David Moenning's Daily State of the Markets: 5/6

May 6, 2009 9:56 AM EDT

Is It Friday Yet?

One of the difficulties in penning a daily market missive is trying to create something halfway interesting out of days like Tuesday. While there were several news stories worthy of mention, the overall market action was rather blasé as both teams went home unhappy and looking forward to Friday.

I’m not suggesting that as of Tuesday afternoon traders had already thrown in the towel on the week and were looking forward to a couple of days off. No, the key here is that by Friday we’ll have the government’s results from the stress tests, the banks’ versions of the same, and the employment report for April. So, after a big breakout gain of +3% on Monday and some important data on the horizon, it wasn’t surprising to see the bulls “take 5� yesterday.

The bears will argue that the lack of follow-through after Monday’s blast is a big negative. Our furry friends will point out that with the overseas markets moving higher and a handful of positive reports available, yesterday should have been a “piling on� day where buying capitulation became the primary theme.

To be fair, the bears do have a point about the market not advancing on good news. Since the theme of the market these days is economic stabilization, one might have expected to see stocks react positively to the ISM Non-Manufacturing report that was significantly higher expected. The report also showed that the New Orders component not only came in a full 8 points above expectations, but at a reading of 47.0 is within a stone’s throw of the 50 mark, which is the line of demarcation for economic growth versus contraction.

It appeared that the bulls also got a hand yesterday from Ben Bernanke. In his prepared testimony before the Joint Economic Committee, the Fed Chairman said that the FOMC expects the economy to bottom out and then turn up later this year. Mr. Bernanke added that the Fed is also seeing signs that the housing market is beginning to stabilize.

So, with two positive catalysts in hand and nothing to show for it, the bears can be heard telling anyone that will listen (which isn’t many these days) that the our heroes in horns are now in trouble.

But on the other side of the aisle, the bulls counter with the idea that it is a positive that stocks didn’t play the ‘give back’ game after Monday’s 180 point pop. Their view is that regardless of the news, every day doesn’t have to be an up day and with the pending data out there, it might be prudent for everyone to take a break. So, with the S&P up +34% since the March 9th low and still sitting above 900, it will be interesting to see how the market handles the news later this week.

Turning to this morning, there is more speculation about which banks will need additional capital in front of tomorrow’s release of the stress test results. Today, Reuters is reporting that according to a person close to the numbers, Bank of America will need to raise an additional $34 billion in capital.

On the economic front, all eyes are on Friday’s employment report. But this morning we’ve got a couple of precursory results on the topic. First Challenger reported that job cuts in April totaled 132.6K, which, while up 47% year-over-year, is the lowest level since the peak of 241.7K in October. In addition, ADP reported that the private sector lost only 491,000 jobs in April, which was much better than the expectations for a loss of 645K jobs.

Running through the rest of the pre-game indicators, the major overseas markets are mostly higher. Crude futures are moving up with the latest quote showing oil trading higher by $0.81 to $54.65. On the interest rate front, we’ve got the yield on the 10-yr currently at 3.18%, while the yield on the 3-month T-Bill is trading at 0.19%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to a modestly higher open. The Dow futures are currently ahead by about 45 points; the S&P’s are up about 6 points, while the NASDAQ looks to be about 3 points below fair value at the moment.

Stocks “In Play� This Morning:

Yesterday’s Earnings After the Bell:

Airgas (NYSE: ARG) – Reported $0.68 vs. $0.65
ArvinMeritor (NYSE: ARM) – Reported -$0.12 vs. -$0.68
Bio-Rad Labs (NYSE: BIO) – Reported $1.10 vs. $0.98
Cephalon (CEPH) – Reported $1.30 vs. $1.27
Charles River Labs (NYSE: CRL) – Reported $0.58 vs. $0.53
Centex (NYSE: CTX) – Reported -$3.25 vs. -$1.34
Walt Disney (NYSE: DIS) – Reported $0.43 vs. $0.40
Electronic Arts (Nasdaq: ERTS) – Reported -$0.37 vs. -$0.43
Harris Corp (NYSE: HRS) – Reported $1.02 vs. $1.00
J2 Global (Nasdaq: JCOM) – Reported $0.46 vs. $0.44
Kinross Gold (NYSE: KGC) – Reported $0.10 vs. $0.15
Lincoln National (NYSE: LNC) – Reported $0.91 vs. $0.71
Las Vegas Sands (NYSE: LVS) – Reported $0.01 vs. -$0.02
Pitney Bowes (NYSE: PBI) – Reported $0.55 vs. $0.64
Pulte Homes (NYSE: PHM) – Reported -$2.02 vs. -$0.58
Pioneer Natural (NYSE: PXD) – Reported -$0.11 vs. -$0.55
Titanium Metals (NYSE: TIE) – Reported $0.11 vs. $0.09
TheStreet.com (Nasdaq: TSCM) – Reported -$0.10 vs. -$0.03
ValueClick (Nasdaq: VCLK) – Reported $0.15 vs. $0.12

Today’s Earnings Before the Bell:

Agrium (NYSE: AGU) – Reported $0.04 vs. $0.29
Boyd Gaming (NYSE: BYD) – Reported $0.15 vs. $0.08
Cooper Tire (NYSE: CTB) – Reported -$0.36 vs. -$0.53
Devon Energy (NYSE: DVN) – Reported $0.48 vs. $0.29
Fortress Investment (NYSE: FIG) – Reported $0.07 vs. -$0.03
Foster Wheeler (Nasdaq: FWLT) – Reported $0.59 vs. $0.69
Garmin (Nasdaq: GRMN) – Reported $0.24 vs. $0.41
Quicksilver Resources (NYSE: KWK) – Reported $0.19 vs. $0.09
Marsh McLennan (NYSE: MMC) – Reported $0.40 vs. $0.51
Quanta Services (NYSE: PWR) – Reported $0.14 vs. $0.12
RR Donnelly (NYSE: RRD) – Reported $0.24 vs. $0.38
Transocean (NYSE: RIG) – Reported $3.75 vs. $3.50

Upgrades/Downgrades/Brokerage Research:

American Eagle (NYSE: AEO) – Upgraded at Piper Jaffray
CNA Financial (NYSE: CNA) – Upgraded at BofA/Merrill
Disney (NYSE: DIS) – Upgraded at Barclays
WYNN Resorts (Nasdaq: WYNN) – Downgraded at Bernstein
Fifth Third Bancorp (Nasdaq: FITB) – Downgraded at Citi
Choice Hotels (NYSE: CHH) – Downgraded at Goldman
Chesapeake Energy (NYSE: CHK) – Removed from Buy list at Goldman
Penn National Gaming (Nasdaq: PENN) – Removed from Buy list at Goldman
Intl Game Technology (NYSE: IGT) – Added to Buy list at Goldman
BJ’s Wholesale Club (NYSE: BJ) – Upgraded at JP Morgan
Semtech (Nasdaq: SMTC) – Upgraded at Oppenheimer
Research in Motion (Nasdaq: RIMM) – Raised tgt at Oppenheimer

Disclosure: Mr. Moenning and/or related firms hold long positions in: BAC, AEO, PWR, BJ

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

• Piper Jaffray
• JPMorgan
• ISM Non-Manufacturing
• Ben S. Bernanke
• Citi
• Banc of America
• Federal Open Market Committee
• Barclays
• David Moenning
• Crude Oil
• Layoffs

Add Your Comment

Name

Subject

Body

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