Is It Time To Get Back In The Market?

Soon enough. I would say if you want to get back into the market, do so on Feb 9th. After this week, we will have cleared the bulk of earnings reports that are coming out and we will have seen Friday's CRITICAL GDP report. The first week of February will be plagued by talk of unemployment as the January unemployment number comes out on Feb 6th. After all this has passed, we will have a much better idea of which way the economy is heading, whether it is getting worse or not. We will have an idea of how bad unemployment is getting, whether the GDP is contracting or not and as earnings come out, you will know what companies are forecasting for 2009. 

During earnings season, you may be inclined to solely focus on the earnings of the previous quarter, don't be. This is a lagging indicator. Instead, focus on what the company is saying about the rest of 2009. If they are not giving any estimates for 2009, that may be a sign that management thinks its business is going to suffer and the numbers will be bad. If management thinks it will have a strong 2009, you might want to look into the company. No one knows the firm better than its management.

You can better assess what stocks to buy, when to buy them, and at what prices to buy them at. Do not be impatient, if you get into the market now, you might be paying too much for a stock as weak unemployment numbers could hurt the company's value.

A Few Important Dates

I hope everyone is enjoying their weekend! I just wanted to post a few important dates that are coming up which should move the markets. These is for the week of Jan 26th-30th.

On Monday we will see existing home sales figures. McDonalds, Caterpillar, Tyson Foods, and Kimberly-Clark all report earnings before the bell. Texas Instruments and Amgen both report earnings after the bell.

On Tuesday we will have the consumer confidence number out. Dupont, Verizon, AK Steel, Peabody Energy, EMC, Badger Meter, US Steel, Nucor, and Valero Energy all report earnings before the bell. Yahoo, Sun Microsystems, Gilead Sciences, and Norfolk Southern all report earnings after the bell.

On Wednesday we have the Federal Reserve rate decision and the mortgage applications number from the Mortgage Bankers Association. Pfizer, Boeing, ConocoPhillips, AT&T, Wells Fargo, Hess, and the New York Times report earnings before the bell. Starbucks, Qualcomm, Boston Scientific, Boston Properties, and Ameriprise Financial all report earnings after the bell.

On Thursday we will have durable goods numbers and new home sales. 3M Company, Altria, Fortune Brands, Auto Nation, Celgene, Starwood Hotels, Eli Lilly, AstraZeneca, Colgate-Palmolive, Occidental Petroleum, Wyeth, International Paper, Raytheon, and Sony all reporting earnings before the bell. Amazon and Monster report after the bell.

Finally on Friday, we have University of Michigan's Consumer Confidence Index. Proctor and Gamble, Honywell, Cheveron, Simon Property, and Gannett all report earnings before the bell. Exxon Mobile reports earnings mid-day.

These earnings will be horrible, and end up sinking the market next week. We should re-test, if not break the previous November and October Lows we had. It is not a good idea to invest in the market next week, wait for the new low in the market to come where you can find better bargains.

Also very IMPORTANT: On FEB 6TH unemployment numbers for the month of January come out.

Even Microsoft Is In Trouble

Microsoft was slammed today. Its shares fell 12% today after the company announced it missed analyst's estimates. Microsoft's profit was down to 4.17 billion dollars, from 4.71 billion dollars a year ago. Microsoft also recorded revenues of $16.63 billion vs. expectations of $17.08 billion. Microsoft also announced it will not give revenue estimates for 2009, a sign of management's lack of confidence in their business outlook. On top of that, the company announced it will cut 5,000 jobs. Software engineers were once considered to be in high demand, but the fact that unemployment has started to spread into the software industry is a sign that unemployment is going to continue to rise. Microsoft's weak earnings reiterates my earlier post of waiting to make investments until the bulk of companies have released their earning report. I know Google posted better than expected earnings today, however they are a rare case and should not be a sign to dive into the market yet.

