Daily State of the Markets 9/01: It's Not The News, But...
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Publishing Note: I am traveling on Thursday and Friday, and will not publish a morning report. Daily State of the Markets reports will return on Tuesday morning.
Good morning. As the saying goes, "It's not the news, but how the market reacts to the news that matters." As such, the bears could be heard telling anyone that was still at their desk and willing to listen on Tuesday that the inability for the market to rally on not one, but two pieces of good news does not bode well for the future.
Apparently this concept gained some traction during the trading day on Tuesday as the good news from the Conference Board's report on Consumer Confidence came in better than expected - suggesting that the consumer has not crawled back into their foxholes - as well as the Case-Shiller Home Price Index, which seemed to indicate that the housing market has not yet entered into the oft-predicted death spiral, was ignored for much of the session.
Although it was a late summer day and interest in the market appeared to be more than a little thin, the action felt rather discouraging on the last trading day of what turned out to be a rather crummy month. The popular press appeared to blame the minutes of the FOMC meeting for the swoon in stocks. And while the quick dive to near the lows of the day did transpire after the Fed minutes were released, there was really nothing new in the report that would have given traders a reason to take action.
In short, the FOMC minutes said that the economy has slowed, the job market remains tough, there are some downside risks in the economy, and that the Fed stands ready to take additional action if needed. And although there was no criteria set for what (or when) the Fed might do next, the bottom line is Mr. Bernanke & Co. made it clear that they would not let the economy go down the drain on their watch.
So, should we come into this morning's session leaning bearish based on the time-honored cliché of "It's not the news, but...?" Based on what we're seeing so far, it would appear that the answer is no. From where we sit, with the abundance of news still to come this week (with the Big Kahuna - the jobs report - due out Friday morning) traders appeared to remain cautious yesterday on the good news from what can be considered second-tier data. Therefore, we will continue to call this a news-driven, range bound market for now.
From a chart standpoint, it would appear that we are in a basing phase. With the market having gone sideways for the past four days, the bulls will suggest that the all-important 1040 line in the sand, which has now been successfully tested three times, has held and that this consolidation pattern will lead to higher prices. Although we hear the argument and it does make sense, we still believe that this market is at the mercy of the news. So, if your crystal ball is currently working (ours is still in the shop for repairs) and you can tell us what to expect from the news for the rest of the week, please give us a shout. Otherwise, we'll just have to see how the news comes out and how the market reacts.
Turning to this morning... Stock futures are pointing higher so far as traders around the globe have received more data suggesting that the macro fears (i.e. the assumption of double-dip recessions around the world) may be overblown at the present time. The Chinese data showed the economy continuing to expand while the data out of Europe suggests that the economy is muddling along - but not diving.
On the economic front... ADP reported that the private sector job market contracted during the month of August. The report shows that private sector jobs fell by 10,000 jobs during the month, which was a well below the consensus expectations for a gain of about 10.7K. (July’s report showed 42K jobs created.)
Finally, remember to smile at least once before lunch...
Pre-Game Indicators
Here are the important indicators we review each morning before the opening bell...
Major Foreign Markets:
Australia: +1.98%
Shanghai: -0.60%
Hong Kong: +0.43%
Japan: +1.17%
France: +1.85%
Germany: +1.04%
London: +1.34%
Crude Oil Futures: + $0.93 to $72.85
Gold: + $5.70 to $1256.00
Dollar: higher against Yen, lower vs Euro and Pound
10-Year Bond Yield: Currently trading lower at 2.53%
Stocks Futures Ahead of Open in U.S. (relative to fair value):
S&P 500: +12.68
Dow Jones Industrial Average: +102
NASDAQ Composite: +24.38
Wall Street Research Summary
Upgrades:
Ceradyne (CRDN) - Benchmark Company
Teekay Offshore Partners (TOO) - Citi
Arch Coal (ACI) - HSBC
Massey Energy (MEE) - HSBC
Western Digital (WDC) - Morgan Stanley
Downgrades:
CF Industries (CF) - BMO Capital
Potash (POT) - BMO Capital
ABB Limited (ABB) - Deutsche Bank
Seimens (SI) - Deutsche Bank
Hudson City Bancorp (HCBK) - Morgan Stanley
Google (GOOG) - Removed from Select List at Stifel
Long positions in stocks mentioned: none
For more "top stock" portfolios and research, visit TopStockPortfolios.com
The opinions and forecasts expressed are those of David Moenning, founder of TopStockPortfolios.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. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.
Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.
The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
The information contained in our websites and TopStockPortfolios publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.
Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.
Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.
Good morning. As the saying goes, "It's not the news, but how the market reacts to the news that matters." As such, the bears could be heard telling anyone that was still at their desk and willing to listen on Tuesday that the inability for the market to rally on not one, but two pieces of good news does not bode well for the future.
Apparently this concept gained some traction during the trading day on Tuesday as the good news from the Conference Board's report on Consumer Confidence came in better than expected - suggesting that the consumer has not crawled back into their foxholes - as well as the Case-Shiller Home Price Index, which seemed to indicate that the housing market has not yet entered into the oft-predicted death spiral, was ignored for much of the session.
Although it was a late summer day and interest in the market appeared to be more than a little thin, the action felt rather discouraging on the last trading day of what turned out to be a rather crummy month. The popular press appeared to blame the minutes of the FOMC meeting for the swoon in stocks. And while the quick dive to near the lows of the day did transpire after the Fed minutes were released, there was really nothing new in the report that would have given traders a reason to take action.
In short, the FOMC minutes said that the economy has slowed, the job market remains tough, there are some downside risks in the economy, and that the Fed stands ready to take additional action if needed. And although there was no criteria set for what (or when) the Fed might do next, the bottom line is Mr. Bernanke & Co. made it clear that they would not let the economy go down the drain on their watch.
So, should we come into this morning's session leaning bearish based on the time-honored cliché of "It's not the news, but...?" Based on what we're seeing so far, it would appear that the answer is no. From where we sit, with the abundance of news still to come this week (with the Big Kahuna - the jobs report - due out Friday morning) traders appeared to remain cautious yesterday on the good news from what can be considered second-tier data. Therefore, we will continue to call this a news-driven, range bound market for now.
From a chart standpoint, it would appear that we are in a basing phase. With the market having gone sideways for the past four days, the bulls will suggest that the all-important 1040 line in the sand, which has now been successfully tested three times, has held and that this consolidation pattern will lead to higher prices. Although we hear the argument and it does make sense, we still believe that this market is at the mercy of the news. So, if your crystal ball is currently working (ours is still in the shop for repairs) and you can tell us what to expect from the news for the rest of the week, please give us a shout. Otherwise, we'll just have to see how the news comes out and how the market reacts.
Turning to this morning... Stock futures are pointing higher so far as traders around the globe have received more data suggesting that the macro fears (i.e. the assumption of double-dip recessions around the world) may be overblown at the present time. The Chinese data showed the economy continuing to expand while the data out of Europe suggests that the economy is muddling along - but not diving.
On the economic front... ADP reported that the private sector job market contracted during the month of August. The report shows that private sector jobs fell by 10,000 jobs during the month, which was a well below the consensus expectations for a gain of about 10.7K. (July’s report showed 42K jobs created.)
Finally, remember to smile at least once before lunch...
Pre-Game Indicators
Here are the important indicators we review each morning before the opening bell...
Major Foreign Markets:
Australia: +1.98%
Shanghai: -0.60%
Hong Kong: +0.43%
Japan: +1.17%
France: +1.85%
Germany: +1.04%
London: +1.34%
Crude Oil Futures: + $0.93 to $72.85
Gold: + $5.70 to $1256.00
Dollar: higher against Yen, lower vs Euro and Pound
10-Year Bond Yield: Currently trading lower at 2.53%
Stocks Futures Ahead of Open in U.S. (relative to fair value):
S&P 500: +12.68
Dow Jones Industrial Average: +102
NASDAQ Composite: +24.38
Wall Street Research Summary
Upgrades:
Ceradyne (CRDN) - Benchmark Company
Teekay Offshore Partners (TOO) - Citi
Arch Coal (ACI) - HSBC
Massey Energy (MEE) - HSBC
Western Digital (WDC) - Morgan Stanley
Downgrades:
CF Industries (CF) - BMO Capital
Potash (POT) - BMO Capital
ABB Limited (ABB) - Deutsche Bank
Seimens (SI) - Deutsche Bank
Hudson City Bancorp (HCBK) - Morgan Stanley
Google (GOOG) - Removed from Select List at Stifel
Long positions in stocks mentioned: none
For more "top stock" portfolios and research, visit TopStockPortfolios.com
The opinions and forecasts expressed are those of David Moenning, founder of TopStockPortfolios.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. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.
Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.
The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
The information contained in our websites and TopStockPortfolios publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.
Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.
Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.
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