David Moenning�s Daily State of the Markets: 06/08
Tweet
Share
E-mail
Can't Find a Reason
Good morning. For the third straight day, the bulls wound up disappointed yesterday as stocks once again swooned into the close. The problem at the present time is simple really; without any new data to help dissuade the argument that the Fed is going to wander too far down the measured path, investors can�t find a reason to buy right now.
We could spend a great deal of time this morning analyzing the technical action, which wasn�t good, and the news from yesterday�s session, but the bottom line is that investors are waiting for the PPI/CPI reports scheduled for release next Tuesday and Wednesday. And with the Fed focused almost exclusively on inflation right now, there is little incentive to put money to work at the present time.
For much of the session, stocks enjoyed a modest rebound on the back of lower oil prices and a bounce in Europe. However, comments from yet another Fed Governor reminded traders that the Fed appears to be bent on both talking and acting tough on inflation. Atlanta Fed President Jack Guynn said inflation levels are �bothersome� and that core inflation may be beyond the comfort zone. Guynn noted that Fed policy is �close to right� at the present time if the forecasts are correct, but that the Fed must remain open to resetting policy as the outlook changes.
After listening closely to the comments of Fed officials this week, it sounds like the FOMC will raise rates in June to respond to the �uncomfortable� and �bothersome� levels of core inflation (recent reports showed the core 0.1% above the high end of the Fed�s zone). It would also seem that they are attempting to �talk down� inflation with all the �data dependent� language that�s been thrown out there recently.
Another item of note from yesterday was Mr. Greenspan�s return to Washington. Acting as a pseudo advisor to Congress, the former Fed Chairman talked about the rise in oil prices and what to do about it. He mentioned that the increased costs of energy ARE beginning to take their toll on the economy and that Ethanol isn�t the answer.
For stock investors, the good news is that if you look real hard, you will notice that the indices did manage to hold above the recent lows, which provides hope for a further rebound effort. However, the way things are going this morning; it looks like we might be in for an exploration of lower levels.
Turning to this morning, stocks are once again seeing red as the foreign markets are down hard across the board on worries over interest rates. The fact that the ECB raised rates by 0.25% to 2.75% helped to remind investors that rates are rising globally and not even the death of al-Quaida�s al-Zarqawi has been able cheer traders up.
While it is tempting to throw in the towel here, let�s remember that the major issue facing the market at the present time is what the Fed is going to do and that in three short weeks, any uncertainty over the Fed�s action should be removed (or at least reduced).
Finally, we�ve been talking about the market�s �issues� and advising a lower risk profile for quite some time. So for the time being anyway, we should continue to keep some powder dry and watch the action carefully to determine if we need to further lighten up on market exposure during the next rally.
Running through the pre-game indicators, overseas markets are all lower. Oil futures are moving lower again this morning on the killing of al-Zarqawi and the improvement in the Iran situation. Crude oil is currently trading down by $0.91 to $69.91. Interest rates are little changed as the curve continues to flatten this morning. This is an interesting area to watch as the bond market has had little movement during the FOMC�s tough talk period. The yield on the 2-year is currently trading at 5.00% and the 10-yr is also quoted at 5.00% right now. And finally, with about an hour before the bell, stock futures in the U.S. are moving up off their lows but are still down on the session. The Dow futures are currently off by 18 points; the S&Ps are down 4.20, and the NASDAQ is sporting a drop of about 6 points.
Stocks �In Play� This Morning:
SBA Communications (SBAC) � Upgraded at Bear Stearns
Crown Castle (CCI) � Downgraded at Bear Stearns
Intel (INTC) � Price target reduced at Citigroup, Mentioned cautiously at Bear Stearns
Advanced Micro Devices (AMD) � Price target reduced at Citigroup, Mentioned cautiously at Bear Stearns
Palm (PALM) � Will replace ANT in S&P 400
Circuit City (CC) � Mentioned positively at Credit Suisse
Matria Healthcare (MATR) � Downgraded at Piper Jaffray
Wellcare Healthplans (WCG) � Highlighted in IBD
BMC Software (MBC) � Reported $0.35 vs. $0.29, Guides higher
General Dynamics (GD) � Authorizes 10 million share buyback
Novell (NOVL) � Guides revenue and EPS higher for current quarter
Merck (MRK) � Mentioned positively at Leerink Swann
Jos A Banks (JOSB) � Downgraded at Ryan Beck and Roth Capital
Abbott Labs (ABT) � Mentioned positively at Leerink
Positions in stocks mentioned: SBAC, CC, BSC
** 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. For the third straight day, the bulls wound up disappointed yesterday as stocks once again swooned into the close. The problem at the present time is simple really; without any new data to help dissuade the argument that the Fed is going to wander too far down the measured path, investors can�t find a reason to buy right now.
