David Moenning's Daily State of the Markets 10/02
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Still Waiting
Good morning and welcome back. Although stocks finished the week, the month, and the third quarter with solid gains, the bulls will have to continue to wait for the elusive new all-time high on the Dow. It was one of the best quarters in years and the best third quarter in over a decade, but that didn�t prevent a certain degree of disappointment from occurring in the bull camp on Friday afternoon.
While there was no specific catalyst for Friday�s modest decline, it would appear that the combination of better economic news, slightly higher interest rates, and a rebound in oil prices (in response to ongoing chatter about a cut in production) was to blame. Although the economic data wasn�t exactly stellar, almost all of the reports issued on Friday were a bit better than expected.
For starters, the University of Michigan confirmed that the consumer is feeling better about things and the Chicago Purchasing Manager�s Index came in unexpectedly higher than the consensus. Then when you toss in St. Louis Fed President William Poole�s remarks, which reminded us that the Fed continues to monitor the data and may need to hike rates further in the future, it is easy to see why some traders might have wanted to book some profits before heading home.
In short, after four days of new-high hoopla, it was by no means surprising to see stocks pull back and take a breather. It was also normal to see a little profit taking into the final session of such a strong quarter. After all, the window dressing had been completed and with the exception of the push to 11,723, there was little reason to buy. The selling wasn�t intense as volume was fairly light, but once again the boxes of party hats were left unopened and the champagne was removed from their now dripping ice buckets.
So while the bulls are still waiting to celebrate, they remain optimistic. They point to the strong seasonality that normally occurs during the first five days of a quarter due to retirement fund inflows as a positive and remind us that earnings season is about to begin. And given the lack of negative preannouncements, our barnyard buddies are already talking about another strong reporting period.
Looking to the week ahead, we�ve got a fairly full calendar of economic releases:
Monday � 10:00 am: August Construction Spending, ISM Manufacturing, Pending Home Sales
Tuesday � September Vehicle Sales
Wednesday � Factory Orders, ISM Non-Manufacturing
Friday � September Employment Report (Consensus: 120K new jobs)
Turning to this morning, the bulls appear to be biding their time at the moment as the pre-open indicators look a little sluggish, despite a new drug deal between Gilead Sciences and Myogen as well as talks of a deal in the casino sector.
Running through the pre-game indicators, overseas markets are fractionally higher across the board. Gold futures are moving a bit higher this morning and are quoted at $608.30 right now. Crude oil futures are giving up some ground and are currently off $0.41 at $62.50. Interest rates are doing little so far with the 2-year currently quoted at 4.70% while the 10-yr is trading with a yield of 4.65% right now. And finally, with an hour before the bell, stock futures in the U.S. are a bit below fair value. The Dow futures are currently off by 14, the S&Ps are up down -1.30, and the NASDAQ is sitting with a decline of about 3.5 points at the moment.
Stocks �In Play� This Morning:
Apple Computer (AAPL) � Mentioned positively in Barron�s
Verizon (VZ) � Mentioned positively in Barron�s
AMR Corp (AMR) � Mentioned positively in Barron�s, Also LLC, UAUA
Alcoa (AA) � Mentioned cautiously in Barron�s
General Dynamics (GD) � Price target increased at BofA
Sierra Health (SIE) � Upgraded at BofA
Flowserve (FLS) � Upgraded at Bear Stearns
Express Scripts (ESRX) � Price target increased at Goldman Sachs
Health Net (HNT) � Upgraded at JP Morgan
Danaher (DHR) � Downgraded at JP Morgan
First Data (FDC) � Downgraded at JP Morgan
Research in Motion (RIMM) � Removed from Monthly Top 3 List at JP Morgan
Spectralink (SLNK) � Added to Monthly Top 3 List at JP Morgan
NYSE Group (NYX) � Downgraded at Raymond James
Inland Real Estate (IRC) � Downgraded at Wachovia
Cheniere Energy (LNG) � Downgraded at Wachovia
Gilead Sciences (GILD) � To acquire Myogen (MYOG)
Advanced Micro Devices (AMD) � Mentioned positively at Bear Stearns
Sepracor (SEPR) � Upgraded at Stanford Group
Starbucks (SBUX) � Confirms the introduction of warm foods in NY stores
Long positions in stocks mentioned: none
** 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 and welcome back. Although stocks finished the week, the month, and the third quarter with solid gains, the bulls will have to continue to wait for the elusive new all-time high on the Dow. It was one of the best quarters in years and the best third quarter in over a decade, but that didn�t prevent a certain degree of disappointment from occurring in the bull camp on Friday afternoon.
