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Morning Watch, July 1


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Jody Osborne, Optionetics.com
July 1, 2009


Bulls look to start new quarter positively, despite larger than expected ADP Payroll figure. The second quarter was very strong for stocks, despite the fact the month of June was mixed for the major market indices. Wednesday will be a very busy day for economic data with reports on mortgage applications, the ISM Mfg. Index and pending home sales still on tap.

The ADP Employment Report showed that private payrolls fell by 473,000 in June after declining 532,000 in May. Obviously, this report didn't do a great job of predicting payroll declines last month, but the data is still disappointing. The nonfarm payrolls report for June due out tomorrow is expected to show a decline of 350,000. In related news, the Challenger report showed improvement with job cut announcements falling to 74,393 from 111,182 in May.

The ISM Index could have a major impact on stocks with traders looking to see if manufacturing activity is improving at home as it is in Europe, China and the U.K. Economists are looking for the index to rise to 45.0 from 42.8 in May. The index hit a low in December at 32.9. On Tuesday, the Chicago PMI matched expectations, rising to 40.0 in June from 34.9 in the prior month.

In individual stock news, General Mills (GIS) announced earnings that were 6-cents above expectations. Better yet, the company raised its full year forecast, with new products and moderating commodity prices the main reason for the revised outlook. GIS shares are up more than two percent this morning to a price near $57.25 with a 52-week range from $46.37 to $72.01.

Oshkosh Corp. (OSK) is seeing its shares rise about 30 percent this morning after winning a billion dollar order. The company will supply all-terrain vehicles to the U.S. Army, sending the stock sharply higher. However, shares of Force Protection (FRPT) are down 35 percent after losing out on the bid. OSK shares are trading near $18.75 with a 52-week range from $3.85 to $20.95.

It will be interesting to see how stocks react following the ISM Index. On Tuesday, things got off to a good start, but ultimately disappointing economic news left stocks in bearish territory. Nonetheless, the bears are having a hard time taking control of the major market indices and this has many analysts stating that a double dip bottom is not likely.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site


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