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Stocks look poised to push higher again this week.
The S&P 500 is on the cusp of a break above resistance at 1,335. And
that would likely set up a test of the post-crash highs at 1,344.
But as Jason Cimpl told his TradeMaster Daily
Stock Alerts members this morning, earnings are coming
and stocks have been relentless since recent lows:
Although the market participants have
seemingly not cared about economic data for the past few weeks, the
market will not move higher if earnings disappoint. And earnings season
will officially begin next week. Even though the bulls look unstoppable
now, and to a large degree they have been over the past eight months, a
poor earnings season will awaken the bears.
Additionally, I would prefer the market fall
to 1301, which lets the bulls regroup before they take stocks to new
highs.
Alcoa (NYSE:AA) starts earnings season next
Monday, April 11.
Let’s also note that there have been virtually no
earnings warnings, so for now, we should expect another round of solid
earnings gains.
*****Oil prices are above $108, but the action in
oil stocks has been a little unusual. The big integrateds, like Exxon
(NYSE:XOM) and Chevron (NYSE:CVX) have been moving higher. But some of
the smaller E&Ps (exploration and production) that I favor have not
moved with higher oil prices.
As readers may know, I am more bullish on oil
stocks that come with little geo-political risk. It is my belief that oil
supplies are in jeopardy of being nationalized in the years to come as
oil prices continue to rise. Oil reserves are money in the bank, and I
find it easy to imagine that certain countries could simply cancel
contracts held by major like Exxon.
I very much favor U.S. and Canadian oil companies.
And I love the small companies working the Bakken oil pool in the Western
U.S. “Official” estimates for Bakken reserves seem conservative at around
5 billion barrels. Because this is oil in a shale formation, the
estimates of how much is truly recoverable may not be reliable.
Horizontal drilling technology is very successful in the Bakken. I
suspect there is upside to the recoverable estimates.
If you’re interested, you can find some of top
Bakken recommendations
HERE.
*****The U.S. pay czar, who is in charge of
compensation issues for executives at companies that still owe the U.S.
government for TARP loans, has issued guidelines for 2011 compensation.
And the results probably won’t sit well with most Americans.
AIG CEO Robert
Benmosche’s salary stands at $3 million, with $7.5 million in stock, for
a total of $10.5. AIG needed a shocking $182 billion in bailouts and is
92% owned by the government. With a current market cap of $62 billion, I
have a hard time seeing how this money gets repaid.
The top dog at GM will be getting $9 million in
salary and stock. The U.S. has recouped about half of GM bailout
money.
Interestingly, the compensation at Chrysler is
much more in line with what we might think is appropriate for a company
with an outstanding debt to the government. The CEO is a Fiat employee,
and doesn’t fall under U.S. pay guidelines. The next highest paid
executive will receive a total of $1.18 million in salary and stock
compensation.
I get the fact that companies need to pay up to
attract top talent. But the simple fact remains that the financial crisis
did little to change the corporate or regulatory climate. And that’s just
sad.
Now right on cue, here are some of your comments
regarding the David Sokol/Lubrizol (NYSE:LZ) situation…
*****Richard S.: