David Moenning�s Daily State of the Markets: 02/28
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David Moenning�s Daily State of the Markets:
Denied
At first glance, it would appear that most everything went the bulls� way yesterday. The indices were up nicely and the NYSE, Russell 2000, S&P Small Cap, and S&P Mid Cap indices all posted another round of new all-time highs.
The bulls could chalk up lower oil prices, a solid earnings report from LOW (which was considered a bit of an economic indicator in and of itself), and some interesting merger chatter (AAPL for DIS) in their column. Stocks opened higher right out of the gate and for a while, it looked like the bulls were off to the races with a breakout in hand.
But with nothing short of a barrage of economic data due out this week, traders turned cautious late in the day and in the end, our barnyard buddies were once again denied entry to the promised land. Breadth and volume was decent but there is no denying the fact that the major indices were unable to move above the overhead resistance.
The bulls will argue that they are simply resting up and gathering the troops at the edge of the front in order to mount another assault shortly. The bears counter with the fact that their opponents have been unable to �get it done� and are thus vulnerable. The Swiss will take note of the arguments from both sides and suggest that this week�s data will hold the key to the current skirmish.
Yesterday�s lone economic report didn�t have much of an impact. The report on New Home Sales showed more evidence of a slowdown in last year�s torrid pace in the housing market. Sales of new homes fell 5.0% in January, which was well below the expectations for an increase of +0.1%. Given the recent data showing a mini boom in housing starts and building permits, and the warm weather during the month, the data has to be considered disappointing. The good news is that due to sales gains in the West, the average sales price of a new home actually continued to increase in January. However, since the data contained in the report provided no real surprises, market response was minimal.
After a relatively stable weekend in the Middle East, which saw Iran and Russia agree in principle to a deal to jointly enrich uranium, the price of oil pulled back. Crude futures were down -$1.96 on the day to $60.95. This, of course, helps ease short-term inflation worries, but the oil bulls are quick to point out that we aren�t going to see $40 any time soon.
So with the markets still sitting at an inflection point, traders are likely to turn to today�s data for guidance. The preliminary report for Q4 GDP came in pretty much in tune with expectations. The headline GDP number shows a gain of +1.6%, which was dead-on with expectations. The Personal Consumption data showed an increase of +1.2%, which was a smidge below the consensus for +1.3%. And finally, the Price index (inflation) was a bit hotter with a reading of +3.3% versus expectations for +3.0%
Stock futures aren't moving much in reaction to the report. Keep in mind that this is the second report concerning the fourth quarter�s GDP growth, so unless there is any big surprise, the report is pretty much �known� by the markets.
At 10:00 a.m. this morning, we will get a plethora of data so traders may want to stay in waiting mode before then. The reports will include Consumer Confidence, Existing Home Sales, the Chicago Purchasing Managers Index, and the Richmond Fed report.
Running through the pre-game analysis, overseas markets are a mixed bag. Oil futures are moving lower again this morning with crude currently trading down by -$0.21 to $60.79. Natural Gas is also quoted lower at $6.73 right now. Gold futures are higher by +$2.60 this morning to $559.60. Bond yields aren�t moving much ahead of the data and the 2-yr yield is currently quoted at 4.72% while the 10-yr is at 4.58%. And finally, stock futures in the U.S. are pointing a little lower at the moment with the Dow currently down by -13, the S&P�s are losing -1.80, and the NASDAQ is unchanged.
Stocks "In Play" This Morning:
CSCO � Upgraded at Lehman
GOOG � Sony Ericsson announced internet service deal
CHK � Will replace DCN in S&P 500 at close on 3/2
HNZ � Reported $0.50 vs. $0.56 Revenue $2.19B vs. $2.37B
MOT � Expects to be number two in India �in no time� according to Reuters
SPLS - $0.39 vs. $0.38 Revenues $4.50B vs. $4.46, increases dividend
AMAT � Bear Sterns defends Semiconductor Equipment sector
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: AMAT, MOT, CSCO
a
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) 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.
