Range-Bound at High Altitude
SOCIAL CLIMBERS AND MOUNTAINEERS know there is more than one way to the top. Stocks took the stealth route last week, pushing incrementally to their highest levels in nearly five years with little fanfare or fuss. The climb was led by a trio of sherpas: financial, industrial and small stocks. While they ran into resistance at the peak -- the all-too-familiar headwinds of inflation risk and energy prices -- stocks ceded little ground and paused for the weekend within sight of the summit.
The perch isn't as precarious as some feared, due to the market's underlying strength. But the path ahead will be mapped from hard-to-handicap data about economic growth, with the interest-rate outlook the driving force -- or convenient culprit -- behind the market's short-term moves. Midweek, a benign inflation reading was credited for spurring stocks' rise, before a sharp drop in unemployment claims prompted handwringing about extended interest-rate hikes. By Friday, a foiled terrorist attack on a vast Saudi Arabian oil refinery managed to send crude up more than $2, providing an easy excuse for stocks' stalled advance.
The Dow Jones Industrial Average rose Wednesday to a 56-month high of 11,137, but retreated to become the only major benchmark to finish the week lower. It lost 53, or 0.5%, to close at 11,062. The Standard & Poor's 500 added 2 points, to end at 1289, and is just a hair away from a 4?-year peak. Small-cap stocks outdid their larger peers for the eighth week over the past nine, lifting the Russell 2000 Index 6 points, or 0.8%, to 737. The index is up 9.4% so far this year and at its all-time high. Large technology stocks lagged early in the week, before Nasdaq added 5 points to close the week at 2287.
For now, the neutral tape seems to point to a tightly range-bound stock market, with a few stabs at marginal new highs. But if upside gains look limited, bulls can take heart in the relatively few weak spots found from the midweek run. Only 10 stocks sunk to fresh 52-week lows at the New York Stock Exchange Wednesday -- a show of strength that will egg on the buy-the-dip crowd in the days to come.
Investor sentiment also keeps moderating, with surveys showing bullish expectations abating slightly even as stocks rose. At the International Securities Exchange, the pace of optimistic call-buying also remained below average last week. And the short-term risk forecast as quantified by the VIX volatility index was higher than at stocks' previous Jan. 11 high. These aren't reason enough to buy stocks, but should give pause to bears scouring for the kind of rampant complacency seen at stock-market tops.
The current market firmness owes largely to continued profit growth. But investors worry, of course, about how long such growth can continue in a world of rising energy prices, mounting borrowing costs, an extended housing market and a stretched consumer. Last week, Gap (ticker: GPS) reported an 11% drop in fourth-quarter profits and a sixth consecutive decline in quarterly same-store sales, hinting that investors shouldn't expect more profits than last year. And Nordstrom (JWN)'s guarded forecast suggested softening demand, even among the better-heeled. Such reports may prove anomalous, but they do add new wrinkles to the already creased fabric of consumer spending.
Amedisys (AMED) also took a hit, after the home health-care provider reported fourth-quarter results well below street expectations. A 24% drop in share price may tempt bargain hunters, especially as management maintains it will eliminate certain travel and marketing expenses to improve margins, and essentially dismissed the shortfall as an issue of cost rather than revenue. But the resignation of its chief financial officer ruffled analysts and raised concerns about management credibility -- some of which Barron's flagged in a skeptical story ("Making Healthy Profits in Home Health Care," Nov. 21).
The upcoming March preannouncement season will no doubt shed some light on whether the first quarter's softer guidance was a passing blip or a more worrying preview of things to come.
Brown Brothers Harriman technical analyst Andrew Burkly found a red flag planted at the Dow Industrials' recent summit: Only five components -- American Express (AXP), Boeing (BA), Caterpillar (CAT), Procter & Gamble (PG) and United Technologies (UTX) -- rose concurrently to their peak of this cyclical run. Meanwhile, nearly half of the 30 components, as well as half of those in the S&P 500, were more than 10% off their current cyclical high. A 10% gap isn't wide. But a stock-market top tends to develop gradually over time, with fewer and fewer stocks peaking each time. As this bull run ages, the number of Big Board stocks surging to new highs has been dwindling, with the recent surge off October '05 lows propelling the fewest stocks to a 52-week high than any other rally over the past three years.
LIKE AMERICAN IDOL, THE STOCK MARKET can get preoccupied with trying to find tomorrow's flashiest performer. Until then, most are content to stick with today's winners. And last week, sector exchange-traded funds surging to a new high included the Industrials Select SPDR Fund (XLI), the Financial Select SPDR (XLF) and the Regional Bank Holdrs Trust (RKH).
While the old adage cautions against fighting the tape, it isn't unreasonable to expect market leadership to eventually change. Technicians have marveled at the industrials' strong charts, with sector indexes outstripping historical moving averages and momentum solid. And despite escalating raw-material costs, industrial companies have steadily improved profit margins for at least seven straight quarters -- to about 11.6% in the fourth quarter, from 9.8% two years ago, according to Goldman Sachs. This suggests that industrial companies have managed so far to pass on higher prices to customers.
