Contributors

Dead Cat Bouncing

Here’s a link to listen to an Audio Version of the report:

After the worst week in 75 years, in which the Dow dropped 18% in just 5 trading sessions, the bulls got back to work yesterday and put together the Dow’s biggest one-day gain on record. The venerable DJIA wasn’t alone in the fun as Monday’s session produced the biggest percentage gain ever seen on the Russell 2000 and the biggest rally in the S&P 500 since 1939.

Among the items cited for triggering the classic, albeit impressive dead-cat bounce was the Fed, the Bank of England, the ECB, and the Swiss Central Bank deciding that the best way to solve this crisis, which was created by an extended period of easy money and low interest rates, was to create an environment where money is well, easy and interest rates are very low for what is likely to be a very long time.

Putting the sarcasm aside for a moment, everybody and their uncle knew that stocks had reached an extreme oversold condition and that sentiment was just about as negative as it’s ever been. Now toss in the forced liquidations from the hedge fund community and the not-so forced liquidations from mutual funds anticipating redemptions, and you had the makings for a nice bounce.

Yesterday morning, I told my office that I expected to see the Dow move at least 1,000 points in a big hurry if the early bounce held and that a test of 10,000 wasn’t out of the question before the thing ended. And while I have reported a few times recently that dead-cat bounces tend to be very exciting and relatively short, in all honesty, I didn’t expect to see my 1,000 points in one session. To which, I will have to point to yesterday’s missive and reiterate that this is what happens when computers control the bid/ask.

But in addition to an oversold market and extremely negative sentiment, the bulls had a couple other things going for them yesterday. First, our heroes in horns benefited from Ben Bernanke’s pledge to jump in his helicopter and to drop more dollars from the sky if he has to. In English, the Fed announced yesterday that it would begin providing “unlimited dollar funding� via its swap facilities. Next, word was that the FDIC was planning to guarantee all non-interest bearing accounts in U.S. banks. In addition, Hank Paulson is planning to “be like Buffett� and invest directly in banks. Then the European banks gathered together over the weekend and unveiled a coordinated effort to recapitalize their banking sector. And finally, the G-7, also known as your REALLY Big Brother, proclaimed that no institution of importance (that’s my favorite part) will be allowed to fail.

So with dollars falling from the sky, plans to fix the banks starting to come together, and the credit markets seeing some improvement, stocks simply roared higher as the shorts covered, traders got long, investors did some nibbling, and the computers did their thing.

So, the obvious question now becomes, will it last? The crash playbook says that after heading down farther than anyone ever thought possible, you will see a bounce that takes your breath away over a period of a few days. The bounce will instill confidence that everything is “all better now� and set up a “retest of the lows� which is triggered by some sort of bad news reminding investors of why stocks went down in the first place. So, will history repeat? Maybe not exactly, but we thought you should be aware of what has happened in the past.

Finally, while we don’t want to do or say anything to ruin the fun, we do need to point out that longer-term interest rates have started to spike higher. Why are rates rising when the Central Bankers are flooding the system with dollars? In short, the definition of inflation is “too many dollars chasing too few goods� and THIS is something to watch going forward.

Turning to this morning, we don’t have any economic news to sift through before the bell. But not surprisingly, the rally in stocks continued overseas as Japan enjoyed its biggest one-day pop ever, gaining an eye-popping +14.15%.

Running through the rest of the pre-game indicators, as we mentioned there are green screens in the overseas markets once again. Crude futures are up with the latest quote showing oil trading higher by $3.39 to $84.58. Interest rates are up on the longer maturities with the yield on the 10-yr currently trading at 4.03% while the yield on the 3-month T-Bill at 0.54% and overnight LIBOR is at 2.18%, which is down from 2.47% yesterday. And finally, with about 60 minutes before the bell, the futures in the U.S. are pointing to another wildly positive open. The Dow futures are currently up by about 350 points; the S&P’s are higher by about 45 points, while the NASDAQ looks to be about 55 points above fair value at the moment.

