David Moenning's Daily State of the Markets 07/12
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Tencor Turnaround
Good morning. With no economic data to guide them, traders focused on geopolitical issues, higher interest rates, higher oil, and some pretty crummy earnings data in the early going yesterday. The major indices broke down below recent support after the bombings in Mumbai and a sales warning from Lucent, which cast a pall over an already struggling tech market. With the NASDAQ testing the recent lows and the S&P 500 moving below its 200 day moving average, it looked like the bears were back in control.
But all�s well that ends well, because by the time the closing bell rang, the bulls had been able to shake off the negative sentiment and focus on positive comments from KLA-Tencor. Early in the afternoon, the semiconductor equipment maker announced that they had exceeded their quarterly bookings estimates, which had been increased on June 12th. The stock exploded upwards and moved up $3.75 or +9.7% from the low of the day, which helped push both the NASDAQ and SOX (Philadelphia Semiconductor Index) to solid gains on the day.
With big name disappointments recently from the likes of Advanced Micro Devices (AMD), EMC (EMC), Lucent (LU), 3M (MMM), and Alcoa (AA) spoiling the bulls fun at the start of earnings season, the positive news from KLAC seemed to remind traders that the season is expected to provide more upside surprises than downside disappointments. Thus, the groupthink that is the market appeared to decide that perhaps all the bad news was out.
While in the long run this may be a case of wishful thinking, the positive attitude was able to turn an early loss of -75 points on the Dow into a gain of +31 points by the close.
After a series of deadly explosions in Mumbai stirred fears of terrorism, stocks repeated a now familiar trend of selling off on the news and then recovering soon after the event. And since the event did not appear to be tied to Al-Qaeda, after the initial selloff, stocks soon returned their attention to the issues of the day.
In short, Tuesday�s action didn�t really change much. While the bulls are always happy to see a turnaround below important technical levels, the reality is that the market continues to be fairly skittish at the moment. And until we can get some more clarity as to the state of the economy and the Fed�s intentions, this choppy trading environment is likely to continue.
Turning to this morning, it would appear that stocks are continuing to seek direction. There is little in the way of important economic data until Friday and the earnings calendar is rather light today. However, the U.S. Trade Deficit for May did come in a bit better than expected at $63.8B, which is putting a bid under the greenback. And finally, the Bank of Japan said that moving away from the current 0% interest rate level would be a slow and steady process, and would not start today.
Running through the rest of the pre-game indicators, with the exception of Japan, overseas markets are solidly higher. Gold is moving a higher again this morning and is up by $4.90 to $648 at the moment. Oil is holding steady right now ahead of this morning�s inventory numbers. The August crude contract is currently trading off by $0.24 to $74.40. Interest rates are moving up a bit this morning with the 2-year currently trading at 5.19% while the 10-yr is at 5.13% right now. And finally, with about an hour before the bell, stock futures in the U.S. are doing very little. The Dow futures are currently off by 10 points; the S&Ps are down by 1.40, and the NASDAQ sports a decline of about 3 points.
Stocks �In Play� This Morning:
Goldman Sachs (GS) � Upgraded at Rochdale
Starbucks (SBUX) � Mentioned cautiously in Barron�s
Genentech (DNA) � Downgraded at Deutsche and Prudential
Wrigley (WWY) � Downgraded at Credit Suisse
TJX Cos (TJX) � Upgraded at Lehman
Regal Entertainment (RGC) � Upgraded at Bear Stearns
Sohu Comm (SOHU) � Upgraded at CIBC
Mattson Tech (MTSN) � Upgraded at Citigroup
Louisiana Pacific (LPX) � Upgraded at Citigroup
Potash (POT) � Upgraded at BMO Capital
Rockwood Holdings (ROC) � Upgraded at Deutsche
Volvo (VOLV) � Added to buy list at Goldman Sachs
Principal Financial Group (PFG) � Downgraded at UBS
Halliburton (HAL) � U.S. Army to end logistics deal
Staples (SPLS) � Added to Better Value list at William Blair
Oplink Communications (OPLK) � Upgraded at Roth Capital
Positions in stocks mentioned: GS, BSC, PFG, and HAL
** 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 no economic data to guide them, traders focused on geopolitical issues, higher interest rates, higher oil, and some pretty crummy earnings data in the early going yesterday. The major indices broke down below recent support after the bombings in Mumbai and a sales warning from Lucent, which cast a pall over an already struggling tech market. With the NASDAQ testing the recent lows and the S&P 500 moving below its 200 day moving average, it looked like the bears were back in control.
