David Moenning's Daily State of the Markets: 4/28

April 28, 2009 10:11 AM EDT

Coming Down With Something?

Most of the chatter in the market yesterday had to do with the swine flu. And while I hate to sound unsympathetic, so far at least, this is not an issue we need to be spending much time on from a stock market perspective. For example, there have been 149 reported deaths so far in Mexico from this ugly virus. But to put this into perspective, I heard a report yesterday that something like 36,000 people die each year from the flu, which, if my math is correct, is something on the order of 3,000 flu deaths each month. So, before you go and sell all of your stocks because of the economic mayhem the swine flu will cause, you might want to consider putting things into perspective.

Again, please don’t think me an uncaring, black-hearted sole. My point is that so far at least, this outbreak probably isn’t something that is going to prolong the recession or throw entire U.S. industries into chaos.

However, what is interesting about this story is that it has people nervous, worried, and upset. And if the stock market was in a precarious position, this is exactly the type of thing that might get investors clicking the sell button with regularity.

When we fired up the screens yesterday morning, we were met with big red numbers in the pre-market trading. Sure, there were some earnings reports to sift through, but the real story was the swine flu. So, with the foreign markets down -1% or more and our futures sinking, it looked like the bears had finally found the trigger they needed to get a real correction started.

But, as has been the case lately, the big decline just didn’t happen. And at the end of the day, the indices were still within spitting distance of their recent highs and the Q’s (QQQQ) actually closed at a new high for the cycle.

So, what should we take away from yesterday’s session? From where we sit, the key thing is that although stocks are overbought, bumping into resistance, and overdue for a pullback that lasts more than a few hours, so far the bears are still 0-fer. And while this could change at a moment’s notice, it suggests that the bulls remain in charge from a big-picture standpoint.

Turning to this morning, although there is still a lot of discussion about the flu outbreak, the real story has to do with reports that both Bank of America (BAC) and Citi (C) have been told by regulators that, as a result of their stress tests, they both need to raise additional capital.

Running through the rest of the pre-game indicators, the major overseas markets are down hard. Crude futures are moving lower with the latest quote showing oil trading down $1.02 to $49.12. On the interest rate front, we’ve got the yield on the 10-yr currently at 2.88%, 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 lower open. The Dow futures are currently off by about 110 points; the S&P’s are down about 14 points, while the NASDAQ looks to be about 15 points below fair value at the moment.

Stocks “In Play” This Morning:

Yesterday’s Earnings After the Bell:

Aarons Inc (NYSE: AAN) – Reported $0.65 vs. $0.52
Baidu (NASDAQ: BIDU) – Reported $0.86 vs. $0.84
Health Management Assoc (NYSE: HMA) – Reported $0.19 vs. $0.12
Masco (NYSE: MAS) – Reported -$0.23 vs. -$0.13
Meritage Homes (NYSE: MTH) – Reported -$0.60 vs. -$1.18
Plum Creek (NYSE: PCL) – Reported $0.95 vs. $0.94
Rent-a-Center (NASDAQ: RCII) – Reported $0.65 vs. $0.55
Southwestern Energy (NYSE: SWN) – Reported $0.36 vs. $0.31
Universal Health Services (NYSE: UHS) – Reported $1.37 vs. $1.14
Weingarten Realty (NYSE: WRI) – Reported $0.77 vs. $0.59
US Steel (NYSE: X) – Reported -$3.60 vs. -$1.62
XL Capital (NYSE: XL) – Reported $0.63 vs. $0.64

Today’s Earnings Before the Bell:

American Greetings (NYSE: AM) – Reported $0.19 vs. $0.25
Brinks (NYSE: BCO) – Reported $0.48 vs. $0.47
Becton Dickinson (NYSE: BDX) – Reported $1.18 vs. $1.16
Bristol Meyers (NYSE: BMY) – Reported $0.48 vs. $0.47
Coca Cola Enterprises (NYSE: CCE) – Reported $0.20 vs. $0.05
Celanese (NYSE: CE) – Reported $0.08 vs. -$0.08
Rockwell Collins (NYSE: COL)– Reported $1.03 vs. $0.98
Coventry Health Care (NYSE: CVH) – Reported $0.30 vs. $0.25
Fresh Del Monte (NYSE: FDP) – Reported $0.56 vs. $0.84
FPL Group (NYSE: FPL) – Reported $0.90 vs. $0.77
Hospira (NYSE: HSP) – Reported $0.60 vs. $0.55
Jacobs Engineering (NYSE: JEC) – Reported $0.88 vs. $0.88
Lazard (NYSE: LAZ) – Reported -$0.26 vs. $0.31
McGraw Hill (NYSE: MHP) – Reported $0.20 vs. $0.18
Office Depot (NYSE: ODP) – Reported $0.10 vs. -$0.10
Pfizer (NYSE: PFE) – Reported $0.54 vs. $0.49
Scotts Miracle Grow (NYSE: SMG) – Reported $1.25 vs. $1.26
Tellabs (NASDAQ: TLAB) – Reported $0.06 vs. $0.03
Valero (NYSE: VLO) – Reported $0.59 vs. $0.49
Waters (NYSE: WAT) – Reported $0.74 vs. $0.57
Waddell & Reed (NYSE: WDR) – Reported $0.22 vs. $0.20

Upgrades/Downgrades/Brokerage Research:

Brinker Intl (NYSE: EAT) – Upgraded at Argus Research
Timken (NYSE: TKR) – Upgraded at BAC/MER
NetApp (NASDAQ: NTAP) – Downgraded at BAC/MER
Corning (NYSE: GLW) – Downgraded at Bernstein
Omnicom (NYSE: OMC) – Upgraded at Deutsche Bank
Universal Health Services (NYSE: UHS) – Upgraded at Deutsche Bank
Checkpoint Software (NASDAQ: CHKP) – Downgraded at Deutsche Bank
Weyerhaeuser (NYSE: WY) – Downgraded at Deutsche Bank
Alberto Culver (NYSE: ACV) – Removed from Conviction Buy list at Goldman
Baidu (NASDAQ: BIDU) – Target and estimate increased at Goldman
CVS Caremark (NYSE: CVS) – Added to Conviction Buy list at Goldman
Forest Oil (NYSE: FST) – Downgraded at Jefferies
Quicksilver Resources (NYSE: KWK) – Upgraded at Jefferies
BJ Services (NYSE: BJS) – Downgraded at JP Morgan
Helmerich & Payne (NYSE: HP) – Downgraded at JP Morgan
Nvidia (NASDAQ: NVDA) – Target and estimate increased at UBS
Brown Forman (NYSE: BF.B) – 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.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.

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