David Moenning's Daily State of the Markets: 06/19

Now What?

Good morning. To put it succinctly, stocks took a break yesterday. Not only from the impressive three-day winning streak, but also from the volatility that we\'ve seen over the past two weeks. In a dull session where very little happened, it was as if traders were posing the question, "Now What?"

Over the past two weeks, traders first corrected stock prices down hard in response to the new reality of higher interest rates around the globe and the worry that there was no end in sight to the rate rampage. Next, after recognizing that inflation isn\'t really a problem here in the U.S. and that we\'d probably seen the worst of the rate increases, traders corrected the correction with an impressive rally.

So, with prices having gone full circle over the two-week period and the indices sitting near all-time highs, traders spent most of yesterday twiddling their thumbs and waiting on the next batch of economic data or trading catalyst.

Things started off well as traders tried to capitalize on another Merger Monday. But, with resistance looming overhead and oil prices once again pushing $70 - crude futures closed up $1.07 at $69.09 - the bulls ran out of gas and were left to ponder what comes next?

Other than oil\'s annoying rise, about the only excitement on the day came after the close as Yahoo! (NASDAQ: YHOO) finally made a move at the top, replacing CEO Terry Semel with company Co-Founder Jerry Yang. Many believe this paves the way for some sort of strategic movement by the company, which of course, fosters rumors of all shapes and sizes. And while there is no immediate expectation for a merger, the news did spruce up an otherwise dull day.

Turning to this morning, we\'ve got some housing data to review before the bell. But before we get to the economic data here in the U.S., we should note that both the German and Eurozone economic sentiment figures came in below expectations, which is putting a damper on the pre-market trading.

Closer to home, the number of housing starts fell in May by 2.1%, but the totals were in line with expectations. However, the forward-looking number, Building Permits, actually showed some strength with an increase of 3.2% from last month and a total of 1.5 million units, which was higher than expectations for 1.47 million units.

Running through the rest of the pre-game indicators, the foreign markets, like yesterday\'s U.S. markets, are little changed. Gold futures are moving down this morning by $1.90 to $658.00. In the oil pits, crude futures are moving down $0.29 with the latest quote at $68.80. Interest rates are moving down this morning with the yield on the 10-year currently trading at 5.13%.

And finally, with about an hour before the bell, stock futures in the U.S. are moving lower. The Dow futures are currently off 20 points; the S&P\'s are about 3 points underwater, while the NASDAQ looks to be about 8 points below fair value at the moment.

Stocks "In Play" This Morning:

Today\'s Earnings Before the Bell:

Best Buy (NYSE: BBY) - Reports $0.39 vs. $0.50

News, Upgrades/Downgrades/Brokerage Research:*

Yahoo! (NASDAQ: YHOO) - Co-Founder Jerry Yang replaces Terry Semel as CEO
Cigna (NYSE: CI) - Upgraded at Banc of America
Applied Materials (NASDAQ: AMAT) - Mentioned positively at Banc of America
Sempra Energy (NYSE: SRE) - Upgraded at Citigroup
Telecom Italia (NYSE: TI) - Upgraded at Goldman Sachs
Textron (NYSE: TXT) - Upgraded at Goldman Sachs
Avaya (NYSE: AV) - Downgraded at JMP Securities
Gannett (NYSE: GCI) - Downgraded at Merrill Lynch
Cemex (NYSE: CX) - Downgraded at Merrill Lynch
DirecTV Group (NYSE: DTV) - Upgraded at Morgan Stanley
Wynn Resorts (NASDAQ: WYNN) - Downgraded at Morgan Stanley
Freeport McMoRan (NYSE: FCX) - Downgraded at Stifel Nicolaus
US Airways (NYSE: LCC) - Upgraded at UBS
BEA Systems (NASDAQ: BEAS) - Downgraded at UBS
Bank of America (NYSE: BAC) - Upgraded at UBS

Mr. Moenning holds Long positions in stocks mentioned: MS, GS, MER, CI, AMAT, AV

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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