Stocks “In Play� This Morning:

Today’s Earnings Before the Bell:

Domino’s Pizza (NYSE: DPZ) – Reported $0.14 vs. $0.21
Johnson & Johnson (NYSE: JNJ) – Reported $1.17 vs. $1.11
JB Hunt (Nasdaq: JBHT) – Reported $0.47 vs. $0.42
PepsiCo (NYSE: PEP) – Reported $1.06 vs. $1.08

News, Upgrades/Downgrades/Brokerage Research:

Prudential (NYSE: PRU) – Downgraded at Citi
SAP (NYSE: SAP) – Downgraded at Deutsche Bank
Morgan Stanley (NYSE: MS) – Debt rating reduced at Fitch
First Solar (Nasdaq: FSLR) – Upgraded at Friedman Billings
SunPower (Nasdaq: SPWRA) – Upgraded at Friedman Billings
Arkansas Best (Nasdaq: ABFS) – Downgraded at Goldman
Union Pacific (NYSE: UNP) – Downgraded at Goldman
Crane Corp (NYSE: CR) – Upgraded at Goldman
Affiliated Managers Group (NYSE: AMG) – Downgraded at Goldman
AGCO (NYSE: AG) – Downgraded at Goldman
Bucyrus (Nasdaq: BUCY) – Downgraded at Goldman
Aon Corp (NYSE: AOC) – Upgraded at Goldman
INVESCO (NYSE: IVZ) – Upgraded at Goldman
Marsh & McLennan (NYSE: MMC) – Upgraded at Goldman
Citrix Systems (Nasdaq: CTXS) – Upgraded at Jeffries
Air Products (NYSE: APD) – Upgraded at Jeffries
Cameco Corp (NYSE: CCJ) – Upgraded at Merrill
Eldorado Gold (NYSE: EGO) – Upgraded at Merrill
Royal Gold (Nasdaq: RGLD) – Downgraded at Merrill
T Rowe Price (Nasdaq: TROW) – Upgraded at Morgan Stanley
Janus Capital (NYSE: JNS) – Downgraded at Morgan Stanley
Google (Nasdaq: GOOG) – Target reduced at Oppenheimer, Deutsche Bank
Nvidia (Nasdaq: NVDA) – Target reduced at UBS
Progressive Corp (NYSE: PGR) – Upgraded at UBS

Disclosure: Mr. Moenning and/or related firms hold long positions in: AOC, MMC

Note: All earnings reports compared to Reuter’s consensus estimates

** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

1,019 Reasons

Here’s a link to listen to an Audio Version of the report:

In the old days, the New York Stock Exchange employed humans to make markets in stocks. The idea was that market makers stood ready to buy or sell a round lot of the stock they specialized in as a way to maintain an orderly market. And for a long time, this was a very good gig if you could get it because, by the very nature of the job, you wound up buying into declines and selling into advances.

However, over in four-letterland, better known as the NASDAQ, they decided to do away with all the silly humans and let computer algorithms do the work. Sure, this is more profitable, but if you were around for the ’87 Crash, the mini-crash of 1989, or the bludgeoning in 1990, you got to see firsthand how the computers made the declines much worse than they already were by adding to the volatility.
You see, with computerized trading, the bid-ask is handled by the computer. There is no emotion involved and when selling gets intense, the bids just keep going lower and lower – even if there is no trade at any of the prices. And so, whenever there is a negative event, whoosh – down you go. With humans making a market, there are actually trades being done at various prices and as such, it takes time for prices to move in a big way. But again, the computers skip all of that in favor of speed and profitability.

Frankly, this is a small part of the problem the stock market is experiencing right now. Well, that and the concerns about the global financial system going kaput. But in reality, a good deal of Friday’s volatility was a result of computers doing the trading instead of humans. I hate to sound like an old fogey (and at age 50 I do now qualify as one), but even with the global meltdown that took place overnight on Thursday, it is hard for stocks to drop 462 points in five minutes without the computerized bid/ask system.

Granted, we knew the open was going to be bad. But 697 points in less than 10 minutes? And then, before you could even find your coffee cup (or can of diet coke in my case), the Dow reversed course and found its way to the plus side – all within a matter of 40 minutes. Now THAT’s volatility!

We bring this up because Friday’s intraday volatility was 1,019 points on the Dow, or 11.87% of Thursday’s close. The problem here isn’t that I am against speed, profitability, or progress. No, the issue is that the technicians are jumping up and down about Friday being a “key reversal day,� which, in theory, should mean the direction of the short-term trend has reversed. But, with all the computer driven violence happening, you can’t even be sure the big event was real.

