9:00am (EST)
Things could get interesting…
Wednesday was whacky and the battle between the bulls and bears is starting to heat up a bit. The market was facing a lot of headwinds yesterday and we figured trading would be tepid heading into the 10-year note auction. That was well-received but after battling back to near even, the bulls got a curveball from one of the Fed members who said interest rates needed to go to 1% sooner rather than later.
The best email that came across our desk yesterday from an obvious bull…
“Hoenig is an a%$hole.”
There were renewed concerns about Greece’s debt and the market got a nasty slider when consumer borrowing came in lower than expected.
Greece’s borrowing costs hit a new high which spooked overseas markets on concerns the country could default on its debt. Meanwhile, consumer borrowing declined by $11.5 billion in February as Wall Street had expected a modest gain of $500 million.
It was just too much for the bulls to overcome as all three major indexes ended the day in the red. The Dow lost 73 points, or 0.7%, to settle at 10,897 after trading to a low of 10,845. The index broke below its 10-day moving average for the first time in two months so we will have to watch this carefully.
The S&P 500 fell 7 points and closed at 1,182 and traded to a low of 1,177. We needed the index to hold 1,175 which was a good sign. The Nasdaq slipped 6 points, or 0.2%, to finish at 2,423 and easily held the 2,400 level.
Palm (PALM, $4.62, up $0.77) rebounded in a big way yesterday, gaining 20%, on renewed speculation that it will be rescued by someone. The latest marriage is to the Chinese company, Lenovo. “Sunday, Bloody Sunday” could be an appropriate theme song for this hookup.
[caption id="attachment_5030" align="aligncenter" width="450" caption="PALM Hourly Chart"]
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There is a trade for Palm but we aren’t so sure the company deserves a premium. Yes, Palm has a nice OS platform but any company buying them will only be playing catch-up to Apple (APPL, $240.60, up $1.06) and to a lesser degree, Research In Motion (RIMM, $69.83, down $0.26).
To us, it just doesn’t make sense for someone to buy Palm when it’s clear they could be headed for bankruptcy court, maybe, but more than likely a deal will get done sometime this year.
As far our agenda for today, we will be watching the retail reports on same-store sales for March. February sales were strong for some companies and there are a couple of names that are reporting earnings as we go to press. We will go over them in our afternoon update.
There won’t be much market-moving economic data besides what we getting this morning and the bulls will have another uphill battle today. Dow futures are currently down 42 points to 10,807 while the S&P 500 futures are lower by 5 to 1,173. The Nasdaq 100 futures are off by 7 points to 1,967.
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