David Moenning�s Daily State of the Markets: 11/30
Tweet
Share
E-mail
Shaken Then Stirred
Good morning. The Bulls were obviously shaken up a little by Monday�s surprise thrashing as the decline seemed to come out of nowhere and produced a lot of fretting over the technical damage that was inflicted. However, the sudden realization that the game may not continue to be a one-way street seems to have stirred the bulls� competitive juices as our heroes in horns have produced a solid recovery over the past two days.
Once again, it was the mixture of economic data that appeared to be responsible for the advance. For the second straight day, traders were provided with a spate of economic news, which came in largely mixed. The data over the past two days has suggested that the economy is growing at a not-so spectacular rate and that inflation remains relatively well contained. Thus, it would appear that the Goldilocks scenario is alive and well, which is exactly what investors are hoping for.
The data deluge continued yesterday with the government�s second stab at the Q3 GDP numbers. The report showed the economy is actually doing a bit better than expectations but that inflation remains at modest levels. Next up, the report on New Home Sales was a bit disappointing, but the housing analysts, as well as Alan Greenspan, are projecting that the worst of the housing slump may be over. And finally, the Fed�s Beige Book, which doesn�t carry much weight with the Fed, but does provide a solid review of economic conditions, showed modest growth across the board.
But, then again, perhaps it was simply fund managers snapping up their favorites after a pullback that sent the Dow up 90 points yesterday. Lest we forget, the year is rapidly coming to a close and with the megacaps now largely in charge, the reality is that the vast majority of fund managers are underperforming the indices. For example, it looks like the venerable Bill Miller is going to be beaten by the S&P 500 for the first time in more than a decade. Thus, the only way managers can attempt to reach their bonus levels is to buy on declines.
In any event, the Dow is now back to within 115 points of its all-time high, the S&P 500 needs just 0.5% to return to its recent high, the NASDAQ is just 1.4% away from new cycle highs, and the NYSE finished yesterday�s session just 2 points shy of a record close. And while the volume was anything but stellar, we need to recognize that it would have been very easy for the bulls to give ground yesterday and be overrun by a group of frustrated bears.
Turning to this morning, we got yet another piece of the economic puzzle in the form of the October Personal Income and Spending report. The report highlights what the consumer is doing as well as the inflationary aspect of their efforts. The report came in largely in line with expectations with income a bit below consensus while the Spending data and the PCE Deflator were a smidge higher. In short, the report is having little effect on the markets.
Running through the rest of the pre-game indicators, the major overseas markets are all higher. Gold futures are higher this morning on the back of renewed weakness in the greenback and are quoted at $648.70 right now. Crude futures are continuing to climb, which may attract some attention at some point if the advance goes much farther. The latest quote shows the December contract up $0.35 to $62.81. Interest rates are moving up a little on the Personal Income data, with the 2-year currently quoted at 4.67% while the 10-yr is trading with a yield of 4.51% right now. And finally, with an hour before the bell, stock futures in the U.S. are looking to open a little higher. The Dow futures are currently ahead by 18 points, the S&Ps are up about 2 points, and the NASDAQ looks to be about 3 points ahead of fair value at the moment.
Stocks �In Play� This Morning:
Mips Technologies (MIPS) � Downgraded at AG Edwards
Toll Brothers (TOL) � Upgraded at BofA
Estee Lauder (EL) � Bear Stearns starts at Peer Perform
Marathon Oil (MRO) � Downgraded at Citigroup, Friedman Billings
Checkfree (CKFR) � Upgraded at Citigroup
Sovereign Bancorp (SOV) � Upgraded at Citigroup
Vornado Realty Trust (VNO) � Upgraded at Deutsche Bank
Tellabs (TLAB) � Downgraded at First Albany
Coldwater Creek (CWTR) � Goldman starts at Neutral
Gap Inc (GPS) � Downgraded at Lazard
Lazard Ltd (LAZ) � Upgraded at Merrill Lynch
Interactive Corp (IACI) � Downgraded at Merrill Lynch
Tivo (TIVO) � Downgraded at Oppenheimer
Novellus (NVLS) � Downgraded at Stifel Nicolaus
Allergan (AGN) � Downgraded at Thomas Weisel
EOG Resources (EOG) � Downgraded at UBS
Tenaris (TS) � Target increased at UBS
Long positions in stocks mentioned: BSC, GS, MER, EL, MRO, NVLS
** 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. The Bulls were obviously shaken up a little by Monday�s surprise thrashing as the decline seemed to come out of nowhere and produced a lot of fretting over the technical damage that was inflicted. However, the sudden realization that the game may not continue to be a one-way street seems to have stirred the bulls� competitive juices as our heroes in horns have produced a solid recovery over the past two days.
