Comtex SmarTrend(R) Morning Call -- March 10, 2010

Stocks climbed higher intraday, then eased back, in a roundtrip returning them to their Tuesday start. The DJIA climbed up over 10,600, but closed up 11 points at 10,564. Some SmarTrend(R) indicators are still rising, while others are bouncing off overbought ceilings, which confirms the surge to DJIA expected to 10,700 this week will be followed by a mild retreat next week.

Stock prices have been flat this week as investors have been contemplating what direction markets are headed with little economic news to react to. That may change today. Yesterday, not surprisingly, the daily SmarTrend(R) uptrends to downtrends eased back, although they were still biased to the upside at 60:4. This performance was enough to keep the IBDI and Trend Ratio moving north, signaling the intermediate-term uptrend is alive and well, and boosting stock prices. However, one of these two indicators, the Trend Ratio, at 76 is close to a topping out level of 80. This will make further rises by the intermediate-term trend weaker and choppier. Still, with continuing help from the long-term uptrend, the investing environment is expected to continue favorable to long stocks for the remainder of this quarter and/or until stimuli start to dry up.

The trading environment is in a correcting mode due to many of its near-term trend indicators being very overbought and in need of easing downward. All four near-term trend indicators have now risen near the tops of their overbought zones. If it were not for the lifting by the investing environment trends, the DJIA would be expected to correct downward 3% before trying to reach for 11,000 on a new try; however, the boosting effect from the intermediate and long-term uptrends is anticipated to keep the anticipated dip in the DJIA next week to about 150 points from here. In other words, a retreat to 10,400 is possible after the DJIA touches 10,700 before this week is out.

The DJIA support and resistance levels can be under, or over, shot by 50 or more DJIA points due to reactions by the trade-term trend to news. There has been little for the trade-term trend to react to the first two days of this week. Cisco appeared yesterday to have overhyped its new "change the world forever" router on Monday, although the new router's reported ability to enable the entire Chinese population to video conference at one time may turn out to be a bigger boost to smart cell phone usage than skeptical investors first thought. Potential market-impacting reports are discussed in the section below. Today, investors will see a report on state unemployment data for January, coming at 10AM Eastern Time, with a wholesale inventories report also to be released then. These items can be expected to cause shallow gyrations in the trade-term trend, but these should mainly end up as minor fluctuations, not alter the continuing multi-day rally, although a pull-back correction by the DJIA is likely to start after the DJIA touches 10,700 later this week. To review the constantly updated list of stocks changing trends in the last week and/or hear a podcast of this report, please go to http://www.mysmartrend.com.

One year after sinking to multi-year lows (the DJIA and S&P500 to 12-year and the NASDAQ to 6-year lows) markets appear relatively sanguine about the prospects for a global recovery even as investors grow concerned that the stock market rally over the past twelve months (61% higher for the DJIA, 68% for the S&P500 and 84% for the NASDAQ) may make further gains increasingly difficult to achieve. Even so, strategists admit finding the world a safer place this March, with financials off the lip of an abyss; China growth stimulating global strengthening; and US manufacturing increasingly vigorous. This morning's headlines return a hopeful picture of: better-than-expected China export growth; speculation that Citigroup (NYSE: C) may raise over $15 billion in equity; a better-than-consensus Caterpillar (NYSE: CAT) estimate of 2010 US and global GDP, as well as former EU President Prodi's proclamation the worst of the Greek debt crisis has past and Papandreou's assertion that Obama has expressed support.

Stocks closed Tuesday modestly higher, leaving the DJIA and S&P500 at 6-week highs, and the tech-heavy NASDAQ at 18-month highs, as volume picked up from recent low trading levels. The DJIA tacked on nearly twelve points to close up 0.1% at 10,564; the S&P500 up 0.2% at 1,140; and the NASDAQ, aided by Cisco's (NASDAQ: CSCO) news of a new router, up 0.4% to nearly 2,341.

Strength in telecom shares and industrials offset declines in basic material shares, as commodities priced lower. Of the S&P500 ten sectors, telecom shares led higher (+1.2%), followed by industrials (+0.7%), technology (+0.4%), financials (+0.3%), oil and gas (+0.1%), consumer goods (+0.1%), health care (-0.1%), consumer services (-0.1%), utilities (-0.2%), and basic materials (-0.4%).

