David Moenning�s Daily State of the Markets 09/19
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Waiting Patiently
Good morning. Like a child having been promised a trip to the ice cream shop if they were good, the bulls spent Monday waiting patiently for Wednesday�s FOMC meeting. The thinking is that if Mr. Bernanke and Company provides ANY sort of hint that the Fed may be done on the hiking trail, then the bulls might be able to push the Dow back to the Promised Land of new all-time highs.
While it is unlikely that the Fed will offer any real clues about the future (we�re more likely to hear a lot more talk about being data dependent) the bull camp appears to be remaining patient and upbeat at the present time.
And as is usually the case in front of any big event with a deadline associated with it, the major indices are being positioned right at the equilibrium point before the �big bad event.� Thus, any good news from the Fed would allow stocks to be pushed to new highs for the year, while bad news should send them right back into the range.
Yesterday�s rather blas� finish was indicative of the tug of war being played in front of the Fed. The bulls talked about the M&A activity as a positive (Freescale Semi is being taken private for $17.6 Billion) while the Bears simply pointed to the price of oil, which rebounded $0.47 to $63.80, to support their case. Stocks had been higher in the early going, but the quick move down back toward breakeven appeared to correspond to the increase in oil.
In the end, the S&P was up a little while the Dow was down a little. The Nasdaq saw a slight gain while the Russell experienced a minimal loss � and so it went. Volume was on the light side as just about everyone spent the day waiting on the Fed.
Turning to this morning, we�ve got another important inflation number to review. The PPI results produced an awful lot of �wow�s� from the crowd when it was announced as the headline number came in at +0.1%, which was below the expectation of +0.2%. However, the core rate apparently picked up some of the recent drop in oil prices and actually FELL -0.4%, which was much lower than the expectations for an increase of +0.2%. Friday�s CPI number did not include the lower energy prices, so today�s PPI number may be a sign of things to come.
On a year-over-year basis, the PPI has grown by 3.7% but the more important Core Rate was reported at just +0.9%, which is the lowest level of the year and actually below the Fed�s comfort zone. This is obviously good news to both stock and bond investors.
The other economic data released this morning was not as positive for the economy, but should also help keep the Fed from putting those hiking boots back on. Housing starts fell by 6% and permits came in lower than expected.
And while the decline in housing isn�t exactly a surprise, this is an area the analysts are watching very closely for signs that the economy might be getting �too cold.�
Running through the rest of the pre-game indicators, prior to the release of the PPI the European markets were lower on the back of Germany�s investor confidence number, which came in significantly lower than expectations. Gold futures are continuing to struggle this morning and are quoted at $587 right now. Crude oil futures are moving a little higher and are currently exchanging hands $0.38 higher at $64.18. Interest rates are moving lower in response to the weaker than expected PPI report � the 2-year is currently quoted at 4.81% while the 10-yr is trading with a yield of 4.77% right now.
And finally, with about an hour before the bell, stock futures in the U.S.
have returned to breakeven. After spending much of the morning in the red, the Dow futures are currently about even with fair value, the S&Ps are lower by 1.70, and the NASDAQ is sporting a gain of 3 points at the moment.
Stocks �In Play� This Morning:
Research in Motion (RIMM) � Upgraded at Needham
Claires Stores (CLE) � Upgraded at Ryan Beck
Cerner (CERN) � Prudential initiates coverage with Overweight rating
Allscripts Healthcare (MDRX) � Prudential initiates coverage with Overweight rating
Burlington Northern (BNI) � Upgraded at Lehman
CSX (CSX) � Downgraded at Lehman
Norfolk Southern (NSC) � Downgraded at Lehman
Target (TGT) � Guides sales to upper end of range
Motorola (MOT) � Will purchase Symbol Tech (SBL)
Performance Food Group (PFGC) � Added to Buy List at Goldman Sachs
CVS (CVS) � Removed from Buy List at Goldman Sachs
GlaxoSmithKline (GSK) � Downgraded at Bear Stearns
Micron Technology (MU) � Downgraded at Citigroup
Cheesecake Factory (CAKE) � Downgraded at JP Morgan
Medtronic (MDT) � Upgraded at Keybanc/McDonald Inv
Deutsche Telekom (DT) � Upgraded at Morgan Stanley
Telekom Italia (TI) � Downgraded at Morgan Stanley
Akami (AKAM) � Downgraded at Piper Jaffray
Long positions in stocks mentioned: None
** 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.
Dave Moenning
www.TopGunsTrading.com
Good morning. Like a child having been promised a trip to the ice cream shop if they were good, the bulls spent Monday waiting patiently for Wednesday�s FOMC meeting. The thinking is that if Mr. Bernanke and Company provides ANY sort of hint that the Fed may be done on the hiking trail, then the bulls might be able to push the Dow back to the Promised Land of new all-time highs.
