David Moenning's Daily State of the Markets: 11/11
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When Will It End?
Just about the time it became obvious that yesterday’s 200 point rally would soon be gone, I got a phone call from a friend who is not in the investment business. He had one simple question for me and after the usual niceties, he asked, “Dave, when is the bull#$&* going to end?”
I laughed and sarcastically replied with, “Well, if I knew that, I wouldn’t be taking YOUR call, I’d be on an island somewhere without a care in the world!” Since he failed to see the humor in what I thought was a fairly obvious answer, I figured I’d best go another direction. I knew he didn’t know or care about “retests,” crash cycles, or Fibonacci retracement levels. And I was fairly confident that my assessment of market volume in relation to the current support and resistance zones might be met with a fairly terse response.
So, as I was buying some time by talking about the really lousy early season ski conditions, the answer suddenly hit me. I said, “Richard (not his real name), this thing will end when countries stop having to come up with half a trillion dollars every other day to bail out this or that. It will end when companies like JP Morgan (JPM) stop telling us to expect ANOTHER $700 million in mortgage losses. It will end when companies that were once associated with the health of the economy stop losing a couple of billion EVERY month. It will end when the likes of AIG (AIG) stops asking the government for another $40 Billion (because the current $120 Billion isn’t going to cut it). And it will end when we stop worrying about big, no, gigantic companies folding up and going away!”
While my skiing partner didn’t really understand the details of all of the points I was making, he must have gotten the gist of the argument as he came back with a quick summation. “Okay, so, you’re saying that the stock market will stop going down when the bad news stops?”
“Exactly!” I told him. And then, as only a good friend can, he decided to be cute and ask one more question, “And when will that be exactly?”
Since he could hear my eyes roll over the telephone, he decided to quickly change the subject. So he proceeded to rattle off some statistics of his own – as in the skiable acres currently open at Loveland, Keystone, Breck, and A-Basin, which, like the stock market, involve some really low numbers these days.
Getting back to the stock market, while it may be painful to watch, it is likely that we’re going to be in this “bottoming process” for some time. And unless the old lows break or something new develops, we should take the volatility in stride and keep looking for signals of a change in the environment.
Turning to this morning, it’s Veteran’s Day, which means that the bond markets are closed and it’s a bank holiday, so the trading might be a little thin. It also looks like today is going to be about helping struggling homeowners. For example, Citigroup (C) has plans to modify a cool $20 Billion in mortgages for those people starting to get behind and then the U.S. Housing Agencies are going to announce new efforts to loosen mortgage terms.
Running through the rest of the pre-game indicators, the major overseas markets are down across the board on renewed global growth concerns. Crude futures are down with the latest quote showing oil trading lower by $2.31 to $60.10. On the interest rate front, bond markets are closed in observance of the holiday. And finally, with about 60 minutes before the bell, stock futures in the U.S. are pointing to a down open. The Dow futures are currently off by about 120 points; the S&P’s are down by about 13 points, while the NASDAQ looks to be about 18 points below fair value at the moment.
Stocks “In Play” This Morning:
Yesterday’s Earnings After the Bell:
Liz Claiborne (NYSE: LIZ) – Reported $0.39 vs. $0.37
Las Vegas Sands (NYSE: LVX) – Reported $0.02 vs. $0.11
Rockwell Automation (NYSE: ROK) – Reported $1.08 vs. $1.01
Starbucks (Nasdaq: SBUX) – Reported $0.10 vs. $0.13
Today’s Earnings Before the Bell:
Cameco Corp (NYSE: CCJ) – Reported $0.41 vs. $0.39
Tyco (NYSE: TYC) – Reported $0.81 vs. $0.73
News, Upgrades/Downgrades/Brokerage Research:
Quest Diagnostics (NYSE: DGX) – Upgraded at Bank of America
Avis Budget (NYSE: CAR) – Downgraded at Barclays
Hertz Global (NYSE :HTZ) – Downgraded at Barclays
KKR Holdings (NYSE: KFN) – Downgraded at Citi
Liberty Global (Nasdaq: LBTYA) – Target reduced at Citi
Jacobs Engineering (NYSE: JEC) – Upgraded Credit Suisse
Prudential (NYSE: PRU) – Downgraded at Goldman
Lincoln National (NYSE: LNC) – Downgraded at Goldman
Tyson Foods (NYSE: TSN) – Downgraded at Goldman
Banco Itau Holdings (NYSE: ITU) – Upgraded at Merrill
Bancolombia (NYSE: CIB) – Upgraded at Merrill
Genworth Financial (NYSE: GNW) – Senior Debt downgraded at Moody’s
Dish Network (Nasdaq: DISH) – Downgraded at Morgan Stanley
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.
