David Moenning�s Daily State of the Markets: 08/18
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Those Who Ignore History...
Good morning and a Happy Friday to everyone. As the saying goes, �those who ignore history are�� well, actually doing pretty darn well this month. According to The Stock Traders Almanac, August is usually one of the worst months of the year. However, after a couple of decent inflation reports and a host of economic data confirming that the growth rate of the economy is moderating, stocks are enjoying a solid month so far.
Although August is traditionally the month where traders are more focused on the beach and family vacations than on charts and economic data, the recent reports appear to have turned the tide for the Bulls. While yesterday�s data wasn�t a major focal point, the fact that the Index of Leading Economic Indicators fell by -0.1% when an increase of +0.1% had been expected, helped to cement the concept of moderating growth.
Stocks wound up advancing for the fourth straight day on Thursday and the Dow has now found its way to a gain of +1.3% for the month, the S&P is now higher by +1.6%, and the NASDAQ has regained a leadership role with an increase of +3.2% in August.
In addition, the bulls have been able to do something that they haven�t been able to do in a long time � sustain a move higher. Until Tuesday�s PPI report, every rally was met almost immediately with selling and it was tough to get gains to stick. However, with the data pointing to the fact that inflation may indeed be contained, it appears that we just might have a breakout on our hands.
As we've mentioned recently, the primary reason for the improved mood on Wall Street is the idea that the combination of tame inflation and slowing economic growth has put the Fed on the back burner. Since Mr. Bernanke and company have made it very clear that they intend to be data dependent going forward, the recent reports makes it tough to argue for any additional time on the hiking trail.
The bulls also got a little help from oil prices yesterday as crude dropped $1.83 to close at $70.06, a level that hasn�t been seen since June. However, oil futures are recovering this morning as traders have returned their attention to Iran. With the truce in the Middle East apparently holding steady, the focus is now on the potential for the application of economic sanctions. Recall that Iran has vowed severe consequences for the price of oil if the U.N. were to impose sanctions.
Crude is trading higher by $0.69 at the moment to $70.75.
Interest rates are also in the news this morning as China�s Central Bank raised rates by a little more than 25 basis points.
And finally, with all the attention paid to the Middle East lately, North Korea must have been feeling left out as they are reportedly readying to do an underground test of their nuclear technology.
As for the rest of the pre-game indicators, with the exception of Japan, the overseas markets are fractionally higher. Interest rates are holding steady this morning as there is no economic data scheduled for release before the bell and the 10-yr is currently trading with a yield of 4.87% right now. And in closing, with about an hour before the bell, stock futures in the U.S. are pointing to a flat-to-slightly down open with the S&P futures off by about 1.30 at the moment.
Stocks "In Play" This Morning:
Nvidia (NVDA) � Upgraded at Bear Stearns
Medimmune (MEDI) � Upgraded at Goldman Sachs
Altria (MO) � Mentioned positively at Citigroup
Keycorp (KEY) � Downgraded at AG Edwards
L-3 Comm (LLL) � Upgraded at BofA
Gap (GAP) � Downgraded at CIBC, Jefferies, Prudential, Susquehanna
Dell Computer (DELL) � Downgraded at Goldman Sachs
Progressive Corp (PGR) � Upgraded at HSBC
Kroger (KR) � Upgraded at HSBC
ST Microelectronics (STM) � Upgraded at Prudential
Petco (PETC) � Downgraded at Raymond James
Mills Corp (MLS) � Upgraded at RBC Capital
Motorola (MOT) � Mentioned positively at BofA, Also NOK, QCOM
China Mobile (CHL) � Upgraded at Citigroup
Long positions in stocks mentioned: BSC, GS, CHL
** 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 and a Happy Friday to everyone. As the saying goes, �those who ignore history are�� well, actually doing pretty darn well this month. According to The Stock Traders Almanac, August is usually one of the worst months of the year. However, after a couple of decent inflation reports and a host of economic data confirming that the growth rate of the economy is moderating, stocks are enjoying a solid month so far.
Although August is traditionally the month where traders are more focused on the beach and family vacations than on charts and economic data, the recent reports appear to have turned the tide for the Bulls. While yesterday�s data wasn�t a major focal point, the fact that the Index of Leading Economic Indicators fell by -0.1% when an increase of +0.1% had been expected, helped to cement the concept of moderating growth.
Stocks wound up advancing for the fourth straight day on Thursday and the Dow has now found its way to a gain of +1.3% for the month, the S&P is now higher by +1.6%, and the NASDAQ has regained a leadership role with an increase of +3.2% in August.
In addition, the bulls have been able to do something that they haven�t been able to do in a long time � sustain a move higher. Until Tuesday�s PPI report, every rally was met almost immediately with selling and it was tough to get gains to stick. However, with the data pointing to the fact that inflation may indeed be contained, it appears that we just might have a breakout on our hands.
As we've mentioned recently, the primary reason for the improved mood on Wall Street is the idea that the combination of tame inflation and slowing economic growth has put the Fed on the back burner. Since Mr. Bernanke and company have made it very clear that they intend to be data dependent going forward, the recent reports makes it tough to argue for any additional time on the hiking trail.
The bulls also got a little help from oil prices yesterday as crude dropped $1.83 to close at $70.06, a level that hasn�t been seen since June. However, oil futures are recovering this morning as traders have returned their attention to Iran. With the truce in the Middle East apparently holding steady, the focus is now on the potential for the application of economic sanctions. Recall that Iran has vowed severe consequences for the price of oil if the U.N. were to impose sanctions.
Crude is trading higher by $0.69 at the moment to $70.75.
Interest rates are also in the news this morning as China�s Central Bank raised rates by a little more than 25 basis points.
And finally, with all the attention paid to the Middle East lately, North Korea must have been feeling left out as they are reportedly readying to do an underground test of their nuclear technology.
As for the rest of the pre-game indicators, with the exception of Japan, the overseas markets are fractionally higher. Interest rates are holding steady this morning as there is no economic data scheduled for release before the bell and the 10-yr is currently trading with a yield of 4.87% right now. And in closing, with about an hour before the bell, stock futures in the U.S. are pointing to a flat-to-slightly down open with the S&P futures off by about 1.30 at the moment.
Stocks "In Play" This Morning:
Nvidia (NVDA) � Upgraded at Bear Stearns
Medimmune (MEDI) � Upgraded at Goldman Sachs
Altria (MO) � Mentioned positively at Citigroup
Keycorp (KEY) � Downgraded at AG Edwards
L-3 Comm (LLL) � Upgraded at BofA
Gap (GAP) � Downgraded at CIBC, Jefferies, Prudential, Susquehanna
Dell Computer (DELL) � Downgraded at Goldman Sachs
Progressive Corp (PGR) � Upgraded at HSBC
Kroger (KR) � Upgraded at HSBC
ST Microelectronics (STM) � Upgraded at Prudential
Petco (PETC) � Downgraded at Raymond James
Mills Corp (MLS) � Upgraded at RBC Capital
Motorola (MOT) � Mentioned positively at BofA, Also NOK, QCOM
China Mobile (CHL) � Upgraded at Citigroup
Long positions in stocks mentioned: BSC, GS, CHL
** 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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