Turning to this morning, the bulls are taking the idea of a key reversal day in the U.S. and running with it. Of course it doesn’t hurt that just about every major country around the globe announced initiatives to shore up their banks over the weekend and are injecting liquidity in their banking systems. So, with some positive chart action in the U.S. and money starting to flow into banks, stocks around the globe are rebounding.

Running through the rest of the pre-game indicators, as we mentioned there are bright green screens everywhere in the overseas markets as Hong Kong is up +10.2%, France is up +5.1%, Germany is higher by +7.2% and London is advancing +3.9%. Crude futures are up with the latest quote showing oil trading higher by $4.40 to $82.10. Interest rates are up on the longer maturities with the yield on the 10-yr currently trading at 3.86% while the yield on the 3-month T-Bill at 0.22% and 3-month LIBOR is at 4.75%. And finally, with about 60 minutes before the bell, the futures in the U.S. are pointing to a nice open for a change. The Dow futures are currently up by about 220 points; the S&P’s are higher by about 30 points, while the NASDAQ looks to be about 49 points above fair value at the moment.

Stocks “In Play� This Morning:

News, Upgrades/Downgrades/Brokerage Research:

Apple (Nasdaq: AAPL) – Upgraded at Bernstein
Royal Dutch Shell (NYSE: RDS.A) – Downgraded at BNP Paribas
Enersis (NYSE: ENI) – Upgraded at BNP Paribas
BP PLC (NYSE: BP) – Downgraded at BNP Paribas

Linear Technology (Nasdaq: LLTC) – Upgraded at Credit Suisse
Manpower (NYSE: MAN) – Upgraded at Deutsche Bank
Robert Half (NYSE: RHI) – Downgraded at Deutsche Bank
Valero (NYSE: VLO) – Downgraded at Deutsche Bank
Petro Canada (NYSE: PCZ) – Downgraded at Goldman Sachs
Sonic Corp (Nasdaq: SONC) – Downgraded at Goldman Sachs
Brinker Intl (NYSE: EAT) – Upgraded at Goldman Sachs
Barnes & Noble (NYSE: BKS) – Upgraded at Goldman Sachs
Baker Hughes (NYSE: BHI) – Upgraded at Goldman Sachs
El Paso Corp (NYSE: EP) – Upgraded at Goldman Sachs
Exxon Mobil (NYSE: XOM) – Upgraded at Goldman Sachs
Marathon Oil (NYSE: MRO) – Downgraded at Goldman Sachs
Murphy Oil (NYSE: MUR) – Downgraded at Goldman Sachs
Schlumberger (NYSE: SLB) – Downgraded at Goldman Sachs
Dow Chemical (NYSE: DOW) – Downgraded at JP Morgan
Covidien (NYSE: COV) – Upgraded at JP Morgan
St. Jude Medical (NYSE: STJ) – Upgraded at JP Morgan
British American Tobacco (NYSE: BTI) – Upgraded at Merrill Lynch
Chipotle Mexican Grill (NYSE: CMG) – Downgraded at Merrill Lynch
Credit Suisse (NYSE: CS) – Upgraded at Merrill Lynch
General Motors (NYSE: GM) – Downgraded at Merrill Lynch
Las Vegas Sands (NYSE: LVS) – Upgraded at Merrill Lynch
MGM Mirage (NYSE: MGM) – Upgraded at Merrill Lynch
Royal Bank Scotland (NYSE: RBS) – Upgraded at Merrill Lynch
Sonic Automotive (NYSE: SAH) – Downgraded at Merrill Lynch
GameStop (NYSE: GME) – Upgraded at Piper
Hewitt Assoc (NYSE: HEW) – Upgraded at UBS
Automatic Data Processing (NYSE: ADP) – Downgraded at UBS
Paychex (Nasdaq: PAYX) – Downgraded at UBS

Disclosure: Mr. Moenning and/or related firms hold long positions in: COV

Note: All earnings reports compared to Reuter’s consensus estimates

** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

T-Minus 15 Days

Here’s a link to listen to an Audio Version of the report:

In an attempt to lighten the mood just a little, let me begin today’s missive with a tongue-in-cheek observation and perhaps some good news. After consulting my trusty $8 solar powered calculator, I have discerned that the current crisis will end in precisely 15 trading days. You see, at the current pace, in which the market loses 600 points or so a day, the DJIA will be at $0 in just three weeks!