While it is unlikely that the Fed will offer any real clues about the future (we�re more likely to hear a lot more talk about being data dependent) the bull camp appears to be remaining patient and upbeat at the present time.
And as is usually the case in front of any big event with a deadline associated with it, the major indices are being positioned right at the equilibrium point before the �big bad event.� Thus, any good news from the Fed would allow stocks to be pushed to new highs for the year, while bad news should send them right back into the range.
Yesterday�s rather blas� finish was indicative of the tug of war being played in front of the Fed. The bulls talked about the M&A activity as a positive (Freescale Semi is being taken private for $17.6 Billion) while the Bears simply pointed to the price of oil, which rebounded $0.47 to $63.80, to support their case. Stocks had been higher in the early going, but the quick move down back toward breakeven appeared to correspond to the increase in oil.
In the end, the S&P was up a little while the Dow was down a little. The Nasdaq saw a slight gain while the Russell experienced a minimal loss � and so it went. Volume was on the light side as just about everyone spent the day waiting on the Fed.
Turning to this morning, we�ve got another important inflation number to review. The PPI results produced an awful lot of �wow�s� from the crowd when it was announced as the headline number came in at +0.1%, which was below the expectation of +0.2%. However, the core rate apparently picked up some of the recent drop in oil prices and actually FELL -0.4%, which was much lower than the expectations for an increase of +0.2%. Friday�s CPI number did not include the lower energy prices, so today�s PPI number may be a sign of things to come.
On a year-over-year basis, the PPI has grown by 3.7% but the more important Core Rate was reported at just +0.9%, which is the lowest level of the year and actually below the Fed�s comfort zone. This is obviously good news to both stock and bond investors.
The other economic data released this morning was not as positive for the economy, but should also help keep the Fed from putting those hiking boots back on. Housing starts fell by 6% and permits came in lower than expected.
And while the decline in housing isn�t exactly a surprise, this is an area the analysts are watching very closely for signs that the economy might be getting �too cold.�
Running through the rest of the pre-game indicators, prior to the release of the PPI the European markets were lower on the back of Germany�s investor confidence number, which came in significantly lower than expectations. Gold futures are continuing to struggle this morning and are quoted at $587 right now. Crude oil futures are moving a little higher and are currently exchanging hands $0.38 higher at $64.18. Interest rates are moving lower in response to the weaker than expected PPI report � the 2-year is currently quoted at 4.81% while the 10-yr is trading with a yield of 4.77% right now.
And finally, with about an hour before the bell, stock futures in the U.S.
have returned to breakeven. After spending much of the morning in the red, the Dow futures are currently about even with fair value, the S&Ps are lower by 1.70, and the NASDAQ is sporting a gain of 3 points at the moment.
Stocks �In Play� This Morning:
Research in Motion (RIMM) � Upgraded at Needham
Claires Stores (CLE) � Upgraded at Ryan Beck
Cerner (CERN) � Prudential initiates coverage with Overweight rating
Allscripts Healthcare (MDRX) � Prudential initiates coverage with Overweight rating
Burlington Northern (BNI) � Upgraded at Lehman
CSX (CSX) � Downgraded at Lehman
Norfolk Southern (NSC) � Downgraded at Lehman
Target (TGT) � Guides sales to upper end of range
Motorola (MOT) � Will purchase Symbol Tech (SBL)
Performance Food Group (PFGC) � Added to Buy List at Goldman Sachs
CVS (CVS) � Removed from Buy List at Goldman Sachs
GlaxoSmithKline (GSK) � Downgraded at Bear Stearns
Micron Technology (MU) � Downgraded at Citigroup
Cheesecake Factory (CAKE) � Downgraded at JP Morgan
Medtronic (MDT) � Upgraded at Keybanc/McDonald Inv
Deutsche Telekom (DT) � Upgraded at Morgan Stanley
Telekom Italia (TI) � Downgraded at Morgan Stanley
Akami (AKAM) � Downgraded at Piper Jaffray
Long positions in stocks mentioned: None
** 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.
Dave Moenning
www.TopGunsTrading.com
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