David Moenning's Daily State of the Markets: 10/23
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NEUTRAL (
Down)Dividend Yield: 1.5%
Revenue Growth %: -0.6%
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An Apple a Day...
As expected, foreign markets followed suit after Friday's plunge in the U.S. and traders awoke yesterday morning to a sea of red. Also as expected, the U.S. opened down hard in response. And with so many people yacking about the 20th anniversary of the ’87 crash, there was some fear that history would repeat. Of course, there was no real reason for stocks to plunge another 22%, but there still seemed to be a fair amount of trepidation going into Monday morning. However, a funny thing happened on the way to the Monday meltdown – it just didn’t happen.
As is often the case, the U.S. not only started the decline, but stopped it as well. After opening down more than 100 points, people began to realize that they had seen this movie and the hero does die in the end. So, with crude oil dropping, nothing new on the subprime front, a break in the tensions in Turkey, and the realization that we have a great deal of earnings numbers yet to review, traders exhaled and the world didn't come to an end after all.
While it is true that last week’s comments from Caterpillar (NYSE: CAT) and several big banks were pretty discouraging, we have to remember that stocks usually don’t tank for the same reason twice. You see, much of Friday’s decline was tied to the idea that the economy seems to be slowing, which isn’t exactly a surprise, and the fear that we haven’t yet seen the worst of the subprime mess – which again, isn’t exactly new. So, given that almost one-half of Friday’s drop could be attributed to hedge fund follies, it wasn’t terribly surprising to see the bulls attempt to make a stand on Monday morning.
Although explanations for yesterday’s rebound were varied, it seems that the combination of falling crude oil and the feeling that the Friday smack-down was sufficient to discount Cat’s comments provided just enough confidence to do some bottom-fishing and short covering.
As Monday’s session rolled on and traders saw that the sky wasn’t falling, the sentiment turned upbeat in anticipation of Apple's (Nasdaq: AAPL) earnings. While the bar had been set fairly high for technology’s King of cool, almost everyone expected the company to deliver. And sure enough, after the close yesterday afternoon, Steven Jobs and Co. hit the ball out of the park by reporting a simply stellar quarter.
Yes, it is true that Apple tends to sandbag a bit. But since everybody on the street knows this, the game really becomes about whether or not the company can beat the whisper numbers. So it is even more impressive that Apple buried the whisper numbers and then raised guidance going forward.
Apple's report single-handedly lifted the spirits to traders everywhere, and as you might have guessed, the overseas markets have responded with green screens.
Turning to this morning we don’t have any economic data to review before the bell, but there are more than enough earnings reports to keep everyone busy in the early going.
Running through the rest of the pre-game indicators; as we mentioned, the overseas markets are up nicely this morning. Crude futures are heading higher with the latest quote up $0.53 to $86.55. Interest rates are moving up a bit this morning with the 10-yr trading at a yield of 4.43% at the moment. And finally, with about an hour and a half before the bell, stock futures in the U.S. are looking to open stronger. The Dow futures are currently ahead by about 40 points; the S&Ps are up by about 4 points, while the NASDAQ looks to be about 19 points above fair value at the moment.
