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David Moenning's Daily State of the Markets: 2/9

February 9, 2009 10:21 AM EST

Did We Say Monday?

Stocks rallied again on Friday primarily in anticipation of the new administration’s plans to jumpstart the economy and continue bailing out the banks. The thinking at the time was that the stimulus bill looked to be a done deal in the Senate and the much ballyhooed comprehensive financial bailout plan was to finally be unveiled on Monday. So, with the possibility for something good to happen over the weekend, traders covered shorts and those feeling upbeat about the future did a little buying.

However, the big story of the day was the horrific jobs report, from which we learned that the economy shed the most jobs since 1974 and the unemployment rate hit a 17-year high. There was virtually no good news to be found in the report and it is assumed that there will be more bad news on the employment front in the months to come. And although the jobs report was bad, it was actually no worse than had been expected. Therefore, the bulls were able to put the report in the category of “rear view mirror” data and move on.

So, with no big surprises on the jobs front, traders returned their focus to the banks. With ideas on how best to fix the situation coming fast and furious, thoughts of nationalization and shareholders being wiped out were set aside. This produced some stellar upside action as the BKX leapt higher by +12% on the session with many of the index constituents jumping +20% or more. It also didn’t hurt that the analyst chatter was focused on the values found in the sector and that many bank executives were busy buying shares for their personal accounts.

Another positive on Friday was the ongoing run higher seen in the Baltic Dry Index, which measures raw materials being moved by sea. So far this year, the index is up 112%, which is giving those investors looking for a commodity-based rebound in places like China something to talk about. However, some of the data suggests that the run higher probably has more to do with the Chinese New Year than is a function of increasing demand.

While the bulls were able to go home happy on Friday, anybody who has been around a while knew that there was likely to be a fair amount of political wrangling happening over the weekend. And sure enough, this crowd was not disappointed.

However, those investors looking to finally hear what our new Treasury Department has cooked up will be disappointed to learn that the much anticipated press conference scheduled for today at 12:30 has been postponed. The party line is that since the stimulus bill may come to a vote today, Treasury didn’t want to distract anyone. So, I guess we will just have to wait until tomorrow for details on the plan.

Turning to this morning, we don’t have any economic data to review before the bell today and it will suffice to say that traders are a little disappointed about Geithner’s postponement. Thus, it is safe to say that today’s focus will be on the stimulus bill.

Running through the rest of the pre-game indicators, the major foreign markets are a mixed bag. Crude futures are higher with the latest quote showing oil trading up by $0.59 to $40.76. On the interest rate front, we’ve got the yield on the 10-yr currently breaching the 3% level, while overnight LIBOR is at 0.31% and the yield on the 3-month T-Bill is trading at 0.28%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a modestly lower open. The Dow futures are currently off by about 50 points; the S&P’s are down about 4 points, while the NASDAQ looks to be about 6 points below fair value at the moment.

Stocks “In Play” This Morning:

Today’s Earnings Before the Bell:

Beazer Homes (NYSE: BZH) – Reported -$2.08 vs. -$2.06
Hasbro (NYSE: HAS) – Reported $0.62 vs. $0.76
Hewitt Associates (NYSE: HEW) – Reported $0.68 vs. $0.60
Loews Corp (NYSE: L) – Reported -$2.20 vs. $0.55
Lorillard Inc (NYSE: LO) – Reported $1.53 vs. $1.37
NYSE Euronext (NYSE: NYX) – Reported $0.52 vs. $0.56
Whirlpool (NYSE: WHR) – Reported $0.60 vs. $0.78

Today’s Corporate News, Upgrades/Downgrades/Brokerage Research:

McDonald’s (NYSE: MCD) – January sales comps +7.1% vs. StreetAccount estimate +5.6%
Standard Pacific (NYSE: SPF) – Downgraded at Argus Research
Biogen Idec (Nasdaq: BIIB) – Downgraded at Barclays
Lennar (NYSE: LEN) – Downgraded at Citi


ResMed (NYSE: RMD) – Downgraded at Citi, JP Morgan
PepsiAmericas (NYSE: PAS) – Downgraded at Citi
Coca Cola (NYSE: KO) – Estimates reduced at Citi
PepsiCo (NYSE: PEP) – Estimates reduced at Citi
Smith Intl (NYSE: SII) – Upgraded at Goldman
Murphy Oil (NYSE: MUR) – Downgraded at Goldman
Chevron (NYSE: CVX) – Downgraded at Goldman
Schlumberger (NYSE: SLB) – Added to Convction Buy list at Goldman
DR Horton (NYSE: DHI) – Added to Convction Buy list at Goldman
Centex (NYSE: CTX) – Downgraded at Goldman
US Steel (NYSE: X) – Removed from Convction Buy list at Goldman
Overseas Shipholding (NYSE: OSG) – Downgraded at Jefferies
Oceaneering Intl (NYSE: OII) – Downgraded at Morgan Stanley
FMC Technologies (NYSE: FTI) – Upgraded at Morgan Stanley, Downgraded at Goldman
Adobe Systems (Nasdaq: ADBE) – Upgraded at Oppenheimer
Pfizer (NYSE: PFE) – Upgraded at UBS
Wyeth (NYSE: WYE) – Upgraded at UBS
Kimco Realty (NYSE: KIM) – Downgraded at Wachovia

Disclosure: Mr. Moenning and/or related firms hold long positions in: OSG

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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