But seriously folks, I’m sure you are all well aware of the fact that the stock market is now experiencing an all-out crash. Since the beginning of October, the S&P 500 has plummeted -21.88% and is now down -38% for the year. It is also worth noting that yesterday’s plunge of 679 points marked the sixth day in a row that the Dow has dropped by 1% or more. And to put this in perspective, I’m told that this hasn’t happened since 1897.

One of the biggest problems right now is that the market isn’t tanking on any specific event or bad news that hits the wires. Sure, there are grave concerns about the state of the consumer. And yes, there were worries yesterday about the $400 billion in Lehman debt that is currently being protected. And it is true that the GM (GM) news was disappointing yesterday afternoon. But in reality, the market is falling right now because of its own weight and traders appear to be responding with the cries of “get me out, now!�

But in looking for a scapegoat on which to blame yesterday’s bloodbath, one need look no further than the SEC. Mr. Cox who, in his infinite wisdom decided it was okay to let the hedge funds start shorting financials, oops, I mean the list of 800+ stocks remotely related to lending money, again. In all honesty, I was never in favor of the short-ban. But why, oh why would you let the ban on shorting stocks expire in the middle of the worst panic in 20 years?

Another factor at work right now is the trouble in the hedge fund community. With countless hedge funds staring at liquidation at the end of their fiscal year if things don’t pick up – and in a BIG hurry – it is little wonder that these fast money traders returned to the one game that has actually been working for them: shorting the financials. Remember, contrary to popular belief, hedge funds aren’t making money in this environment either as there is simply no place to hide on the long side.

But, if you can take your eyes off the horror in the stock market for a moment, there was actually some good news to be seen in the credit markets yesterday. First, according to Reuters, yields on the highest rated commercial paper dropped by 115 basis points yesterday to 2.35%. And then the state of California said yesterday that liquidity is improving as evidenced by Massachusetts’s sale of $750 Million in short-term notes. However, it will be very important to watch how IBM’s $4 Billion debt issuance will be received as this will indicate how high-end borrowers are being impacted.

Turning to this morning, as you’d expect, the global panic continues unabated with a plunge of nearly -10% in Japan and roughly -7% or more on the rest of the major foreign markets. There is some economic news this morning, but frankly, I don’t think anyone is going to be terribly interested in the fact that the Trade Deficit narrowed by a few billion last month.

Running through the rest of the pre-game indicators, as we mentioned there is a sea of red ink in the overseas markets. Crude futures are down again on global growth concerns with the latest quote showing oil trading down $3.74 to $82.85. Interest rates are up on the longer maturities with the yield on the 10-yr currently trading at 3.85% while the yield on the 3-month T-Bill continues to reflect a flight to safety and is now at 0.406%. And finally, with about 60 minutes before the bell, the futures in the U.S. are pointing down once again. The Dow futures are currently off by about 200 points; the S&P’s are down by about 26 points, while the NASDAQ looks to be about 27 points below fair value at the moment.

Stocks “In Play� This Morning:

Today’s Earnings Before the Bell:

General Electric (NYSE: GE) – Reported $0.45 vs. $0.45
Host Hotels (NYSE: HST) – Reported $0.31 vs. $0.28

News, Upgrades/Downgrades/Brokerage Research:

Macy’s (NYSE: M) – Reduces 2008 guidance to $1.30 - $1.50 from $1.70 - $1.85
Dish Network (Nasdaq: DISH) – Upgraded at Bernstein
Abercrombie & Fitch (NYSE: ANF) – Upgraded at Citi
Aeropostale (NYSE: ARO) – Upgraded at Citi
Columbia Sportswear (Nasdaq: COLM) – Target reduced at Citi
Conagra (NYSE: CAG) – Removed from Top Picks Live list at Citi
General Mills (NYSE: GIS) – Removed from Top Picks Live list at Citi
Heinz (NYSE: HNZ) – Downgraded at Deutsche Bank
MasterCard (NYSE: MA) – Downgraded at Deutsche Bank
Align Technology (Nasdaq: ALGN) – Downgraded at Deutsche Bank
Humana (NYSE: HUM) – Mentioned positively at Goldman
Cigna (NYSE: CI) – Mentioned positively at Goldman
Duke Energy (NYSE: DUK) – Upgraded at Goldman
Principal Financial Group (NYSE: PFG) – Upgraded at Morgan Stanley
Google (Nasdaq: GOOG) – Target reduced at RBC Capital
AGCO (NYSE: AG) – Target reduced at UBS
Brinker Intl (NYSE: EAT) – Target reduced at UBS
Boeing (NYSE: BA) – Target reduced at UBS
Public Storage (NYSE: PSA) – Upgraded at Wachovia

