David Moenning's Daily State of the Markets: 1/22

January 22, 2009 9:59 AM EST

Putting Their Money Where Their Mouths Are

It was another wild ride on the Wall Street roller coaster yesterday as traders responded to the various inputs in rather emphatic fashion. Stocks started higher out of the gate in response to IBM’s better-than expected earnings and rosy forecast. However, the upbeat mood didn’t last once the mudslinging toward Secretary of Treasury nominee Timothy Geithner began. But, word that a couple of big wigs were buying their own stocks finally gave traders some confidence and the day finished with a flurry of buying.

Stocks appear to be having some difficulty figuring out what to focus on at the moment. On the one hand, there is the trouble in the banking sector and the economy. Then, there is the earnings parade and the associated uncertainty and surprise. And finally, there is the brand new administration and the hope for brighter days ahead.

Yesterday’s session was a bit of a mixture as IBM’s earnings surprise seemingly came out of nowhere and produced the biggest day for Big Blue in years. In addition, the outlook going forward fostered a positive vibe in the tech sector, which correlated to a nice pop of +4.6% in the NASDAQ.

Next up, given the fiasco with the first go-round of the TARP hearings, investors have been more than a little concerned that politicking might turn into more problems in the banking sector with regard to the Geithner hearings. While most everyone expects Mr. Geithner to be approved after apologizing for the misstep over his personal taxes, the fear that he might be turned away created enough uncertainty to kill the early morning warm fuzzies and send the Dow briefly into the red.

However, probably the most important factor relating to the stock market’s future is confidence. And so, when word hit the street that Bank of America’s (BAC) CEO Ken Lewis had just plunked down cold hard cash to buy 200,000 shares of his company’s stock, trades voiced their approval with a round of buy orders of their own. It also didn’t hurt when we learned that JP Morgan’s Jamie Dimon had bought another 500,000 shares of JPM on Friday at $22.45 per share or that an executive VP had bought with both hands as well.

In short, this was just the type of confidence boost the bulls needed in order to turn things around and break away from the danger zone on the charts (all eyes are currently fixed squarely on S&P 817). Speaking of the charts, yesterday’s blast didn’t really have much of an impact. And whether the confident mood and green screens will last is anybody’s guess. But for now at least, the bulls have found a way to fight on another day.

Turning to this morning, the tone has turned down a bit after the reports on Jobless Claims and Housing Starts. Both Housing Starts and Building Permits came in below expectations with drops of 15% or more. And then, the weekly Jobless Claims number increased by 62,000 to a higher than expected 589,000.

Running through the rest of the pre-game indicators, the major foreign markets followed Wall Street’s lead although Europe is waning. Crude futures are lower with the latest quote showing oil trading down by $0.61 to $43.15. On the interest rate front, we’ve got the yield on the 10-yr currently at 2.52%, while overnight LIBOR jumped to 0.21%, and the yield on the 3-month T-Bill is at 0.10%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a lower open. The Dow futures are currently off by about 90 points; the S&P’s are down by about 7 points, while the NASDAQ looks to be about 5 points below fair value at the moment.

Stocks “In Play” This Morning:

Yesterday’s Earnings After the Bell:

Apple (Nasdaq: AAPL) – Reported $1.78 vs. $1.39
Burlington Northern (NYSE: BNI) – Reported $1.79 vs. $1.74
eBay (Nasdaq: EBAY) – Reported $0.41 vs. $0.39
Kinder Morgan Energy Partners (NYSE: KMP) – Reported $0.26 vs. $0.52
Noble Corp (NYSE: NE) – Reported $1.59 vs. $1.47

Sanmina (Nasdaq: SANM) – Reported $0.00 vs. $0.01
SLM Corp (NYSE: SLM) – Reported $0.08 vs. $0.21
Seagate Technology (NYSE: STX) – Reported -$0.23 vs. -$0.05

Today’s Earnings Before the Bell:

AmerisourceBergen (NYSE: ABC) – Reported $0.73 vs. $0.69
Baxter (NYSE: BAX) – Reported $0.91 vs. $0.89
BB&T Corp (NYSE: BBT) – Reported $0.44 vs. $0.51
CIT Group (NYSE: CIT) – Reported -$0.54 vs. -$0.66
Comerica (NYSE: CMA) – Reported $0.14 vs. $0.35
Cypress Semiconductor (NYSE: CY) – Reported -$0.08 vs. -$0.08
Brinker Intl (NYSE: EAT) – Reported $0.27 vs. $0.18
ITT Educational (NYSE: ESI) – Reported $1.61 vs. $1.44
Fifth Third (Nasdaq: FITB) – Reported -$3.82 vs. $0.00
Huntington Bancshares (Nasdaq: HBAN) – Reported -$1.20 vs. $0.20
Intl Game Technology (NYSE: IGT) – Reported $0.29 vs. $0.26
Janus Capital (NYSE: JNS) – Reported $0.05 vs. $0.01
KeyCorp (NYSE: KEY) – Reported -$0.28 vs. -$0.01
Lockheed Martin (NYSE: LMT) – Reported $2.05 vs. $1.92
Southwest Air (NYSE: LUV) – Reported $0.08 vs. $0.05
M&T Bank (NYSE: MTB) – Reported $1.16 vs. $1.10
Knight Capital (Nasdaq: NITE) – Reported $0.56 vs. $0.39
Nokia (NYSE: NOK) – Reported €0.26 vs. €0.28
SunTrust Banks (NYSE: STI) – Reported -$1.08 vs. $0.06
UnitedHealth (NYSE: UNH) – Reported $0.78 vs. $0.78
Union Pacific (NYSE: UNP) – Reported $1.31 vs. $1.23

Today’s Corporate News, Upgrades/Downgrades/Brokerage Research:

Macerich (NYSE: MAC) – Upgraded at Bank of America Merrill Lynch
Tanger Outlets (NYSE: SKT) – Upgraded at Bank of America Merrill Lynch
Allegheny Technologies (NYSE: ATI) – Downgraded at Bank of America Merrill Lynch
Hershey (NYSE: HSY) – Upgraded at Citi
Kellogg (NYSE: K) – Downgraded at Citi
99 Cents Only Stores (NYSE: NDN) – Downgraded at Deutsche Bank
Petsmart (Nasdaq: PETM) – Downgraded at Deutsche Bank
Lowes (NYSE: LOW) – Upgraded at Deutsche Bank
Best Buy (NYSE: BBY) – Upgraded at Deutsche Bank
Macy’s (NYSE: M) – Upgraded at Deutsche Bank
Freeport McMoRan (NYSE: FCX) – Downgraded at Friedman Billings
Ericsson (Nasdaq: ERIC) – Upgraded at Goldman
Wal-Mart (NYSE: WMT) – Mentioned positively at Goldman
Jacobs Engineering (NYSE: JEC) – Added Conviction Sell at Goldman
Advance Auto Parts (NYSE: AAP) – Upgraded at JP Morgan
Federated Investors (NYSE: FII) – Upgraded at JP Morgan
BT Group (NYSE: BT) – Upgraded at JP Morgan
BHP Billiton (NYSE: BHP) – Downgraded at JP Morgan
eBay (Nasdaq: EBAY) – Downgraded at Oppenheimer
Cerner (Nasdaq: CERN) – Downgraded at Oppenheimer
Wyeth (NYSE: WYE) – Downgraded at UBS

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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• Deutsche Bank
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• Timothy Geithner

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