Is Goldilocks Back?

Although it might be a bit of a stretch to call it a “Goldilocks” report, Friday’s jobs data did seem to provide the type of not-too-hot, yet not-too-cold data that can often lead to gains in the stock market.

So given that the data was strong enough to support the idea that the economy may have finally turned the corner on jobs, gains is what investors got again on Friday.

The DJIA wound up flirting with new highs for this bull market cycle while the market-leading Midcap and Smallcap indices once again marched to new all-time highs for the third day in a row.

Of course, the bear camp will argue that the afternoon dive is a precursor of bad things to come. Those leaning to the negative side of the ledger suggest that there is an important double-top forming on the charts of the Dow, NASDAQ and S&P 500. The bears are also quick to point out that the macro picture isn’t all that rosy and that the issues of inflation and European debt are sure to come home to roost at some point. As such, our furry friends will say that Friday’s afternoon dive was their way of saying, “Uh, no… Not this time.”

Although we do have eyes and we can certainly see the potential double-top formation, I’m also a card-carrying member of the glass-is-half-full club and therefore, I choose to look at the action of the leaders as a precursor of good things to come. The bottom line is it hard for me to become overly negative with the Smallcaps and Midcaps romping to three straight all-time highs last week. News or no news; macro headwinds or not; the broader market is giving us some old-fashioned leadership.

And while I may be interpreting the action in a positive fashion, I will also admit that calling this a “Goldilocks” environment might be a bit of a stretch. Although I was on the road with the family, I was able to check in with the markets on a regular basis and was a little disturbed to hear the talking heads jawing about things suddenly looking not-too-hot and not-too-cold. At this stage of the game, I believe that the stock market and Mr. Bernanke would prefer to do away with the not-too-cold part of the formula and get this economy moving forward as fast as humanly possible.

But regardless of the moniker you choose to put on this market, it is clear that the driver continues to be the global recovery theme. Yes, there are “issues.” However, those in the “Yea, but” camp must remember that “issues” are ALWAYS present and simply a part of the game. So, as long as fund managers continue to have cash to put to work and the economic data continues to be encouraging, the bears might be sidelined for a while longer yet.

Turning to this morning… The upbeat tone appears to be hanging around in the early going. While things can always change on a moment’s notice, it looks like the bulls may have eyes on making another run at the highs on the DJIA and S&P 500. We shall see…

On the Economic front… There is no economic data to review before the bell this morning.

Thought for the day: Keep in mind that not every opinion is worthy of your attention…

Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell…

  • Major Foreign Markets: Australia: +0.61% Shanghai: NA Hong Kong: +1.46% Japan: +0.11% France: -0.05% Germany: +0.12% London: +0.28%
  • Australia: +0.61%
  • Shanghai: NA
  • Hong Kong: +1.46%
  • Japan: +0.11%
  • France: -0.05%
  • Germany: +0.12%
  • London: +0.28%
  • Crude Oil Futures: +$0.05 (May contract) to $107.99
  • Gold: +$9.40 to $1438.30
  • Dollar: higher against the Yen,lower vs Euro and Pound
  • 10-Year Bond Yield: Currently trading at 3.433%
  • Stocks Futures Ahead of Open in U.S. (relative to fair value): S&P 500: +2.89 Dow Jones Industrial Average: +19 NASDAQ Composite: +6.43
  • S&P 500: +2.89
  • Dow Jones Industrial Average: +19
  • NASDAQ Composite: +6.43

Wall Street Research Summary

Upgrades:

  • Optimer Pharmaceuticals (OPTR) – BAC/ML
  • Arch Capital Group (ACGL) – Citi
  • Axis Capital (AXS) – Citi
  • ParterRe (PRE) – Citi
  • EverestRe (RE) – Citi
  • Transatlantic Holdings (TRH) – Citi
  • Ford (F) – Credit Suisse
  • CenterPoint (CNP) – Credit Suisse
  • Cheesecake Factory (CAKE) – Janney
  • PF Chang’s (PFCB) – Janney
  • Edwards Lifesciences (EW) – Jefferies
  • Goodrich (GR) – JPMorgan

Downgrades:

  • HiSoft Technology (HSFT) – BMO
  • Research In Motion (RIMM) – Removed from Focus List at Credit Suisse
  • Federated Investors (FII) – Added to Short-Term Sell List at Deutsche Bank
  • Nasdaq OMX Group (NDAQ) – Jefferies
  • CenturyLink (CTL) – Long term debt downgraded at S&P
  • Southwestern Energy (SWN) – UBS
  • Colfax Corp (CFX) – UBS
  • NYSE Euronext (NYX) – Wells Fargo

Long positions in stocks mentioned: none

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The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.

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