David Moenning's Daily State of the Markets: 11/06
Tweet
Share
E-mail
Surprise, Surprise, Surprise
Good Monday morning and welcome back to the game. Friday�s trading session was full of surprises and in general, traders, like Mother Nature, don�t like surprises. There were big surprises in the Jobs report, a surprise plunge in bond prices, surprisingly better numbers from the economy�s service sector, and a surprise pop in oil prices. All told, the markets limped into the weekend with a sixth straight decline. However, the losses were once again minimal, which in and of itself, is also a bit surprising.
The big news of the day came an hour before the market opened in the way of the October Employment Report issued by the Labor Department. While the cynics are sneering loudly at this particular set of numbers, the report�s headline showed that the economy produced just 92,000 jobs, which was far below analyst estimates. This number seemed to be in line with the week�s data, which was almost unanimously weaker than expected.
But, never fear dear soft landing supporters, because in the blink of an eye, the economy suddenly went from too weak to rather robust. You see, thanks primarily to the Government�s hiring of workers, the number of new jobs that the economy created was revised surprisingly higher. And while the timing of the increased jobs data is questionable with the election just days away, the big jump in job creation pushed the unemployment rate down to 4.4% which was the lowest level since May 2001.
While the politicians loved the report, the bond market did not. You see, the job of bond traders is to position bond yields so as to reflect what is happening in the economy and inflation. Thus, with the surprising jobs data and the labor market suddenly being deemed �tight,� traders were forced to reverse course and erase any inkling of a Fed ease. And although the boys in the bond pits had spent the last seven sessions taking yields lower to reflect the potential for a less than soft landing, the employment data caused a massive drop in bond prices and sent yields soaring back to 4.72%.
Now toss in the 2.2% pop in oil prices caused by word that Nigerian militants were ready to stage a new round of attacks on oil installations and stocks of almost all sizes, shapes, and colors had problems. So with higher rates, higher oil, and uncertainty over this week�s elections, stocks once again closed modestly lower, producing the longest losing streak in more than a year.
But, turning to this morning�s pre-market activity, it looks like the bulls will look to put an end to the six straight days of losses as the futures are moving higher. There are no economic reports scheduled for release today and the calendar is actually very light this week. And with the earnings parade winding down all eyes may turn to Tuesday�s elections.
Running through the rest of the pre-game indicators, the major overseas markets are up nicely this morning. Gold futures are pulling back and are quoted at $625.20 right now. Crude futures are moving a little lower this morning with the latest quote showing oil down $0.26 to $58.88. Interest rates are continuing to move higher this morning with the 2-year currently quoted at 4.84% while the 10-yr is trading with a yield of 4.73% right now. And finally, with about an hour before the bell, stock futures in the U.S. are looking green. The Dow futures are currently 20 points above fair value, the S&Ps are ahead by 4.80, and the NASDAQ is also sporting a advance of about 6 points at the moment.
Stocks �In Play� This Morning:
Berkshire Hathaway (BRK.A) � Reported $1687 vs. $1243.70
General Electric (GE) � Mentioned positively in Barron�s
Triad Hospitals (TRI) � Downgraded at BofA
Intel (INTC) � Downgraded at Bernstein
National Semiconductor (NSM) � Downgraded at Bernstein
Overseas Shipholding Group (OS) � Downgraded at JP Morgan
Verisign (VRSN) � Upgraded at Lehman
Unilever (UN) � Upgraded at Merrill Lynch
ST Microelectronics (STM) � Upgraded at Piper Jaffray
Lowes (LOW) � Downgraded at UBS
Home Depot (HD) � Downgraded at UBS
Express Scripts (ESRX) � Upgraded at Wachovia
Principal Financial (PFG) � Upgraded at Fox-Pitt
Entergy (ETR) � Upgraded at BMO Capital
Ericsson (ERIC) � Credit rating increased at Fitch
Swift Transportation (SWFT) � Receives cash offer from former Chairman
Long positions in stocks mentioned: LEH, MER
** 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 Monday morning and welcome back to the game. Friday�s trading session was full of surprises and in general, traders, like Mother Nature, don�t like surprises. There were big surprises in the Jobs report, a surprise plunge in bond prices, surprisingly better numbers from the economy�s service sector, and a surprise pop in oil prices. All told, the markets limped into the weekend with a sixth straight decline. However, the losses were once again minimal, which in and of itself, is also a bit surprising.
