10:00pm (EST)
The market continued its sell-off on Friday as the Dow dropped another 216 points to close at 10,172. The bears woke up on Wednesday from a long rest and have caused panic and fear for some investors. The Dow’s 550 point drop in 3 days marked its worst week since March 2008.
Perhaps the biggest bomb was dropped by the President who seems to have a personal vendetta against the financial companies. We kept quiet on the subject but we really think Washington is picking the wrong battles. Instead, they should concentrate on “shovel-ready” projects that will bring unemployment back below 10%.
The market’s decline has been broad-based and Friday’s drop can be attributed to Ben Bernanke not possibly getting a second term as Fed chairman. His gig expires at the end of the month and now there is serious doubt he gets the 60 votes he needs.
The S&P 500 fell 25 points and closed at 1,091 while the Nasdaq tanked 60 points, or 2.7%, to finish at 2,205.
A week ago right here in this space we said there was chance we get a 5%-10% and we got the 5%. We still think there is some weakness in the market but we are expecting one last rally by the bulls.
As we head to press the futures have turned around as the overseas markets get ready to trade in a few hours. Dow futures are up 42 points, the S&P 500 and Nasdaq futures are up 6. The heart of earnings season will hit this week and if you look at the list below there will be some action (quotes are from Friday’s close):
Monday: (Before the bell) AK Steel Holding (AKS, $20.19, down $1.03), Eaton (ETN, $65.88, down $0.86), Halliburton (HAL, $31.15, down $1.38)
(After the bell) Amgen (AMGN, $56.60, down $0.03), Apple (AAPL, $197.75, down $10.32), Jacobs Engineering (JEC, $39.66, down $0.24), VMware (VMW, $41.58, down $2.36)
Tuesday: (Before the bell) Baker Hughes (BHI, $44.27, down $2.36), Corning (GLW, $18.56, down $1.05), DuPont (DD, $32.50, down $0.65), Johnson & Johnson (JNJ, $63.20, down $0.77), Peabody Energy (BTU, $45.10, down $0.60), Sherwin-Williams (SHW, $58.00, down $0.61), Travelers Companies (TRV, $48.31, down $0.64), Wynn Resorts (WYNN, $63.95, down $1.42)
(After the bell) Callaway Golf (ELY, $8.25, down $0.10), DeVry (DV, $56.88, up $0.42), Gilead Sciences (GILD, $46.08, up $0.30), QLogic (QLGC, $19.19, down $0.50), Yahoo (YHOO, $15.88, down $0.32)
Wednesday: (Before the bell) Abbott Laboratories (ABT, $54.51, down $1.05), BlackRock (BLK, $225.00, down $5.24), ConocoPhillips (COP, $50.60, down $1.64), Piper Jaffray (PJC, $46.20, down $1.80), Valero Energy (VLO, $18.18, down $0.72)
(After the bell) Green Mountain Coffee Roasters (GMCR, $81.16, up $1.24), Harris (HRS, $45.78, down $1.46), Qualcomm (QCOM, $46.78, down $1.31), WellPoint (WLP, $65.10, down $0.40)
Thursday: (Before the bell) 3M Company (MMM, $81.48, down $1.22), Altria Group (MO, $19.71, down $0.18), AT&T (T, $25.39, down $0.28), Colgate-Palmolive (CL, $80.71, up $1.64), Eli Lilly (LLY, $35.52, down $0.59), Ford Motor (F, $10.52, down $0.66), Lockheed Martin (LMT, $75.58, down $1.40), Nokia (NOK, $12.72, down $0.18), Potash (POT, $109.05, down $3.59), Time Warner Cable (TWC, $43.84, down $1.04), Under Armour (UA, $26.63, down $0.71)
(After the bell) Amazon.com (AMZN, $121.43, down $5.19), Genworth Financial (GNW, $12.41, down $0.49), Juniper Networks (JNPR, $24.95, down $1.17), Microsoft (MSFT, $28.96, down $1.05), Rambus (RMBS, $24.74, up $0.72), SanDisk (SNDK, $28.39, down $0.97), Stanley (SXE, $27.74, up $0.14)
Friday: (Before the bell) Arch Coal (ACI, $24.80, down $0.51), Honeywell (HON, $39.88, down $0.85), Mattel (MAT, $19.95, down $0.63)
(After the bell) Horizon Lines (HRZ, $6.17, down $0.03)
This will be an important week for the bulls and we don’t expect them to go away quietly. We said back in December there could be an “epic battle” between the two sides and so far we have been dead-on with our market analysis. We have used caution to establish some long-termer term option plays and we have some insurance in our portfolio for protection.
If the market does continue lower there will be some incredible opportunities to buy put options on stocks that are overbought. Some of the high-flying stocks have already been clipped and there is plenty of downside to go if they are going to correct.
We will be back in the AM with the trade updates and the morning outlook.
