Did the Rally Start Without Me?

Yesterday I told you I was starting to see bullish signs. Stocks have been holding steady through earnings season. And that suggests that the stimulus bill and the bad debt bank/nationalization plan have the potential to be positive catalysts for earnings expectations (and hence stock prices). 
I went on to say that my best guess as to timing was sometime next week, as earnings season starts to slow down.
Of course, the stock market seems to delight in its ironic sense of humor sometimes. The Dow Industrials rallied 140+ points yesterday afternoon. And it’s tacking on some more today.

What a Game! Politickin’ the Stimulus Bill; Reader Mail

That was one of the best Super Bowl games we’ve seen in a long time. There were some costly penalties on both sides of the ball, but in the end, both teams made some phenomenal plays. Congratulations go to the Steelers for their sixth championship ring. And equal congratulations go to the Arizona Cardinals for turning their first ever Super Bowl appearance into a great game.
*****There are rumblings that Senate Republicans may not pass Obama’s massive stimulus bill. This may be politicking, as the GOP clearly wants to show that it has some teeth. But there’s a lot of pretty ridiculous spending included, too. $300 million for sexually transmitted diseases jumps to mind. I hope the GOP is successful in stripping out the fat.

A “blunter” approach to China; Will GDP get “worser”?

*****Q4 GDP numbers are out today. The U.S. economy shrank at a 3.8% annual rate. Sounds bad. But it wasn’t as bad as economists were expecting. They were looking for a 5.4% decline. 
Stocks are down in response, even though this is better-than-expected news. Many analysts were expecting Q4 GDP numbers to be horrible, and possibly the worst that we’d see. So since the number wasn’t as bad as expected, we can perhaps think that stocks are down because of a perception that the worst GDP number is yet to come. That’s the bearish argument.

Slogging Through; Foxes in the Henhouse

Here’s a quote that sums up the way stocks have been trading better than anything else I have read. It’s from Diane de Vries Ashley, who’s a managing partner at Zenith Capital Partners. She said: "There’s a semblance that there’s not a solution but a working and workable means by which to plow your way out of this…[t]here’s no magic solution. It’s a slog. If you have a market that is reacting well to the kind of slog they see, hallelujah." 
A slog. That’s perfect. Paulson has attacked the toxic asset problem from a couple angles now. Of course, none has been a perfect solution. Balance sheets at many banks are still overwhelmed by deteriorating assets.

Q4 Earnings on Steel: AKS, NU, X + Bank Nationalization

It seems we’re getting just enough decent earnings reports to keep things interesting. And of all the unlikely suspects, US Steel (NYSE:X) is near the top of the list. 
It goes almost without saying that steel should not do well in a global recession. But US Steel beat Q4 revenue expectations handily. (Earnings per share is not comparable due to a bunch of one-time items.)

The Lost Decade, American Style?

Housing prices fell as much as 18% in November 2008 when compared to the year-earlier period. Consumer confidence registered a 40-year low. Influential NYU economics professor Nouriel Roubini says unemployment will hit 9% and that the best we can hope for is 1% GDP growth in 2010.

Brother, can you spend a dime?

Caterpillar (NYSE:CAT) missed earnings expectations and announced 5,000 job cuts. Home Depot (NYSE:HD) is cutting 7,000 jobs. And Sprint (NYSE:S) plans to ax 8,000 employees. And yet stocks are up today due to a surprise jump in existing home sales for December.

Dividend cut at GE?

They say what doesn’t kill you makes you stronger. I keep that in mind as I watch the Dow Industrials repeatedly test the 8,000 support level. 
We’ve watched buyers continue to step in at the 8,000 range. That clearly makes this support level stronger. The recent sell-off at Bank of America (NYSE:BAC) failed to send the Dow below 8,000. Today, it’s GE’s (NYSE:GE) turn.

IBM, AAPL Beat Earnings, MSFT Misses and USO

Once again, the buyers have stepped in at obvious support levels and sent stocks higher. We’ve identified support for the Dow Industrials at around 8,000. And while the index traded below 8,000 this week, the fact that buyers continue to step in remains one of the few positives for stock prices.