Stocks "In Play" This Morning:
Yesterday’s Earnings After the Bell:
Apple (Nasdaq: AAPL) – Reported $1.01 vs. $0.84
American Express (NYSE: AXP) – Reported $0.87 vs. $0.86
Netflix (Nasdaq: NFLX) – Reported $0.23 vs. $0.17
Pactiv (NYSE: PTV) – Reported $0.45 vs. $0.44
SL Green Realty (NYSE: SLG) – Reported $1.25 vs. $1.23
Taubman Centers (NYSE: TCO) – Reported $0.68 vs. $0.63
Texas Instruments (NYSE: TXN) – Reported $0.52 vs. $0.50
Today's Earnings Before the Bell:
TD Ameritrade (Nasdaq: AMTD) – Reported $0.33 vs. $0.31
Biogen Idec (Nasdaq: BIIB) – Reported $0.58 vs. $0.64
Burlington Northern (NYSE: BNI) – Reported $1.48 vs. $1.37
Coach (NYSE: COH) – Reported $0.41 vs. $0.40
DuPont (NYSE: DD) – Reported $0.59 vs. $0.52
JetBlue (Nasdaq: JBLU) – Reported $0.12 vs. $0.07
Lockheed Martin (NYSE: LMT) – Reported $1.80 vs. $1.64
Lexmark (NYSE: LXK) – Reported $0.60 vs. $0.13
AT&T (NYSE: T) – Reported $0.71 vs. $0.71
T Rowe Price (Nasdaq: TROW) – Reported $0.63 vs. $0.63
Unisys (NYSE: UIS) – Reported <$0.09> vs. $0.05
Whirlpool (NYSE: WHR) – Reported $2.20 vs. $2.13
Waters (NYSE: WAT) – Reported $0.62 vs. $0.60
News, Upgrades/Downgrades/Brokerage Research:
Teradyne (NYSE: TER) – Upgraded at Citi
Kellogg (NYSE: K) – Downgraded at Citi
Freeport-McMoRan (NYSE: FCX) – Target increased at Goldman Sachs
Texas Instruments (NYSE: TXN) – Downgraded at Credit Suisse, Jefferies, JP Morgan, Lehman, UBS
Checkpoint Software (Nasdaq: CHKP) – Downgraded at Jefferies
ConocoPhillips (NYSE: COP) – Downgraded at JP Morgan
Marathon Oil (NYSE: MRO) – Downgraded at JP Morgan
Occidental Petroleum (NYSE: OXY) – Upgraded at JP Morgan
Murphy Oil (NYSE: MUR) – Upgraded at JP Morgan
Taubman Centers (NYSE: TCO) – Upgraded at Merrill
Diamond Offshore (NYSE: DO) – Upgraded at Morgan Stanley
Google (Nasdaq: GOOG) – Target increased at ThinkEquity
Yahoo (Nasdaq: YHOO) – Target increased at ThinkEquity
Apple (Nasdaq: AAPL) – Target increased at ThinkEquity, UBS, Bear Stearns
Mr. Moenning holds Long positions in stocks mentioned: MER, BIIB, T, TROW, WAT, FCX
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.
As expected, foreign markets followed suit after Friday's plunge in the U.S. and traders awoke yesterday morning to a sea of red. Also as expected, the U.S. opened down hard in response. And with so many people yacking about the 20th anniversary of the ’87 crash, there was some fear that history would repeat. Of course, there was no real reason for stocks to plunge another 22%, but there still seemed to be a fair amount of trepidation going into Monday morning. However, a funny thing happened on the way to the Monday meltdown – it just didn’t happen.
As is often the case, the U.S. not only started the decline, but stopped it as well. After opening down more than 100 points, people began to realize that they had seen this movie and the hero does die in the end. So, with crude oil dropping, nothing new on the subprime front, a break in the tensions in Turkey, and the realization that we have a great deal of earnings numbers yet to review, traders exhaled and the world didn't come to an end after all.
While it is true that last week’s comments from Caterpillar (NYSE: CAT) and several big banks were pretty discouraging, we have to remember that stocks usually don’t tank for the same reason twice. You see, much of Friday’s decline was tied to the idea that the economy seems to be slowing, which isn’t exactly a surprise, and the fear that we haven’t yet seen the worst of the subprime mess – which again, isn’t exactly new. So, given that almost one-half of Friday’s drop could be attributed to hedge fund follies, it wasn’t terribly surprising to see the bulls attempt to make a stand on Monday morning.
Although explanations for yesterday’s rebound were varied, it seems that the combination of falling crude oil and the feeling that the Friday smack-down was sufficient to discount Cat’s comments provided just enough confidence to do some bottom-fishing and short covering.
As Monday’s session rolled on and traders saw that the sky wasn’t falling, the sentiment turned upbeat in anticipation of Apple's (Nasdaq: AAPL) earnings. While the bar had been set fairly high for technology’s King of cool, almost everyone expected the company to deliver. And sure enough, after the close yesterday afternoon, Steven Jobs and Co. hit the ball out of the park by reporting a simply stellar quarter.