But all�s well that ends well, because by the time the closing bell rang, the bulls had been able to shake off the negative sentiment and focus on positive comments from KLA-Tencor. Early in the afternoon, the semiconductor equipment maker announced that they had exceeded their quarterly bookings estimates, which had been increased on June 12th. The stock exploded upwards and moved up $3.75 or +9.7% from the low of the day, which helped push both the NASDAQ and SOX (Philadelphia Semiconductor Index) to solid gains on the day.
With big name disappointments recently from the likes of Advanced Micro Devices (AMD), EMC (EMC), Lucent (LU), 3M (MMM), and Alcoa (AA) spoiling the bulls fun at the start of earnings season, the positive news from KLAC seemed to remind traders that the season is expected to provide more upside surprises than downside disappointments. Thus, the groupthink that is the market appeared to decide that perhaps all the bad news was out.
While in the long run this may be a case of wishful thinking, the positive attitude was able to turn an early loss of -75 points on the Dow into a gain of +31 points by the close.
After a series of deadly explosions in Mumbai stirred fears of terrorism, stocks repeated a now familiar trend of selling off on the news and then recovering soon after the event. And since the event did not appear to be tied to Al-Qaeda, after the initial selloff, stocks soon returned their attention to the issues of the day.
In short, Tuesday�s action didn�t really change much. While the bulls are always happy to see a turnaround below important technical levels, the reality is that the market continues to be fairly skittish at the moment. And until we can get some more clarity as to the state of the economy and the Fed�s intentions, this choppy trading environment is likely to continue.
Turning to this morning, it would appear that stocks are continuing to seek direction. There is little in the way of important economic data until Friday and the earnings calendar is rather light today. However, the U.S. Trade Deficit for May did come in a bit better than expected at $63.8B, which is putting a bid under the greenback. And finally, the Bank of Japan said that moving away from the current 0% interest rate level would be a slow and steady process, and would not start today.
Running through the rest of the pre-game indicators, with the exception of Japan, overseas markets are solidly higher. Gold is moving a higher again this morning and is up by $4.90 to $648 at the moment. Oil is holding steady right now ahead of this morning�s inventory numbers. The August crude contract is currently trading off by $0.24 to $74.40. Interest rates are moving up a bit this morning with the 2-year currently trading at 5.19% while the 10-yr is at 5.13% right now. And finally, with about an hour before the bell, stock futures in the U.S. are doing very little. The Dow futures are currently off by 10 points; the S&Ps are down by 1.40, and the NASDAQ sports a decline of about 3 points.
Stocks �In Play� This Morning:
Goldman Sachs (GS) � Upgraded at Rochdale
Starbucks (SBUX) � Mentioned cautiously in Barron�s
Genentech (DNA) � Downgraded at Deutsche and Prudential
Wrigley (WWY) � Downgraded at Credit Suisse
TJX Cos (TJX) � Upgraded at Lehman
Regal Entertainment (RGC) � Upgraded at Bear Stearns
Sohu Comm (SOHU) � Upgraded at CIBC
Mattson Tech (MTSN) � Upgraded at Citigroup
Louisiana Pacific (LPX) � Upgraded at Citigroup
Potash (POT) � Upgraded at BMO Capital
Rockwood Holdings (ROC) � Upgraded at Deutsche
Volvo (VOLV) � Added to buy list at Goldman Sachs
Principal Financial Group (PFG) � Downgraded at UBS
Halliburton (HAL) � U.S. Army to end logistics deal
Staples (SPLS) � Added to Better Value list at William Blair
Oplink Communications (OPLK) � Upgraded at Roth Capital
Positions in stocks mentioned: GS, BSC, PFG, and HAL
** 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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