David Moenning�s Daily State of the Markets: 03/15
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Bulls Break Through
Despite higher rates recently, worries over Iran, concerns about the state of the economy, and uncertainty over what the Fed will do next, the bulls stuck with it and yesterday they finally broke through.
Lower bond yields, gangbusters earnings from Goldman Sachs, a win for Google in court, and a report from Medley Advisors, a Washington-based consulting firm, who stated that the Fed will be �one and done� all helped the bulls cause yesterday.
Bond prices moved higher yesterday after the report from Medley suggested that the Fed will not raise rates beyond 4.75%. This coupled with an uninspiring report on Retail Sales was music to the ears of the markets (remember, when the markets are worried about the Fed raising rates, bad news is actually good news). Bond yields spiked lower and after threatening a break-out of their own recently, settled back to the 4.70% level.
The day of broad-based gains moved the major indices to their best levels in almost five years. While the Dow and S&P 500 broke out to new cycle highs, the NYSE actually popped up to another new all-time high water mark. And although the NASDAQ, Small Cap and Mid Cap indices all enjoyed gains in excess of 1%, they still have some work to do in order to break out of their respective trading ranges.
However, the bulls will argue that the big boys are now in charge and it was positive to see the generals leading the troops. And while our indicators do indicate that large caps have been improving in stature lately, it might be premature to announce that there is a new sheriff in town.
But (come on, you knew there had to be a �but� in here somewhere) while we hate to even think about throwing cold water on yesterday�s fun, we do have to recognize a couple of things. First, let�s not forget that this will be the third Friday of the third month, which means its time for a quadruple witch expiration event. So with stocks popping through some technical levels yesterday, you can bet that there was a little extra curricular activity going on.
In addition, we would be remiss if we failed to mention that the overall volume totals were less than stellar. While volume did increase a smidge from Monday and there may have been some hesitancy in front of this week�s CPI report, total volume of 1.55 billion shares on the NYSE is rather lethargic and well below the 50-day average of more than 1.7 billion. However, the bulls can argue that the move up and out may have taken some by surprise and that we should look for the volume to pick up in the next few sessions.
Turning to this morning, the bulls should be encouraged by the results from Sears and another strong earnings number in the investment banking sector. Sears beat estimates handily and Lehman Brothers reported a very nice quarter this morning. In addition, the bulls have to like the fact that the number of bullish advisors, as reported by Investors Intelligence, actually declined last week to 42.3.
On the economic front, this morning�s data doesn�t appear to be having much of an impact. Import Prices came in with a decline of -0.5%, which was a bit better than expectations for -0.6%. In addition, the Empire Manufacturing report form March was better than expected with a reading of 31.2 versus the consensus of 18.9.
Running through the rest of the pre-game indicators about 45 minutes before the bell, overseas markets were higher across the board in response to Wall Street�s good day yesterday. Oil futures are pulling back some this morning with crude currently trading -$0.50 to $62.60. Natural Gas is trading lower at $7.09 right now. Gold futures are higher by +$0.50 to $535.50. Bond yields are moving up a little this morning after yesterday�s big drop. The 2-yr yield currently quoted at 4.65% while the 10-yr is at 4.73%. And finally, stock futures in the U.S. are pointing a little higher at the moment with the Dow currently +4, the S&Ps are +0.20, and the NASDAQ is ahead by 4.50.
Stocks "In Play" This Morning:
LEH � Reports $3.50 vs. $3.14
MOT � CEO says RAZR problems resolved and shipments resume
DD � Guided coming quarter higher
KSS � Barron�s positive on growth potential
DISH � Reports $0.30 vs. $0.35
LEXR � Reports -$0.29 vs. -$0.24
MSFT � Blog suggests Vista launch will occur in November
SNE � Confirms November launch of PS3
UNP � Raises guidance for quarter
VMC � Raises guidance for quarter
SHLD � Reports $4.03 vs. $3.62
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: LEH, MOT, VMC, SHLD
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.
