David Moenning's Daily State of the Markets: 4/29

April 29, 2009 10:09 AM EDT

Has the Tide Turned?

If you had been out on the golf course yesterday afternoon and someone told you in the clubhouse that the Dow closed down 8 points, you might be inclined to think that it was a blasé day where nothing of subsequence occurred. However, you’d also be mistaken.

Okay, we’ll admit that the price action wasn’t terribly inspiring yesterday and that on a chart basis it did appear that it was a rather no-nothing day. But, it is our humble opinion that there was definitely something worthy of note to take away from the session.

No, we’re not talking about the fact that a couple of big-name banks will need to raise some additional capital. Actually, it is kind of surprising that it took so long for the results of the so-called stress tests to be leaked. And no, we are most definitely not talking about the status of the swine flu pandemic. Nor are we talking about the action (or lack thereof) on the charts or even the rather pathetic degree of volume.

Nope, what we found intriguing about yesterday’s action is the fact that stocks did not advance on good news. This market has been notorious for its ability to shake off just about every piece of bad news that has been thrown at it recently. But this is the first time we can recall where the bulls decided to sit on their hands when presented with better than expected economic data.

Granted, everyone seems to be distracted by the swine flu and the hoopla surrounding the President’s 100 day in office. But the simple fact of the matter is that we got not one, not two, but three pieces of economic data that came in well above consensus expectations.

For starters, the Case Shiller Home Price Index, which measures the changes in home prices in 20 metro areas, came in at 143.17. While this wasn’t earth shattering news, the reading was better than the expectations of 142.8. Next, Consumer Confidence was reported at 39.2, which was significantly better than the economists’ consensus for a level of 29.7. It also didn’t hurt that March’s reading was revised up about a point. And finally, the Richmond Fed Index was reported at -9, which, again was significantly better than the consensus for -17 and March’s reading of -20.

Why is this important? In short, should traders continue to ignore good news, it would represent a change in the market’s character and we would want to get onboard the correction train in a big hurry. However, for now we’ll simply invoke the old saw, “One day does not a trend make.”

Turning to this morning, the big news is the Bloomberg report that at least 6 of the 19 banks that underwent the government’s stress test will need to raise additional capital.

On the economic front, the GDP numbers for the first quarter have just been reported and it looks like all the numbers were bigger than expected. But in this case, this is not a good thing as Q1 GDP fell by -6.1%, which was much worse than expectations for a decline of -5.0%. In addition, the GDP Price Index increased by +2.9% versus expectations for +1.8% and the Core PCE (a measure of inflation) came in with an increase of +1.5% versus the consensus estimate for +1.2%. However, the good news is Personal Consumption increased by +2.2% versus expectations for +0.9%;

And speaking of economics, don’t forget that we’ll get a FOMC announcement this afternoon at 2:15pm.

Running through the rest of the pre-game indicators, the major overseas markets are all up nicely. Crude futures are moving up with the latest quote showing oil trading higher by $0.38 to $50.30. On the interest rate front, we’ve got the yield on the 10-yr currently at 3.004%, while the yield on the 3-month T-Bill is trading at 0.12%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a higher open. The Dow futures are currently off their highs but are ahead by about 55 points; the S&P’s are up about 7 points, while the NASDAQ looks to be about 11 points above fair value at the moment.

Stocks “In Play” This Morning:

Yesterday’s Earnings After the Bell:

