Comtex SmarTrend(R) Morning Call -- November 10, 2009

This morning the market indices are expected to endure an uptrend pause, and give back a little of yesterday's gains as many stocks became temporarily overbought. However, the uptrend pause is anticipated to be mild and short-lived as the momentum is still building for the DJIA to reach 10,300, and the S&P500 index to reach 1,100 this week. This prediction, first made here last Thursday morning as the current multi-day rally was commencing, was confirmed by yesterday's daily SmarTrend(R) uptrends to downtrends as they registered 230:13, and drove the IBDI and Trend Ratio both sharply higher. The intermediate-term uptrend is firmly in gear now and doing its share to boost fortunes of the investing environment along with the long-term uptrend.

There was a very preliminary sign yesterday that the long-term uptrend, which had been gathering upward momentum over the last five months, has started to show some signs of fatigue. This was a sufficient signal to warrant close and continuing monitoring of the long-term uptrend as the sign of fatigue appears due to more than the recent impact on the long-term trend by the near-term downtrend correction through the middle of last week.

Since last week, the near-term trend indicators have rallied smartly. Two of these indicators, SmarTrend(R) Ratio and NBDX, are close to becoming overbought, and the other two, the NBDI and NBDV, are headed in that direction. When three out of four of these indicators arrive in their overbought zones, probably around Friday, the market indices are expected to top out and stall the near-term rally. Today should bring a mixed bag of signals, with the market indices likely to move sideways to consolidate some of yesterday's gains even while the daily SmarTrend(R) uptrends to downtrends probably register another day polarized to the upside. This is not an unusual sign of mixed signals of a multi-day trend when it approaches a top or a valley.

The choppiness seen in the market indices will ebb and flow from the influence of the trade-term trend, the second key component of the trading environment. This often happens around bottoms and tops of market indices as the movements driven by the longer-term trends discussed above have run out of steam and overall slopes become shallow. The resultant, mainly sideways movements by the market indices make them particularly vulnerable to trade-term trend movements, which in turn frequently overreact to news reports. It is now unquestioned that last week's trading environment signal that a multi-day rally had commenced was a good opportunity for buying stocks. The same indicators continue to signal that a top is likely to be reached by the end of this week. Today a report on home prices could impact the trade-term trend and that is discussed below. Overall, the SmarTrend(R) indicators point to a resumed rally, through the end of this week at least, as soon as today's consolidation of gains is complete. To examine the long list of stocks changing trends in the last few days, please click on http://www.mysmartrend.com.

It was a day without much going on, but waning winds in the Caribbean and memories of a communique repeat over the weekend, that sent stocks soaring to highs not seen since last October. The US dollar was outed by the IMF as "still on the strong side," and leaders of the G-20 agreed again to maintain rates low and budget deficits high. But no news was good news in the equity markets, and the DJIA, supported by all but one of its components, rose 203 points, or 2.0%, to a 13-month high of 10,227. The S&P500 climbed 2.2% for its sixth straight session gain to 1093. The NASDAQ gained 2.0% for a 2154 close.

All ten S&P500 industry sectors moved higher during the session, led by gains in basic material shares (+3.5%) and financials (+3.5%). Crude prices added $2.00 for a close of $79.43, rising to an intraday high of $80.19. Hurricane Ida was downgraded to a tropical storm, and considered less of a threat to petroleum installations in the Gulf.

Gold prices, soaring 5.3% last week, continued strong yesterday, up $5.70 to $1101.40 as the implications of the world governments' spending sprees were considered in terms of long-term inflation risks. Such concerns sent the value of the US dollar down 1.0% against a basket of currencies, to a 15-month intraday low of 75.04. The currency's IMF report card of November 7 revealed its judgment that the greenback remains "on the strong side," and is "now serving as the funding currency for carry trades," which "may be contributing to upward pressure on the euro and some emerging-economy currencies." Shares of Freeport-McMoRan (NYSE: FCX | Quote | Chart | News | PowerRating) jumped 4.6%; Rio Tinto (NYSE:RTP) gained 5.9%.

