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Stock Market Opening Report - November 15, 2012

 November 15, 2012 08:59 AM

(By Rich Bieglmeier) Slide, slide, slippity, slide stocks are taking investors for a dippity ride. Wall Street turned way negative following the release of the FOMC minutes, the President's press conference, and bombs flying in the Middle East. Boy, how things can turn so quickly.

The Fed appears unsure of what action it wants to take in its deliberations. There seems to be a growing consensus that it is about time to turn the spigot on full blast until inflation starts to rip of jobs come back. Want to guess which is likely to come first? I have that 70s feeling again, just not too into beads and bellbottoms.

As for the president, Mr. Obama say the folks making a little more need to pay a little more, and that's final, no and, if or buts. Republicans are starting to crack. They'll give in and anger the base into dismay. Read my lips, no news taxes – it's Groundhog Day all over again. Our guess is that after the tax-hikes go through, the US department of Fish and Wildlife will add families earning more than $250,000 and individuals making $200,000 or more to the endangered species list. Almost like magic, they'll just disappear. Wherever did they go?

[Related -World Growth: Mediocre or Pathetic?]

Let's see if we have this right? Errant bombs from Syria are flying into Turkey and Israel. Both are getting fired up at the Syrians, Israel chucked a few bombs back, and Turkey says you better cut it out if you know what's good for you. In the meantime, Israel takes out the top Hamas guy. Egypt and Hamas respond that enough is enough, put up your dukes.  It's getting so messy over there that folks taking to the streets and rioting in Europe ain't nothing but a thing.

[Related -Bullish Sentiment Solidifies Even In The Face Of Lofty Valuations]

It's starting to feel like the pants are a little too tight, and the button is about to come undone and fly off. iStock hopes not, but it sure seems like we've been at full moon wackiness for since the election.

All the nastiness, including the drive towards the fiscal cliff has put the NASDAQ, Dow, and S&P a checkpoint one. If the tape stays bloody, then it is 2,750ish for the NASDAQ, at least 12,400, maybe 12,100 for the Dow, and stops at 1,325, 1,300 and ultimately 1,275 for the S&P. If those levels fail, all of 2012's gains could be wiped clean.

With more than 90% of the S&P 500's Q3 earnings on the books, the market will have to find its way higher on political and economic news. Third quarter sales were dull, posting a mild gain of 2.62% while operating earnings grew at 2.38%, and as reported eps did the best with an increase of 8.77%.  For the fourth quarter, analysts expect operating earnings to pick up the pace and grow at 5.6% while sales remain in the neighborhood of 2.6% growth.

Earnings growth should lead to P/E expansion and give stocks a lift as we enter into 2013. However, it remains to be seen what effect income, capital gains, and dividend tax-hikes will have on the economy and stock prices. We believe the initial reaction will be negative as Wall Street reprices securities accordingly.



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