ACE Ltd (NYSE: ACE) – Reported $1.99 vs. $1.97

Arch Capital Group (Nasdaq: ACGL) – Reported $2.24 vs. $2.58
Advent Software (Nasdaq: ADVS) – Reported $0.38 vs. $0.25
Arthur J Gallagher (NYSE: AJG) – Reported $0.29 vs. $0.14
Buffalo Wild Wings (Nasdaq: BWLD) – Reported $0.47 vs. $0.46
Chicago Bridge (NYSE: CBI) – Reported $0.51 vs. $0.45
Cerner (Nasdaq: CERN) – Reported $0.52 vs. $0.48
DreamWorks Animation (NYSE: DWA) – Reported $0.68 vs. $0.46
E*Trade Financial (Nasdaq: ETFC) – Reported -$0.41 vs. -$0.40
Hertz Global (NYSE: HTZ) – Reported -$0.25 vs. $-0.22
Sun Microsystems (Nasdaq: JAVA) – Reported -$0.07 vs. -$0.19
Jones Lang LaSalle (NYSE: JLL) – Reported -$0.47 vs. -$0.13
Massey Energy (NYSE: MEE) – Reported $0.51 vs. $0.53
Nalco Holdings (NYSE: NLC) – Reported $0.17 vs. $0.19
Panera Bread (Nasdaq: PNRA) – Reported $0.57 vs. $0.56
Psychiatric Solutions (Nasdaq: PSYS) – Reported $0.50 vs. $0.49
RF Micro Devices (Nasdaq: RFMD) – Reported -$0.10 vs. -$0.05
Range Resources (NYSE: RRC) – Reported $0.24 vs. $0.21
Stericycle (Nasdaq: SRCL) – Reported $0.47 vs. $0.46

Textron (NYSE: TXT) – Reported $0.26 vs. $0.01
VF Corp (NYSE: VFC) – Reported $0.91 vs. $0.94
Websense (Nasdaq: WBSN) – Reported $0.37 vs. $0.36


Today’s Earnings Before the Bell:

Aetna (NYSE: AET) – Reported $0.96 vs. $0.93
American Tower (NYSE: AMT) – Reported $0.15 vs. $0.15
Baker Hughes (NYSE: BHI) – Reported $0.82 vs. $0.76
Burger King Holdings (NYSE: BKC) – Reported $0.34 vs. $0.33
General Dynamics (NYSE: GD) – Reported $1.54 vs. $1.46
Hess Corp (NYSE: HES) – Reported -$0.18 vs. -$0.28
Interactive Corp (Nasdaq: IACI) – Reported -$0.02 vs. $0.00
Jones Apparel (NYSE: JNY) – Reported $0.28 vs. $0.10
Moody’s (NYSE: MCO) – Reported $0.41 vs. $0.34
Medco Health Solutions (NYSE: MHS) – Reported $0.63 vs. $0.62
PepsiAmericas (NYSE: PAS) – Reported $0.20 vs. $0.16
Qwest (NYSE: Q) – Reported $0.12 vs. $0.08
Reynolds American (NYSE: RAI) – Reported $1.00 vs. $0.96
Rogers Communications (NYSE: RCI) – Reported $0.40 vs. $0.45
Rockwell Automation (NYSE: ROK) – Reported $0.29 vs. $0.29
Rollins Inc (NYSE: ROL) – Reported $0.16 vs. $0.15
Sealed Air (NYSE: SEE) – Reported $0.33 vs. $0.28
Southern Cos (NYSE: SO) – Reported $0.42 vs. $0.41
Time Warner Cable (NYSE: TWC) – Reported $0.75 vs. $0.58
Time Warner (NYSE: TWX) – Reported $0.45 vs. $0.39
Waste Management (NYSE: WMI) – Reported $0.42 vs. $0.41
Wyeth (NYSE: WYE) – Reported $0.95 vs. $0.89

Upgrades/Downgrades/Brokerage Research:

Coca Cola Enterprises (NYSE: CCE) – Upgraded at BofA/Merrill
Smithfield Foods (NYSE: SFD) – Downgraded at Barclays
Health Management Association (NYSE: HMA) – Downgraded at Barclays
America Movil (NYSE: AMX) – Upgraded at Citi, JP Morgan
E*Trade Financial (Nasdaq: ETFC) – Downgraded at Friedman Billings Ramsey
Dish Network (Nasdaq: DISH) – Downgraded at Goldman
Bristol Myers (NYSE: BMY) – Downgraded at Goldman
Steel Dynamics (Nasdaq: STLD) – Downgraded at Goldman
DR Horton (NYSE: DHI) – Removed from Conviction Buy list at Goldman
Olympic Steel (Nasdaq:ZEUS) – Downgraded at Goldman
Activision Blizzard (Nasdaq:ATVI) – Upgraded at Goldman
DreamWorks (NYSE: DWA) – Upgraded at Goldman
Macy’s (NYSE: M) – Downgraded at JP Morgan
Whole Foods (Nasdaq: WFMI) – Downgraded at Morgan Stanley
Lincoln National (NYSE: LNC) – Upgraded at Morgan Stanley

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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