David Moenning Daily State of the Markets: 1/17
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Shifting Focus
To be honest, Friday�s market action seems like ancient history after the long holiday weekend. And in looking back, using the word �action� in conjunction with Friday�s session may not be entirely appropriate as there was little, if any activity of importance after the opening bell.
At the outset, stocks reacted positively to the PPI report, which showed that core inflation pressures remained subdued. However, some crummy earnings from Dow components Alcoa and DuPont, as well as warnings from Lucent and Tyco, halted any hopes of the bulls continuing their New Year advance.
After the move higher at the open, the day turned into a see-saw affair with the end result showing little movement in anything outside of gold (which made a new 25-year high at $557) and energy. Stocks tried to decline after the Lucent and Tyco news, but some afternoon buying cropped up to keep the indices in check at the close
Turning to this morning, it is our humble opinion that investors have officially shifted their focus. Up to this point, traders have celebrated the fact that the Fed may soon end their hike down the measured path. The focus has been on the idea that a major headwind will soon be removed and the potential upside that the end to the campaign may provide.
However, traders are not known for their long attention spans and it would appear that the focus is now on earnings and, for the time being at least, oil. The earnings parade begins in earnest today and will march on swiftly for the next two weeks. Analysts will be listening closely to the reports for the usual comparisons to expectations, but it would appear that forward looking guidance will take on more meaning than usual at the present time. At issue is the health of corporate America after the hurricanes, the rate hikes, and increasing costs.
In addition to the onslaught of earnings data, this holiday-shortened week will provide some guidance on the economic front. This morning we see that the Empire Manufacturing report, which provides insight as to the strength of manufacturing in the New York region, came in weaker than expected at 20.1 versus expectations of 22.0.
We will also get a report on Industrial Production just before the market opens today. Then tomorrow will bring an update on December�s CPI and the Fed�s Beige Book report. On Thursday, we will receive reports on Housing Starts and the Philly Fed Index. And finally, on Friday we will hear from the University of Michigan on the state of the consumer.
Looking at the immediate future however, stocks are looking to open down hard this morning. Weakness overseas coupled with surging oil prices has stock futures significantly lower (Dow -55, S&P -6.0, and NASDAQ -12.50). Oil prices are up $1.35 to $65.27 on concerns over supply disruptions in Nigeria due to sabotage and the ongoing nuclear issues in Iran.
So with a sea of red awaiting traders at the opening bell, it will be very interesting to see how the bulls react to their first real test of the New Year.
Stocks "In Play" This Morning:
CAT � Upgraded at Citigroup
MCD � Reports Dec sales comps +4.4% vs. 4.8% and guides earnings to $0.48 vs. $0.47
NEM � Downgraded at UBS
AMAT � Deutsche Bank downgrades to Hold
WFC � Reports $1.14 vs. $1.15
TGT � January sales are trending in-line with guidance
COP � UBS initiates with Buy along with AHC
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: NEM, AMAT
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
To be honest, Friday�s market action seems like ancient history after the long holiday weekend. And in looking back, using the word �action� in conjunction with Friday�s session may not be entirely appropriate as there was little, if any activity of importance after the opening bell.
At the outset, stocks reacted positively to the PPI report, which showed that core inflation pressures remained subdued. However, some crummy earnings from Dow components Alcoa and DuPont, as well as warnings from Lucent and Tyco, halted any hopes of the bulls continuing their New Year advance.
After the move higher at the open, the day turned into a see-saw affair with the end result showing little movement in anything outside of gold (which made a new 25-year high at $557) and energy. Stocks tried to decline after the Lucent and Tyco news, but some afternoon buying cropped up to keep the indices in check at the close
Turning to this morning, it is our humble opinion that investors have officially shifted their focus. Up to this point, traders have celebrated the fact that the Fed may soon end their hike down the measured path. The focus has been on the idea that a major headwind will soon be removed and the potential upside that the end to the campaign may provide.
However, traders are not known for their long attention spans and it would appear that the focus is now on earnings and, for the time being at least, oil. The earnings parade begins in earnest today and will march on swiftly for the next two weeks. Analysts will be listening closely to the reports for the usual comparisons to expectations, but it would appear that forward looking guidance will take on more meaning than usual at the present time. At issue is the health of corporate America after the hurricanes, the rate hikes, and increasing costs.
In addition to the onslaught of earnings data, this holiday-shortened week will provide some guidance on the economic front. This morning we see that the Empire Manufacturing report, which provides insight as to the strength of manufacturing in the New York region, came in weaker than expected at 20.1 versus expectations of 22.0.
We will also get a report on Industrial Production just before the market opens today. Then tomorrow will bring an update on December�s CPI and the Fed�s Beige Book report. On Thursday, we will receive reports on Housing Starts and the Philly Fed Index. And finally, on Friday we will hear from the University of Michigan on the state of the consumer.
Looking at the immediate future however, stocks are looking to open down hard this morning. Weakness overseas coupled with surging oil prices has stock futures significantly lower (Dow -55, S&P -6.0, and NASDAQ -12.50). Oil prices are up $1.35 to $65.27 on concerns over supply disruptions in Nigeria due to sabotage and the ongoing nuclear issues in Iran.
So with a sea of red awaiting traders at the opening bell, it will be very interesting to see how the bulls react to their first real test of the New Year.
Stocks "In Play" This Morning:
CAT � Upgraded at Citigroup
MCD � Reports Dec sales comps +4.4% vs. 4.8% and guides earnings to $0.48 vs. $0.47
NEM � Downgraded at UBS
AMAT � Deutsche Bank downgrades to Hold
WFC � Reports $1.14 vs. $1.15
TGT � January sales are trending in-line with guidance
COP � UBS initiates with Buy along with AHC
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: NEM, AMAT
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
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