Daily State of the Markets 11/11: Three and Out?

Good morning. With stocks moving lower in the early going on Wednesday, the bear camp was likely feeling pretty good about themselves as it appeared our furry friends were moving the ball up field and on their way to the first meaningful decline since mid-August. But then the defense held as the dollar peaked and the dip-buyers returned. And as of yesterday's close, it looked like the glass-is-half-empty team could be staring at yet another three-and-out possession.

In attempt to make my little football analogy make sense, I will point out that the bears have not been able to put together even three straight down days since August 25th. Thus the bad news bears have been unable to move the chains; let alone put anything up on the scoreboard.

However, everybody in the game knows that this joyride to the upside, which has been based on the hope that the Bernanke cavalry will once again ride to the rescue with yet another easy money solution to the economy's ills, will eventually come to an end. So, after what is looking more and more like a miserable quarter of play, the bears hope that this time it will be different.

Despite some modestly encouraging news on the jobs front here at home (weekly jobless claims once again came in below expectations), the early action was driven by a second rate hike in China, another weak bond auction from one of the PIGI'S, concerns about the potential for currency wars to heat up, and the growing chorus of boos from our foreign friends in response to the Fed's latest bond buying binge.

However, it is important to recognize that traders appear to remain fixated on the movements in the dollar. With the reflation trade all the rage, a rising dollar can lead to a sea of red in commodities, stocks, and emerging markets while a falling dollar is cause for celebration amongst those holding "risk assets." So, with the dollar popping higher at the open yesterday and looking like this move could be for real from a chart standpoint, it wasn't long before the bears began to feel good about the prospects of gaining that elusive first down.

As has been the case lately though, the bears were unable to convert. First, they were called for holding and then on the replay of third down, the snap found its way to the turf as the dip buyers came with an all-out blitz. The good news is that the officials are reviewing the play and the fact that Cisco (Nasdaq: CSCO) came in with a less than inspiring report has given our furry friends some hope this morning.

So, will Cisco's profit margins turn the tide for a frustrated bear team? Will the lack of news on this Veteran's Day cause the bulls to stand aside? Or will the combination of performance anxiety and the 'hope trade' cause the bear's punter to once again take the field? Stick around, although trading may be light due to a bank holiday, the technical action around the line of scrimmage today might be interesting.

Turning to this morning... Cisco Systems is the talk of the town as Mr. Chamber's comments have caused the stock to fall -$4.16 or -17% from yesterday's close. This is putting pressure on the futures market, which will likely lead to some significant selling at the open.

On the economic front... We don't have any data to reveiw at all today as a result of the holiday.

Finally, don't forget the first rule of life, medicine, and money management: Do no harm...

Pre-Game Indicators

Here are the important indicators we review each morning before the opening bell...

* Major Foreign Markets:
o Australia: +0.64%
o Shanghai: +1.04%
o Hong Kong: +0.82%
o Japan: +0.31%
o France: -0.43%
o Germany: -0.07%
o London: -0.24%

* Crude Oil Futures: + $0.17 to $87.98
* Gold: + $8.40 to $1407.70
* Dollar: higher against the Yen and Euro, lower vs. the Pound
* 10-Year Bond Yield: Currently trading at 2.648%

* Stocks Futures Ahead of Open in U.S. (relative to fair value):
o S&P 500: -8.81
o Dow Jones Industrial Average: -65
o NASDAQ Composite: -29.5

Yesterday's Earnings After the Bell

Cisco Systems reports $0.42, vs. Reuters estimate $0.40

Earnings Before The Bell

Kohl's (NYSE: KSS) reports $0.63, vs. cons. $0.63
Viacom (NYSE: VIA.B) reports $0.75, vs. cons. $0.70

* Report includes items that make comparisons to the consensus estimate questionable

Wall Street Research Summary

Upgrades:
# Southern Copper (Nasdaq: SCCO) - BofA/Merrill
# Anglogold Ashanti (NYSE: AU) - BofA/Merrill
# PetSmart (Nasdaq: PETM) - Barclays
# BlackRock (NYSE: BLK) - Citi
# 99 Cents Only (NYSE: NDN) - Deutsche Bank
# Intel (Nasdaq: INTC) - Morgan Stanley
# Autodesk (Nasdaq: ADSK) - Morgan Stanley

Downgrades:
# Thoratec (Nasdaq: THOR) - AURIGA
# Radio Shack (NYSE: RSH) - Barclays
# JetBlue Airways (Nasdaq: JBLU) - Citi
# WW Grainger (NYSE: GWW) - Citi
# Flextronics (Nasdaq: FLEX) - Citi
# Jabil Circuit (NYSE: JBL) - Citi
# Cisco Systems (Nasdaq: CSCO) - Deutsche Bank, William Blair
# Colonial Properties (NYSE: CLP) - FBR Capital
# UDR Inc (NYSE: UDR) - FBR Capital

Long positions in stocks mentioned: none

For more "top stock" portfolios and research, visit TopStockPortfolios.com

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