The big news of the day came an hour before the market opened in the way of the October Employment Report issued by the Labor Department. While the cynics are sneering loudly at this particular set of numbers, the report�s headline showed that the economy produced just 92,000 jobs, which was far below analyst estimates. This number seemed to be in line with the week�s data, which was almost unanimously weaker than expected.
But, never fear dear soft landing supporters, because in the blink of an eye, the economy suddenly went from too weak to rather robust. You see, thanks primarily to the Government�s hiring of workers, the number of new jobs that the economy created was revised surprisingly higher. And while the timing of the increased jobs data is questionable with the election just days away, the big jump in job creation pushed the unemployment rate down to 4.4% which was the lowest level since May 2001.
While the politicians loved the report, the bond market did not. You see, the job of bond traders is to position bond yields so as to reflect what is happening in the economy and inflation. Thus, with the surprising jobs data and the labor market suddenly being deemed �tight,� traders were forced to reverse course and erase any inkling of a Fed ease. And although the boys in the bond pits had spent the last seven sessions taking yields lower to reflect the potential for a less than soft landing, the employment data caused a massive drop in bond prices and sent yields soaring back to 4.72%.
Now toss in the 2.2% pop in oil prices caused by word that Nigerian militants were ready to stage a new round of attacks on oil installations and stocks of almost all sizes, shapes, and colors had problems. So with higher rates, higher oil, and uncertainty over this week�s elections, stocks once again closed modestly lower, producing the longest losing streak in more than a year.
But, turning to this morning�s pre-market activity, it looks like the bulls will look to put an end to the six straight days of losses as the futures are moving higher. There are no economic reports scheduled for release today and the calendar is actually very light this week. And with the earnings parade winding down all eyes may turn to Tuesday�s elections.
Running through the rest of the pre-game indicators, the major overseas markets are up nicely this morning. Gold futures are pulling back and are quoted at $625.20 right now. Crude futures are moving a little lower this morning with the latest quote showing oil down $0.26 to $58.88. Interest rates are continuing to move higher this morning with the 2-year currently quoted at 4.84% while the 10-yr is trading with a yield of 4.73% right now. And finally, with about an hour before the bell, stock futures in the U.S. are looking green. The Dow futures are currently 20 points above fair value, the S&Ps are ahead by 4.80, and the NASDAQ is also sporting a advance of about 6 points at the moment.
Stocks �In Play� This Morning:
Berkshire Hathaway (BRK.A) � Reported $1687 vs. $1243.70
General Electric (GE) � Mentioned positively in Barron�s
Triad Hospitals (TRI) � Downgraded at BofA
Intel (INTC) � Downgraded at Bernstein
National Semiconductor (NSM) � Downgraded at Bernstein
Overseas Shipholding Group (OS) � Downgraded at JP Morgan
Verisign (VRSN) � Upgraded at Lehman
Unilever (UN) � Upgraded at Merrill Lynch
ST Microelectronics (STM) � Upgraded at Piper Jaffray
Lowes (LOW) � Downgraded at UBS
Home Depot (HD) � Downgraded at UBS
Express Scripts (ESRX) � Upgraded at Wachovia
Principal Financial (PFG) � Upgraded at Fox-Pitt
Entergy (ETR) � Upgraded at BMO Capital
Ericsson (ERIC) � Credit rating increased at Fitch
Swift Transportation (SWFT) � Receives cash offer from former Chairman
Long positions in stocks mentioned: LEH, MER
** 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.
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!