Yet the financials' charge seems to have unfolded despite the market. A naggingly inverted yield curve cuts into banks' profits as the interest rates they pay to attract deposits rise relative to their return on investments. Still, hopes of an end to the campaign of interest-rate hikes have sent the sector soaring.
Brokerages, in particular, have benefited from the market's appetite for financial stocks and its wariness of lenders. Profit growth has been stellar, and looks likely to remain robust this year -- testament to management panache in wringing profits in a challenging trading environment. But the group's stretched valuation also suggests many of these stocks may already be discounting the bulk of the good news.
The largest Wall Street firms like Goldman Sachs (GS), Lehman Brothers (LEH) and Morgan Stanley (MS), for example, today trade at nearly 2.5 times their respective book values -- well above the mean of 1.75 times over the last 15 years. According to Bernstein's brokerage analyst Brad Hintz, these stocks have rarely approached such levels, trading below the current 2.5 times price-to-book about 90% of the time from 1990 to 2005.
美股高位振荡
登山运动员和想要从底层进入上流社会的人都知道，登顶的路不止一条。股市也是一样，上周走了一条迂回曲折的道路，静悄悄一小步一小步地逼近了近五年高点。这一次的攀升有三大领路人：金融类股、工业类股和小型股。虽然它们在达到顶峰时都遭遇了阻力──又是通货膨胀风险和能源价格这些老生常谈──但并没有太大跌幅，结束上周交易时距峰顶仅一步之遥。
这次的高点并不像有些人担心的那么根基不稳，因为股市仍有一定的实力。不过，前进的道路如何，还要取决于各类经济增长数据和利率前景，而后者往往是股市短期走势的重要因素。上周三发布的温和的通货膨胀数据推动股市走高，但紧接著就是申请失业率救济人数锐减，让人们对加息周期的结束遥遥无期更感绝望。到了周五，沙特阿拉伯一处大规模炼油设施险些遭遇恐怖袭击的消息导致油价上涨逾2美元，轻松挡住了股市继续前进的道路。
道琼斯工业股票平均价格指数上周三创出56个月高点11,137点，但随即回落，至上周五收盘成为当周唯一收低的主要股指。道琼斯指数上周累计下跌53点，收于11,062点，跌幅0.5%。标准普尔500指数上涨2点，收于1289点，与4年半高点只有咫尺之遥。小型股的表现好于大型股，这已经是过去九周里的第八周了。罗素2000指数涨6点，收于737点，涨幅0.8%。今年以来，该指数累计上涨9.4%，创出历史高点。大型科技类股上周出表现滞后，但那斯达克综合指数仍上涨了5点，收于2287点。
到目前为止，在窄幅波动的市场上横盘整理的股票居多，个别股票稍稍刷新了历史高点。如果涨幅看来有限，看涨一方还会从上周三的强劲涨势中得到安慰。上周三，纽约证交所只有10只股票创出52周新低──预示著未来几天的逢低买进动力将会相当强大。
投资者人气不断下降，几项调查都显示，虽然股市不断走高，但看涨预期却略有消退。国际证交所(International Securities Exchange)上周看涨期权的买盘仍然低于平均水平。VIX波幅指数的量化短期风险预期还是高于1月11日上一次高点时的水平。这些理由不足以引发买盘，但会给股市冲顶时的看跌者一些安慰。
市场目前的强势在很大程度上归因于利润的继续增长。但投资者担心在能源价格上涨、借款成本上升、住房市场价格高企和消费者过度支出的情况下，利润的增长还能维持多久。上周，Gap公布第四季度利润下降11%，这也是其同店销售额连续第六个季度下降，提醒投资者对今年的利润预期不应过于乐观。Nordstrom谨慎的预期表明需求趋软，即使经济宽裕的消费者也是如此。此类报告可能并不是主流，但的确令本已低迷的消费者支出雪上加霜。
Amedisys也受到重创，此前这家家庭医疗保健提供商公布了大大低于预期的第四季度业绩。股价暴跌24%可能会吸引逢低买进的投资者，尤其是管理层已表示将削减部分差旅和营销开支，以提高利润率。但该公司首席财务长的辞职令分析师感到不安，这也增加了他们对管理层信誉的担忧。
即将开始的3月份收益预告季节无疑将使人们进一步确认第一季度的低迷预期是暂时现象还是形势将继续恶化的前奏。
Brown Brothers Harriman的技术分析师安德鲁?伯克利(Andrew Burkly)发现，近期道琼斯指数创出高点的背后却是众多股票的走低：只有5只成分股──美国运通公司(American Express Co.)、波音公司(Boeing Co.)、卡特彼勒公司(Caterpillar Inc.)、宝洁公司(Procter & Gamble Co., 又名：宝硷公司)和联合技术公司(United Technologies Corp.)──在本轮涨势中与大盘同步走高。但与此同时，30只成分股中接近一半股票，标准普尔500指数中也有一半股票较本轮的周期性高点下跌了10%以上。10%的跌幅并不是很大。但股市的高点通常是随著时间的推移逐步变化的，每次会有越来越少的股票创出高点。在牛市接近尾声时，创出新高的股票数量会不断下降，在从2005年10月低点走出的最新一轮反弹中，创出52周新高的股票数量是过去三年的所有反弹中最少的。