Disclosure: Mr. Moenning and/or related firms hold long positions in: none

Note: All earnings reports compared to Reuter’s consensus estimates

** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

From Notable Calls

BMO Capital is out cautious on Apple (NASDAQ: AAPL) having recently visited or spoken with sales reps at 32 Apple and 30 AT&T stores in various parts of the US and the UK. Apple is not escaping the gravity of weakening consumer spending, in firm's view.

Negative – for the first time in years, store reps are indicating sales have slowed, in CPUs in particular. While the data was not universal, about onethird of sales reps they spoke with noticed some slowing, which is a significant change from past checks. Conversations with AT&T sales reps indicated no recent change in iPhone run rates, but the firm has elected to cut their FY2009 iPhone forecast nonetheless.

In recent visits to 32 stores across the country, 11 indicated that sales had slowed in the past 30 days, while 20 indicated that sales had stayed about the same, and one indicated that sales had improved. While store checks might not seem that negative, over the past five years of checking Apple stores, wthey have received consistently steady and/or improving sales comments. This is the first time they have heard store reps describe slowing sales since Apple began its stock run five years ago. In addition research provided by ChangeWave Research indicate slowing sales.

How Might Apple Guide for the Dec Q?

The question is not if Apple will guide below Street estimates, but how far will Apple guide
below Street estimates. For example, for the September quarter, the firm suggested that Apple would guide to $1.00 when Street estimates were approximately $1.30 – too great of a delta, and the stock sold off. For this quarter, with the inclusion of significant deferred revenues, they believe estimating quarterly guidance is more difficult.

BMO's analysis suggests that Apple would guide to around $10.0 billion in revenue vs. the Street at $10.8 billion and their $10.1 billion estimate. They also believe that Apple will guide EPS in the range of $1.45-$1.50, compared with current Street estimates of $1.71 and their $1.60.

Maintains Outperform on AAPL due to stock’s recent decline relative to their target price of $120.

Notablecalls: Not making a call here but letting you know it's out there.

http://notablecalls.blogspot.com/

Sell What You Can...

Here's a link to listen to an Audio Version of the report:

Central Bankers around the globe mounted their white horses yesterday and attempted to ride to the rescue of the financial markets with an impressive display of coordinated rate cuts. Since this was one of the things we said we were looking for in this weekend’s big-picture missive, we will have to give credit to the Fed and their cohorts across the pond for doing just about everything they can to try and stop the bleeding in the markets.

While the point of yesterday’s surprise move may have been lost on the average investor, it should be noted that the goal of Mr. Bernanke and Co’s latest effort was to encourage banks to lend again. And what better way to do that than to wave a fistful of dollars – this time in the form of an ever increasing profit margin – in the faces of bankers everywhere? You see, by cutting the rate at which banks may borrow, the Fed effectively added another 50 basis points to the spread between borrowing and lending. So, since market rates continue to be “sticky� on the upside and the cost of capital is now even lower – boom; as a banker, you’ve got a higher profit margin on your hands and an additional 50 reasons to lend money.

What is perhaps most impressive about the move was the fact that Gentle Ben was able to round up some of his banker buddies to join him in his latest counteroffensive against the credit crisis. Heck, even the ECB’s enigmatic Jean-Claude Trichet managed to get on board and for the moment at least, set aside his paranoia regarding the potential for runaway inflation in Europe.

But, despite the massive global intervention, some surprisingly good news on the housing market, and several attempts at an intraday rally, stock market investors once again went home disappointed. For those of you keeping score at home (and who isn’t these days?) this was the fifth straight down day for stocks. Yesterday’s drop of 189 points brings the total bloodletting for the month to -14.7% on the Dow, -15.4% for the S&P 500, and -16.4% over in four-letterland. To which I can only say, wow, am I glad I’ve had a lot of cash on hand.

