Welcome Timeout as the Bears Extend Their Run
IT'S BEEN A BEAR TRYING to select winners in the current college basketball tournament, with so many underdogs dispatching consensus picks. Even tougher has been fending off the bears in the stock market, which have exacted a fair amount of portfolio damage under the surface of the indexes in the early part of 2005.
For evidence that the first quarter has made a hash of stock pickers' best intentions entering the year, look no further than the Dow Jones Industrial Average, which fell 186 points, or 1.8%, to 10,442 last week, and is down 3.1% year to date.
So far in 2005, only seven of the 30 Dow stocks are up, with 23 under water. Exxon Mobil (up 15.2%) alone has climbed by a double-digit percentage, while six Dow members have fallen at least 10% (J.P. Morgan Chase, American Express, Home Depot, Verizon Communications, American International Group and General Motors).
None of the 13 biggest stock mutual-fund categories, with $3 trillion of collective assets, have managed positive returns on the year, and fewer than half those groups have outperformed S&P index funds' 3.1% drop, according to Lipper.
That's the kind of extended run of poor play that usually causes a coach to call a timeout, so perhaps the three-day respite from trading over Easter weekend was well-timed.
Last week's four-day market week was long enough, though, to feature a fresh set of inflation scares. Higher wholesale and consumer price readings bracketed a more strident comment from Federal Reserve policy makers following Tuesday's as-expected quarter-point increase in short-term interest rates.
The flare-up in inflation concerns extended a string of plague-like headlines that have soured once-cheerful investor sentiment and kept stock prices in a downward cast for most of the month. These include a new high in oil prices (since subsided a bit), a regulatory assault on AIG and a nasty bout of financial stress on GM's enormous balance sheet.
With last week's drop of 18 points, or 1.6%, to 1171, the Standard & Poor's 500 fell for a third straight week and is near the lower extreme of a tight range the index has inhabited since the week of Election Day. Since then, the benchmark S&P has buzzed around the span between 1162 and 1225, lots of daily noise signifying little.
The Nasdaq Composite, which led the broad market lower, has begun to stabilize, as it outperformed the other indexes by slipping 16, off 0.8% last week to 1991.
The news has been uniformly bad enough and stocks have gotten oversold enough in a short period of time that a brief bounce, at least, might be anticipated soon. The S&P has tumbled by 4.4% in less than three weeks since hitting a three-and-a-half-year high of 1225 on March 7.
Ned Davis of Ned Davis Research reports to clients that the firm's comprehensive measure of investor sentiment -- comprising what investors are doing as well as saying -- is "getting close to extreme pessimism." Given rising rates and the other well-advertised ills, Davis says "we might even need a little more pessimism to have a high-confidence buy spot."
He's nearing a point when he'll call for an April market rally, but this positive tactical view hinges on the S&P's ability to stay above the 1163 level that marked its late-2004 upward thrust.
In this way, Davis is like a number of traders trying to read the market's message, who are saying, in effect, that not only should there be a bounce before too much longer, but there had better be.
With an aging, narrowing bull market facing tighter money, building inflation perceptions, less-favorable seasonal patterns and slowing corporate fundamentals, the market needs to signal that its long uptrend is intact in order to generate another run higher, traders say.
As the macro headlines have dominated investors' attentions, the earnings-warning season has proceeded largely unnoticed. For S&P 500 companies, the ratio of negative warnings to upward profit revisions has been about 2.3, somewhat above the historical norm of 2.0, according to Thomson Financial.
In a bit of seesaw logic, a tough preannouncement period often gets the lousy news out of the way, and ushers in a decent market tone during the real earnings-reporting season, as investors can safely look on the bright side.
Forecasts for first-quarter profit growth have settled in at 7.5%, well below the 20% pace of the fourth quarter but close to expectations at the start of the year. Earnings are projected to accelerate somewhat in the second half of the year, for a full-year rate of 9% or so.
The question -- and it's a big one -- re-mains how much investors will choose to pay for even that kind of healthy profit growth if the din of higher rates, heady oil prices and inflation threats doesn't quiet down.
THIS MONTH SAW THE DEATH of George Atkinson, who opened the country's first video-rental store in 1979. Judging by Wall Street's stance toward video-rental stocks, plenty of investors are questioning whether the industry he launched will outlive him by much longer.
But the piddling values assigned to the few extant video chains has made for much transactional ferment, with takeovers percolating and opportunistic big investors anteing up to bet on the industry's fate.
The biggest bit of corporate news to ripple the calm of the Good Friday market holiday was Blockbuster's decision to abandon its unsolicited bid to buy its smaller competitor, Hollywood Entertainment. The company allowed its existing $14.50-per-share tender offer to expire Thursday night, citing the same likely antitrust challenges that many observers believed made it a long-shot effort all along.
The move cleared the way for Hollywood's agreed deal to be acquired by Movie Gallery for $13.50 a share to proceed.
The market may have gotten a small jump on the news Thursday, when Blockbuster's class A shares (BBI) turned higher late in a weak market, rising 2% in the last hour to 9.46. It's not clear whether there was a leak, or whether traders simply surmised that Blockbuster wouldn't extend the offer if it hadn't by that time.
That leaves Blockbuster where it stood before its Feb. 2 bid: as the largest player in a stagnant-to-declining industry, trying to thrive in a world of online movie rentals and video-on-demand.