Once again, it was the mixture of economic data that appeared to be responsible for the advance. For the second straight day, traders were provided with a spate of economic news, which came in largely mixed. The data over the past two days has suggested that the economy is growing at a not-so spectacular rate and that inflation remains relatively well contained. Thus, it would appear that the Goldilocks scenario is alive and well, which is exactly what investors are hoping for.
The data deluge continued yesterday with the government�s second stab at the Q3 GDP numbers. The report showed the economy is actually doing a bit better than expectations but that inflation remains at modest levels. Next up, the report on New Home Sales was a bit disappointing, but the housing analysts, as well as Alan Greenspan, are projecting that the worst of the housing slump may be over. And finally, the Fed�s Beige Book, which doesn�t carry much weight with the Fed, but does provide a solid review of economic conditions, showed modest growth across the board.
But, then again, perhaps it was simply fund managers snapping up their favorites after a pullback that sent the Dow up 90 points yesterday. Lest we forget, the year is rapidly coming to a close and with the megacaps now largely in charge, the reality is that the vast majority of fund managers are underperforming the indices. For example, it looks like the venerable Bill Miller is going to be beaten by the S&P 500 for the first time in more than a decade. Thus, the only way managers can attempt to reach their bonus levels is to buy on declines.
In any event, the Dow is now back to within 115 points of its all-time high, the S&P 500 needs just 0.5% to return to its recent high, the NASDAQ is just 1.4% away from new cycle highs, and the NYSE finished yesterday�s session just 2 points shy of a record close. And while the volume was anything but stellar, we need to recognize that it would have been very easy for the bulls to give ground yesterday and be overrun by a group of frustrated bears.
Turning to this morning, we got yet another piece of the economic puzzle in the form of the October Personal Income and Spending report. The report highlights what the consumer is doing as well as the inflationary aspect of their efforts. The report came in largely in line with expectations with income a bit below consensus while the Spending data and the PCE Deflator were a smidge higher. In short, the report is having little effect on the markets.
Running through the rest of the pre-game indicators, the major overseas markets are all higher. Gold futures are higher this morning on the back of renewed weakness in the greenback and are quoted at $648.70 right now. Crude futures are continuing to climb, which may attract some attention at some point if the advance goes much farther. The latest quote shows the December contract up $0.35 to $62.81. Interest rates are moving up a little on the Personal Income data, with the 2-year currently quoted at 4.67% while the 10-yr is trading with a yield of 4.51% right now. And finally, with an hour before the bell, stock futures in the U.S. are looking to open a little higher. The Dow futures are currently ahead by 18 points, the S&Ps are up about 2 points, and the NASDAQ looks to be about 3 points ahead of fair value at the moment.
Stocks �In Play� This Morning:
Mips Technologies (MIPS) � Downgraded at AG Edwards
Toll Brothers (TOL) � Upgraded at BofA
Estee Lauder (EL) � Bear Stearns starts at Peer Perform
Marathon Oil (MRO) � Downgraded at Citigroup, Friedman Billings
Checkfree (CKFR) � Upgraded at Citigroup
Sovereign Bancorp (SOV) � Upgraded at Citigroup
Vornado Realty Trust (VNO) � Upgraded at Deutsche Bank
Tellabs (TLAB) � Downgraded at First Albany
Coldwater Creek (CWTR) � Goldman starts at Neutral
Gap Inc (GPS) � Downgraded at Lazard
Lazard Ltd (LAZ) � Upgraded at Merrill Lynch
Interactive Corp (IACI) � Downgraded at Merrill Lynch
Tivo (TIVO) � Downgraded at Oppenheimer
Novellus (NVLS) � Downgraded at Stifel Nicolaus
Allergan (AGN) � Downgraded at Thomas Weisel
EOG Resources (EOG) � Downgraded at UBS
Tenaris (TS) � Target increased at UBS
Long positions in stocks mentioned: BSC, GS, MER, EL, MRO, NVLS
** 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.
You May Also Be Interested In
- Midday movers: Tesla, Boeing rise; Uber, Old Dominion Freight fall
- After-hours movers: Cadence Design Systems, Cleveland-Cliffs, Riot Platforms, and more
- After-hours movers: Netflix, Intuitive Surgical, Nordstrom, KB Home
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
