schaeffer's market recap

Market Recap

After a slight dip around midday, the market has rallied higher to
continue its roller-coaster-like trend over the past couple weeks. Traders
were pleased with the narrowed U.S. trade deficit for November. Results
came in at $38 billion (down 8.6 percent) compared to the Street estimate
of $41.6 billion. Meanwhile, the Producer Price Index soared 0.3 percent
for December versus the consensus estimate for a 0.2-percent gain.
Excluding food and energy prices, the index tumbled 0.1 percent.

The brokerage firms were eager to fill in any gaps today. One house
downgraded Pfizer from "outperform" to "market perform" on valuation
concerns and its fragile pricing of Lipitor. Furthermore, Wendy's was
upgraded from "neutral" to "buy" while May Department Stores was lifted
from an "underweight" rating to a "neutral." Nokia also jumped into the
act, being upgraded from "neutral" to "buy," with the analyst citing
better growth expectations for both its handsets and infrastructure.

In earnings news, Delta Air Lines fell short, reporting a loss of $1.71
per share (excluding items) while the Street had anticipated a loss of
only $1.66 per share. Elsewhere, Plantronics blew past the consensus
estimate of 28 cents per share. The company reported earnings of $17.6
million, or 37 cents per share. Of course, these reports only succeeded in
whetting the appetites of traders for what is to come after the close.
Intel, Apple Computer, and Yahoo! are all slated to slip into the earnings
confession tonight following the closing bell. These reports could have a
heavy effect on trading tomorrow.

Honeywell International led the charge for blue chips today, setting a new
52-week high and gaining more than three percent on the day. The surge in
optimism towards the company came after an analyst upped his target price
from $31 to $32, citing that the increased earnings outlook of competitor
Rockwell Collins should have a positive impact on the Dow component.

Speaking of the Dow, the blue-chip barometer slipped yet another day of
triple-digit gains under its belt, finishing up 110.8 points (or 1.06
percent) at 10,538.3. Only three of the Dow's components missed out on
today's rally. Johnson & Johnson, Intel and Eastman Kodak all closed the
day in the red as investors were shaky today before INTC's fourth-quarter
earnings announcement after the market close. Leading the bulls charge for
the index were the aforementioned Honeywell, Caterpillar, and United
Technologies.

The tech-laden Nasdaq Composite (COMP) was also up on the day, albeit more
tentatively. The COMP gained 14.7 points (or 0.70 percent) to end the
session at 2111.1, as investors wait for tonight's deluge of heavy-hitting
tech stocks to report earnings.

Levels to watch for in Thursday's trading :


Dow Jones Industrial Average (INDU) - support at 10,000; resistance at 10,
600


S&P 500 (SPX) - support at 1090, resistance at 1160


Nasdaq Composite (COMP) - support at 2000; resistance at 2200