David Moenning's Daily State of the Markets: 4/7
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Old News?
Coming into yesterday’s session, traders were well aware of the fact that the market was overbought and after a run of +24.5% in 19 days, was probably due for a rest. Thus, it followed that if the bears would have been able find a reason to get something going to the downside, the bulls might have decided to stand aside and take their licks for a day or two.
So when one of Wall Street’s respected banking analysts, who had just departed Deutsche Bank for greener pastures, initiated coverage of the big bank names with the suggestion that loan losses would exceed those seen in the Great Depression, one might have thought the bears would have been ready to rock. Thus, the dive at the open, which took the Dow down a quick 100 points, didn’t take anyone by surprise.
Mr. Mayo, now with Calyon Securities, referred to the recent “fixes” in the financial sector as merely “window dressing” and mentioned that many of the big banks are still in trouble. This, coupled with Timothy Geithner’s announcement over the weekend that the Treasury Department would likely be booting some CEO’s out of banks left one wondering if there still might be some trouble ahead in the banking sector.
In addition, the market-leading technology sector encountered some trouble in the early going on the back of downgrades and/or estimate revisions to the likes of Cisco (CSCO), BMC Software (BMC), Novell (NOVL), CA (CA), and Juniper Networks (JNPR). And it didn’t help that IBM (IBM) decided to walk away from its deal with Sun Microsystems (SUNW).
Next, unless you live in a cave, you are probably aware of the fact that the rope will be dropped on the earnings parade with Alcoa’s (AA) report after today’s close. And although no one is expecting good news, there is still some uncertainty about what corporate America will have to say for itself over the next month or so. And on that note, there have been several studies bandied about talking about how badly the market has performed during earnings season lately, which would seem to favor the bears right about now.
The bottom line here is our furry friends in the bear camp had a pretty decent setup yesterday morning and a decline of 200 – 300 points seemed to be a reasonable expectation. Almost immediately, there was talk that the bulls had had their fun and that the recent run was now over. Downside projections were abundant and even the most upbeat bulls might have been feeling a little uneasy.
However, a funny thing happened on the way to the meltdown… the sellers failed to show. Instead, the modest 41 point decline seemed to suggest that most of the concerns being voiced yesterday could be considered “old news.” So after escaping relatively unscathed on the day, the bulls could be heard arguing that the dip buyers are still out there and that the bears had better step up to the plate soon if they have any hopes of pushing prices lower.
Turning to this morning, we don’t have any economic news to review before the opening bell. In terms of the action in the pre-market, in the early going it looks like the bears are once again attempting to play the earnings jitters card.
Running through the rest of the pre-game indicators, the overseas markets are lower across the board. Crude futures are moving down with the latest quote showing oil trading off $0.77 to $50.28. On the interest rate front, we’ve got the yield on the 10-yr currently at 2.90%, while 3-month LIBOR is at 1.15% and the yield on the 3-month T-Bill is trading at 0.19%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a lower open. The Dow futures are currently off by about 130 points; the S&P’s are down by about 15 points, while the NASDAQ looks to be about 20 points below fair value at the moment.
Stocks “In Play” This Morning:
Today’s Corporate News, Upgrades/Downgrades/Brokerage Research:
NII Holdings (Nasdaq: NIHD) – Downgraded at BAC/MER
Exxon Mobil (NYSE: XOM) – Estimates reduced at Barclays
Nokia (NYSE: NOK) – Estimates increased at Cannacord Adams
Archer Daniels Midland (NYSE: ADM) – Downgraded at Citi
American Express (NYSE: AXP) – Upgraded at Citi
PG&E (NYSE: PCG) – Upgraded at Credit Suisse
Consolidated Edison (NYSE: ED) – Downgraded at Credit Suisse
Duke Energy (NYSE: DUK) – Downgraded at Credit Suisse
URS Corp (NYSE: URS) – Downgraded at Credit Suisse
Broadcom (Nasdaq: BRCM) – Estimates and target increased at Friedman Billings Ramsey
Federal Mogul (Nasdaq: FDML) – Added to Conviction Buy list at Goldman
Borg Warner (NYSE: BWA) – Removed from Conviction Buy list at Goldman
Rackspace (NYSE: RAX) – Upgraded at Goldman
Sunoco (NYSE: SUN) – Upgraded at JP Morgan
Cabot Corp (NYSE: CBT) – Downgraded at JP Morgan
Cullen Frost Bankers (NYSE: CFR) – Upgraded at Oppenheimer
Google (Nasdaq: GOOG) – Estimates reduced at RBC Capital
Adobe Systems (Nasdaq: ADBE) – Upgraded at RBC Capital
Salesforce.com (NYSE: CRM) – Upgraded at RBC Capital
Digital River (Nasdaq: DRIV) – Upgraded at RBC Capital
Microsoft (Nasdaq: MSFT) – Upgraded at RBC Capital
Symantec (Nasdaq: SYMC) – Upgraded at RBC Capital
Estee Lauder (NYSE: EL)– Downgraded at UBS
Brinker Intl (NYSE: EAT) – Upgraded at Wachovia
Disclosure: Mr. Moenning and/or related firms hold long positions in: SYMC, XOM
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.TopStockPortfolios.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.
