David Moenning's Daily State of the Markets 07/17
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A What If Wipeout
Good Monday morning and welcome back. In a news-driven environment, no one really wants to be a buyer on Fridays for one simple reason; if something bad happens over the weekend, there is nothing you can do about it until Monday morning. And in reality, it was the fear of �what if� that produced another triple-digit decline for stocks on Friday.
With Israel and Hezbollah shooting at each other, North Korea sounding more defiant than ever about its missiles, and the Iran nuclear situation not showing any signs of improvement, any and all buyers simply stood on the sidelines Friday with their hands in their pockets.
It didn�t help matters much that oil prices set a new record high for the fourth consecutive day. The fact that there is now �open war� in the Middle East kept a bid under crude as the fear of the conflict spreading into oil rich areas grows. Crude futures hit an intraday high of $78.40 before settling $0.33 higher to $77.03 and discussions of $80 are occurring on a regular basis.
It wound up being a very rough week for stocks as the DJIA finished with a loss of -3.2% while the NASDAQ dropped -4.35%. The bears� handiwork for the week pushed the Dow back to breakeven on the year while the S&P now sits with a loss of 1% for 2006 and the NASDAQ is suffering with a decline of -7.6%.
On the economic front, after a drought of data for much of the week, we finally got some fresh numbers to sift through on Friday. Unfortunately however, none of the reports provided the bulls with any ammunition for their argument. Retail Sales were uninspiring, Import Prices were a bit better than the consensus; the University of Michigan told us that Consumer Sentiment is on the decline, and business inventories increased a bit.
Looking ahead, we have to keep in mind that markets that are driven by news can turn on a dime. Currently all the news is bad and traders are looking at only the negative side of the �what if� game. However, in any armed conflict, we should remember that peace can break out at any time. And then given the fact that the earnings parade is about to really get rolling, the bulls will be on the lookout for some good news soon.
In addition, it will be a pretty big week of economic data. On Tuesday, we will get the PPI report and Wednesday will bring the all-important CPI data. We�ll also get a peek at Housing starts, the Philly Fed Index, Consumer Confidence, and the Index of Leading Economic Indicators.
Turning to this morning, while the air strikes have intensified and Israel did briefly send troops into Lebanon; Israel also announced that the conflict could end within the next few days. This news has triggered some profit taking in the oil pits and stocks, while still negative, have improved from earlier levels.
This morning�s only economic news continues to back the idea of a slowing economy. The Empire Manufacturing Survey (i.e. manufacturing in the New York region) came in weaker than expected with a reading of 15.6, which was well below the consensus for 20.0.
Running through the rest of the pre-game indicators, with the exception of Japan, which was closed for a holiday, overseas markets are again down across the board. Gold is seeing some profit taking this morning and is currently down by $6 to $662. Oil is also pulling back on talk of an end to the conflict between Israel and Hezbollah and is currently trading off by $0.41 to $76.62. Interest rates are moving the opposite direction as the 10-yr is trading with a yield at 5.07% right now. And finally, with about an hour before the bell, stock futures in the U.S. are looking a little lower. The Dow futures are currently off by 14 points; the S&Ps are down by 3.10, and the NASDAQ is lower by about 3 points.
Stocks �In Play� This Morning:
Apple Computer (AAPL) � Mentioned positively in Barron�s
Chesapeake Energy (CHK) � Mentioned as takeover target in Barron�s
Qualcomm (QCOM) � Upgraded at UBS
Target (TGT) � Added to Buy List at Goldman Sachs
CVS Corp (CVS) � Added to Buy List at Goldman Sachs
Vitesse Semiconductor (VTSS) � Downgraded at CIBC
Seagate Technology (STX) � Upgraded at Morgan Stanley
Network Appliance (NTAP) � Downgraded at Morgan Stanley
Disney (DIS) � Downgraded at Cowen
Citigroup (C) � Reports $1.05 vs. $1.05
Camden Property (CPT) � Downgraded at BofA
Petco Animal Supplies (PETC) � Downgraded at Bear Stearns, Citigroup
Stone Energy (SGY) � Upgraded at JP Morgan
Boyd Gaming (BYD) � Upgraded at Thomas Weisel
IBM (IBM) � ThinkEquity initiated coverage with Sell
Hewlett Packard (HPQ) � ThinkEquity initiated coverage with Sell
Dell (DELL) � ThinkEquity initiated coverage with Sell
Positions in stocks mentioned: CHK, GS, BSC, CPT, IBM
** 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. In a news-driven environment, no one really wants to be a buyer on Fridays for one simple reason; if something bad happens over the weekend, there is nothing you can do about it until Monday morning. And in reality, it was the fear of �what if� that produced another triple-digit decline for stocks on Friday.