Despite higher rates recently, worries over Iran, concerns about the state of the economy, and uncertainty over what the Fed will do next, the bulls stuck with it and yesterday they finally broke through.
Lower bond yields, gangbusters earnings from Goldman Sachs, a win for Google in court, and a report from Medley Advisors, a Washington-based consulting firm, who stated that the Fed will be �one and done� all helped the bulls cause yesterday.
Bond prices moved higher yesterday after the report from Medley suggested that the Fed will not raise rates beyond 4.75%. This coupled with an uninspiring report on Retail Sales was music to the ears of the markets (remember, when the markets are worried about the Fed raising rates, bad news is actually good news). Bond yields spiked lower and after threatening a break-out of their own recently, settled back to the 4.70% level.
The day of broad-based gains moved the major indices to their best levels in almost five years. While the Dow and S&P 500 broke out to new cycle highs, the NYSE actually popped up to another new all-time high water mark. And although the NASDAQ, Small Cap and Mid Cap indices all enjoyed gains in excess of 1%, they still have some work to do in order to break out of their respective trading ranges.
However, the bulls will argue that the big boys are now in charge and it was positive to see the generals leading the troops. And while our indicators do indicate that large caps have been improving in stature lately, it might be premature to announce that there is a new sheriff in town.
But (come on, you knew there had to be a �but� in here somewhere) while we hate to even think about throwing cold water on yesterday�s fun, we do have to recognize a couple of things. First, let�s not forget that this will be the third Friday of the third month, which means its time for a quadruple witch expiration event. So with stocks popping through some technical levels yesterday, you can bet that there was a little extra curricular activity going on.
In addition, we would be remiss if we failed to mention that the overall volume totals were less than stellar. While volume did increase a smidge from Monday and there may have been some hesitancy in front of this week�s CPI report, total volume of 1.55 billion shares on the NYSE is rather lethargic and well below the 50-day average of more than 1.7 billion. However, the bulls can argue that the move up and out may have taken some by surprise and that we should look for the volume to pick up in the next few sessions.
Turning to this morning, the bulls should be encouraged by the results from Sears and another strong earnings number in the investment banking sector. Sears beat estimates handily and Lehman Brothers reported a very nice quarter this morning. In addition, the bulls have to like the fact that the number of bullish advisors, as reported by Investors Intelligence, actually declined last week to 42.3.
On the economic front, this morning�s data doesn�t appear to be having much of an impact. Import Prices came in with a decline of -0.5%, which was a bit better than expectations for -0.6%. In addition, the Empire Manufacturing report form March was better than expected with a reading of 31.2 versus the consensus of 18.9.
Running through the rest of the pre-game indicators about 45 minutes before the bell, overseas markets were higher across the board in response to Wall Street�s good day yesterday. Oil futures are pulling back some this morning with crude currently trading -$0.50 to $62.60. Natural Gas is trading lower at $7.09 right now. Gold futures are higher by +$0.50 to $535.50. Bond yields are moving up a little this morning after yesterday�s big drop. The 2-yr yield currently quoted at 4.65% while the 10-yr is at 4.73%. And finally, stock futures in the U.S. are pointing a little higher at the moment with the Dow currently +4, the S&Ps are +0.20, and the NASDAQ is ahead by 4.50.
Stocks "In Play" This Morning:
LEH � Reports $3.50 vs. $3.14
MOT � CEO says RAZR problems resolved and shipments resume
DD � Guided coming quarter higher
KSS � Barron�s positive on growth potential
DISH � Reports $0.30 vs. $0.35
LEXR � Reports -$0.29 vs. -$0.24
MSFT � Blog suggests Vista launch will occur in November
SNE � Confirms November launch of PS3
UNP � Raises guidance for quarter
VMC � Raises guidance for quarter
SHLD � Reports $4.03 vs. $3.62
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: LEH, MOT, VMC, SHLD
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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