As long-time readers know, I have somewhat of an obsession about understanding why things happen the way they do in the stock market. And given that most would argue that the global rate cut was a good thing and not a reason for yet another plunge in stock prices, I feel it is especially important to understand why stock prices dove into the close.

We could say that the barrage of September Same-Store Sales data, which did not paint a pretty picture, was at fault. After all, except for Wal-Mart (WMT) and Costco (COST), the rest of the retailers didn’t fare well at all. But, we should keep in mind that nobody in their right mind was expecting these numbers to be strong, so we’ll have to put this aside as a reason for the selling.

We could also argue that it was earnings as the season got off to a shaky start. For example, Alcoa (AA) missed badly, Bank of America’s (BAC) results were disappointing, and the 48% year-over-year drop in earnings at MetLife (MET) was not well received. But again, there is nothing new here.

And then there was the fact that Hank Paulson had reminded investors that the crisis in credit is likely to last a while yet. But, in looking at the tape, stocks didn’t start dropping until after he was done speaking. So, just about the time I was ready to blame the fast money traders and call it a day, I was reminded of the fact that hedge fund managers are facing redemptions right now and the public is likely to start yanking their money out of mutual funds very shortly. Thus, the old saw “sell what you can, not what you have to� seems to fit the situation.

If you are a fund manager responsible for several billion dollars and you know you’ve got redemptions coming soon, you will sell your General Mills (GIS), your McDonalds (MCD), your Kraft (KFT), and your Colgate (CL) right now because you can – which makes a lot more sense than trying to sell the stuff that’s been beaten to a pulp or is illiquid.

Turning to this morning, IBM (IBM) is providing a bit of a lift as the company surprised investors after the close by reporting early that they had beaten the street’s estimates by $0.04. In addition, reports that the Treasury is considering taking ownership in banks is providing a little confidence in the pre-market.

Running through the rest of the pre-game indicators, with the exception of Japan, the foreign markets are seeing a nice bounce. Crude futures are little changed with the latest quote showing oil trading down $0.03 to $88.92. Interest rates are up so far with the yield on the 10-yr currently trading at 3.72% while the yield on the 3-month T-Bill is now 0.67%. And finally, with about 60 minutes before the bell, the futures are currently a nice shade of green. The Dow futures are currently ahead by about 60 points; the S&P’s are higher by about 7 points, while the NASDAQ looks to be about 4 points above fair value at the moment.

Stocks “In Play� This Morning:

News, Upgrades/Downgrades/Brokerage Research:

Abercrombie & Fitch (NYSE: ANF) – September same-store sales -14% vs. StreetAccount -7.5%
Gap Inc (NYSE: GAP) – September same-store sales -11% vs. StreetAccount -8.5%
TJX Cos (NYSE: TJX) – September same-store sales -1% vs. StreetAccount +0.9%
Baxter Intl (NYSE: BAX) – Price target cut at Citi
Covidien Ltd (NYSE: COV) – Price target cut  at Citi
Medtronic (NYSE: MDT) – Price target cut at Citi
CEMEX (NYSE: CX) – Downgraded at Citi
Ruby Tuesday (NYSE: RT) â€“ Downgraded at Credit Suisse
Eli Lilly (NYSE: LLY) – Downgraded at Credit Suisse
American Eagle Outfitters (NYSE: AEO) – Upgraded at Friedman Billings
US Steel (NYSE: X) – Downgraded at Goldman
Steel Dynamics (Nasdaq: STLD) – Downgraded at Goldman
AK Steel (NYSE: AKS) – Downgraded at Goldman
Commercial Metals (NYSE: CMC)– Upgraded at Goldman
Ternium (NYSE: TX) – Downgraded at Goldman
Pactiv (NYSE: PTV) – Upgraded at JP Morgan
Harris Corp (NYSE: HRS) – Upgraded at JP Morgan
Microsoft (Nasdaq: MSFT) – Target reduced at Morgan Stanley
Dynegy (NYSE: DYN) – Downgraded at UBS
Reliant Energy (NYSE: RRI) – Downgraded at UBS

Disclosure: Mr. Moenning and/or related firms hold long positions in: WMT, COST

Note: All earnings reports compared to Reuter’s consensus estimates

** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.