David Moenning's Daily State of the Markets: 4/23

April 23, 2009 10:07 AM EDT

Riding the Range

It was a seesaw affair at the corner of Broad and Wall yesterday as the market was pushed and pulled in both directions several times in response to the news flow. The back-and-forth action reminds us of a commonly accepted principle in technical analysis that says when volatility picks up, you need to be on the lookout for a trend change.

So, with stocks heading down at the open, then reversing higher, then heading back down, then up again – only to finish with a dive into the close, this is definitely something to keep in the back of your mind.

But then again, one look at the charts makes it clear that we’ve got a consolidation pattern on our hands at the present time. And since it is also commonly accepted that a stock or index will exit a consolidation pattern heading in the same direction it was going when it entered the consolidation phase, the bulls can argue that stocks should eventually break higher.

In short, welcome to the trading range where the current low end is 7750 (ish) on the Dow (which could easily expand to 7500 (ish), if the bears get their act together) and 8200 on the high end.

Yesterday’s market got a boost in the early going in response to the report from the FHFA which showed home prices advanced nationwide for the second straight month. And although January’s big gains were revised downward, the bottom line is prices in January still enjoyed their biggest increase on record. In addition, it is encouraging to note that home prices advanced +1.7% during the first two months of the year.

So with another sign that things may be stabilizing in the housing market, stocks were sitting pretty by the time the lunch bell rang and Monday’s worries about the banking system seemed miles away. Well, until we got word that General Motors (GM) was not going to be able to make a $1 billion debt payment, that is. And with investors recognizing that banks hold a great deal of GM debt on their books, you can probably guess where the worry started heading in the late afternoon.

Where does this leave us now? As we mentioned, it’s probably time to mount up and ride the trading range for a while. It’s a decent bet that the short-term traders will be back to “buying the dips and selling the rips” on a short-term basis and that it will now take a concerted effort by the bulls in order to break through the top end of the range.

However, please note that we are of the mind that this consolidation phase is likely to represent a break in the action and although things could get ugly every once in a while, it isn’t likely that the move that began on March 10th has ended.

Turning to this morning, the earnings reports are coming in fast and furious this morning and Apple’s (AAPL) report is definitely providing a boost. On the economic front, it was reported that initial jobless claims came in at 640,000, which was a bit above expectations for a reading of 630,000.

Running through the rest of the pre-game indicators, the major overseas markets are mostly higher. Crude futures are moving higher with the latest quote showing oil trading up $0.67 to $49.52. On the interest rate front, we’ve got the yield on the 10-yr currently at 2.95%, while the yield on the 3-month T-Bill is trading at 0.13%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a modestly higher open. The Dow futures are currently ahead by about 12 points; the S&P’s are up about 2 points, while the NASDAQ looks to be about 7 points above fair value at the moment.

Stocks “In Play” This Morning:

Yesterday’s Earnings After the Bell:

Apple (NASDAQ: AAPL) – Reported $1.33 vs. $1.09
Alcon (NYSE: ACL) – Reported $1.51 vs. $1.43
CR Bard (NYSE: BCR) – Reported $1.17 vs. $1.17
Chipotle Mexican Grill (NYSE: CMG) – Reported $0.78 vs. $0.55
Covanta Holding (NYSE: CVA) – Reported $0.01 vs. $0.08
eBay (NASDAQ: EBAY) – Reported $0.39 vs. $0.34
Equifax (NYSE: EFX) – Reported $0.50 vs. $0.43
Gander Mountain (GMTN) – Reported $0.54 vs. $0.49
Intersil (NASDAQ: ISIL) – Reported $0.02 vs. $0.03
Knight Transportation (NYSE: KNX) – Reported $0.14 vs. $0.11
Lam Research (NASDAQ: LRCX) – Reported -$0.71 vs. -$0.66
Noble Corp (NYSE: NE) – Reported $1.62 vs. $1.46
Newfield Exploration (NYSE: NFX) – Reported $0.85 vs. $0.72
Novellus (NASDAQ: NVLS) – Reported -$0.47 vs. -$0.52
Pactiv (NYSE: PTV) – Reported $0.69 vs. $0.45
Robert Half (NYSE: RHI) – Reported $0.06 vs. $0.06
Sanmina (NASDAQ: SNMA) – Reported -$0.06 vs. $0.00
SLM Corp (NYSE: SLM) – Reported $0.21 vs. $0.13
Steel Dynamics (NASDAQ: STLD) – Reported -$0.19 vs. -$0.43
Torchmark Corp (NYSE: TMK) – Reported $1.49 vs. $1.47
TriQuint Semi (NASDAQ: TQNT) – Reported -$0.07 vs. -$0.09
VMware (NYSE: VMW) – Reported $0.25 vs. $0.20
Xlinix NASDAQ: (XLNX) – Reported $0.20 vs. $0.18
YUM! Brands (NYSE: YUM) – Reported $0.48 vs. $0.40

Today’s Earnings Before the Bell:

AmerisourceBergen (NYSE: ABC) – Reported $0.95 vs. $0.89
Alaska Air (NYSE: ALK) – Reported -$0.70 vs. -$0.46
Alexion Pharmaceuticals (NASDAQ: ALXN) – Reported $0.16 vs. $0.14
Autonation (NYSE: AN) – Reported $0.23 vs. $0.16
Black & Decker (NYSE: BDK) – Reported $0.22 vs. $0.08
Cooper Industries (NYSE: CBE) – Reported $0.47 vs. $0.47
CIT Group (NYSE: CIT) – Reported -$1.30 vs. -$0.43
CME Group (NYSE: CME) – Reported $3.20 vs. $3.20
CONSOL Energy (NYSE: CNX) – Reported $1.08 vs. $0.94
ConocoPhillips (NYSE: COP) – Reported $0.56 vs. $0.41
Danaher (NYSE: DHR) – Reported $0.72 vs. $0.73
Diamond Offshore (NYSE: DO) – Reported $2.51 vs. $2.21
EMC Corp (NYSE: EMC) – Reported $0.16 vs. $0.16
Ensco (NYSE: ESV) – Reported $1.56 vs. $1.51
ITT Educational (NYSE: ESI) – Reported $1.59 vs. $1.41
Fifth Third Bancorp (FITB) – Reported -$0.11 vs. -$0.27
Goodrich (NYSE: GR) – Reported $1.35 vs. $1.07
Hershey (NYSE: HSY) – Reported $0.38 vs. $0.34
Intl Game Technology (NYSE: IGT) – Reported $0.15 vs. $0.22
Invesco (NYSE: INV) – Reported $0.08 vs. $0.14
Janus (NYSE: JNS) – Reported $0.02 vs. $0.07
Laboratory Corp (NYSE: LH) – Reported $1.22 vs. $1.17
US Airways (NYSE: LCC) – Reported -$2.28 vs. -$2.33
Marriott (NYSE: MAR) – Reported $0.24 vs. $0.14
National Oilwell Varco (NYSE: NOV) – Reported $1.13 vs. $1.06
Occidental Petroleum (NYSE: OXY) – Reported $0.50 vs. $0.37
Penn Natl Gaming (NASDAQ: PENN) – Reported $0.38 vs. $0.33
Philip Morris (NYSE: PM) – Reported $0.74 vs. $0.69
PNC Bank (NYSE: PNC) – Reported $1.03 vs. $0.42
Potash (NYSE: POT) – Reported $1.02 vs. $0.82
Radio Shack (NYSE: RSH) – Reported $0.34 vs. $0.22
Raytheon (NYSE: RTN) – Reported $1.11 vs. $1.00
IMS Health (NYSE: RX) – Reported $0.38 vs. $0.38
SEI Investments (NASDAQ: SEIC) – Reported $0.23 vs. $0.22
Sigma-Aldrich (NASDAQ: SIAL) – Reported $0.68 vs. $0.64
SunTrust Banks (NYSE: STI) – Reported -$0.46 vs. -$0.64
Supervalu (NYSE: SVU) – Reported $0.87 vs. $0.96
Thermo Fisher Scientific (NYSE: TMO) – Reported $0.62 vs. $0.70
Union Pacific (NYSE: UNP) – Reported $0.72 vs. $0.65
UPS (NYSE: UPS) – Reported $0.52 vs. $0.56
Zimmer Holdings (NYSE: ZMH) – Reported $0.95 vs. $0.94

Upgrades/Downgrades/Brokerage Research:

Morgan Stanley (NYSE: MS) – Upgraded at BAC/MER
Dicks Sporting Goods (NYSE: DKS) – Downgraded at Citi
Air Products (NYSE: APD) – Upgraded at Citi
Praxair (NYSE: PKX) – Upgraded at Citi
Torchmark (NYSE: TMK) – Downgraded at Credit Suisse
Temple Inland (NYSE: TIN) – Upgraded at Goldman
Packaging Corp (NYSE: PKG) – Downgraded at Goldman
Posco (NYSE: PKX) – Downgraded at Goldman
VMware (NYSE: VMW) – Downgraded at Jefferies
Brocade (NASDAQ: BRCD) – Upgraded at Jefferies
MSCI Inc (NYSE: MXB) – Downgraded at Keefe Bruyette
Baidu (NASDAQ: BIDU) – Estimates increased at RBC Capital
Norfolk Southern (NYSE: NSC) – Upgraded at RBC Capital
Canadian Natl Railway (NYSE: CNI) – Downgraded at RBC Capital
Apple (NASDAQ: AAPL) – Upgraded at RBC Capital
Citrix Systems (NASDAQ: CTXS) – Downgraded at UBS
F-5 Networks (NASDAQ: FFIV) – Downgraded at UBS

Disclosure: Mr. Moenning and/or related firms hold long positions in: OXY



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.TopStockPortfolios.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.

Related Categories

Contributors

Stocks Mentioned

Related Entities

• Credit Suisse
• Keefe, Bruyette & Woods
• UBS
• Initial Jobless Claims
• Citi
• Morgan Stanley
• Jefferies & Co
• RBC Capital
• David Moenning
• Crude Oil

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?