David Moenning's Daily State of the Markets: 10/24
Tweet
Share
E-mail
Of Bulls and Bandwagons
Good morning. Stocks blasted higher once again yesterday as the bulls continue to enjoy one of their best runs in quite some time. After the close, the glass-is-half-full crowd told anyone that would listen that one of the most impressive aspects of yesterday�s action is the move occurred without any obvious catalyst.
While the major indices did reverse a lower open at roughly the same time Wal-Mart announced that they planned to focus more on investor returns going forward, most media outlets attributed the triple-digit gain to improving confidence about upcoming earnings. But since stocks tend to discount the future and just about everybody on the planet already knows that the current season is expected to be solid, this view might be a bit flawed.
No, it is our humble opinion that a better explanation for yesterday�s move has to do with a story about bulls and bandwagons. Don�t get me wrong, the earnings results continue to be solid and another drop in oil prices didn�t hurt anybody�s feelings. It�s just that the earnings guidance for the future hasn�t been anything out of the ordinary so far and certainly not enough to warrant the straight-up move that is taking place. Therefore, we�re sticking with the idea that this move has more to do with money jumping on the bandwagon than any fundamental prognostication.
Normally, investors might have been a little concerned about the fact that the FOMC is sitting down to the table today and will provide us with an update on their view of all things economic tomorrow afternoon. And given the latest chatter out of the Fed, it wouldn�t be surprising to hear Mr. Bernanke and Co. sound a little more hawkish tomorrow. We�ve heard more than one Fed Governor say lately that the worries over the economy cooling too fast seem to have faded and that the risks of inflation remain. Thus, we should probably take a cue from the bond market and brace for some tough talk about inflation.
Perhaps this will be enough to slow the bull train. But then again, our heroes in hooves have quite a head of steam going right now, so we should probably expect any and all dips to be bought for now. In reality, it will be during the inevitable pullback when we can get a true sense of where things might be heading from here. So, we should watch those declines for signs of money continuing to jump on the bandwagon.
Turning to this morning, there is no economic news scheduled for release before the bell, but we will get the Richmond Fed index at 10:00 am. In looking at the pre-market activity, it would appear that we might see the bears make an entrance to the arena this morning. However, how long they plan to play is anybody�s guess.
Running through the pre-game indicators, with the exception of Hong Kong, the major overseas markets are fractionally lower this morning. Gold futures are moving a little higher and are quoted at $583.30 right now. Crude oil futures are steady so far with the latest quote down -$0.08 to $58.73. Interest rates are little changed this morning with the 2-year currently quoted at 4.92% while the 10-yr is trading with a yield of 4.82% right now. And finally, with an hour before the bell, stock futures in the U.S. are heading lower. The Dow futures are currently about 20 points below fair value, the S&Ps are off by -4.50, and the NASDAQ is sitting almost 6 points under fair value at the moment.
Stocks �In Play� This Morning:
Amgen (AMGN) � Reported $1.04. Vs. $0.98
Archstone Smith (ASN) � Reported $0.55 Vs. $0.53
Bell South (BLS) � Reported $0.65 Vs. $0.58
Burlington Northern (BNI) � Reported $1.33 Vs. $1.30
Chicago Mercantile Exch (CME) � Reported $2.95 Vs. $2.86
DuPont (DD) � Reported $0.49 Vs. $0.44
Kraft (KFT) � Reported $0.46 Vs. $0.45
Level 3 Comm (LVLT) � Reported -$0.12 Vs. -$0.14
Pactiv (PTV) � Reported $0.40 Vs. $0.34
Texas Instruments (TXN) � Reported $0.45 Vs. $0.45, Reduced guidance
Kimberly Clark (KMB) � Downgraded at Citigroup
Ford Motor (F) � Upgraded at Goldman Sachs
Wrigley (WWY) � Downgraded at Merrill Lynch
Arch Coal (ACI) � Upgraded at Morgan Stanley
Anheuser Busch (BUD) � Downgraded at UBS
Pfizer (PFE) � Downgraded at UBS
Allied Waste (AW) � UBS begins coverage with Buy
Long positions in stocks mentioned: ASN, BLS, BNI, CME, LVLT, PTV, MER, MS, AW, WMT
** 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.
www.TopGunsTrading.com
Good morning. Stocks blasted higher once again yesterday as the bulls continue to enjoy one of their best runs in quite some time. After the close, the glass-is-half-full crowd told anyone that would listen that one of the most impressive aspects of yesterday�s action is the move occurred without any obvious catalyst.
