Market Outlook
Thursday, May 6th, 2010



Listed below are the reports on the economic front today:-

• Weekly initial jobless claims, and

• The preliminary nonfarm productivity report for the first quarter of 2010.

Also, once again, there will be plenty of action on the economic front as Thursday seems to be a popular day, by companies, to report their quarterly earnings. These are:-

• CIGNA Corp. (CI),

• Cincinnati Bell Inc. (CBB),

• DIRECTV (DTV),

• Dr Pepper Snapple Group Inc. (DPS),

• El Paso Corp. (EP),

• Fuel Systems Solutions Inc. (FSYS),

• SandRidge Energy Inc. (SD),

• Hyatt Hotels Corp. (H),

• MGM MIRAGE (MGM),

• Plains Exploration & Production Co. (PXP),

• Omnicare Inc. (OCR),

• Scripps Networks Interactive Inc. (SNI),

• Sara Lee Corp. (SLE),

• Warner Music Group Corp. (WMG),

• bebe stores inc. (BEBE),

• Blue Nile Inc. (NILE),

• Consolidated Edison Inc. (ED),

• Crocs Inc. (CROX),

• General Cable Corp. (BGC),

• Kraft Foods Inc. (KFT),

• Leap Wireless International Inc. (LEAP), and

• STEC Inc. (STEC),

which indicates that we, once again, will have an interesting day on the markets, with plenty of ups-and-downs. I hope that we have some ups today after the dramatic downs we suffered yesterday.

It appears that overseas markets are mixed today. European markets, early in trading, had sharp declines, but are fighting their way back up due to some timely good news from BNP Paribas, who offered some strong results, which is now helping boost the banking section.

However, Asian markets are still suffering as stocks are falling due to investors reacting to the signs that more countries could be affected in a similar fashion to Greece.

There should be some relief for the bulls, this morning, when trading on the U.S. markets opens as the Dow Jones Industrial Average (DJIA) futures were trading up by 29 points above fair value, while the broader Standard & Poor's 500 (SPX) futures have risen 3.5 point above fair value.

Looking back to January/February's drop in the market of 5.6%, the current pullback is only about half the size of that situation. This is an encouraging sign if investors can see that the worst is behind us and move forward with optimism.

Same-store sales data for the retail sector is on the agenda this morning. A look at two of these companies which are:-

Big Lots Inc. (BIG)

Big Lots Inc. (BIG) said first-quarter sales rose 8.1% to $1.22 billion. Also, same-store sales rose 6%, arriving at the higher end of the company's guidance for a 4% to 6% increase.

Costco Wholesale Corp. (COST)

Costco Wholesale Corp. (COST) reported April same-store sales rose 11%, as net sales rose 13% to $5.83 billion. Excluding higher gasoline prices and the benefit of stronger foreign currencies, total same-store sales rose 4%.

Also several companies have announced their quarterly reports which seem to be supporting or surprising analysts’ predictions. These are:-

RIG Chart

Transocean Ltd. (RIG)

Transocean Ltd. (RIG) posted a first-quarter profit of $2.09 per share, as revenue slid to $2.6 billion. Analysts had forecast earnings of $2.14 per share on revenue of $2.66 billion. In pre-market trading they are up about 2%.

Hot Topic Inc. (HOTT)

Hot Topic Inc. (HOTT) narrowed guidance for its first quarter to a loss of 3 cents to 4 cents per share, compared with prior expectations for a loss of 2 cents to 5 cents per share. The company also noted that April same-store sales fell 12.5%. Analysts had expected same-store sales to drop 7.9%. They are down about 5% in electronic trading.

Other factors which need to considered are:-

• Gold futures are doing well, as once again they are viewed as a safe-haven for nervous investors, and are now up by $9.60 to $1,184.60 an ounce in London.

• Crude futures are fairly steady at the moment, only down by 10 cents to $80.07 per barrel.

• The U.S. Dollar Index is doing very well this morning, due to the renewed concerns in Europe, where it is up 0.24% at 84.29.

Today has a similar feel to it as yesterday, where there is a bullish air to the market, but pessimism is still being acknowledged. Maybe it is time that traders and investors decided to get on with the art of making money instead of dwelling on the factors that have been and disasters that might be! If we observe the narrowing gap between call options contracts to put options contracts being traded, certainly gives an indication that the bears are making a good claw-back. Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,842,132 call contracts traded on Wednesday, compared to 1,291,757 put contracts.

Trading with caution today, particularly with the EU situation still in the forefront, and the concern that overseas markets are in the red, is advised. With so many negative events occurring at the moment, the “fear” factor, the CBOE Market Volatility Index (VIX), will certainly be still prominent.




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