The market pulled another fainting spell today and traders vainly tried to find a pulse.
The market opened up slightly after the futures recovered from a -$4 deficit during the night. The news today was all a rehash of the previous two days and failed to stimulate any trading.
The blue chips suffered some after a profit warning from JP Morgan and the Proctor & Gamble analyst downgrade. MRK dropped -6.75 after their analyst meeting today. They have many well known drugs with patents expiring in 2000 & 2001. They have plans to replace this income but analysts were not impressed. MRK said they were only comfortable with earnings estimates of $4.85-4.95 and analysts estimates were in the range of $4.97. Merrill Lynch also drained Coke of -1.88 after warning of global problems.
Only 10 of the Dow 30 were up. Chevron was up +3.75, on rumors of a takeover by Royal Dutch, and AT&T was up +4.00 on favorable analyst statements about the IBM deal. Even with these high flyers the Dow was still overcome by declining issues. Continuing profit warnings and concern about Brazil were reasons given.
Concern over 1999 earnings will continue to linger until the coming pre-warning season is over. The global flu is still with us but according to the Fed Beige book report released this morning the U.S. economy is still growing. As long as we continue to grow then the market should continue upward as well.
Brazil was scheduled to vote late today on another set of reforms which are required for the IMF bailout. Until the results of this vote are known the market will be range bound.
The tech stocks continued their record run as the Nasdaq set yet another record high. In spite of the continued reporting of an impending tech wreck on CNBC the PC and Internet stocks just keep on computing higher profits for their owners.
We feel the market is just in the middle of a profit taking session while treading water waiting for the Brazil vote and the impeachment vote.
We are still cautioning starting a new long call play until after these events pass and markets stabilize again.
Futures are trading up slightly after hours but not enough to establish a direction for tomorrow.
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