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FirstAlert[tm] 5/5: New Phonebooks Are Here!

fa_logo_sq_225px-w_bwMay 5, 2009 (FinancialWire) (By Philip Holmes) — Remember that scene in The Jerk where Steve Martin gets all excited over the news that his name is in the phonebook? Well, on Monday investors got equally giddy over news that less exuberant people might take with a shrug: non-residential construction spending may go up a bit when the government spends a trillion on stimulus, and that pending residential home sales may rise a bit above 50-year lows. How was it all looking at the Berkshire Hathaway (NYSE: BRK-A) get-together?

But giddy they were. The Dow Jones industrial closed at 8,426.74 on Monday, up a big 214.33 points. The S&P 500 index rose 29.72 points, to 907.24, while the Nasdaq composite index gained 44.36 points to end the trading session at 1,763.56.

Call it Little Green Nail Gun syndrome, or the dubious hope that housing has bottomed. Investors learned that U.S. construction spending was up by 0.3% in March, beating Street expectations for a 1.7% drop. The March gain follows five consecutive declines in construction spending.

Investors also learned that pending home sales increased 3.2% in March vs February, and are up 1.6% from last year.

It’s worth noting that residential construction spending, (the kind that put the capital R in “Recession”), dropped 4.1% in March, and is down a big 33% from last year. The big gains were in nonresidential and public construction spending. Could it be that credit is a bit less tight and businesses are going ahead with projects, and because the U.S. government just committed a lot of money to infrastructure projects that are, you know, “shovel ready”?

Note as well that pending home sales often fail to become actual home sales. We’d also go out on a limb and say last March was hardly a healthy time for home sales in these United States.

Naaah, housing has bottomed! Housing has bottomed!

Ok, so the giddy were in good company, sort of. Warren Buffet addressed the Berkshire Hathaway faithful on Monday, and had some encouraging things to say about housing. According to the Wall Street Journal, Buffett cited the California market, where “medium and lower-price homes — under $750,000 — have been selling more, though there hasn’t been a bounce back in sale prices.”

But BusinessWeek’s Christopher Palmeri says “Not So Fast” to anyone expecting a long trend of gains in housing. He points out that new home sales are still in the crapper. There’s also continuing mortgage mess in which “many smart people in the home-finance business are worrying not about whether the housing market has recovered but whether it could still get worse.”

Indeed. We would add that no recovery is in sight so long as $749,999 still counts as a “medium priced” house in California. Expect prices to drop a lot more before those record inventory numbers show any big dents.

The Investrend Earnings Calendar features Archer Daniels Midland (NYSE: ADM), expected at $0.49 a year ago versus $0.8 a year ago; Atlas Air (NASDAQ: AAWW), expected at $0.64 versus $-0.25 a year ago; Bio-Rad Labs (AMEX: BIO), expected at $0.98 versus $1.06 a year ago; Cephalon (NASDAQ: CEPH), expected at $1.27 versus $1.02 a year ago.

The Investrend Economics Calendar lists Weekly Chain Store Sales (8:55 a.m.), ISM Services Index for April (10 a.m.), Fed Chairman Bernanke testifies before Congress (10 a.m.), Treasury auctions 3-year notes (1 p.m.).

The Investrend Events Calendar showcases ABK Meeting of Stockholders; BMY Shareholders Meeting; CELG at Thomas Weisel/NASDAQ Conference; D Shareholders Meeting; DHR Shareholders Meeting; FTO at Credit Suisse Group OTC Conference; GIGA, ANSW, MSPD, RMTR at AeA Micro Cap Financial Conference Presented by TechAmerica; N, LUV at Financial Executives International Summit; NITE, SCHW at Security Traders Association Washington Conference; ORLY Shareholders Meeting; PM Shareholders Meeting.

The Investrend Money Index is an indicator of the depth of market direction or indirection. While not always including the same stocks, the NYSE/NASDAQ 50 Most Actives indicate the direction in which the mass of money is flowing. Last session’s trading showed 41 advancers versus eight decliners and one unchanged. Advancers were led by Financial Bull 3x (NYSE: FAS) up 26.85%, Oceanfreight Inc. (NASDAQ: OCNF) up 26.80%, Regions Financial Cp (NYSE: RF) up 25.97%, Fifth Third Bancorp (NASDAQ: FITB) up 25.45%, Wells Fargo & Co New (NYSE: WFC) up 23.66%, Bk Of America Cp (NYSE: BAC) up 19.31%, Las Vegas Sands Corp (NYSE: LVS) up 18.75%, Ultra Financials Pro (NYSE: UYG) up 17.84%, Ultra Real Estate Pr (NYSE: URE) up 16.85%, Dryships Inc. (NASDAQ: DRYS) up 14.49%, Us Bancorp (NYSE: USB) up 13.22%, Jp Morgan Chase Co (NYSE: JPM) up 10.16%, Taiwan Semicond Ads (NYSE: TSM) up 9.83%, E*Trade Financial Corporation (NASDAQ: ETFC) up 8.86%, Huntington Bancshares Incorpora (NASDAQ: HBAN) up 8.55%, Citigroup Inc (NYSE: C) up 7.74%, Companhia Vale Ads (NASDAQ: VALE) up 7.23%, Sprint Nxtel Cp (NYSE: S) up 7.07%, Alcoa Inc (NYSE: AA) up 6.91%, Ultra S&P500 Proshrs (NYSE: SSO) up 6.67%. Decliners followed Financial Bear 3x (NYSE: FAZ) down 26.83%, Ultrashort Financial (NYSE: SKF) down 17.99%, Pt Ultrshrt Sp500 Ps (NYSE: SDS) down 6.86%.

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Quote of the Day: “The best way to have a good idea is to have a lot of ideas.” Linus Pauling

Today is: Cinco de Mayo.

Happy Birthday: Søren Kierkegaard, Karl Marx, Christopher Morley, Tyrone Power, Ann B. Davis, Michael Palin, John Rhys-Davies.

Today in History: Kublai Khan became ruler of the Mongol Empire in 1260. Russia and Prussia signed the Treaty of St. Petersburg in 1762. In 1809, Mary Kies became the first woman awarded a U.S. patent, for a technique of weaving straw with silk and thread. In Mexico, troops led by Ignacio Zaragoza halted a French invasion in the Battle of Puebla in 1862. In North Bend, Ohio, the first train robbery in the United States took place in 1854. A crash in 1893 on the New York Stock Exchange started a depression. Pitching against the Philadelphia Athletics at the Huntington Avenue Grounds in 1904, Cy Young of the Boston Americans threw the first perfect game in the modern era of baseball. Mohandas Gandhi was freed from prison in 1944. In 1961, Alan Shepard became the first American to travel into space, making a sub-orbital flight of 15 minutes. Pete Rose of the Cincinnati Reds hit his 3000th major league hit in 1978. Wolfenstein 3D was released in 1992, the first-ever first-person shooter computer game.

[FirstAlertTM was created by Gayle Essary, founder of Investrend Communications, Inc., parent of Investrend Information ( The opinions expressed in FirstAlertTM do not necessarily reflect the opinions of Investrend.]

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