DJIA leaders included United Tech (NYSE: UTX), up 1.4% on a ratings boost to "outperform" by analysts at Cowen & Co, General Electric (NYSE: GE), up 1.4% after predicting an earnings pick up in 2011 after a flat 2010, and AT&T (NYSE: T), up 1.1% after testing the new Cisco (NASDAQ: CSCO) router and reporting it moves data at ten times that of typical broadband connections. Hopes for reduced congestion on mobile networks also lifted shares of Sprint (NYSE: S), which gained 6.5%, and Leap Wireless (NASDAQ: LEAP), up 3.9%.

AIG (NYSE: AIG) turned in the sharpest S&P500 increase, up 12.6%, on speculation its recent $51 billion in deals might be joined soon with additional asset sales. Citigroup (NYSE: C) shares climbed 7.3% after a Fox Business report averred the US government is considering sale of its 27% stake in the company, perhaps within the next three months. And this morning news circulated the firm may begin selling as much as $2 billion trust preferred securities as soon as today. Fannie Mae (NYSE: FNM), up 5.9%, and Freddie Mac (NYSE: FRE), up 7.6%, found their shares lifted by the others' news.

A WSJ report suggesting the Fed is currently debating how it will signal the inevitable, though not yet, lifting of interest rates raises again the specter of higher-priced money. Investors perhaps might take solace in the likelihood of such advance warning, something the Bernanke Fed team has tried to accomplish after surprises unduly unsettled markets previously. And Bank of America (NYSE: BAC), officially has returned its TARP bailout money, taking to $116 billion the amount so far returned to the US Treasury.

Today begins the week's releases of various economic posts after a notably quiet first several days. Wholesale trade is expected to show 0.2% January growth versus last month's 0.8% decline; sales are expected up 0.7%. The EIA petroleum stats are expected to post an increase in US crude stockpiles; however, news that China exports surged a better-than-estimated 45.7% YoY in February despite the Lunar New Year holiday restrained oil price declines.

Additional items of interest include another Obama arm-twisting, health-care speech, weekly mortgage apps, state employment rates, a Google (NASDAQ: GOOG) hearing, and a Treasury auction of 10-years.

According to our analytics team, if it were not for the lifting by the investing environment trends, the DJIA would be expected to correct downward 3% before trying to reach for 11,000; however, the boosting effect from the intermediate and long-term uptrends is anticipated to keep next week's expected dip in the DJIA to about 150 points from here. In other words, a retreat to 10,400 is possible after the DJIA touches 10,700 before this week is out. To examine the list of stocks changing trends in the last week, please click on http://www.mysmartrend.com.

In the corporate corner, Facet Biotech (NASDAQ: FACT) agreed to its purchase by Abbott Labs (NYSE: ABT) for $722 million or $27 per share.

American Eagle Outfitters (NYSE: AEO) announced plans to shutter all 28 Martin & Osa stores. The company is due to report results today, with fourth quarter earnings of 33 cents versus 19 cents a year ago anticipated.

Goldman Sachs (NYSE: GS) added Bucyrus (NASDAQ: BUCY) to its Conviction Buy List with an $80 price target.

Several analysts reiterated "buy" recommendations on J Crew (NYSE: JCG), raising price targets. Late yesterday the firm posted a swing to profitability in its fourth quarter and forecast better-than-expected current year results of $2.20-$2.30; Street estimates were $2.13.

Goldman Sachs (NYSE: GS) Conviction Buy List changes included additions of Evercore Partners (NYSE: EVR) and Goodrich (NYSE: GR); deletions were Lazard (NYSE: LAZ) and Textron (NYSE: TXT) although buy ratings were maintained.

Childrens' Place (NASDAQ: PLCE) reported inline earnings and revenues, with earnings of $1.03 and revenues of $462 million. Full-year guidance of $2.90-$3.10 was provided; the Street expects $3.00.

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
----------------------------------------------------------------------
C          3.82          Uptrend             3.70           3/9/2010
CAT        59.18         Uptrend             56.72          2/16/2010
CSCO       26.13         Uptrend             24.13          2/18/2010
GE         16.49         Uptrend             16.48          1/8/2010
UTX        71.78         Uptrend             67.86          2/18/2010

INX -- S&P 500: 1,140
Lo: 1,135 Hi: 1,145
Change: +1.94

http://www.mysmartrend.com/images/INX20100310.jpg

INDU -- DOW JONES: 10,564
Lo: 10,534 Hi: 10,613
Change: +11.86

http://www.mysmartrend.com/images/INDU20100310.jpg

QQQQ -- NASDAQ: 2,341
Lo: 2,326 Hi: 2,353
Change: +8.47

http://www.mysmartrend.com/images/QQQQ20100310.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. 2010

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