it looked like the sellers had plenty of steam left in them when the markets closed for the weekend. Today, economic news is relatively light, with November consumer credit data being the only main announcement item. Both Treasury secretary Paulson and President Bush are expected to speak on the economy later today.

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TradingMarkets 5 Business Stories You Need to Know

Weak Job Growth Hammers Stocks – USA Today

A weaker-than-expected jobs growth allowed a correction in the markets to turn into a frenzy of selling as investors found still yet another reason to abandon stocks.

McDonald’s Takes On Starbucks – Wall Street Journal

The world’s greatest burger and fries maker has announced plans to continue its expansion into the gourmet coffee market by opening 14,000 coffee bars in its stores. McDonald’s baristas will sell lattes, cappuccinos, mochas, and a drink similar to Starbuck’s ice-blended Frappucino.

Microsoft Wins T.V., Movie Content Deal – Wall Street Journal

Microsoft’s deal to introduce programming from NBC, Walt Disney, MGM and CBS as part of company’s Xbox Live and MSN Online services will make it easier for the software giant to compete with the likes of Apple and Adboe Systems, says Microsoft chairman, Bill Gates.

Sentiment Plunges as More Economists Predict Recession – Marketwatch

American Economic Association’s analysts only the latest to join the Recession 08 bandwagon. Ideas vary about the severity of a recession the organization’s economists now say is a “given”.

A Volatility Primer for the 20th Century – New York Times

A fascinating, graphic look at market volatility in the Dow Jones Industrial Average since 1900, and the Nasdaq Composite since the 1970s.

» For more stories as they happen, go to our Breaking News section.

TradingMarkets 7 Stocks You Need to Know for Today

Here are 7 stocks for traders for today from TradingMarkets.com:

» For a list of today’s highest PowerRating stocks, click here.

TradingMarkets 5 Top PowerRatings Stocks for Today

Company
 Symbol PowerRatings
BioMimetic Therapeutics BMTI 10
TradeStation Group TRAD 9
TiVo TIVO 9
U.S. Steel X 8
Warner Music Group WMG 8

» View More Stocks

TradingMarkets Tracking the Wizards

Lew Sanders of Alliance Bernstein Talks Long-Term Performance – Barron’s

With a top ten emerging markets fund over the past five years, and a number of other funds with double digit returns in three-year periods, as well. AllianceBernstein’s Sanders looks to move beyond a disappointing 2007.

Bear Not Out of Wood with Feds – Reuters

Federal investigators continue to probe into hedge funds managed by Bear Stearns. Officials from Bear Stearns are schedued to meet with U.S. prosecutors later this month to discuss the failure of a pair of Bear hedge funds.

Jim Rogers Predicts “Worst Recession” for U.S. – Bloomberg

The most severe recession the United States has experienced in “a while” is just around the corner according to Jim Rogers, legendary “investment biker” and former hedge fund partner with George Soros. Western governments, says Rogers, have been “lying” about inflation.

» View Portfolios of Prominent Investors

TradingMarkets Playbook

If the markets were oversold on Friday–which they were–then they are all the more oversold this morning, with the S&P 500 starting the day with an RSI of 0.435.

The last time the S&P 500 has an RSI value this low was in late February of 2007, when that correction has just experienced its first severe sell-off. One difference between now and then was in late February, the markets had just begun their correction whereas now, the markets have been in correction mode for nearly three months.

The S&P 500 has slipped below the 200-day moving average, a clearly bearish development. However, given the oversold nature of the market–and the fact that we have been in correction mode for several weeks, traders should treat stocks on an individual basis. Those stocks that are showing strength below the 200-day moving average continue to be stocks to avoid, and those stocks showing weakness above the 200-day moving average remain stocks to watch. The rising number of opportunities in our PowerRatings lists suggests that a number of names are coming ini, and could represent good bets to the upside in the event that the sellers overplay their hand this week.

David Penn is Senior Editor at TradingMarkets.com.

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