David Moenning's Daily State of the Markets: 08/29
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Missing Wide Right
Good morning. Stocks broke out of the their sleepy summer slump yesterday and moved higher on news that Tropical Storm Ernesto looks like it will take a more Northeasterly track and wind up missing the Gulf�s key oil installations. On the one-year anniversary of Katrina�s devastation, Mother Nature appears to have taken pity on the Gulf Coast and pushed the storm away from the battered region. This, of course, allowed the boys in the oil pits to knock prices down and stock traders to celebrate.
Although volume was still extremely light, the bulls were very pleased to see that prices could actually advance in this sluggish environment. Our barnyard buddies used lower oil prices (crude dropped $1.90 and closed at $70.61) to push the S&P right back up to the recent highs and finished with the first gain in the last six sessions.
At one point yesterday afternoon, the Dow was sitting with a gain of more than 100 points and it looked like we might have a breakout on our hands. But with an abundance of economic data on the horizon, caution became the better part of valor, and those with short-term profits cashed in prior to the close.
Given that we are still stuck in Wall Street�s traditional vacation season, we probably shouldn�t try and read too much into yesterday�s action. However, the bulls will argue that the move suggests that stocks will be inclined to move higher once everyone is back at their desks and has had a chance to peruse this week�s economic data. The bull camp is betting that the economic reports will come in soft enough to encourage Mr. Bernanke and Co. to remain in pause mode but yet be strong enough to remove worries about the �R word.�
On the other side of the aisle, however, the bear camp remains steadfast in their view that the Fed has already gone too far and that the combination of high energy prices and a slumping housing market will present a double-whammy for consumers and the market at some point soon.
Frankly, it�s tough to tell which team has the better argument right now. But we do have to admit that field position favors the bulls right now. With prices sitting right at three-month highs, it wouldn�t take much to get a bull party started. But then again, if the economic news is good, then this is also the stuff that creates key resistance levels. So, it�s probably best that we stay in a neutral corner for now and watch the action and the data with an objective eye.
Turning to this morning, things are pretty quiet once again, however, the market does seem to have a positive bent to it in the early going. There is no economic data scheduled for release before the bell, but we will get the report on Consumer Confidence this morning at 10:00 and then the release of the minutes from the last Fed Meeting will be sure to attract some attention.
Running through the rest of the pre-game indicators, the overseas markets are sporting green screens across the board on the back of lower oil and Wall Street�s advance. Gold futures are hovering around unchanged this morning and are currently exchanging hands at $624.10. Crude futures are lower again this morning and are trading down by $0.23 to $70.38. Interest rates are little changed this morning with the 2-year currently quoted at 4.90% while the 10-yr is trading with a yield of 4.81% right now. And finally, with about an hour before the bell, stock futures in the U.S. modestly higher. The Dow futures are currently ahead by 12, the S&Ps are up a fraction, and the NASDAQ is sporting an advance of about 3 points.
Stocks �In Play� This Morning:
Avalon Bay Communities (AVB) � Upgraded at RW Baird
Cisco Systems (CSCO) � Mentioned positively at RBC Capital
BP PLC (BP) � WSJ reports investigation into market manipulation
Reliance Steel (RS) � Upgraded at Goldman Sachs
Ryland Group (RYL) � Downgraded at BofA
SGX Pharma (SGXP) � Downgraded at CIBC, Piper, JMP Sec
Jackson Hewitt Tax (JTX) � Downgraded at Credit Suisse
Navistar (NAV) � Estimates reduced at Bear Stearns
Ashland (ASH) � Downgraded at BB&T
Dominion (D) � Estimates reduced at Bernstein
Boston Beer (SAM) � Downgraded at Deutsche Bank
TJX Cos (TJX) � Downgraded at Jefferies
Ciena (CIEN) � Mentioned positively at Merriman
Long positions in stocks mentioned: AVB, CSCO
** 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.
Good morning. Stocks broke out of the their sleepy summer slump yesterday and moved higher on news that Tropical Storm Ernesto looks like it will take a more Northeasterly track and wind up missing the Gulf�s key oil installations. On the one-year anniversary of Katrina�s devastation, Mother Nature appears to have taken pity on the Gulf Coast and pushed the storm away from the battered region. This, of course, allowed the boys in the oil pits to knock prices down and stock traders to celebrate.
Although volume was still extremely light, the bulls were very pleased to see that prices could actually advance in this sluggish environment. Our barnyard buddies used lower oil prices (crude dropped $1.90 and closed at $70.61) to push the S&P right back up to the recent highs and finished with the first gain in the last six sessions.
At one point yesterday afternoon, the Dow was sitting with a gain of more than 100 points and it looked like we might have a breakout on our hands. But with an abundance of economic data on the horizon, caution became the better part of valor, and those with short-term profits cashed in prior to the close.
Given that we are still stuck in Wall Street�s traditional vacation season, we probably shouldn�t try and read too much into yesterday�s action. However, the bulls will argue that the move suggests that stocks will be inclined to move higher once everyone is back at their desks and has had a chance to peruse this week�s economic data. The bull camp is betting that the economic reports will come in soft enough to encourage Mr. Bernanke and Co. to remain in pause mode but yet be strong enough to remove worries about the �R word.�
On the other side of the aisle, however, the bear camp remains steadfast in their view that the Fed has already gone too far and that the combination of high energy prices and a slumping housing market will present a double-whammy for consumers and the market at some point soon.
Frankly, it�s tough to tell which team has the better argument right now. But we do have to admit that field position favors the bulls right now. With prices sitting right at three-month highs, it wouldn�t take much to get a bull party started. But then again, if the economic news is good, then this is also the stuff that creates key resistance levels. So, it�s probably best that we stay in a neutral corner for now and watch the action and the data with an objective eye.
Turning to this morning, things are pretty quiet once again, however, the market does seem to have a positive bent to it in the early going. There is no economic data scheduled for release before the bell, but we will get the report on Consumer Confidence this morning at 10:00 and then the release of the minutes from the last Fed Meeting will be sure to attract some attention.
Running through the rest of the pre-game indicators, the overseas markets are sporting green screens across the board on the back of lower oil and Wall Street�s advance. Gold futures are hovering around unchanged this morning and are currently exchanging hands at $624.10. Crude futures are lower again this morning and are trading down by $0.23 to $70.38. Interest rates are little changed this morning with the 2-year currently quoted at 4.90% while the 10-yr is trading with a yield of 4.81% right now. And finally, with about an hour before the bell, stock futures in the U.S. modestly higher. The Dow futures are currently ahead by 12, the S&Ps are up a fraction, and the NASDAQ is sporting an advance of about 3 points.
Stocks �In Play� This Morning:
Avalon Bay Communities (AVB) � Upgraded at RW Baird
Cisco Systems (CSCO) � Mentioned positively at RBC Capital
BP PLC (BP) � WSJ reports investigation into market manipulation
Reliance Steel (RS) � Upgraded at Goldman Sachs
Ryland Group (RYL) � Downgraded at BofA
SGX Pharma (SGXP) � Downgraded at CIBC, Piper, JMP Sec
Jackson Hewitt Tax (JTX) � Downgraded at Credit Suisse
Navistar (NAV) � Estimates reduced at Bear Stearns
Ashland (ASH) � Downgraded at BB&T
Dominion (D) � Estimates reduced at Bernstein
Boston Beer (SAM) � Downgraded at Deutsche Bank
TJX Cos (TJX) � Downgraded at Jefferies
Ciena (CIEN) � Mentioned positively at Merriman
Long positions in stocks mentioned: AVB, CSCO
** 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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