Daily State of the Markets 7/27: Is It Over?
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Good morning. Traders came into Monday morning watching the European bourses. While our markets had rallied Friday in response to the results of the European bank stress tests, European markets had been closed when the report cards were released. Thus, one couldn't help but wonder what a weekend of reflection might bring to the markets across the pond. After all, there were some pretty big holes in the stress tests (not the least of which was the fact that a sovereign debt default was ommitted from the tests) and there was already talk of some data being faulty.
However, the focus of the session shifted very quickly on Monday away from European banks to the economy here at home. And before you could look up whether or not the second "e" in FedEx was capitalized, the bulls reappeared at the corner of Broad and Wall. Oh, and that little report on New Home Sales didn't hurt either.
Although the discussion over how much farther the stock market can run from here is sure to become heated in relatively short order, the action over the past few days makes one point very clear: The correction is over.
Long-time readers may note that there is nary a single hedge or caveat in that statement. You see, with FedEx saying that they were actually going to earn more money than they previously thought because business was - wait for it - better than they had previously thought, it is VERY hard to argue that our economy is on the brink of disaster. And even if one suggests that the stock market tends to look ahead six months or so, today's comments by FedEx and the break above important resistance by the Dow simply don't suppport a downbeat view over that time frame.
The bears are likely to argue that one incident of increased earnings guidance does not a trend make. However, if one strings together some of the positives that have sprung up lately, well, again, it is easy to see why stock prices are rising at the moment. Don't forget that just last week traders were treated to better-than-expected economic data in the Eurozone. And then there is the fact the a little company called GE decided to give some of their cash hoard back to shareholders in the form of an increased dividend. Next, the stress tests didn't turn out to be such a bad thing. And finally, we've got today's admission by an economic bellwether that things are going pretty well. Hmmm...
While the HFT boys could jump in at any moment and ruin the pretty picture on the charts and a pullback to do some retesting is to be expected, there is no denying the current chart action isn't half bad. So, although things aren't likely to be straight up from here, we do have to recognize that the environment has definitely improved.
Turning to this morning... Stock futures are pointing a bit higher before the bell on the back of a turnaround in Europe and continuation of the earnings parade.
On the economic front... We don't have any economic data to review before the bell, but we will get the Case-Shiller Home Price Index for May at 9:00 am and then the both the Consumer Confidence and Richmond Fed Manufacturing Indices at 10:00 am eastern.
Finally, don’t forget, ego is the enemy in this game...
Pre-Game Indicators
Here are the important indicators we review each morning before the opening bell...
• Major Foreign Markets:
o Australia: +0.21%
o Shanghai: -0.51%
o Hong Kong: +0.64%
o Japan: -0.03%
o France: +1.33%
o Germany: +0.68%
o London: +0.78%
• Crude Oil Futures: + $0.27 to $79.25
• Gold: + $0.40 to $1183.50
• Dollar: lower against Yen, Euro and Pound
• 10-Year Bond Yield: Currently trading lhigher at 3.03%
• Stocks Futures Ahead of Open in U.S. (relative to fair value):
o S&P 500: +3.64
o Dow Jones Industrial Average: +33
o NASDAQ Composite: +7.1
Wall Street Research Summary
Upgrades:
• CH Robinson (CHRW) - Added to s.t. buy at Deutsche Bank
• PG&E (PCG) - Goldman Sachs
• CLECO (CNOL) - Goldman Sachs
• Sony (SNE) - JPMorgan
Downgrades:
• NextEra Energy (NEE) - Citi
• Raytheon (RTN) - Cowen
• Omnicare (OCR) - Credit Suisse
• Werner Enterprises (WERN) - Removed from s.t. buy at Deutsche Bank
• Radio Shack (RSH) - Removed from s.t. buy at Deutsche Bank
• Knight Transportation (KNX) - Deutsche Bank
• Entergy (ETR) - Goldman Sachs
• Zoran (ZRAN) - Needham
Yesterday's Earnings After the Bell
Fluor FLR $0.87 vs $0.70
Legg Mason LM $0.30 vs $0.31
Masco MAS $0.16 vs $0.14
Plum Creek PCL $0.21 vs $0.15
Range Resources RRC $0.09 vs $0.11
Earnings Before The Bell
AmerisourceBergen ABC $0.52 vs $0.49
Bemis BMS $0.58 vs $0.56
Cummins CMI $1.25 vs $0.88
DuPont DD $1.17 vs $0.93
Invesco IVZ $0.27 $0.26
L-3 Communications LLL $2.04 $1.93
Lockheed Martin LMT $1.96 $1.78
Lexmark LXK $1.23 $0.93
Nasdaq OMX Group NDAQ $0.52 $0.49
Office Depot ODP -$0.07 -$0.17
Occidental Petroleum OXY $1.31 $1.36
Regions Financial RF -$0.11 -$0.21
Supervalu SVU $0.43 $0.43
Teva Pharmaceutical TEVA $1.08 $1.03
Tellabs TLAB $0.16 $0.13
Thermo Fisher Scientific TMO $0.84 $0.84
Valero Energy VLO $0.93 $0.68
Western Union WU $0.36 $0.32
U.S. Steel X $0.77 $0.63
* Report includes items that make comparisons to the consensus estimate questionable
Long positions in stocks mentioned: LXK, CMI, ABC
David Moenning
Main: 630-250-4700
Direct: 303-670-9761
________________________________________
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) 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.
