David Moenning's Daily State of the Markets: 09/20

September 20, 2006 9:31 AM EDT

Waiting on the Fed (Again)

Good morning. The popular explanation for yesterday’s sloppy session was that investors were once again waiting on today’s Fed announcement. This would mark the 19th time that this explanation has been used since June 2004, so frankly this excuse is a becoming a bit worn. And with most everyone on the planet expecting Mr. Bernanke to stay off the hiking trail for at least another month, this argument doesn’t really ring true.

There was also some mild concern about the military coup that occurred in Thailand. But while the currency markets did experience some fluctuation, few expect a replay of the 1997 debacle. And then, the market also seemed to quake briefly in response to Yahoo’s negative guidance. But we should remember that the days of a single stock (especially a tech stock) moving the markets are long gone

Now toss in the overbought condition of the market and most analysts would agree that the bears were due to win a round. However, an afternoon rebound resulted in a drop of just 14 points on the day, which is hardly a resounding victory for our furry friends.

The problem for the bears was that there was just too much good news for them to get anything going. The PPI report had to be considered a positive from just about any angle and the numbers on Housing Starts were a reminder that Goldilocks is alive and well. And finally, regardless of how bearish one might be at the moment, it’s hard to ignore crude’s plunge of
$2.14 yesterday. Let’s face it; oil priced at $61.66 is starting to sound downright cheap!

So, with some hesitation in front of today’s missive from Mr. Bernanke and friends and a mix of good and bad news, I guess we’ll have to call yesterday’s session a moral victory for the bulls and recognize that there does indeed appear to be a positive predilection a the present time.

Turning to this morning, there is no economic data scheduled for release today, so traders will be on their own until the Fed meeting at 2:15 eastern. However, the combination of solid earnings from Oracle, another big order for Boeing, and the futures’ prediction of just a 2% chance of a rate hike today has market participants in a good mood in the early going.

On the news front, the UN Security Council has agreed on a “very specific timeframe” for Iran to either suspend the enrichment of uranium or face sanctions. I’m not sure, but this sounds a little like another deadline.
So I guess we can hold out hope that this one will actually mean something.

Running through the rest of the pre-game indicators, with the exception of Japan, overseas markets are mostly higher. Gold futures are quoted at $584.40 right now. Crude oil futures are continuing to move lower this morning and are currently down another $0.85 higher at $60.81. Interest rates are little changed with the 2-year currently quoted at 4.81% while the 10-yr is trading with a yield of 4.74% right now. And finally, with about an hour before the bell, stock futures in the U.S. are sporting a nice green glow. The Dow futures are currently ahead by 35, the S&Ps are higher by 4.00, and the NASDAQ is sporting a gain of about 12 points at the moment.

Stocks “In Play” This Morning:

Oracle (ORCL) – Reported $0.18 vs. $0.16, Upgraded at Citigroup
Transocean (RIG) – Mentioned positively in Barron’s
Weatherford Intl (WFT) – Mentioned positively in Barron’s
Caterpillar (CAT) – Prudential initiates rating at overweight
TJX Cos (TJX) – Mentioned cautiously in Barron’s relating to insider sales
Universal Health (UHS) – Upgraded at BofA
Reynolds American (RAI) – Downgraded at Citigroup
Ericsson (ERIC) – Upgraded at Citigroup
Marsh & Mclennan (MMC) – Upgraded at Lehman
Aeropostale (ARO) – Price target increased at Piper Jaffray
Symbol Tech (SBL) – Downgraded at Raymond James
Dell (DELL) – Price target reduced at ThinkEquity
Research in Motion (RIMM) – Mentioned positively at UBS
BT Group (BT) – Downgraded at UBS
XTO Energy (XTO) – Wachovia begins coverage with overweight, also NFX, CHK, FST, BRY
Autozone (AZO) – Price target increased at Piper Jaffray
RF Micro Device (RFMD) – Mentioned positively at Raymond James
Circuit City (CC) – Reports $0.06 vs. $0.05
Intl Bus Machines (IBM) – Price target raised at UBS

Long positions in stocks mentioned: ORCL, CAT, RAI, XTO, IBM

** 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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