Denied
At first glance, it would appear that most everything went the bulls� way yesterday. The indices were up nicely and the NYSE, Russell 2000, S&P Small Cap, and S&P Mid Cap indices all posted another round of new all-time highs.
The bulls could chalk up lower oil prices, a solid earnings report from LOW (which was considered a bit of an economic indicator in and of itself), and some interesting merger chatter (AAPL for DIS) in their column. Stocks opened higher right out of the gate and for a while, it looked like the bulls were off to the races with a breakout in hand.
But with nothing short of a barrage of economic data due out this week, traders turned cautious late in the day and in the end, our barnyard buddies were once again denied entry to the promised land. Breadth and volume was decent but there is no denying the fact that the major indices were unable to move above the overhead resistance.
The bulls will argue that they are simply resting up and gathering the troops at the edge of the front in order to mount another assault shortly. The bears counter with the fact that their opponents have been unable to �get it done� and are thus vulnerable. The Swiss will take note of the arguments from both sides and suggest that this week�s data will hold the key to the current skirmish.
Yesterday�s lone economic report didn�t have much of an impact. The report on New Home Sales showed more evidence of a slowdown in last year�s torrid pace in the housing market. Sales of new homes fell 5.0% in January, which was well below the expectations for an increase of +0.1%. Given the recent data showing a mini boom in housing starts and building permits, and the warm weather during the month, the data has to be considered disappointing. The good news is that due to sales gains in the West, the average sales price of a new home actually continued to increase in January. However, since the data contained in the report provided no real surprises, market response was minimal.
After a relatively stable weekend in the Middle East, which saw Iran and Russia agree in principle to a deal to jointly enrich uranium, the price of oil pulled back. Crude futures were down -$1.96 on the day to $60.95. This, of course, helps ease short-term inflation worries, but the oil bulls are quick to point out that we aren�t going to see $40 any time soon.
So with the markets still sitting at an inflection point, traders are likely to turn to today�s data for guidance. The preliminary report for Q4 GDP came in pretty much in tune with expectations. The headline GDP number shows a gain of +1.6%, which was dead-on with expectations. The Personal Consumption data showed an increase of +1.2%, which was a smidge below the consensus for +1.3%. And finally, the Price index (inflation) was a bit hotter with a reading of +3.3% versus expectations for +3.0%
Stock futures aren't moving much in reaction to the report. Keep in mind that this is the second report concerning the fourth quarter�s GDP growth, so unless there is any big surprise, the report is pretty much �known� by the markets.
At 10:00 a.m. this morning, we will get a plethora of data so traders may want to stay in waiting mode before then. The reports will include Consumer Confidence, Existing Home Sales, the Chicago Purchasing Managers Index, and the Richmond Fed report.
Running through the pre-game analysis, overseas markets are a mixed bag. Oil futures are moving lower again this morning with crude currently trading down by -$0.21 to $60.79. Natural Gas is also quoted lower at $6.73 right now. Gold futures are higher by +$2.60 this morning to $559.60. Bond yields aren�t moving much ahead of the data and the 2-yr yield is currently quoted at 4.72% while the 10-yr is at 4.58%. And finally, stock futures in the U.S. are pointing a little lower at the moment with the Dow currently down by -13, the S&P�s are losing -1.80, and the NASDAQ is unchanged.
Stocks "In Play" This Morning:
CSCO � Upgraded at Lehman
GOOG � Sony Ericsson announced internet service deal
CHK � Will replace DCN in S&P 500 at close on 3/2
HNZ � Reported $0.50 vs. $0.56 Revenue $2.19B vs. $2.37B
MOT � Expects to be number two in India �in no time� according to Reuters
SPLS - $0.39 vs. $0.38 Revenues $4.50B vs. $4.46, increases dividend
AMAT � Bear Sterns defends Semiconductor Equipment sector
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: AMAT, MOT, CSCO
a
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) 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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