Market Outlook
Tuesday, May 11th, 2010


March wholesale inventories report is the only economic report due today.

Also, once again, there will be plenty of action on the economic front with the following companies reporting their quarterly earnings:-

• Fossil Inc. (FOSL),

• JA Solar Holdings Co., Ltd. (JASO),

• Electronic Arts Inc. (ERTS),

• SunPower Corp. (SPWRA), and

• The Walt Disney Co. (DIS).

Where to today in regard to the market and it’s direction? Probably settled down for the moment and coast for a couple of days, particularly now the European Union has decided on rescue plans.

However, after saying this and then checking out what is happening globally, it seems that all is still not well. It looks as if investors are taking a closer look at the EU rescue plan and are not happy with it.

The futures on the Dow Jones Industrial Average (DJIA) and Standard & Poor's 500 (SPX), heading into the opening, are trading at 112 points and 11 points below fair value, respectively.

The CBOE Market Volatility Index (VIX) dropped more than 29% yesterday, after spiking at an impressive 85% last week. The VIX is currently trading just short of the 30 level, and is likely to climb again today if the markets follow the futures trend.

Points to consider are:-

• It seems that most, if not all, of the foreign indexes are trading in negative territory. In Asia, most stocks finished lower, as doubt lingered about how Greece and other debt-laden euro zone countries will reduce their budget deficits. Meanwhile, looking to Europe, stocks have retreated, as doubts about Greece's ability to smoothly cut its fiscal deficit persisted.

• Crude futures are trading down by 1.54% at $75.62 per barrel.

• Ahead of the open, the U.S. Dollar Index has added 0.50% to trade at 84.58.

• Gold futures are up by $15.80 to $1,216.60 an ounce in London.

• Equity option activity on the Chicago Board Options Exchange (CBOE) saw 1,656,149 call contracts traded on Monday, compared to 1,045,195 put contracts.

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

PCLN chart

priceline.com Inc. (PCLN)

priceline.com Inc. (PCLN) said first-quarter net income rose to $1.06 per share, or $1.70 per share on a pro forma basis, from 53 cents per share a year ago. Revenue grew 26.5% to $584.4 million. Analysts estimated earnings of $1.66 per share. The stock is down more than 12.6% in pre-market trading.

LDK chart

LDK Solar Co. Ltd. (LDK)

LDK Solar Co. Ltd. (LDK) reported a first-quarter profit of $7.2 million, or 6 cents per share. Analysts were looking for a profit of 2 cents per share. Sales rose 23% to $347.6 million from a year ago. Gross profit margin expanded to 15.7% from 1.7%. In electronic trading, LDK has rallied more than 3.4%.

The “fear” factor, the CBOE Market Volatility Index (VIX), will certainly be prominent again today. Trade cautiously!




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