We could spend a great deal of time this morning analyzing the technical action, which wasn�t good, and the news from yesterday�s session, but the bottom line is that investors are waiting for the PPI/CPI reports scheduled for release next Tuesday and Wednesday. And with the Fed focused almost exclusively on inflation right now, there is little incentive to put money to work at the present time.
For much of the session, stocks enjoyed a modest rebound on the back of lower oil prices and a bounce in Europe. However, comments from yet another Fed Governor reminded traders that the Fed appears to be bent on both talking and acting tough on inflation. Atlanta Fed President Jack Guynn said inflation levels are �bothersome� and that core inflation may be beyond the comfort zone. Guynn noted that Fed policy is �close to right� at the present time if the forecasts are correct, but that the Fed must remain open to resetting policy as the outlook changes.
After listening closely to the comments of Fed officials this week, it sounds like the FOMC will raise rates in June to respond to the �uncomfortable� and �bothersome� levels of core inflation (recent reports showed the core 0.1% above the high end of the Fed�s zone). It would also seem that they are attempting to �talk down� inflation with all the �data dependent� language that�s been thrown out there recently.
Another item of note from yesterday was Mr. Greenspan�s return to Washington. Acting as a pseudo advisor to Congress, the former Fed Chairman talked about the rise in oil prices and what to do about it. He mentioned that the increased costs of energy ARE beginning to take their toll on the economy and that Ethanol isn�t the answer.
For stock investors, the good news is that if you look real hard, you will notice that the indices did manage to hold above the recent lows, which provides hope for a further rebound effort. However, the way things are going this morning; it looks like we might be in for an exploration of lower levels.
Turning to this morning, stocks are once again seeing red as the foreign markets are down hard across the board on worries over interest rates. The fact that the ECB raised rates by 0.25% to 2.75% helped to remind investors that rates are rising globally and not even the death of al-Quaida�s al-Zarqawi has been able cheer traders up.
While it is tempting to throw in the towel here, let�s remember that the major issue facing the market at the present time is what the Fed is going to do and that in three short weeks, any uncertainty over the Fed�s action should be removed (or at least reduced).
Finally, we�ve been talking about the market�s �issues� and advising a lower risk profile for quite some time. So for the time being anyway, we should continue to keep some powder dry and watch the action carefully to determine if we need to further lighten up on market exposure during the next rally.
Running through the pre-game indicators, overseas markets are all lower. Oil futures are moving lower again this morning on the killing of al-Zarqawi and the improvement in the Iran situation. Crude oil is currently trading down by $0.91 to $69.91. Interest rates are little changed as the curve continues to flatten this morning. This is an interesting area to watch as the bond market has had little movement during the FOMC�s tough talk period. The yield on the 2-year is currently trading at 5.00% and the 10-yr is also quoted at 5.00% right now. And finally, with about an hour before the bell, stock futures in the U.S. are moving up off their lows but are still down on the session. The Dow futures are currently off by 18 points; the S&Ps are down 4.20, and the NASDAQ is sporting a drop of about 6 points.
Stocks �In Play� This Morning:
SBA Communications (SBAC) � Upgraded at Bear Stearns
Crown Castle (CCI) � Downgraded at Bear Stearns
Intel (INTC) � Price target reduced at Citigroup, Mentioned cautiously at Bear Stearns
Advanced Micro Devices (AMD) � Price target reduced at Citigroup, Mentioned cautiously at Bear Stearns
Palm (PALM) � Will replace ANT in S&P 400
Circuit City (CC) � Mentioned positively at Credit Suisse
Matria Healthcare (MATR) � Downgraded at Piper Jaffray
Wellcare Healthplans (WCG) � Highlighted in IBD
BMC Software (MBC) � Reported $0.35 vs. $0.29, Guides higher
General Dynamics (GD) � Authorizes 10 million share buyback
Novell (NOVL) � Guides revenue and EPS higher for current quarter
Merck (MRK) � Mentioned positively at Leerink Swann
Jos A Banks (JOSB) � Downgraded at Ryan Beck and Roth Capital
Abbott Labs (ABT) � Mentioned positively at Leerink
Positions in stocks mentioned: SBAC, CC, BSC
** 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.
You May Also Be Interested In
- After-Hours Movers: TEAM, NET, TWLO, DOCS, FROG, DV, TTD, ABNB, DKNG, SG, RKT
- After-Hours Stock Movers: AAPL, AMZN, COIN, RBLX, RDDT, AXTI, FND, WU, GDDY
- After-Hours Stock Movers: PLTR, SNAP, ON, ICHR, WGS, WHR
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