While there was no specific catalyst for Friday�s modest decline, it would appear that the combination of better economic news, slightly higher interest rates, and a rebound in oil prices (in response to ongoing chatter about a cut in production) was to blame. Although the economic data wasn�t exactly stellar, almost all of the reports issued on Friday were a bit better than expected.
For starters, the University of Michigan confirmed that the consumer is feeling better about things and the Chicago Purchasing Manager�s Index came in unexpectedly higher than the consensus. Then when you toss in St. Louis Fed President William Poole�s remarks, which reminded us that the Fed continues to monitor the data and may need to hike rates further in the future, it is easy to see why some traders might have wanted to book some profits before heading home.
In short, after four days of new-high hoopla, it was by no means surprising to see stocks pull back and take a breather. It was also normal to see a little profit taking into the final session of such a strong quarter. After all, the window dressing had been completed and with the exception of the push to 11,723, there was little reason to buy. The selling wasn�t intense as volume was fairly light, but once again the boxes of party hats were left unopened and the champagne was removed from their now dripping ice buckets.
So while the bulls are still waiting to celebrate, they remain optimistic. They point to the strong seasonality that normally occurs during the first five days of a quarter due to retirement fund inflows as a positive and remind us that earnings season is about to begin. And given the lack of negative preannouncements, our barnyard buddies are already talking about another strong reporting period.
Looking to the week ahead, we�ve got a fairly full calendar of economic releases:
Monday � 10:00 am: August Construction Spending, ISM Manufacturing, Pending Home Sales
Tuesday � September Vehicle Sales
Wednesday � Factory Orders, ISM Non-Manufacturing
Friday � September Employment Report (Consensus: 120K new jobs)
Turning to this morning, the bulls appear to be biding their time at the moment as the pre-open indicators look a little sluggish, despite a new drug deal between Gilead Sciences and Myogen as well as talks of a deal in the casino sector.
Running through the pre-game indicators, overseas markets are fractionally higher across the board. Gold futures are moving a bit higher this morning and are quoted at $608.30 right now. Crude oil futures are giving up some ground and are currently off $0.41 at $62.50. Interest rates are doing little so far with the 2-year currently quoted at 4.70% while the 10-yr is trading with a yield of 4.65% right now. And finally, with an hour before the bell, stock futures in the U.S. are a bit below fair value. The Dow futures are currently off by 14, the S&Ps are up down -1.30, and the NASDAQ is sitting with a decline of about 3.5 points at the moment.
Stocks �In Play� This Morning:
Apple Computer (AAPL) � Mentioned positively in Barron�s
Verizon (VZ) � Mentioned positively in Barron�s
AMR Corp (AMR) � Mentioned positively in Barron�s, Also LLC, UAUA
Alcoa (AA) � Mentioned cautiously in Barron�s
General Dynamics (GD) � Price target increased at BofA
Sierra Health (SIE) � Upgraded at BofA
Flowserve (FLS) � Upgraded at Bear Stearns
Express Scripts (ESRX) � Price target increased at Goldman Sachs
Health Net (HNT) � Upgraded at JP Morgan
Danaher (DHR) � Downgraded at JP Morgan
First Data (FDC) � Downgraded at JP Morgan
Research in Motion (RIMM) � Removed from Monthly Top 3 List at JP Morgan
Spectralink (SLNK) � Added to Monthly Top 3 List at JP Morgan
NYSE Group (NYX) � Downgraded at Raymond James
Inland Real Estate (IRC) � Downgraded at Wachovia
Cheniere Energy (LNG) � Downgraded at Wachovia
Gilead Sciences (GILD) � To acquire Myogen (MYOG)
Advanced Micro Devices (AMD) � Mentioned positively at Bear Stearns
Sepracor (SEPR) � Upgraded at Stanford Group
Starbucks (SBUX) � Confirms the introduction of warm foods in NY stores
Long positions in stocks mentioned: none
** 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
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