With Israel and Hezbollah shooting at each other, North Korea sounding more defiant than ever about its missiles, and the Iran nuclear situation not showing any signs of improvement, any and all buyers simply stood on the sidelines Friday with their hands in their pockets.
It didn�t help matters much that oil prices set a new record high for the fourth consecutive day. The fact that there is now �open war� in the Middle East kept a bid under crude as the fear of the conflict spreading into oil rich areas grows. Crude futures hit an intraday high of $78.40 before settling $0.33 higher to $77.03 and discussions of $80 are occurring on a regular basis.
It wound up being a very rough week for stocks as the DJIA finished with a loss of -3.2% while the NASDAQ dropped -4.35%. The bears� handiwork for the week pushed the Dow back to breakeven on the year while the S&P now sits with a loss of 1% for 2006 and the NASDAQ is suffering with a decline of -7.6%.
On the economic front, after a drought of data for much of the week, we finally got some fresh numbers to sift through on Friday. Unfortunately however, none of the reports provided the bulls with any ammunition for their argument. Retail Sales were uninspiring, Import Prices were a bit better than the consensus; the University of Michigan told us that Consumer Sentiment is on the decline, and business inventories increased a bit.
Looking ahead, we have to keep in mind that markets that are driven by news can turn on a dime. Currently all the news is bad and traders are looking at only the negative side of the �what if� game. However, in any armed conflict, we should remember that peace can break out at any time. And then given the fact that the earnings parade is about to really get rolling, the bulls will be on the lookout for some good news soon.
In addition, it will be a pretty big week of economic data. On Tuesday, we will get the PPI report and Wednesday will bring the all-important CPI data. We�ll also get a peek at Housing starts, the Philly Fed Index, Consumer Confidence, and the Index of Leading Economic Indicators.
Turning to this morning, while the air strikes have intensified and Israel did briefly send troops into Lebanon; Israel also announced that the conflict could end within the next few days. This news has triggered some profit taking in the oil pits and stocks, while still negative, have improved from earlier levels.
This morning�s only economic news continues to back the idea of a slowing economy. The Empire Manufacturing Survey (i.e. manufacturing in the New York region) came in weaker than expected with a reading of 15.6, which was well below the consensus for 20.0.
Running through the rest of the pre-game indicators, with the exception of Japan, which was closed for a holiday, overseas markets are again down across the board. Gold is seeing some profit taking this morning and is currently down by $6 to $662. Oil is also pulling back on talk of an end to the conflict between Israel and Hezbollah and is currently trading off by $0.41 to $76.62. Interest rates are moving the opposite direction as the 10-yr is trading with a yield at 5.07% right now. And finally, with about an hour before the bell, stock futures in the U.S. are looking a little lower. The Dow futures are currently off by 14 points; the S&Ps are down by 3.10, and the NASDAQ is lower by about 3 points.
Stocks �In Play� This Morning:
Apple Computer (AAPL) � Mentioned positively in Barron�s
Chesapeake Energy (CHK) � Mentioned as takeover target in Barron�s
Qualcomm (QCOM) � Upgraded at UBS
Target (TGT) � Added to Buy List at Goldman Sachs
CVS Corp (CVS) � Added to Buy List at Goldman Sachs
Vitesse Semiconductor (VTSS) � Downgraded at CIBC
Seagate Technology (STX) � Upgraded at Morgan Stanley
Network Appliance (NTAP) � Downgraded at Morgan Stanley
Disney (DIS) � Downgraded at Cowen
Citigroup (C) � Reports $1.05 vs. $1.05
Camden Property (CPT) � Downgraded at BofA
Petco Animal Supplies (PETC) � Downgraded at Bear Stearns, Citigroup
Stone Energy (SGY) � Upgraded at JP Morgan
Boyd Gaming (BYD) � Upgraded at Thomas Weisel
IBM (IBM) � ThinkEquity initiated coverage with Sell
Hewlett Packard (HPQ) � ThinkEquity initiated coverage with Sell
Dell (DELL) � ThinkEquity initiated coverage with Sell
Positions in stocks mentioned: CHK, GS, BSC, CPT, IBM
** 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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