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Thursday, July 22, 2010

Stock Market News and Truth by NeverLossTrading

Wow, what a Stock Market Rally. How did this one come. Take a short moment and check out our reports from yesterday:

Now we get to the points:

The market reported a softer than expected decline in existing home sales. NAR said existing home sales fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million units in May. Economists had been expecting existing home sales to show a steeper decline to a 5.09 million unit rate. So with the advanced sales by the government stimulus program this is a good sign.

Let us take a look in the world: Eurostat reported that orders for industrial goods in the euro zone rose 3.8 percent in May, a jump of nearly 22.7 percent compared to the same period last year. The figure surprised economists, who had forecast flat monthly orders. But why did this figure rise? US-companies make profits and invest further into machinery that is often bough from Europe.

Now we come to realization: The US companies restructured, highly profitable and have money to spend. They get it done with less people and this will be a given and the Government now owns the liability for all those people who cannot find a job. Look at today’s Labor Department report: showing that jobless claims jumped to 464,000 in the week ended July 17th from the previous week's revised figure of 427,000. Economists had expected weekly jobless claims to increase to 445,000 from the 429,000 originally reported for the previous week.

On the earnings front, construction machinery manufacturer Caterpillar Inc. (CAT) reported second quarter net income of $1.09 per share, topping forecasts for $0.85 per share for the period. Sales and revenues for the quarter totaled $10.409 billion, firmly beating forecast for $9.80 billion. The company's median forecast for earnings and revenues for fiscal 2010 was also above analyst expectations. Again somebody who sells machinery to those who have money.

Economic bellwether United Parcel Service Inc. (UPS) reported second-quarter net income of $0.84 per share, which was above analyst consensus of $0.77 per share. Total revenues for the quarter rose to $12.20 billion from the $10.83 billion posted in the prior year quarter. Analysts had consensus revenue estimate of $11.98 billion for the period. Where there is freight there are goods exchanged.

3M Co. (MMM) said its second quarter net income came in at $1.54 per share, beating estimates for $1.48 per share. Net sales for the quarter rose 17.7 percent to $6.73 billion, also topping estimates that called for $6.66 billion. The firm also boosted its 2010 sales growth expectations.

So the economy does better that previously reported. The key problem is that there is not enough jobs and new jobs will most likely not be created with the rate of revenue and profit growth. This leads into a future where at one point the government needs to restructure taxes and health care to cope with the additional spending. Considering this, we see whip slash market ups and downs which are good for the day trader and hard for the long term investor who one day will be in heaven and in hell the next.

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