Yes, it is true that Apple tends to sandbag a bit. But since everybody on the street knows this, the game really becomes about whether or not the company can beat the whisper numbers. So it is even more impressive that Apple buried the whisper numbers and then raised guidance going forward.
Apple's report single-handedly lifted the spirits to traders everywhere, and as you might have guessed, the overseas markets have responded with green screens.
Turning to this morning we don’t have any economic data to review before the bell, but there are more than enough earnings reports to keep everyone busy in the early going.
Running through the rest of the pre-game indicators; as we mentioned, the overseas markets are up nicely this morning. Crude futures are heading higher with the latest quote up $0.53 to $86.55. Interest rates are moving up a bit this morning with the 10-yr trading at a yield of 4.43% at the moment. And finally, with about an hour and a half before the bell, stock futures in the U.S. are looking to open stronger. The Dow futures are currently ahead by about 40 points; the S&Ps are up by about 4 points, while the NASDAQ looks to be about 19 points above fair value at the moment.
Stocks "In Play" This Morning:
Yesterday’s Earnings After the Bell:
Apple (Nasdaq: AAPL) – Reported $1.01 vs. $0.84
American Express (NYSE: AXP) – Reported $0.87 vs. $0.86
Netflix (Nasdaq: NFLX) – Reported $0.23 vs. $0.17
Pactiv (NYSE: PTV) – Reported $0.45 vs. $0.44
SL Green Realty (NYSE: SLG) – Reported $1.25 vs. $1.23
Taubman Centers (NYSE: TCO) – Reported $0.68 vs. $0.63
Texas Instruments (NYSE: TXN) – Reported $0.52 vs. $0.50
Today's Earnings Before the Bell:
TD Ameritrade (Nasdaq: AMTD) – Reported $0.33 vs. $0.31
Biogen Idec (Nasdaq: BIIB) – Reported $0.58 vs. $0.64
Burlington Northern (NYSE: BNI) – Reported $1.48 vs. $1.37
Coach (NYSE: COH) – Reported $0.41 vs. $0.40
DuPont (NYSE: DD) – Reported $0.59 vs. $0.52
JetBlue (Nasdaq: JBLU) – Reported $0.12 vs. $0.07
Lockheed Martin (NYSE: LMT) – Reported $1.80 vs. $1.64
Lexmark (NYSE: LXK) – Reported $0.60 vs. $0.13
AT&T (NYSE: T) – Reported $0.71 vs. $0.71
T Rowe Price (Nasdaq: TROW) – Reported $0.63 vs. $0.63
Unisys (NYSE: UIS) – Reported <$0.09> vs. $0.05
Whirlpool (NYSE: WHR) – Reported $2.20 vs. $2.13
Waters (NYSE: WAT) – Reported $0.62 vs. $0.60
News, Upgrades/Downgrades/Brokerage Research:
Teradyne (NYSE: TER) – Upgraded at Citi
Kellogg (NYSE: K) – Downgraded at Citi
Freeport-McMoRan (NYSE: FCX) – Target increased at Goldman Sachs
Texas Instruments (NYSE: TXN) – Downgraded at Credit Suisse, Jefferies, JP Morgan, Lehman, UBS
Checkpoint Software (Nasdaq: CHKP) – Downgraded at Jefferies
ConocoPhillips (NYSE: COP) – Downgraded at JP Morgan
Marathon Oil (NYSE: MRO) – Downgraded at JP Morgan
Occidental Petroleum (NYSE: OXY) – Upgraded at JP Morgan
Murphy Oil (NYSE: MUR) – Upgraded at JP Morgan
Taubman Centers (NYSE: TCO) – Upgraded at Merrill
Diamond Offshore (NYSE: DO) – Upgraded at Morgan Stanley
Google (Nasdaq: GOOG) – Target increased at ThinkEquity
Yahoo (Nasdaq: YHOO) – Target increased at ThinkEquity
Apple (Nasdaq: AAPL) – Target increased at ThinkEquity, UBS, Bear Stearns
Mr. Moenning holds Long positions in stocks mentioned: MER, BIIB, T, TROW, WAT, FCX
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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