Even as the long-term implications of free-spending governments weighed against the US dollar and boosted gold's appeal, benchmark US indices claimed gains of 61.6% on the S&P500 since sinking to 12-year lows of last March, and increased 56.2% on the DJIA and 69.8% on the NASDAQ from March lows. In November alone, the averages are up 5.5% on the S&P500 and 5.3% on the DJIA and NASDAQ. Dollar weakness has driven risk appetites, and even after the market's recent lofty gains investors have grown increasingly sanguine about the market's prospects. Yesterday saw the CBOE Vix, the gauge of using options as insurance against declines in the S&P500, plummet 4.3% to 23.15.

Dollar weakness strengthened shares of those firms deriving a large percentage of revenues overseas, sending such DJIA heavyweights as Caterpillar (NYSE: CAT | Quote | Chart | News | PowerRating) up 4.2%, DuPont (NYSE:DD) up 3.7%, Boeing (NYSE: BA | Quote | Chart | News | PowerRating) up 3.4%, and General Electric (NYSE: GE | Quote | Chart | News | PowerRating) up 3.4%.

Financials rose 3.5% with American Express (NYSE:AXP) trading 4.9% higher, Bank of America (NYSE:BAC) up 4.8%, Discover Financial Services (NYSE:DFS) up 5.9% and Capital One Financial (NYSE:COF) up 5.6%. The Fed commented that only GMAC of the ten stress-tested bank holding companies, which were considered short of capital back in May, have raised their capital reserves sufficiently to meet the economic risks of higher unemployment and slowing growth. On Thursday, the FDIC meets to address the negative implications of an accounting rule change requiring credit-card firms to bring back on to their books card loans that are bundled into securities and sold to investors. Today Bank of America (NYSE:BAC) CEO Ken Lewis is scheduled to appear before the Bank of America Financial Services Conference in New York City, where he is likely to face more questions concerning his next in line.

While the economic calendar remains light and corporate results slim, Fed speak is thick, with Atlanta Fed President Lockhart slated to 9:15 ET; San Francisco President Yellen at 10:15. Boston Fed President Rosengren is due to speak at 4:15, Dallas Fed President Fisher at 7:30 and Fed Governor Tarullo at 8:30. Senate Banking Committee Chairman Christopher Dodd is expected to release a draft of the bill on financial regulatory reform. Today's Treasury auction of $25 billion in 10-years follows yesterday's successful auction of $40 billion in 3-year notes. Bond markets will be closed Wednesday for observance of Veterans Day.

According to our analytics team, with the DJIA approaching 10,300 resistance, tough going is likely. Nevertheless, SmarTrend(R) indicators point to a resumed rally, through the end of this week at least, as soon as today's consolidation of gains is complete. To examine the long list of stocks changing trends in the last few days, please click on http://www.mysmartrend.com.

In the corporate corner, Priceline.com (NASDAQ:PCLN) reported adjusted third quarter earnings of $3.45, 55 cents above consensus estimates, on better-than-expected revenues of $730.7 million, ahead of estimates of $$693.97 million on strong summer season travel. The firm provided fourth quarter guidance at about $1.06-$1.16.

Electronic Arts (NASDAQ:ERTS) plans to cut 1500 additional workers. The firm reported second quarter adjusted earnings of 6 cents, a one penny miss, on revenues of $1.15 billion, which slightly topped Street projections of $1.12 billion. The firm forecast 2010 earnings of $0.70-$1.00, topping estimates of 89 cents on revenues of $4.2-$4.4 billion versus estimates of $4.26 billion.

Cadbury (NYSE:CBY) rejected the latest Kraft (NYSE:KFT) bid as "derisory."

Moody's (NYSE:MCO) commented that AIG (NYSE:AIG) will be able to repay its Federal loans.

Wells Fargo (NYSE:WFC) lifted its growth expectations for the semiconductor group following release of third quarter numbers. Intel (NASDAQ:INTC) remained its first pick within the group, with "outperform" ratings also on Micron Tech (NYSE:MU) and Xilinx (NASDAQ:XLNX). Analysts increased 2010 growth expectations of 25% for the industry from 10-20% prior.

Goldman Sachs (NYSE:GS) added Polo Ralph Lauren (NYSE:RL) to its Conviction Buy List, with a price target of $94.

Goldman Sachs (NYSE:GS) also added Kroger (NYSE:KR) to its Conviction Buy List, with a price target of $27.

Goldman Sachs (NYSE:GS) removed Coca-Cola Enterprises (NYSE:CCE) from the Conviction Buy List, although maintained a "buy" on the shares.

