David Moenning's Daily State of the Markets: 04/24

Milestone Mind Games

Good morning. CNBC has a new ticker, which keeps track of exactly how far away the DJIA is from the apparently all-important 13,000 milestone. The numbers are red, highlighted in yellow, and are updated on a second by second basis. And you get the feeling that streamers and confetti might fall from the ceiling the moment the new market milestone is breeched.

But sure enough, just as the venerable index got close to surmounting the new round number yesterday (the Dow’s intraday high was 12,983), the bears came out to play and the party hats were left unopened. It wasn’t a terribly dramatic decline as there was no apparent catalyst for the pullback, so neither team could really take credit for the day.

But this is how it goes whenever one of these supposedly important psychological barriers comes along. In short, unless the bulls are charging hard, a milestone mentality creeps in and traders take some profits. The thinking may be that it is bad luck to just blast through a round number of such significance without an appropriate turf war and some degree of backing and filling.

However, there were also a handful of modest negatives that may have played a more important role in yesterday’s trading than whether or not the Dow closed above 13,000. The fact that that oil spiked up $1.78 to $65.89 on unrest in Nigeria just might have caused some mild concerns. The fact that stocks are once again overbought might have been reason to take pause. And the fact that there may have been some artificial buying during Friday’s expiration may have created a little post-expiration giveback.

Okay, I’ll admit that talking about the current turf war between the bulls and the bears over Dow 13,000 is a tad more interesting than the obvious fact that stocks took a break yesterday after being up 15 of the previous 16 sessions. And as someone who makes their living trying to help investors make their accounts go up, the opportunity to don the party hats is definitely appealing. But, in case you haven’t been able to detect the intended sarcasm in this morning's missive, we are of the opinion that all of this talk about another milestone for the Dow is a just little on the silly side.

So, with the Dow now just 80.6 points away from the vital 13,000 level, we will turn our attention to the important issues of today’s earnings reports and economic data.

Turning to this morning, there is no economic data scheduled for release before the bell. However, we will get reports on Existing Home Sales and Consumer Confidence at 10:00 am.

Running through the rest of the pre-game indicators, with the exception of Hong Kong, the major foreign markets are modestly lower. Gold futures are moving up this morning and are trading higher by $1.00 to $695.20. In the oil pits, crude futures are off by $0.14 with the latest quote at $65.75. Interest rates are a smidge lower this morning as the yield on the 10-year is currently trading at 4.64%. And finally, with about an hour before the bell, stock futures in the U.S. are looking cautiously higher. The Dow futures are currently ahead by 19 points; the S&P’s are about 2 points above board, while the NASDAQ looks to be about 6 points ahead of fair value at the moment


Stocks “In Play” This Morning:

Yesterday’s Earnings After the Bell

Amgen (AMGN) – Reported $1.08 vs. $1.08
Chubb (CB) – Reported $1.53 vs. $1.38
Juniper Networks (JNPR) – Reported $0.19 vs. $0.19
Texas Instruments (TXN) – Reported $0.35 vs. $0.31, Upgraded at Piper

Today’s Earnings Before the Bell:

BJ Services (NYSE: BJS) – Reported $0.64 vs. $0.71
Brinker Intl (NYSE: EAT) – Reported $0.44 vs. $0.48
Chicago Mercantile Holdings (NYSE: CME) – Reported $3.65 vs. $3.62
Coach (NYSE: COH) – Reported $0.39 vs. $0.38
DuPont (NYSE: DD) – Reported $1.07 vs. $1.04
Lockheed Martin (NYSE: LMT) – Reported $1.39 vs. $1.37
Pepsi Bottling Group (NYSE: PBG) – Reported $0.12 vs. $0.10
AT&T (NYSE: T) – Reported $0.65 vs. $0.61
Whirlpool (NYSE: WHR) – Reported $1.55 vs. $0.1.09
US Steel (NYSE: X) – Reported $2.32 vs. $1.88

News, Upgrades/Downgrades/Brokerage Research:

Exxon Mobil (NYSE: XOM) – Downgraded at AG Edwards
Cummins (NYSE: CMI) – Upgraded at Bear Stearns
Sandisk (Nasdaq: SNDK) – Upgraded at Citigroup
Express Scripts (Nasdaq: ESRX) – Citigroup raises price target
Medimmune (Nasdaq: MEDI) – Downgraded at Lehman
Jones Lang LaSalle (NYSE: JLL) – Downgraded at Morgan Stanley
Resmed Inc (NYSE: RMD) – Downgraded at Merrill

Mr. Moenning holds Long positions in stocks mentioned: JLL, LMT, T, X


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.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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