October 20, 2011 at 08:47 AM EDT
Earnings Match Economic Background – Mixed.
Thursday, October 20, 2011. 8:35 a.m. So far third quarter earnings have been as much a mixed picture as the economic background. In the background there are now signs of improvement mixed into the overall dismal conditions, with economic reports in the U.S. not quite so relentlessly negative. Industrial Production edged up 0.2% in September. [...]

Thursday, October 20, 2011. 8:35 a.m.

So far third quarter earnings have been as much a mixed picture as the economic background.

In the background there are now signs of improvement mixed into the overall dismal conditions, with economic reports in the U.S. not quite so relentlessly negative.

Industrial Production edged up 0.2% in September. There were 103,000 new jobs created in September, much better than the consensus forecast of 60,000, and the previous report of zero jobs created in August was revised to 57,000 jobs having been created. Auto sales picked up some in September, coming in at the high end of analysts’ forecasts. Retail sales rose 1.1% in September, the biggest increase since February.

The Housing Market Index, which measures the sentiment of the nation’s home builders, remains depressed but picked up from 14 to 18 in October, its first noticeable improvement in months. Yesterday we saw why when it was reported that new housing starts surged 15% in September to a 17-month high.

And the third quarter earnings reports seem to reflect the same mixed picture.

This morning Baxter International (BAX) reported its 3rd quarter earnings were up 20%, but that failed to meet Wall Street’s estimates. Boston Scientific (BSX) reported its earnings fell 25%, and were also worse than forecasts. Ingersoll Rand (IR) reported a sharp earnings decline, to 25 cents a share from 68 cents a year ago, also well short of estimates. Eli Lilly reported a 5% decline in earnings even though sales rose 9%, missing estimates.

However, Philip Morris (PM) reported its 3rd quarter earnings were up 26%, beating the estimates. AutoNation (AN) reported a 24% jump in its earnings, better than estimates. EBay’s (EBAY) earnings were up 14%, in line with estimates. American Express (AXP) reported an 11% earnings increase on a 9% gain in sales, beating estimates.

But so far neither the earnings reporting period nor the economic reports are having much impact on markets, where the focus is locked on the eurozone debt crisis.

And that leaves markets as mixed at the earnings and economic reports.

 102011b

 

102011c

Technical analysis and technical indicators have become very interesting to say the least.

Subscribers to Street Smart Report: In addition to the charts and signals in the premium content area of this blog, the new issue of the newsletter is in the subscriber area of the Street Smart Report Online from yesterday, and an important hotline from least evening.

To read my weekend newspaper column ‘Will Seasonality Overcome the Economic Uncertainties?’ click here!

Yesterday in the U.S. Market.

Uncertainty most of the day, with the Dow up 50 points or so and market breadth marginally positive, but the S&P 500 and Nasdaq to the downside – until mid-afternoon.

But when the Fed’s ‘Beige Book’ was released mid-afternoon and painted a picture of a still soft economy, with few signs of recovery, the Dow also headed south.

The Dow closed down 72 points, or 0.6%. The S&P 500 closed down 2.1%. The NYSE Composite closed down 1.4%. The Nasdaq closed down 2.0%. The Nasdaq 100 closed down 2.0%. The Russell 2000 closed down 2.1%. The DJ Transportation Avg. closed down 1.3%. The DJ Utilities Avg closed up 0.1%.

Gold closed down $10 an ounce at $1,643.

Oil closed down $2.17 a barrel at $86.13.

The U.S. dollar etf UUP closed up 0.1%.

The U.S. Treasury bond etf TLT closed down 0.1%.

Yesterday in European Markets.

Markets in Europe closed up for the day. London closed up 0.7%. The German DAX closed up 0.6%. France closed up 0.5%.

Asian Markets Closed Down Last Night.

The DJ Asia-Pacific Index closed down 1.7%.

Among individual markets:

Australia closed down 1.6%. China closed down 1.9%. Hong Kong closed down 1.8%. India closed down 0.9%. Indonesia closed down 1.7%. Japan closed down 1.0%. Malaysia closed down 0.7%. New Zealand closed down 0.3%. South Korea closed down 2.7%. Singapore closed down 1.0%. Taiwan closed down 1.5%. Thailand closed down 3.1%.

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Markets This Morning.

European markets are off earlier lows but still down. The London FTSE is down 0.4%. Germany’s DAX is down 0.4%. France’s CAC is down 0.5%

Oil is up $.12 at 86.23 a barrel.

Gold is plunging another $28 an ounce at $1,619 an ounce.

This morning in the U.S. Market:

This week is a fairly heavy week for potential market-moving economic reports, including reports from the housing industry we haven’t heard much from lately. The reports will include the Consumer Price Index, New Housing Starts, Existing Home Sales, and the Phila Fed Mfg Index. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Monday’s reports were that the Empire State (NY) Mfg. Index remained negative in October for the 5th straight month, but did rise fractionally, from minus 8.8 in September to minus 8.5 in October. And Industrial Production was up 0.2% in September, but August was revised down to zero from the previously reported gain of 0.2%.

Tuesday it was that the Producer Price Index jumped 0.8% in September, double the forecasts, and the core rate was up 0.2%, also double the estimates. And the Housing Market Index, measuring the sentiment of home-builders remained dismal but moved up to 18 in October from 14 in September, its first noticeable improvement in months.

Yesterday, we saw why home-builders were more optimistic. It was reported that New Housing Starts surged up 15% in September, to a 17-month high. The Consumer Price Index rose 0.3% in September, while the core rate was only up 0.1%. But then the Fed’s Beige Book poured cold water on the better reports, with the 12 Fed districts reporting less certain outlooks for business conditions in their areas.

This morning’s report was that new Weekly Unemployment Claims fell 6,000 to 403,000 last week.

Still to come are the Fed’s Philadelphia area Mfg Index, and Leading Economic Indicators, both of which will be released at 10 a.m.

I’m putting this post on early this morning due to an early out-of-town meeting, so don’t have the late readings on our early morning indicators. But at the moment (8:35):

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 50 points or so in the early going, in the current volatility probably meaningless as to direction by the close.

To read my weekend newspaper column ‘Will Seasonality Overcome the Economic Uncertainties?’ click here!

Subscribers to Street Smart Report: In addition to the charts and signals in the premium content area of this blog, the new issue of the newsletter is in the subscriber area of the Street Smart Report Online from yesterday, and an important hotline from least evening.

Non-subscribers: How are you doing so far in 2011? We can help, and at very reasonable cost! Street Smart Report Online provides an 8-page newsletter every 3 weeks, an in-depth 6 page interim update every Wednesday on our intermediate-term signals and recommended holdings, an in-depth 4-page ‘Gold, Bonds, Dollar’ update every 2 weeks, and special reports and hotline updates as needed. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 23nd year. As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

I’ll be back Saturday morning with the regular Saturday morning post, as usual later than the weekday posts, probably around 11 a.m. (This blog appears every Tuesday, Thursday, and Saturday morning!).

**** End of Today’s post*****

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