Just about the time it became obvious that yesterday’s 200 point rally would soon be gone, I got a phone call from a friend who is not in the investment business. He had one simple question for me and after the usual niceties, he asked, “Dave, when is the bull#$&* going to end?”
I laughed and sarcastically replied with, “Well, if I knew that, I wouldn’t be taking YOUR call, I’d be on an island somewhere without a care in the world!” Since he failed to see the humor in what I thought was a fairly obvious answer, I figured I’d best go another direction. I knew he didn’t know or care about “retests,” crash cycles, or Fibonacci retracement levels. And I was fairly confident that my assessment of market volume in relation to the current support and resistance zones might be met with a fairly terse response.
So, as I was buying some time by talking about the really lousy early season ski conditions, the answer suddenly hit me. I said, “Richard (not his real name), this thing will end when countries stop having to come up with half a trillion dollars every other day to bail out this or that. It will end when companies like JP Morgan (JPM) stop telling us to expect ANOTHER $700 million in mortgage losses. It will end when companies that were once associated with the health of the economy stop losing a couple of billion EVERY month. It will end when the likes of AIG (AIG) stops asking the government for another $40 Billion (because the current $120 Billion isn’t going to cut it). And it will end when we stop worrying about big, no, gigantic companies folding up and going away!”
While my skiing partner didn’t really understand the details of all of the points I was making, he must have gotten the gist of the argument as he came back with a quick summation. “Okay, so, you’re saying that the stock market will stop going down when the bad news stops?”
“Exactly!” I told him. And then, as only a good friend can, he decided to be cute and ask one more question, “And when will that be exactly?”
Since he could hear my eyes roll over the telephone, he decided to quickly change the subject. So he proceeded to rattle off some statistics of his own – as in the skiable acres currently open at Loveland, Keystone, Breck, and A-Basin, which, like the stock market, involve some really low numbers these days.
Getting back to the stock market, while it may be painful to watch, it is likely that we’re going to be in this “bottoming process” for some time. And unless the old lows break or something new develops, we should take the volatility in stride and keep looking for signals of a change in the environment.
Turning to this morning, it’s Veteran’s Day, which means that the bond markets are closed and it’s a bank holiday, so the trading might be a little thin. It also looks like today is going to be about helping struggling homeowners. For example, Citigroup (C) has plans to modify a cool $20 Billion in mortgages for those people starting to get behind and then the U.S. Housing Agencies are going to announce new efforts to loosen mortgage terms.
Running through the rest of the pre-game indicators, the major overseas markets are down across the board on renewed global growth concerns. Crude futures are down with the latest quote showing oil trading lower by $2.31 to $60.10. On the interest rate front, bond markets are closed in observance of the holiday. And finally, with about 60 minutes before the bell, stock futures in the U.S. are pointing to a down open. The Dow futures are currently off by about 120 points; the S&P’s are down by about 13 points, while the NASDAQ looks to be about 18 points below fair value at the moment.
Stocks “In Play” This Morning:
Yesterday’s Earnings After the Bell:
Liz Claiborne (NYSE: LIZ) – Reported $0.39 vs. $0.37
Las Vegas Sands (NYSE: LVX) – Reported $0.02 vs. $0.11
Rockwell Automation (NYSE: ROK) – Reported $1.08 vs. $1.01
Starbucks (Nasdaq: SBUX) – Reported $0.10 vs. $0.13
Today’s Earnings Before the Bell:
Cameco Corp (NYSE: CCJ) – Reported $0.41 vs. $0.39
Tyco (NYSE: TYC) – Reported $0.81 vs. $0.73
News, Upgrades/Downgrades/Brokerage Research:
Quest Diagnostics (NYSE: DGX) – Upgraded at Bank of America
Avis Budget (NYSE: CAR) – Downgraded at Barclays
Hertz Global (NYSE :HTZ) – Downgraded at Barclays
KKR Holdings (NYSE: KFN) – Downgraded at Citi
Liberty Global (Nasdaq: LBTYA) – Target reduced at Citi
Jacobs Engineering (NYSE: JEC) – Upgraded Credit Suisse
Prudential (NYSE: PRU) – Downgraded at Goldman
Lincoln National (NYSE: LNC) – Downgraded at Goldman
Tyson Foods (NYSE: TSN) – Downgraded at Goldman
Banco Itau Holdings (NYSE: ITU) – Upgraded at Merrill
Bancolombia (NYSE: CIB) – Upgraded at Merrill
Genworth Financial (NYSE: GNW) – Senior Debt downgraded at Moody’s
Dish Network (Nasdaq: DISH) – Downgraded at Morgan Stanley
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.
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