David Moenning's Daily State of the Markets: 05/07
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Good morning. With Friday's advance of 23 points, the Dow has now finished in the green in 23 of the last 26 sessions, which is certainly an impressive statistic and the longest such streak since 1944. The Dow Industrials have also now closed higher for four straight weeks and with the indices now up about 6% year-to-date, investors are once again feeling pretty good about their portfolios. Friday’s move was fostered by a jobs report that made Goldilocks smile, some new M&A rumors, falling oil prices, and more earnings reports.
The problem is that there seemed to be a distinct lack of energy behind the move up. As expected, stocks moved higher at the open on the back of the solid jobs report, but never seemed to get going from there and the indices even went negative for a while mid-morning. We might go so far as to say that there appears to be a good deal of skepticism surrounding the Dow’s recent ascent and even the S&P's move back over 1500 (the S&P 500 finished at 1505.62 on Friday) has failed to cause a stir.
We were guilty last week of doing a little whining about the lack of enthusiasm behind the Dow’s relentless march higher. We noted a lack of oomph behind the advances and expressed concerns about the momentum, the lack of confirmation among the broader indices, and the lackluster volume.
It turns out that we weren’t the only ones raising a skeptical eye toward the Dow’s new highs as Barron's The Trader column also discussed some skepticism toward the market’s current run higher this weekend. The article questioned what might happen to the bulls if the current merger mania were to cool off. And in an interview, Philip Roth noted, “The longer the broader averages make little progress in an environment of blue chip strength, the more likely it becomes that a top is forming.”
Although stocks were higher for the fourth consecutive day on Friday and the Dow finished at a new all time high for the eleventh time in the last thirteen days, once again, volume declined from the prior day’s totals. In short, if the market is humming along, we normally wouldn’t see volume decline as prices are rising for three consecutive days.
So while none of the above should be considered fatal to the current bull, we are going to suggest a little caution for the time being. But then again, as we like to tell our children when they are little, whining rarely gets you anything in life. So, we'll try and get into an upbeat frame of mind and be looking for the negatives to be rectified this week.
Looking ahead, we’ll get a peek at the all-important Producer Price Index and Retail Sales reports on Friday as well as some earnings from the retail sector this week.
Turning to this morning, there is no economic data available before the bell but we will get a report on Consumer Credit later this afternoon. In terms of the mood of the market in the early going, the tone is modestly positive but a little on the quiet side.
Running through the rest of the pre-game indicators, the major foreign markets were mixed overnight. Gold futures are moving up this morning by $2.70 and are trading at $692.40. In the oil pits, crude futures are lower by $0.51 with the latest quote at $61.42. Interest rates are moving up a smidge this morning with the yield on the 10-year currently trading at 4.65%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to a modest open. The Dow futures are currently ahead by about 17 points; the S&P's are about 2 points above fair value, while the NASDAQ also to be about 3 points ahead of fair value at the moment
Stocks "In Play" This Morning:
Today's Earnings Before the Bell:
American Tower (NYSE: AMT) – Reported $0.05 vs. $0.06
News, Upgrades/Downgrades/Brokerage Research:
Darden Restaurants (NYSE: DRI) – Upgraded at Bear Stearns
Companhia Vale do Rio (NYSE: RIO) – Downgraded at BMO Capital
Cablevision (NYSE: CVC) – Upgraded at Citigroup
Reliant Energy (NYSE: RRI) – Upgraded at Citigroup
UAL Corp (NASDAQ: UAUA) – Upgraded at Credit Suisse
Microsoft (NASDAQ: MSFT) – Downgraded at Davenport
Chemed (NYSE: CHE) – Upgraded at Deutsche Bank
Abbott Labs (NYSE: ABT) – Upgraded at Lehman
Saks Inc. (NYSE: SKS) – Downgraded at Merrill Lynch
EW Scripps (NYSE: SSP) – Downgraded at Morgan Stanley
Tesoro (NYSE: TSO) – Mentioned positively at Oppenheimer
Mr. Moenning holds Long positions in stocks mentioned: RRI, ABT, TSO
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.