As Barron's pointed out last fall ("Fast Forward," Sept. 27, 2004), there's often value to be found in hard-put companies and their despised stocks. At the time, Blockbuster's A shares were at 7.37, and have since jumped 28%.
At current prices, the Street is discounting a higher probability that Blockbuster management will succeed in quickly gaining online-rental subscribers, creating a secondary market for used DVDs and video games and offsetting the $300 million a year in forgone operating income from late fees it no longer levies.
复活节为低迷股市提供喘息之机
由于众多参赛者表现拙劣，从本届大学生篮球联赛中一直难以选拔出优秀选手。阻止股市的下跌就更难了，在2005年年初的这几个月里大盘的下挫令各种股票投资组合损失惨重。
只需关注一下道琼斯工业股票平均价格指数第一季度的糟糕走势便可以看出：这种局面令对今年大盘行情寄予厚望的投资组合经理感到手忙脚乱。道琼斯指数上周跌186点，至10,442点，跌幅1.8%，今年迄今为止的跌幅已达3.1%。
今年目前为止，30只道琼斯指数成份股中只有7只股票走高，其余23只悉数走低。只有埃克森美孚(Exxon Mobil)的涨幅达到两位数（涨15.2%）；6只成份股的跌幅至少达到10%，它们分别是摩根大通(J.P. Morgan Chase)、美国运通(American Express)、Home Depot、Verizon Communications、美国国际集团(American International Group)和通用汽车(General Motors)。
Lipper的数据显示，总资产加起来达到3万亿美元的13家大型股票共同基金今年目前为止的业绩全线下滑，其中一半以上的表现不及标准普尔500指数的走势（跌3.1%）。
若是在比赛场上，这种持续低迷的表现往往会迫使教练叫一个暂停，因此，复活节三天长周末或许是来的恰到好处。
上周4天的市场走势将投资者对通货膨胀的新一轮忧虑体现得淋漓尽致。联邦储备委员会(Federal Reserve, 简称Fed)在如期加息25个基点之后发表的声明中对通货膨胀形势的忧虑加重，而随后公布的批发价格指数及消费者价格指数的上升表明Fed的担心并非杞人忧天。
在对通货膨胀形势的忧虑加剧之前，股市已经受到了一系列负面消息的困扰，导致一度乐观的市场人气转入低迷，并致使3月的大部分时间里股市处于下跌格局。这些负面消息包括油价在短暂回调之后再创历史新高、监管部门对美国国际集团展开调查、以及通用汽车面临财政压力。
标准普尔500指数上周跌18点，至1171点，跌幅1.6%，为连续第三周下跌，接近一个窄幅波动区间的底部。自总统大选当周以来，标准普尔500指数就一直在这个1162点-1225点的区间内波动。
在大盘下跌过程中扮演开路先锋角色的那斯达克综合指数的走势开始稳定下来，该指数上周下跌16点，至1991点，跌幅0.8%。
在短时期内负面消息接踵而至以及股市已经处于严重超卖状态意味著投资者至少可以期待不久后股市将迎来一次短暂的反弹行情。自3月7日升至1225点的3年半高点之后，在不到3周的时间内标准普尔500指数累计下跌了4.4%。
Ned Davis Research的奈德?戴维斯(Ned Davis)在致客户的报告中表示，该公司衡量投资者人气的一套综合指标（将投资者的言行举止均考虑在内）表明，市场上的悲观情绪快到穷途末路的地步了。鉴于利率的上升以及其他一些众所周知的负面消息，戴维斯表示，“或许大盘只需要再有一点点跌幅，我们就可以高枕无忧地大举买进了。”
他认为，市场将在4月份迎来大幅上扬的行情，但他认为这个预期能否实现要取决于标准普尔500指数能否停留在1163点的上方。2004年年末时，标准普尔500指数就是从这个点位展开了一轮飙升行情。
从这个角度来讲，戴维斯也是试图解读市场信息的交易员阵营中的一员。这些交易员认为过不了多久市场就将迎来一次反弹，而且他们也急切地盼望著能出现一次反弹。
交易员们表示，由于涨势日渐难以维系的牛市行情正面临著货币政策收紧、通货膨胀压力加剧、季节性因素不利、以及企业盈利增长放缓等负面因素，市场只有在证明长期上升趋势仍然完好无损之后才能实现新一轮的上扬。
由于投资者把主要目光都放在宏观消息面上，多家公司发布的收益预警被市场忽略了。Thomson Financial的数据显示，在标准普尔500指数的成分股中，下调预期与上调预期的比例为2.3:1，这个比例高于2.0这一历史平均水平。
根据物极必反的常理，如果有众多公司在最新收益预期发布期间下调收益预期，市场经常会提前消化了负面消息，在真正的收益报告期市场往往走势尚可，原因在于这时候的投资者可以用积极的目光来看待后市的行情。
目前对第一季度企业盈利增长率的预期为7.5%，远远低于第四季度20%的盈利增长率，但接近于年初时的预期。预计企业盈利将在今年下半年加速增长，全年的盈利增长率将为9%左右。
一个重要问题是，如果对利率上升、油价高企、通货膨胀加剧的担心不能得到缓和的话，投资者会以多大的热情来迎接企业盈利稳固增长的局面？