Tyco International (NYSE:TYC) released better-than-expected third quarter results of 61 cents, 7 cents above estimates, on revenues of $4.42 billion, slightly higher than estimates of $4.32 billion.

Burlington Northern (NYSE:BNI) CEO advised Berkshire Hathaway (NYSE:BRK.A) is liquidating shares of rival railroads Norfolk Southern Corp. (NYSE:NSC) and Union Pacific (NYSE:UNP) as it readies its purchase of Burlington.

Google (NASDAQ:GOOG) moved further into the market for digital advertising on cell phones with the acquisition of AdMob for $750 million.

By Chip Brian, Editor-in-Chief, Comtex news Network

www.Comtex.com -- editor@mysmartrend.com

The following equities mentioned above include:

                                    Comtex SmarTrend Alert
                        ----------------------------------------------
Ticker    Last Close    Trend Direction    Trend Price      Trend Date
----------------------------------------------------------------------
BA         51.35         Downtrend           48.99          10/26/2009
CAT        60.00         Uptrend             54.15          10/15/2009
FCX        83.20         Uptrend             50.55          7/15/2009
GE         15.85         Downtrend           15.00          10/27/2009
RTP        204.73        Uptrend             203.89         11/9/2009

INX -- S&P 500: 1,093
Lo: 1,072 Hi: 1,093
Change: +23.78

http://www.mysmartrend.com/images/INX20091110.jpg

INDU -- DOW JONES: 10,227
Lo: 10,021 Hi: 10,228
Change: +203.52

http://www.mysmartrend.com/images/INDU20091110.jpg

QQQQ -- NASDAQ: 2,154
Lo: 2,128 Hi: 2,154
Change: +41.62

http://www.mysmartrend.com/images/QQQQ20091110.jpg

This report is divided into three sections. The first deals with our 5 proprietary market indicators, the second section examines important economic and business happenings which are expected to affect U.S. Stock market movements and the third section describes specific company announcement and earnings releases. Experience demonstrates that when these 5 indicators reach extremes they can shortly be expected to change direction and move in the opposite direction. When such happens in all or most of the 5 indicators, on or about the same time, followed by a move from below an extreme (oversold) to above that extreme (or vice versa for overbought), a change in market direction is very probable. The near term market moves are measured to identify the best possible returns for traders/investors. Daily price/volume examinations provide the best data upon which to base such forecasts. In this report though, intraday indicators are examined to improve the point of entry timing for the expected move.

Comtex News Network, Inc. is not a registered investment advisor and does not provide investment advice. Investors bear complete responsibility for their own investment research and decisions and should seek the advice of a qualified investment professional prior to making investment decisions. SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright, Comtex News Network, Inc. 2008

Comtex News Network, Inc. ("Comtex") obtains information from sources deemed to be reliable; however, Comtex does not guarantee the accuracy of any of the information or commentary provided. Comtex makes no warranties, expressed or implied, as to the fitness of the information for any purpose, or to results obtained by individuals using the information. In no event shall Comtex be liable for direct, indirect, or incidental damages resulting from the use of the information. Comtex shall be indemnified and held harmless from any actions, claims, proceedings, or liabilities with respect to the information and its use. Comtex does not make specific trading recommendations or provide individualized market advice. The information contained in the Morning Call product is provided as an information service only.

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For full details on Caterpillar Inc (CAT) CAT. Caterpillar Inc (CAT) has Short Term PowerRatings at TradingMarkets. Details on Caterpillar Inc (CAT) Short Term PowerRatings is available at This Link.

For full details on General Electric Co (GE) GE. General Electric Co (GE) has Short Term PowerRatings at TradingMarkets. Details on General Electric Co (GE) Short Term PowerRatings is available at This Link.

For full details on Boeing Co (BA) BA. Boeing Co (BA) has Short Term PowerRatings at TradingMarkets. Details on Boeing Co (BA) Short Term PowerRatings is available at This Link.

For full details on Freeport Mcmoran C&G B (FCX) FCX. Freeport Mcmoran C&G B (FCX) has Short Term PowerRatings at TradingMarkets. Details on Freeport Mcmoran C&G B (FCX) Short Term PowerRatings is available at This Link.

For full details on Rio Tinto Plc Adr (RTP) RTP. Rio Tinto Plc Adr (RTP) has Short Term PowerRatings at TradingMarkets. Details on Rio Tinto Plc Adr (RTP) Short Term PowerRatings is available at This Link.