David Moenning's Daily State of the Markets: 01/05
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Not-So Rude Crude
Good morning. The bears definitely entered yesterday morning with their game faces on. Armed with disappointing retailer results and a decent decline in most foreign markets, our furry friends appeared ready to remind everyone that stock prices can actually move in two directions.
However, within an hour, the dip buyers emerged, having jumped on the back of the positive comments thrown Intel�s way. Thus, before you could calculate how long it�s been since we�ve seen a correction of even -3% (for the record, it�s been 5 months and counting), the pullback had abated and once again, everything appeared right with the world.
Although the flattering words toward Intel clearly helped the NASDAQ stay on solid ground, it was the 10:00 report on oil inventories that pushed the bears back to the sidelines. The report showed a lower-than expected drawdown in crude and a significant build in gasoline and distillates. Having been once again rebuffed in equities, the bears recognized the opening and quickly focused their attention on the oil pits. And at the end of the day, crude futures had fallen -$2.73 to the not-so rude price of $55.59.
So, with another big drop in oil, a rally in tech, and Pimco�s Bill Gross saying nice things about the bond market (Mr. Gross suggested that the Fed will cut rates within the next six months), investors had little choice but to put their buying hats back on. And to be sure, the last-hour rally didn�t hurt anybody�s feelings as the major indices managed to overcome the weakness in energy and finish with modest plus signs.
Although green screens are always enjoyable to see, the bulls were heard going on about the leadership displayed by the NASDAQ yesterday. While the 1.25% gain was certainly impressive, we should point out that the chart of the constituents in four-letter-land remains in a trading range. Therefore, tech lovers everywhere should hold the champagne for now.
Turning to this morning, a pretty big warning from Motorola has put a damper on the bulls� fun so far. But we�ve also got the big Kahuna of economic reports to review, so let�s get straight to it. The Labor Department reported that the economy created 167,000 new jobs in December, which was well above expectations for job growth of 113,000. In addition, November�s totals were revised higher by 22,000, so this report has to be considered stronger than expected.
In response, the yields in the bond market are moving sharply higher since this clear cut sign of strength in the economy instantly reduces the possibility of a Fed ease any time soon. For example, the yield on the 2-year note has popped from 4.68% before the report to 4.79% at the present time.
Running through the rest of the pre-game indicators, with the exception of Hong Kong, the overseas markets are all moderately lower this morning. Gold futures are off a bit with the last trade down $1.50 to $624.70. In the oil pits, crude futures are continuing to move lower and the latest quote shows the February futures contract down another $0.34 to $55.25. As we mentioned, interest rates are moving up this morning with the 10-year currently trading with a yield of 4.66%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are looking to open lower. The Dow futures are currently off by 26 points, which is up off their lows of the morning; the S&Ps are 5 points below breakeven, and the NASDAQ looks to be about 7.5 points under fair value at the moment.
Stocks �In Play� This Morning:
Motorola (MOT) � Reduces guidance, Downgraded at Bear Stearns, Deutsche Bank, Piper Jaffray, Oppenheimer
XM Satellite Radio (XMSR) � Estimates reduced at CIBC
Sirius Satellite Radio (SIRI) � Estimates reduced at CIBC
Norfolk Southern (NSC) � Upgraded at Citigroup
Gilead Sciences (GILD) � Target increased at Citigroup
EOG Resources (EOG) � Upgraded at Credit Suisse
Intel (INTC) � Downgraded at Credit Suisse
Nokia (NOK) � Downgraded at Credit Suisse
Western Digital (WDC) � Downgraded at Deutsche Bank
Wellpoint (WLP) � Upgraded at Goldman Sachs
Aetna (AET) � Downgraded at Goldman Sachs
s
Sony (SNE) � Upgraded at Goldman Sachs
EGL Inc (EAGL) � Downgraded at HSBC
Dell (DELL) � Downgraded at JP Morgan
Exxon Mobil (XOM) � Downgraded at Lehman
Abercrombie & Fitch (ANF) � Upgraded at Merrill
Constellation Brands (STZ) � Downgraded at Merrill
Gap Inc (GPS) � Downgraded at Stifel Nicolaus
Long positions in stocks mentioned: BSC, MS, MER
** 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 bears definitely entered yesterday morning with their game faces on. Armed with disappointing retailer results and a decent decline in most foreign markets, our furry friends appeared ready to remind everyone that stock prices can actually move in two directions.