Good morning. With Friday's advance of 23 points, the Dow has now finished in the green in 23 of the last 26 sessions, which is certainly an impressive statistic and the longest such streak since 1944. The Dow Industrials have also now closed higher for four straight weeks and with the indices now up about 6% year-to-date, investors are once again feeling pretty good about their portfolios. Friday’s move was fostered by a jobs report that made Goldilocks smile, some new M&A rumors, falling oil prices, and more earnings reports.
The problem is that there seemed to be a distinct lack of energy behind the move up. As expected, stocks moved higher at the open on the back of the solid jobs report, but never seemed to get going from there and the indices even went negative for a while mid-morning. We might go so far as to say that there appears to be a good deal of skepticism surrounding the Dow’s recent ascent and even the S&P's move back over 1500 (the S&P 500 finished at 1505.62 on Friday) has failed to cause a stir.
We were guilty last week of doing a little whining about the lack of enthusiasm behind the Dow’s relentless march higher. We noted a lack of oomph behind the advances and expressed concerns about the momentum, the lack of confirmation among the broader indices, and the lackluster volume.
It turns out that we weren’t the only ones raising a skeptical eye toward the Dow’s new highs as Barron's The Trader column also discussed some skepticism toward the market’s current run higher this weekend. The article questioned what might happen to the bulls if the current merger mania were to cool off. And in an interview, Philip Roth noted, “The longer the broader averages make little progress in an environment of blue chip strength, the more likely it becomes that a top is forming.”
Although stocks were higher for the fourth consecutive day on Friday and the Dow finished at a new all time high for the eleventh time in the last thirteen days, once again, volume declined from the prior day’s totals. In short, if the market is humming along, we normally wouldn’t see volume decline as prices are rising for three consecutive days.
So while none of the above should be considered fatal to the current bull, we are going to suggest a little caution for the time being. But then again, as we like to tell our children when they are little, whining rarely gets you anything in life. So, we'll try and get into an upbeat frame of mind and be looking for the negatives to be rectified this week.
Looking ahead, we’ll get a peek at the all-important Producer Price Index and Retail Sales reports on Friday as well as some earnings from the retail sector this week.
Turning to this morning, there is no economic data available before the bell but we will get a report on Consumer Credit later this afternoon. In terms of the mood of the market in the early going, the tone is modestly positive but a little on the quiet side.
Running through the rest of the pre-game indicators, the major foreign markets were mixed overnight. Gold futures are moving up this morning by $2.70 and are trading at $692.40. In the oil pits, crude futures are lower by $0.51 with the latest quote at $61.42. Interest rates are moving up a smidge this morning with the yield on the 10-year currently trading at 4.65%. And finally, with about an hour before the bell, stock futures in the U.S. are pointing to a modest open. The Dow futures are currently ahead by about 17 points; the S&P's are about 2 points above fair value, while the NASDAQ also to be about 3 points ahead of fair value at the moment
Stocks "In Play" This Morning:
Today's Earnings Before the Bell:
American Tower (NYSE: AMT) – Reported $0.05 vs. $0.06
News, Upgrades/Downgrades/Brokerage Research:
Darden Restaurants (NYSE: DRI) – Upgraded at Bear Stearns
Companhia Vale do Rio (NYSE: RIO) – Downgraded at BMO Capital
Cablevision (NYSE: CVC) – Upgraded at Citigroup
Reliant Energy (NYSE: RRI) – Upgraded at Citigroup
UAL Corp (NASDAQ: UAUA) – Upgraded at Credit Suisse
Microsoft (NASDAQ: MSFT) – Downgraded at Davenport
Chemed (NYSE: CHE) – Upgraded at Deutsche Bank
Abbott Labs (NYSE: ABT) – Upgraded at Lehman
Saks Inc. (NYSE: SKS) – Downgraded at Merrill Lynch
EW Scripps (NYSE: SSP) – Downgraded at Morgan Stanley
Tesoro (NYSE: TSO) – Mentioned positively at Oppenheimer
Mr. Moenning holds Long positions in stocks mentioned: RRI, ABT, TSO
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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