Coming into yesterday’s session, traders were well aware of the fact that the market was overbought and after a run of +24.5% in 19 days, was probably due for a rest. Thus, it followed that if the bears would have been able find a reason to get something going to the downside, the bulls might have decided to stand aside and take their licks for a day or two.
So when one of Wall Street’s respected banking analysts, who had just departed Deutsche Bank for greener pastures, initiated coverage of the big bank names with the suggestion that loan losses would exceed those seen in the Great Depression, one might have thought the bears would have been ready to rock. Thus, the dive at the open, which took the Dow down a quick 100 points, didn’t take anyone by surprise.
Mr. Mayo, now with Calyon Securities, referred to the recent “fixes” in the financial sector as merely “window dressing” and mentioned that many of the big banks are still in trouble. This, coupled with Timothy Geithner’s announcement over the weekend that the Treasury Department would likely be booting some CEO’s out of banks left one wondering if there still might be some trouble ahead in the banking sector.
In addition, the market-leading technology sector encountered some trouble in the early going on the back of downgrades and/or estimate revisions to the likes of Cisco (CSCO), BMC Software (BMC), Novell (NOVL), CA (CA), and Juniper Networks (JNPR). And it didn’t help that IBM (IBM) decided to walk away from its deal with Sun Microsystems (SUNW).
Next, unless you live in a cave, you are probably aware of the fact that the rope will be dropped on the earnings parade with Alcoa’s (AA) report after today’s close. And although no one is expecting good news, there is still some uncertainty about what corporate America will have to say for itself over the next month or so. And on that note, there have been several studies bandied about talking about how badly the market has performed during earnings season lately, which would seem to favor the bears right about now.
The bottom line here is our furry friends in the bear camp had a pretty decent setup yesterday morning and a decline of 200 – 300 points seemed to be a reasonable expectation. Almost immediately, there was talk that the bulls had had their fun and that the recent run was now over. Downside projections were abundant and even the most upbeat bulls might have been feeling a little uneasy.
However, a funny thing happened on the way to the meltdown… the sellers failed to show. Instead, the modest 41 point decline seemed to suggest that most of the concerns being voiced yesterday could be considered “old news.” So after escaping relatively unscathed on the day, the bulls could be heard arguing that the dip buyers are still out there and that the bears had better step up to the plate soon if they have any hopes of pushing prices lower.
Turning to this morning, we don’t have any economic news to review before the opening bell. In terms of the action in the pre-market, in the early going it looks like the bears are once again attempting to play the earnings jitters card.
Running through the rest of the pre-game indicators, the overseas markets are lower across the board. Crude futures are moving down with the latest quote showing oil trading off $0.77 to $50.28. On the interest rate front, we’ve got the yield on the 10-yr currently at 2.90%, while 3-month LIBOR is at 1.15% and the yield on the 3-month T-Bill is trading at 0.19%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a lower open. The Dow futures are currently off by about 130 points; the S&P’s are down by about 15 points, while the NASDAQ looks to be about 20 points below fair value at the moment.
Stocks “In Play” This Morning:
Today’s Corporate News, Upgrades/Downgrades/Brokerage Research:
NII Holdings (Nasdaq: NIHD) – Downgraded at BAC/MER
Exxon Mobil (NYSE: XOM) – Estimates reduced at Barclays
Nokia (NYSE: NOK) – Estimates increased at Cannacord Adams
Archer Daniels Midland (NYSE: ADM) – Downgraded at Citi
American Express (NYSE: AXP) – Upgraded at Citi
PG&E (NYSE: PCG) – Upgraded at Credit Suisse
Consolidated Edison (NYSE: ED) – Downgraded at Credit Suisse
Duke Energy (NYSE: DUK) – Downgraded at Credit Suisse
URS Corp (NYSE: URS) – Downgraded at Credit Suisse
Broadcom (Nasdaq: BRCM) – Estimates and target increased at Friedman Billings Ramsey
Federal Mogul (Nasdaq: FDML) – Added to Conviction Buy list at Goldman
Borg Warner (NYSE: BWA) – Removed from Conviction Buy list at Goldman
Rackspace (NYSE: RAX) – Upgraded at Goldman
Sunoco (NYSE: SUN) – Upgraded at JP Morgan
Cabot Corp (NYSE: CBT) – Downgraded at JP Morgan
Cullen Frost Bankers (NYSE: CFR) – Upgraded at Oppenheimer
Google (Nasdaq: GOOG) – Estimates reduced at RBC Capital
Adobe Systems (Nasdaq: ADBE) – Upgraded at RBC Capital
Salesforce.com (NYSE: CRM) – Upgraded at RBC Capital
Digital River (Nasdaq: DRIV) – Upgraded at RBC Capital
Microsoft (Nasdaq: MSFT) – Upgraded at RBC Capital
Symantec (Nasdaq: SYMC) – Upgraded at RBC Capital
Estee Lauder (NYSE: EL)– Downgraded at UBS
Brinker Intl (NYSE: EAT) – Upgraded at Wachovia
Disclosure: Mr. Moenning and/or related firms hold long positions in: SYMC, XOM
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.TopStockPortfolios.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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