However, within an hour, the dip buyers emerged, having jumped on the back of the positive comments thrown Intel�s way. Thus, before you could calculate how long it�s been since we�ve seen a correction of even -3% (for the record, it�s been 5 months and counting), the pullback had abated and once again, everything appeared right with the world.
Although the flattering words toward Intel clearly helped the NASDAQ stay on solid ground, it was the 10:00 report on oil inventories that pushed the bears back to the sidelines. The report showed a lower-than expected drawdown in crude and a significant build in gasoline and distillates. Having been once again rebuffed in equities, the bears recognized the opening and quickly focused their attention on the oil pits. And at the end of the day, crude futures had fallen -$2.73 to the not-so rude price of $55.59.
So, with another big drop in oil, a rally in tech, and Pimco�s Bill Gross saying nice things about the bond market (Mr. Gross suggested that the Fed will cut rates within the next six months), investors had little choice but to put their buying hats back on. And to be sure, the last-hour rally didn�t hurt anybody�s feelings as the major indices managed to overcome the weakness in energy and finish with modest plus signs.
Although green screens are always enjoyable to see, the bulls were heard going on about the leadership displayed by the NASDAQ yesterday. While the 1.25% gain was certainly impressive, we should point out that the chart of the constituents in four-letter-land remains in a trading range. Therefore, tech lovers everywhere should hold the champagne for now.
Turning to this morning, a pretty big warning from Motorola has put a damper on the bulls� fun so far. But we�ve also got the big Kahuna of economic reports to review, so let�s get straight to it. The Labor Department reported that the economy created 167,000 new jobs in December, which was well above expectations for job growth of 113,000. In addition, November�s totals were revised higher by 22,000, so this report has to be considered stronger than expected.
In response, the yields in the bond market are moving sharply higher since this clear cut sign of strength in the economy instantly reduces the possibility of a Fed ease any time soon. For example, the yield on the 2-year note has popped from 4.68% before the report to 4.79% at the present time.
Running through the rest of the pre-game indicators, with the exception of Hong Kong, the overseas markets are all moderately lower this morning. Gold futures are off a bit with the last trade down $1.50 to $624.70. In the oil pits, crude futures are continuing to move lower and the latest quote shows the February futures contract down another $0.34 to $55.25. As we mentioned, interest rates are moving up this morning with the 10-year currently trading with a yield of 4.66%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are looking to open lower. The Dow futures are currently off by 26 points, which is up off their lows of the morning; the S&Ps are 5 points below breakeven, and the NASDAQ looks to be about 7.5 points under fair value at the moment.
Stocks �In Play� This Morning:
Motorola (MOT) � Reduces guidance, Downgraded at Bear Stearns, Deutsche Bank, Piper Jaffray, Oppenheimer
XM Satellite Radio (XMSR) � Estimates reduced at CIBC
Sirius Satellite Radio (SIRI) � Estimates reduced at CIBC
Norfolk Southern (NSC) � Upgraded at Citigroup
Gilead Sciences (GILD) � Target increased at Citigroup
EOG Resources (EOG) � Upgraded at Credit Suisse
Intel (INTC) � Downgraded at Credit Suisse
Nokia (NOK) � Downgraded at Credit Suisse
Western Digital (WDC) � Downgraded at Deutsche Bank
Wellpoint (WLP) � Upgraded at Goldman Sachs
Aetna (AET) � Downgraded at Goldman Sachs
s
Sony (SNE) � Upgraded at Goldman Sachs
EGL Inc (EAGL) � Downgraded at HSBC
Dell (DELL) � Downgraded at JP Morgan
Exxon Mobil (XOM) � Downgraded at Lehman
Abercrombie & Fitch (ANF) � Upgraded at Merrill
Constellation Brands (STZ) � Downgraded at Merrill
Gap Inc (GPS) � Downgraded at Stifel Nicolaus
Long positions in stocks mentioned: BSC, MS, MER
** 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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