© Copyright 2010 Heritage Capital Management, Inc. All rights reserved.
However, the focus of the session shifted very quickly on Monday away from European banks to the economy here at home. And before you could look up whether or not the second "e" in FedEx was capitalized, the bulls reappeared at the corner of Broad and Wall. Oh, and that little report on New Home Sales didn't hurt either.
Although the discussion over how much farther the stock market can run from here is sure to become heated in relatively short order, the action over the past few days makes one point very clear: The correction is over.
Long-time readers may note that there is nary a single hedge or caveat in that statement. You see, with FedEx saying that they were actually going to earn more money than they previously thought because business was - wait for it - better than they had previously thought, it is VERY hard to argue that our economy is on the brink of disaster. And even if one suggests that the stock market tends to look ahead six months or so, today's comments by FedEx and the break above important resistance by the Dow simply don't suppport a downbeat view over that time frame.
The bears are likely to argue that one incident of increased earnings guidance does not a trend make. However, if one strings together some of the positives that have sprung up lately, well, again, it is easy to see why stock prices are rising at the moment. Don't forget that just last week traders were treated to better-than-expected economic data in the Eurozone. And then there is the fact the a little company called GE decided to give some of their cash hoard back to shareholders in the form of an increased dividend. Next, the stress tests didn't turn out to be such a bad thing. And finally, we've got today's admission by an economic bellwether that things are going pretty well. Hmmm...
While the HFT boys could jump in at any moment and ruin the pretty picture on the charts and a pullback to do some retesting is to be expected, there is no denying the current chart action isn't half bad. So, although things aren't likely to be straight up from here, we do have to recognize that the environment has definitely improved.
Turning to this morning... Stock futures are pointing a bit higher before the bell on the back of a turnaround in Europe and continuation of the earnings parade.
On the economic front... We don't have any economic data to review before the bell, but we will get the Case-Shiller Home Price Index for May at 9:00 am and then the both the Consumer Confidence and Richmond Fed Manufacturing Indices at 10:00 am eastern.
Finally, don’t forget, ego is the enemy in this game...
Pre-Game Indicators
Here are the important indicators we review each morning before the opening bell...
• Major Foreign Markets:
o Australia: +0.21%
o Shanghai: -0.51%
o Hong Kong: +0.64%
o Japan: -0.03%
o France: +1.33%
o Germany: +0.68%
o London: +0.78%
• Crude Oil Futures: + $0.27 to $79.25
• Gold: + $0.40 to $1183.50
• Dollar: lower against Yen, Euro and Pound
• 10-Year Bond Yield: Currently trading lhigher at 3.03%
• Stocks Futures Ahead of Open in U.S. (relative to fair value):
o S&P 500: +3.64
o Dow Jones Industrial Average: +33
o NASDAQ Composite: +7.1
Wall Street Research Summary
Upgrades:
• CH Robinson (CHRW) - Added to s.t. buy at Deutsche Bank
• PG&E (PCG) - Goldman Sachs
• CLECO (CNOL) - Goldman Sachs
• Sony (SNE) - JPMorgan
Downgrades:
• NextEra Energy (NEE) - Citi
• Raytheon (RTN) - Cowen
• Omnicare (OCR) - Credit Suisse
• Werner Enterprises (WERN) - Removed from s.t. buy at Deutsche Bank
• Radio Shack (RSH) - Removed from s.t. buy at Deutsche Bank
• Knight Transportation (KNX) - Deutsche Bank
• Entergy (ETR) - Goldman Sachs
• Zoran (ZRAN) - Needham
Yesterday's Earnings After the Bell
Fluor FLR $0.87 vs $0.70
Legg Mason LM $0.30 vs $0.31
Masco MAS $0.16 vs $0.14
Plum Creek PCL $0.21 vs $0.15
Range Resources RRC $0.09 vs $0.11
Earnings Before The Bell
AmerisourceBergen ABC $0.52 vs $0.49
Bemis BMS $0.58 vs $0.56
Cummins CMI $1.25 vs $0.88
DuPont DD $1.17 vs $0.93
Invesco IVZ $0.27 $0.26
L-3 Communications LLL $2.04 $1.93
Lockheed Martin LMT $1.96 $1.78
Lexmark LXK $1.23 $0.93
Nasdaq OMX Group NDAQ $0.52 $0.49
Office Depot ODP -$0.07 -$0.17
Occidental Petroleum OXY $1.31 $1.36
Regions Financial RF -$0.11 -$0.21
Supervalu SVU $0.43 $0.43
Teva Pharmaceutical TEVA $1.08 $1.03
Tellabs TLAB $0.16 $0.13
Thermo Fisher Scientific TMO $0.84 $0.84
Valero Energy VLO $0.93 $0.68
Western Union WU $0.36 $0.32
U.S. Steel X $0.77 $0.63
* Report includes items that make comparisons to the consensus estimate questionable
Long positions in stocks mentioned: LXK, CMI, ABC
David Moenning
Main: 630-250-4700
Direct: 303-670-9761
________________________________________
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) 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.
© Copyright 2010 Heritage Capital Management, Inc. All rights reserved.
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