David Moenning's Daily State of the Markets: 03/20
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Catching A Wave
Good morning. The tail continued to wag the dog yesterday as the U.S. market rode a wave of green screens that began in Asia and just kept going. The end result was a solid gain here in the U.S., which definitely improved the mood after Friday's disappointing session.
The rally began as Asian investors appeared to breathe a sigh of relief on a couple of fronts. First, while China’s decision to raise rates was a surprise, investors may have been relieved that the increase wasn’t worse. And after selling the rumor that rates may have to go up soon, there may have been a little buying “on the news” going on.
In addition, overseas investors seemed to be relieved that the Yen’s climb has stalled out in recent sessions. This eases concerns about the Yen-Carry Trade being unwound all at once and the corresponding fear regarding global liquidity.
The bulls also got a good deal of help on the M&A front yesterday from across the pond and here at home. The big deal that got everyone talking was the merger of Barclays and Dutch investment banker ABN Amro. The deal would be one of the biggest ever and reassured investors that (1) the global economy is still in good enough shape for companies to want to do deals and (2) there are still good values in the marketplace.
And while the reason for the decline might be a bit counterintuitive given the rally in stock prices, lower oil prices also helped the bull case yesterday. Crude futures fell on concerns about the growth of the global economy, but the move was music to the bulls ears as prices under $57 are sure to help keep consumers heading to the malls.
While it was definitely enjoyable to see stocks post a triple-digit gain, we should note that the major indices have now moved back up into a resistance zone. As such, the sledding might get a bit tougher from here as the bulls will likely need some sort of a catalyst to break through the overhead resistance. And with a two-day Fed meeting commencing today, all eyes will once again be on Mr. Bernanke tomorrow afternoon.
Turning to this morning, we’ve got some fresh numbers to look at on the housing front. Housing Starts for February were reported up 9% to 1.53 million units on an annualized basis, which was higher than expected. However, Permits came in with a drop of -2.5% and were a bit weaker than analysts had hoped for. Stocks have improved a bit on the news as any hopeful signs in the housing market are well received these days.
Running through the pre-game indicators, overseas markets are mixed by region with Asia enjoying green screens while Europe is experiencing modest losses this morning. Gold futures are trading up by $1.40 this morning to $655.70. In the oil pits, crude futures are higher by $0.41 this morning and the latest quote is at $57.00. Interest rates are moving a little lower this morning, with the yield on the 10-year currently trading at 4.56%. And finally, with about an hour before the bell, stock futures in the U.S. are just a little ahead of breakeven. The Dow futures are currently ahead by about 11 points; the S&P’s are up by about 2 points, while the NASDAQ looks to be about 5 points above fair value at the moment.
Stocks “In Play” This Morning:
Affiliated Computer (NYSE: ACS) – Received offer from firms founder
Medimmune (Nasdaq: MEDI) – Downgraded at Bear Stearns
Sandisk (Nasdaq: SNDK) – Upgraded at CIBC
Volkswagen (Nasdaq: VLKAY) – Upgraded at Lehman
Praxair (NYSE: PX) – Upgraded at Merrill Lynch
Gilead Sciences (Nasdaq: GILD) – Upgraded at Merrill Lynch
Public Storage (NYSE: PSA) – Downgraded at Morgan Stanley
Taubman Centers (NYSE: TCO) – Downgraded at Morgan Stanley
Juniper Networks (Nasdaq: JNPR) – Upgraded at Morgan Stanley
Express Scripts (Nasdaq: ESRX) – Upgraded at UBS
Coach (NYSE: COH) – Target increased at UBS
UBS (NYSE: UBS) – Upgraded at West LB Equity
ABN Amro Holdings (NYSE: ABN) – Upgraded at West LB Equity
Mr. Moenning holds Long positions in stocks mentioned: BSC, MER, TCO
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.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 tail continued to wag the dog yesterday as the U.S. market rode a wave of green screens that began in Asia and just kept going. The end result was a solid gain here in the U.S., which definitely improved the mood after Friday's disappointing session.
The rally began as Asian investors appeared to breathe a sigh of relief on a couple of fronts. First, while China’s decision to raise rates was a surprise, investors may have been relieved that the increase wasn’t worse. And after selling the rumor that rates may have to go up soon, there may have been a little buying “on the news” going on.
In addition, overseas investors seemed to be relieved that the Yen’s climb has stalled out in recent sessions. This eases concerns about the Yen-Carry Trade being unwound all at once and the corresponding fear regarding global liquidity.
The bulls also got a good deal of help on the M&A front yesterday from across the pond and here at home. The big deal that got everyone talking was the merger of Barclays and Dutch investment banker ABN Amro. The deal would be one of the biggest ever and reassured investors that (1) the global economy is still in good enough shape for companies to want to do deals and (2) there are still good values in the marketplace.
And while the reason for the decline might be a bit counterintuitive given the rally in stock prices, lower oil prices also helped the bull case yesterday. Crude futures fell on concerns about the growth of the global economy, but the move was music to the bulls ears as prices under $57 are sure to help keep consumers heading to the malls.
While it was definitely enjoyable to see stocks post a triple-digit gain, we should note that the major indices have now moved back up into a resistance zone. As such, the sledding might get a bit tougher from here as the bulls will likely need some sort of a catalyst to break through the overhead resistance. And with a two-day Fed meeting commencing today, all eyes will once again be on Mr. Bernanke tomorrow afternoon.
Turning to this morning, we’ve got some fresh numbers to look at on the housing front. Housing Starts for February were reported up 9% to 1.53 million units on an annualized basis, which was higher than expected. However, Permits came in with a drop of -2.5% and were a bit weaker than analysts had hoped for. Stocks have improved a bit on the news as any hopeful signs in the housing market are well received these days.
Running through the pre-game indicators, overseas markets are mixed by region with Asia enjoying green screens while Europe is experiencing modest losses this morning. Gold futures are trading up by $1.40 this morning to $655.70. In the oil pits, crude futures are higher by $0.41 this morning and the latest quote is at $57.00. Interest rates are moving a little lower this morning, with the yield on the 10-year currently trading at 4.56%. And finally, with about an hour before the bell, stock futures in the U.S. are just a little ahead of breakeven. The Dow futures are currently ahead by about 11 points; the S&P’s are up by about 2 points, while the NASDAQ looks to be about 5 points above fair value at the moment.
Stocks “In Play” This Morning:
Affiliated Computer (NYSE: ACS) – Received offer from firms founder
Medimmune (Nasdaq: MEDI) – Downgraded at Bear Stearns
Sandisk (Nasdaq: SNDK) – Upgraded at CIBC
Volkswagen (Nasdaq: VLKAY) – Upgraded at Lehman
Praxair (NYSE: PX) – Upgraded at Merrill Lynch
Gilead Sciences (Nasdaq: GILD) – Upgraded at Merrill Lynch
Public Storage (NYSE: PSA) – Downgraded at Morgan Stanley
Taubman Centers (NYSE: TCO) – Downgraded at Morgan Stanley
Juniper Networks (Nasdaq: JNPR) – Upgraded at Morgan Stanley
Express Scripts (Nasdaq: ESRX) – Upgraded at UBS
Coach (NYSE: COH) – Target increased at UBS
UBS (NYSE: UBS) – Upgraded at West LB Equity
ABN Amro Holdings (NYSE: ABN) – Upgraded at West LB Equity
Mr. Moenning holds Long positions in stocks mentioned: BSC, MER, TCO
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.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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