Obama Effect? Look Towards Congress Instead

The upcoming stimulus plan will, without a doubt, have an impact on the markets. We saw the greatest point drop in history for the Dow Jones Industrial Index when the 700 Billion dollar Troubled Asset Relieve Program (TARP) bill did not pass Congress. And then we saw huge upswings when the bill was revised and passed. Investors everywhere are looking to President Obama (feels nice to not have to say President-elect anymore) to see how the stimulus plan will shape up. Investors are looking to invest in companies who will receive business from the stimulus plan, and therefore are following President Obama's every move.

So how important is Obama to the stimulus plan, and therefore your investment? Not that important. If you are following Obama's every word to try and gain some early insight on when the stimulus bill will be passed, you will not gain much information. Instead look at Republican leaders in the House and Senate. Most people forgetting that Congress will decide the fate of the stimulus bill, not President Obama, so they are not looking in the right direction. Follow what GOP leaders are saying, because they are the ones who will be the ones stopping the bill from passing. Depending on what the GOP leaders are saying, you will be able to tell if the bill gets passed or not.

Right now, it seems that GOP leaders are not opposed to spending money, but opposed to HOW the money in the stimulus bill is going to be passed. House Appropriations Committee's ranking Republican member Jerry Lewis, R-Calif., has said that Republicans are ready to vote against the bill if they are not satisfied with how the money will be spent. Republicans will be working with Democrats to get a bill that both agree on, but it might not happen quickly.

The following days will be critical to follow, make sure you are following what Republican congressional leaders are saying about stimulus bill, if they are satisfied or not. This will give you great insight on whether it will be passed or not, so you can adjust your investments accordingly.

Want A Quick Trade?

The first half of this year is not going to be positive for the stock market. The rising unemployment in America, mixed with the worsening bank situation is only making the fundamentals of the economy worse. Knowing that, if you are looking for a quick trade, wait until after next week when 1/3 of the S&P 500 releases their 4th quarter earnings. The poor earnings have NOT been priced into stocks yet, as seen with the huge downturn we have had the last week. The markets will go down next week when the big players release poor earnings. After earnings are out, we should see a small bounce in the market. It’s clear that investors want the market to go up, as seen in the beginning of the year. There was no news out to change the economic landscape, yet we saw a substantial rally in the markets. After earnings come out, there will be excitement for a stimulus plan that President-Elect Obama will be hard at work with Congress to get something passed. Look to invest in some stocks that were beat down during earnings season, but that should fare well from the Stimulus hype. Look for stocks like Caterpillar, AT&T, and Honeywell, stocks that will benefit from infrastructure spending. But please, beware, do not hold these stocks for long, they will go up only because of excitement. Sell them before unemployment data comes out for the month of January. This data will bring investors back down to Earth and remind them of the worsening economic scene. The infrastructure spending will not really impact companies for months, so it is not time to invest in them for the long run yet.

A Voice to Shake Wall Street

If you ever turn on CNBC or read any financial websites/newspapers you will see a hoard of so called financial "experts" giving their take on what is going to happen with the economy and where you should be investing. After you survey all their opinions in order to gain some direction on what you should be investing in or where the economy seems to be going, you will end up where you started. Half of them say the economy is going to get better, half say it's going into a depression. But one of these analysts has stood out. That's Meredith Whitney, an analyst at Oppenheimer & Co.; she has been dead right on calling the mortgage meltdown and predicting the need for capital by banks. The market has fallen in love with her because of her accurate predictions, and thus she has earned their trust. CNBC took a poll in December asking who the most important person to the stock market was. Meredith Whitney won easily. Her voice is so strong that when she predicted banks would need to raise more capital, bank stocks plummeted. I have attached a few of her predictions for the future state of the economy. Just because she has been right in the past does not mean she will be right in the future. I am not suggesting you should do whatever she says, but it is certainly worth taking her opinion into consideration.

The woman who called Wall Street's meltdown

8 really, really scary predictions

Banks may need to raise fresh capital in '09: Whitney