David Moenning's Daily State of the Markets: 10/28
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Stocks had a pretty rotten day yesterday as the -115 point drop on the Dow put an exclamation point on the third straight day of declines. In light of the fact that the market shot higher during Monday�s Bernanke rally and has since given back every point and then some, it is natural to wonder why the market suddenly had a change of heart. The vast majority of the time, the reasons for movements in the market are not completely obvious. However, sometimes things are as simple as they seem. And one look at the news headlines from yesterday tells the whole story.
With the market already conflicted with the issues of inflation, interest rates, and the outlook for the economy, just about the last thing the bulls need right now is another crisis of confidence or corporate scandal. And while neither is indicated so far with the GM subpoenas, it doesn�t take long for investors to find the sell button when news like this hits the wires. The next two headlines suggest some uncertainty with regard to the outlook for the economy. Orders for Durable Goods fell more than twice as much as had been expected. And on the home front, the key takeaway from yesterday�s report on new home sales is that while the industry continues to hum along, there are signs a slowdown in the torrid pace of sales as well as price increases.
Turning to this morning, the big news comes from the GDP report. The report shows that the economy grew at an annual rate of 3.8%, which was better than the projections of 3.6% and the 3.3% rate from last quarter. This marks the 10th straight quarter of economic growth in excess of 3%. On the inflation front, the price index also came in above expectations at 3.1%. So the report is a mixed bag for the markets. The economy is doing pretty well, which should enable the Fed to keep doing its thing, and inflation continues to percolate.
In response to the report, stock futures have moved higher and are currently pointing to an up opening. However, let�s remember that all rallies have been sold lately, and the key right now is for the market to remain above the October lows.
Stocks "In Play" This Morning:
(NASDAQ: MSFT) � Beat by a penny but provided disappointing guidance
(NYSE: CVX) � Reported $1.64 vs. $1.91
(NYSE: BMY) � EPS $0.31 vs. $0.33
(NYSE: MRK) � Upgraded at Morgan Stanley
(NASDAQ: KLAC) � Beat estimates but guided lower
(NYSE: APC) � Earnings and sales missed mark
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: MSFT
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
Stocks had a pretty rotten day yesterday as the -115 point drop on the Dow put an exclamation point on the third straight day of declines. In light of the fact that the market shot higher during Monday�s Bernanke rally and has since given back every point and then some, it is natural to wonder why the market suddenly had a change of heart. The vast majority of the time, the reasons for movements in the market are not completely obvious. However, sometimes things are as simple as they seem. And one look at the news headlines from yesterday tells the whole story.
With the market already conflicted with the issues of inflation, interest rates, and the outlook for the economy, just about the last thing the bulls need right now is another crisis of confidence or corporate scandal. And while neither is indicated so far with the GM subpoenas, it doesn�t take long for investors to find the sell button when news like this hits the wires. The next two headlines suggest some uncertainty with regard to the outlook for the economy. Orders for Durable Goods fell more than twice as much as had been expected. And on the home front, the key takeaway from yesterday�s report on new home sales is that while the industry continues to hum along, there are signs a slowdown in the torrid pace of sales as well as price increases.
Turning to this morning, the big news comes from the GDP report. The report shows that the economy grew at an annual rate of 3.8%, which was better than the projections of 3.6% and the 3.3% rate from last quarter. This marks the 10th straight quarter of economic growth in excess of 3%. On the inflation front, the price index also came in above expectations at 3.1%. So the report is a mixed bag for the markets. The economy is doing pretty well, which should enable the Fed to keep doing its thing, and inflation continues to percolate.
In response to the report, stock futures have moved higher and are currently pointing to an up opening. However, let�s remember that all rallies have been sold lately, and the key right now is for the market to remain above the October lows.
Stocks "In Play" This Morning:
(NASDAQ: MSFT) � Beat by a penny but provided disappointing guidance
(NYSE: CVX) � Reported $1.64 vs. $1.91
(NYSE: BMY) � EPS $0.31 vs. $0.33
(NYSE: MRK) � Upgraded at Morgan Stanley
(NASDAQ: KLAC) � Beat estimates but guided lower
(NYSE: APC) � Earnings and sales missed mark
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: MSFT
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
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