While the major indices did reverse a lower open at roughly the same time Wal-Mart announced that they planned to focus more on investor returns going forward, most media outlets attributed the triple-digit gain to improving confidence about upcoming earnings. But since stocks tend to discount the future and just about everybody on the planet already knows that the current season is expected to be solid, this view might be a bit flawed.
No, it is our humble opinion that a better explanation for yesterday�s move has to do with a story about bulls and bandwagons. Don�t get me wrong, the earnings results continue to be solid and another drop in oil prices didn�t hurt anybody�s feelings. It�s just that the earnings guidance for the future hasn�t been anything out of the ordinary so far and certainly not enough to warrant the straight-up move that is taking place. Therefore, we�re sticking with the idea that this move has more to do with money jumping on the bandwagon than any fundamental prognostication.
Normally, investors might have been a little concerned about the fact that the FOMC is sitting down to the table today and will provide us with an update on their view of all things economic tomorrow afternoon. And given the latest chatter out of the Fed, it wouldn�t be surprising to hear Mr. Bernanke and Co. sound a little more hawkish tomorrow. We�ve heard more than one Fed Governor say lately that the worries over the economy cooling too fast seem to have faded and that the risks of inflation remain. Thus, we should probably take a cue from the bond market and brace for some tough talk about inflation.
Perhaps this will be enough to slow the bull train. But then again, our heroes in hooves have quite a head of steam going right now, so we should probably expect any and all dips to be bought for now. In reality, it will be during the inevitable pullback when we can get a true sense of where things might be heading from here. So, we should watch those declines for signs of money continuing to jump on the bandwagon.
Turning to this morning, there is no economic news scheduled for release before the bell, but we will get the Richmond Fed index at 10:00 am. In looking at the pre-market activity, it would appear that we might see the bears make an entrance to the arena this morning. However, how long they plan to play is anybody�s guess.
Running through the pre-game indicators, with the exception of Hong Kong, the major overseas markets are fractionally lower this morning. Gold futures are moving a little higher and are quoted at $583.30 right now. Crude oil futures are steady so far with the latest quote down -$0.08 to $58.73. Interest rates are little changed this morning with the 2-year currently quoted at 4.92% while the 10-yr is trading with a yield of 4.82% right now. And finally, with an hour before the bell, stock futures in the U.S. are heading lower. The Dow futures are currently about 20 points below fair value, the S&Ps are off by -4.50, and the NASDAQ is sitting almost 6 points under fair value at the moment.
Stocks �In Play� This Morning:
Amgen (AMGN) � Reported $1.04. Vs. $0.98
Archstone Smith (ASN) � Reported $0.55 Vs. $0.53
Bell South (BLS) � Reported $0.65 Vs. $0.58
Burlington Northern (BNI) � Reported $1.33 Vs. $1.30
Chicago Mercantile Exch (CME) � Reported $2.95 Vs. $2.86
DuPont (DD) � Reported $0.49 Vs. $0.44
Kraft (KFT) � Reported $0.46 Vs. $0.45
Level 3 Comm (LVLT) � Reported -$0.12 Vs. -$0.14
Pactiv (PTV) � Reported $0.40 Vs. $0.34
Texas Instruments (TXN) � Reported $0.45 Vs. $0.45, Reduced guidance
Kimberly Clark (KMB) � Downgraded at Citigroup
Ford Motor (F) � Upgraded at Goldman Sachs
Wrigley (WWY) � Downgraded at Merrill Lynch
Arch Coal (ACI) � Upgraded at Morgan Stanley
Anheuser Busch (BUD) � Downgraded at UBS
Pfizer (PFE) � Downgraded at UBS
Allied Waste (AW) � UBS begins coverage with Buy
Long positions in stocks mentioned: ASN, BLS, BNI, CME, LVLT, PTV, MER, MS, AW, WMT
** 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.
www.TopGunsTrading.com
You May Also Be Interested In
- After-Hours Movers: AMAT, DLO, GLOB, YSS, ETON
- After-Hours Movers: P, RIOT, BW, RKLB, HIMS, UPWK
- After-Hours Movers: CSCO, COHR, HLIT, CBRS, STUB, ENS
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
