David Moenning's Daily State of the Markets: 03/09
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The Bulls Push Back
After being pushed around for four and one-half days, the bulls finally decided to push back yesterday. Lower oil prices and stable interest rates allowed the indices to get up off the mat and show some life. And while the rebound can easily be attributed to short-covering and an oversold condition, stocks have actually hung tough around the recent highs over the past five sessions � so the bounce was a positive sign.
Crude prices fell for the third straight day and for a while, actually moved below $60 in the evening session. The catalyst for the decline was two-fold. First, at their meeting in Vienna, OPEC announced that they would not reduce production at the present time. And second, the Department of Energy reported that inventories of crude products were significantly higher than expected.
As refineries prepare for new EPA standards going into effect in June, the heavy maintenance schedule was expected to have kept production down. However, despite refineries running at just 83% capacity right now, crude stocks increased by 6.8 million barrels. This was more than five times expectations and the biggest weekly jump since October 1998. The build in inventories left stockpiles at their highest level since May 1999.
However, in the big picture, with the ongoing violence in Nigeria and the uncertainty over the escalating rhetoric out of Iran, oil prices aren�t likely to fall significantly in the near-term. The bulls argue that once these two issues are �out of the way� then oil could easily pull back further. This would significantly reduce inflation pressures, which, in turn, would reduce the likelihood of further interest rates increases. As expected, the response from the bear camp to this argument is something along the lines of �shoulda, coulda, woulda.�
After moving higher during the prior four sessions, bond yields were actually stable yesterday. A couple of Fed speeches suggesting that the economy is in good shape and that the housing market isn�t at risk of collapse helped rates to stay in a tight range.
So with rates steady and oil in decline (crude closed down -$1.56 to $60.02) the bulls decided it was time for a rebound after lunch. While there wasn�t any real impetus for the move and volume remained modest, it was nice to see some green on the screens for a change.
Turning to this morning, the markets are breathing a small sigh of relief due to the fact that the Bank of Japan decided not to raise interest rates from near-zero at this time. They did, however, end their campaign of fighting deflation and announced the tightening of liquidity by reducing the amount of cash available for overnight loans.
On the economic front, the January Trade Deficit came in higher than expected at $68.5 Billion. The consensus had been for a deficit of $66.5 Billion. And on the topic of jobs, the weekly Jobless Claims numbers were a bit higher than expected with those seeking unemployment rose by 8,000 to 303,000. This morning�s reports have moved the dollar a little lower, but have had little impact other than that.
Running through the rest of the pre-game indicators an hour before the bell, overseas markets are higher across the board. Oil futures are moving up a bit this morning with crude currently trading +$0.28 to $60.30. Natural Gas is quoted down by -$0.02 at $6.63 right now. Gold futures are rebounding by +$3.50 to $547.80. Bond yields are holding steady this morning with the 2-yr yield currently quoted at 4.72% while the 10-yr is at 4.74%. Note that the 10-yr is now actually higher than the 2-yr as the curve has been steepening a bit lately. And finally, stock futures in the U.S. are pointing higher at the moment with the Dow currently +20, the S&Ps are +3.0, and the NASDAQ is up by +4.0.
Stocks "In Play" This Morning:
INTC � DigiTimes reports Intel may have to cut prices to entice Dell
GOOG � Has proposed settlement of �Click Fraud� lawsuit
SCHW � Barron�s says online brokers are not cheap but SCHW may be most appealing
XOM � Financial Times repots board has decided against a special dividend
CWTR � Reports $0.20 vs $0.18 Revenues $287.9 vs. $255M
EAT � February same-store-sales lower than expected � blames winter storms
JNJ � Announces $5B buyback
TIVO � Reports -$0.23 vs. -$0.24 Revenues $47.0M vs. $45.3, Announces new pricing plan
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: INTC, SCHW, JNJ
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) 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
After being pushed around for four and one-half days, the bulls finally decided to push back yesterday. Lower oil prices and stable interest rates allowed the indices to get up off the mat and show some life. And while the rebound can easily be attributed to short-covering and an oversold condition, stocks have actually hung tough around the recent highs over the past five sessions � so the bounce was a positive sign.
Crude prices fell for the third straight day and for a while, actually moved below $60 in the evening session. The catalyst for the decline was two-fold. First, at their meeting in Vienna, OPEC announced that they would not reduce production at the present time. And second, the Department of Energy reported that inventories of crude products were significantly higher than expected.
As refineries prepare for new EPA standards going into effect in June, the heavy maintenance schedule was expected to have kept production down. However, despite refineries running at just 83% capacity right now, crude stocks increased by 6.8 million barrels. This was more than five times expectations and the biggest weekly jump since October 1998. The build in inventories left stockpiles at their highest level since May 1999.
However, in the big picture, with the ongoing violence in Nigeria and the uncertainty over the escalating rhetoric out of Iran, oil prices aren�t likely to fall significantly in the near-term. The bulls argue that once these two issues are �out of the way� then oil could easily pull back further. This would significantly reduce inflation pressures, which, in turn, would reduce the likelihood of further interest rates increases. As expected, the response from the bear camp to this argument is something along the lines of �shoulda, coulda, woulda.�
After moving higher during the prior four sessions, bond yields were actually stable yesterday. A couple of Fed speeches suggesting that the economy is in good shape and that the housing market isn�t at risk of collapse helped rates to stay in a tight range.
So with rates steady and oil in decline (crude closed down -$1.56 to $60.02) the bulls decided it was time for a rebound after lunch. While there wasn�t any real impetus for the move and volume remained modest, it was nice to see some green on the screens for a change.
Turning to this morning, the markets are breathing a small sigh of relief due to the fact that the Bank of Japan decided not to raise interest rates from near-zero at this time. They did, however, end their campaign of fighting deflation and announced the tightening of liquidity by reducing the amount of cash available for overnight loans.
On the economic front, the January Trade Deficit came in higher than expected at $68.5 Billion. The consensus had been for a deficit of $66.5 Billion. And on the topic of jobs, the weekly Jobless Claims numbers were a bit higher than expected with those seeking unemployment rose by 8,000 to 303,000. This morning�s reports have moved the dollar a little lower, but have had little impact other than that.
Running through the rest of the pre-game indicators an hour before the bell, overseas markets are higher across the board. Oil futures are moving up a bit this morning with crude currently trading +$0.28 to $60.30. Natural Gas is quoted down by -$0.02 at $6.63 right now. Gold futures are rebounding by +$3.50 to $547.80. Bond yields are holding steady this morning with the 2-yr yield currently quoted at 4.72% while the 10-yr is at 4.74%. Note that the 10-yr is now actually higher than the 2-yr as the curve has been steepening a bit lately. And finally, stock futures in the U.S. are pointing higher at the moment with the Dow currently +20, the S&Ps are +3.0, and the NASDAQ is up by +4.0.
Stocks "In Play" This Morning:
INTC � DigiTimes reports Intel may have to cut prices to entice Dell
GOOG � Has proposed settlement of �Click Fraud� lawsuit
SCHW � Barron�s says online brokers are not cheap but SCHW may be most appealing
XOM � Financial Times repots board has decided against a special dividend
CWTR � Reports $0.20 vs $0.18 Revenues $287.9 vs. $255M
EAT � February same-store-sales lower than expected � blames winter storms
JNJ � Announces $5B buyback
TIVO � Reports -$0.23 vs. -$0.24 Revenues $47.0M vs. $45.3, Announces new pricing plan
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: INTC, SCHW, JNJ
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) 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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