Bux Weekend Report January 25 2009

Bux Weekend Report will be discussing the previous week and the upcoming week. We’ll look at individual stocks, economic data, and politics. The W.R. will provide indicator information as to where the markets are headed in the near future.

On Friday the markets opened drastically lower than the close on Thursday. At one point, the Dow futures were trading one point below the 52-week low of the Dow at 7,881. Luckily, when the market opened it only reached a low of 7,909 and from there trended higher.

A good performer last week, Potash (POT), a fertilizer maker, reported strong earnings for the quarter and the company expects the back half of 2009 to be strong as well. The turbulence in the credit markets and crop prices volatility is probably the cause of the rebound. Another plus for Potash, grain prices seem to have begun to stabilize.

For the first part of the week oil wasn’t very active. On Thursday the Energy Information Agency released their numbers on crude oil reserves; they rose by 6.1 million barrels–I had to re-check the numbers because at first I didn’t believe it! A number of analysts were expecting an increase of only 2.1 million barrels. It’s an impressive tribute to the value of oil that even with a massive influx of crude oil into the system, and an initial price drop of roughly $3.00, the day prices stabilized and fought back to end the day down only about $0.60.

The investment world likes to focus on news being “”less bad”" than expected or forecasted. For example, if I expect the economy to shrink by 4% but it shrinks by 8% this turns me negative on the economy; however, if the next time GDP is reported and I expect the economy to shrink by 3% but it only drops by 1%, then my expectations are beat. So if I know numbers for a stock or economic data are going to be bad but the number reported beats my expectation, it’s positive. This is one reason the stock market tends to turn positive 6-9 months before the actual economy turns up. Take a second and think about how hysterical that is, but that’s how it works.

Now let’s take a look at earnings for the upcoming week. Earnings season will swing into full gear with big names reporting their numbers. We’ll be seeing earnings from Caterpillar (CAT), Tyson Foods (TSN), Nucor (NUE) and 3M (MMM).

In addition to earnings season, this week showcases the release of some important government data. Existing Home Sales, GDP and the FOMC meeting and a slew of other data will be released throughout the week. People will be paying a lot of attention to these numbers, as the data will help folks judge where the economy is headed.

That’s all for today folks. We’ll continue our market analysis at the end of the week.