David Moenning's Daily State of the Markets: 02/06
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No Real Reason
Good morning. Monday’s trading session provided lots of news, but no real reason to take any action. As usual, there was a slew of merger news to start off the week, another batch of earnings, and an economic report on the state of the economy. And while the majority of the news was fairly positive, this time the bulls were not inspired to do any buying.
Yesterday, we learned that Wal-Mart’s January sales figures exceeded expectations by a healthy margin, which helped the Dow outperform the rest of the indices on the session. We also were treated to the busiest day of M&A activity of the year as private equity funds appear to continue to have money burning holes in their pockets.
And then at mid-morning, we got word that the ISM Non-Manufacturing Business Activity Index, which represents the Service sector of the economy, rose 2.3 points to a reading of 59.0 in January (remember that readings over 50 are indicative of economic growth). This was the highest reading since last May. The report was fairly positive all around as the Prices Index actually fell 4.5 points. All in all, the report indicates that the Service sector continues to hum along nicely.
However, the big surprise of the day was the fact that the bears were once again unable to get anything going. Everybody knows that a market that doesn’t respond to good news is vulnerable. And everybody knows that the market is more than a little extended to the upside right now. Thus, just about everybody is looking for a pullback these days. In fact, CNBC ran special segments on the probability of a pullback all day long.
It is logical to assume that if and when prices do begin to pull back a bit that the bulls might offer up their best matador imitation and stand aside during the early part of the decline. Thus, all the bears really need is a reason to get things moving downward. But once again yesterday, there were no real reasons available.
Turning to this morning, despite oil pushing the $60 level, things are looking up in the early going. While there is no economic data scheduled for release today, we will get to hear testimony from Treasury Secretary Hank Paulson this morning and a speech from Fed Chairman Bernanke later today at 1:30.
Running through the pre-game indicators, overseas markets are higher across the board. Gold is trading up $5.10 to $661.20 right now. In the oil pits, crude futures are higher this morning with the latest quote showing the March contract up $1.16 to $59.90. Interest rates are fairly steady this morning with the yield on the 10-year currently trading at 4.81%. And finally, with an hour before the bell, stock futures in the U.S. are looking to open a little higher. The Dow futures are currently up by about 19 points; the S&P’s are 3.60 above board, while the NASDAQ looks to be about 4 points ahead of fair value at the moment.
Stocks “In Play” This Morning:
Avon Products (AVP) – Reported $0.41 vs. $0.38
Automatic Data (ADP) – Reported $0.52 vs. $0.51
Emerson (EMR) – Reported $0.55 vs. $0.53
InterActive Corp (IACI) – Reported $0.67 vs. $0.53
Louisiana-Pacific (LPX) – Reported <$0.24> vs. $0.15
National Oilwell Varco (NOV) – Reported $1.35 vs. $1.06
Tyco (TYC) – Reported $0.45 vs. $0.44
Triad Hospitals (TRI) – Upgraded at BofA
National Semiconductor (NSM) – Downgraded at Citigroup, UBS
Temple Inland (TIN) – Downgraded at Citigroup
Lear Corp (LEA) – Upgraded at Credit Suisse
Exelon (EXC) – Upgraded at Deutsche Bank
Nvidia (NVDA) – Upgraded at JP Morgan
Tellabs (TLAB) – Upgraded at Merrill Lynch
State Street (STT) – Upgraded at Morgan Stanley
Hewitt Associates (HEW) – Upgraded at RBC Capital
CSX Corp (CSX) – Downgraded at Stifel Nicolaus
Union Pacific (UNP) – Downgraded at Stifel Nicolaus
Medimmune (MEDI) – Downgraded at Thomas Weisel
ING (ING) – Upgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: MER, MS, AVP
Note: All earnings reports compared to Reuters 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.
Good morning. Monday’s trading session provided lots of news, but no real reason to take any action. As usual, there was a slew of merger news to start off the week, another batch of earnings, and an economic report on the state of the economy. And while the majority of the news was fairly positive, this time the bulls were not inspired to do any buying.
Yesterday, we learned that Wal-Mart’s January sales figures exceeded expectations by a healthy margin, which helped the Dow outperform the rest of the indices on the session. We also were treated to the busiest day of M&A activity of the year as private equity funds appear to continue to have money burning holes in their pockets.
And then at mid-morning, we got word that the ISM Non-Manufacturing Business Activity Index, which represents the Service sector of the economy, rose 2.3 points to a reading of 59.0 in January (remember that readings over 50 are indicative of economic growth). This was the highest reading since last May. The report was fairly positive all around as the Prices Index actually fell 4.5 points. All in all, the report indicates that the Service sector continues to hum along nicely.
However, the big surprise of the day was the fact that the bears were once again unable to get anything going. Everybody knows that a market that doesn’t respond to good news is vulnerable. And everybody knows that the market is more than a little extended to the upside right now. Thus, just about everybody is looking for a pullback these days. In fact, CNBC ran special segments on the probability of a pullback all day long.
It is logical to assume that if and when prices do begin to pull back a bit that the bulls might offer up their best matador imitation and stand aside during the early part of the decline. Thus, all the bears really need is a reason to get things moving downward. But once again yesterday, there were no real reasons available.
Turning to this morning, despite oil pushing the $60 level, things are looking up in the early going. While there is no economic data scheduled for release today, we will get to hear testimony from Treasury Secretary Hank Paulson this morning and a speech from Fed Chairman Bernanke later today at 1:30.
Running through the pre-game indicators, overseas markets are higher across the board. Gold is trading up $5.10 to $661.20 right now. In the oil pits, crude futures are higher this morning with the latest quote showing the March contract up $1.16 to $59.90. Interest rates are fairly steady this morning with the yield on the 10-year currently trading at 4.81%. And finally, with an hour before the bell, stock futures in the U.S. are looking to open a little higher. The Dow futures are currently up by about 19 points; the S&P’s are 3.60 above board, while the NASDAQ looks to be about 4 points ahead of fair value at the moment.
Stocks “In Play” This Morning:
Avon Products (AVP) – Reported $0.41 vs. $0.38
Automatic Data (ADP) – Reported $0.52 vs. $0.51
Emerson (EMR) – Reported $0.55 vs. $0.53
InterActive Corp (IACI) – Reported $0.67 vs. $0.53
Louisiana-Pacific (LPX) – Reported <$0.24> vs. $0.15
National Oilwell Varco (NOV) – Reported $1.35 vs. $1.06
Tyco (TYC) – Reported $0.45 vs. $0.44
Triad Hospitals (TRI) – Upgraded at BofA
National Semiconductor (NSM) – Downgraded at Citigroup, UBS
Temple Inland (TIN) – Downgraded at Citigroup
Lear Corp (LEA) – Upgraded at Credit Suisse
Exelon (EXC) – Upgraded at Deutsche Bank
Nvidia (NVDA) – Upgraded at JP Morgan
Tellabs (TLAB) – Upgraded at Merrill Lynch
State Street (STT) – Upgraded at Morgan Stanley
Hewitt Associates (HEW) – Upgraded at RBC Capital
CSX Corp (CSX) – Downgraded at Stifel Nicolaus
Union Pacific (UNP) – Downgraded at Stifel Nicolaus
Medimmune (MEDI) – Downgraded at Thomas Weisel
ING (ING) – Upgraded at UBS
Mr. Moenning holds Long positions in stocks mentioned: MER, MS, AVP
Note: All earnings reports compared to Reuters 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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