David Moenning's Daily State of the Markets: 07/16

Consumers Not Fretting Either

Good morning. Stocks followed up their biggest point gain in four years on Thursday with a nice little follow-through rally Friday. The move was marked by all the indices moving up to new all-time highs, the Dow moving past 13,900 for the first time ever, and the S&P breaching its intraday high set way back on March 24, 2000.

There really wasn't much for the bears to complain about as even the small-cap indices, which had just missed making new highs on Thursday, broke out during the session and new highs were seen all around. And although the volume was less than stellar, this is easily explained by the fact that it was a summer Friday.

There also wasn't much news on Friday, but the data that was released after the bell wound up being a positive for stocks. For example, the Universityof Michigan's Consumer Sentiment Index rebounded strongly at midmonth and came in much higher than the consensus. This data point helped support the idea that "all frets are off" right now and that investors are focusing on the positive.

However, we should remember that the trend recently has seen stocks rally at the beginning of earnings season in anticipation of strong numbers only to then pull back once the earnings parade starts to roll. And with the bulk of the reports due to be released over the next couple weeks, it is probably a good idea to avoid getting overly confident at this time.

Turning to this morning, we've got some economic data to review before the bell, so let's get to it. The July Empire Manufacturing Index (which measures the manufacturing activity in the New York region) came in at a reading of 26.5. While this data can be volatile, this was well above the expectations for a reading of 18.0, although stocks have shown only a modest reaction so far.

Running through the rest of the pre-game indicators, the foreign markets are sporting fractionally mixed results this morning. Gold futures are moving up by $1.50 to $668.80. In the oil pits, crude futures are moving up a bit with the latest quote up $0.10 at $74.03. Interest rates are moving down a fraction this morning with the yield on the 10-year currently trading at 5.09%. And finally, with about an hour before the bell, stock futures in the U.S. are looking to open modestly lower at the moment. The Dow futures are currently off by about more than 5 points; the S&P's are lower about a point, while the NASDAQ looks to be almost 2 points below fair value at the moment.

Stocks "In Play" This Morning:

Today's Earnings Before the Bell:
Eaton (NYSE: ETN) – Reported $1.70 vs. $1.47
Mattel (NYSE: MAT) – Reported $0.11 vs. $0.10

News, Upgrades/Downgrades/Brokerage Research:

Yahoo! (NASDAQ: YHOO) – Bear Stearns reduces estimates
Playtex Products (NYSE: PYX) – Downgraded at CIBC
Sandisk (NASDAQ: SNDK) – Upgraded at CIBC, Downgraded at UBS
Rio Tinto (NYSE: RTP) – Downgraded at Citi
Charles Schwab (NASDAQ: SCHW) – Price target increased at Citi
Intel (NASDAQ: INTC) – Price target increased at Citi
Hess Corp (NYSE: HES) – Upgraded at Deutsche Bank
Motorola (NYSE: MOT) – Upgraded at Deutsche Bank
Wellcare Group (NYSE: WCG) – Upgraded at Jefferies
Arkansas Best (NASDAQ: ABFS) – Upgraded at JP Morgan
Schering Plough (NYSE: SGP) – Upgraded at JP Morgan
Dean Foods (NYSE: DF) – Upgraded at Merrill Lynch
BT Group (NYSE: BT) – Upgraded at Merrill Lynch
Marvell Technology (NASDAQ: MRVL) – Upgraded at UBS

Mr. Moenning holds Long positions in stocks mentioned: MER

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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