David Moenning�s Daily State of the Markets: 09/15
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Looking For Clues
Good morning and Happy Friday to all. Stocks spent the majority of Thursday�s session watching and waiting for clues on the economy. And while there was a fair amount of fresh economic data to sift through yesterday, with the CPI and PPI reports as well as the Fed meeting all on tap within the next few days, there didn�t seem to be any reason to drive prices very far in either direction.
In short, the data that was available to investors yesterday was fairly benign and didn't provide a sufficient catalyst to take action. The report on retail sales was better than expected, thanks to higher numbers for vehicle sales. But when you strip out autos, the report came in below expectations � so that one�s a wash. Weekly jobless claims continued to be strong, Business Inventories were better than consensus, and Import Prices were also stronger than expected. One might have thought that the report on Import Prices might have caused a stir, however, since the gains were due primarily to higher energy prices � a situation that has since changed � market participants responded with a yawn.
Not even another drop in oil prices could get the bulls fired up. Crude fell for the eighth time in the last nine days and the October contract finished at $63.22. However, everybody knows that the Fed still holds the key to the market�s next move. And with the Fed concerned about inflation, there just wasn�t any reason to place a bet with the reports so close to being released.
Let�s also remember that the market is no longer oversold and is now bumping into some pretty important technical levels. With the Dow and S&P a stone�s throw away from the highs for the year and the DJIA flirting with its all-time high water mark, it is probably going to take something more than an oversold condition to push prices through these levels. So, unless the bulls can find the clues they need to propel prices higher, the bears might seize the opportunity to run with the ball for a while.
Turning to this morning, it�s time to unwrap another important clue to the game. The CPI report has just been released, so let�s take a peek. Analysts were looking for a gain of +0.2% in both the headline and Core numbers and (drum roll please�) that�s exactly what they got. This may bode well for the stock market as there were no surprises in the numbers � which means the Fed may not have any reason to return to the hiking trail. Stock futures bounced higher immediately following the report, but we�ll have to wait and see if traders are willing to continue to buy in front of the Fed.
Running through the rest of the pre-game indicators, for the most part, the overseas markets also appeared to be waiting on the US inflation data, as there was little change overnight. Gold futures are continuing to struggle this morning and are quoted at $583.80 right now. Crude futures are little changed and are currently exchanging hands just $0.10 higher at $63.32. Interest rates are moving lower this morning with the 2-year currently quoted at 4.83% while the 10-yr is trading with a yield of 4.78% right now. And finally, with about an hour before the bell, stock futures in the U.S. are moving higher. The Dow futures are currently about 48 points ahead of fair value, the S&Ps are higher by more than 5, and the NASDAQ is sporting a gain of 9.20 at the moment.
Stocks �In Play� This Morning:
Motorola (MOT) � Mentioned positively at CIBC
Cummins (CMI) � Wachovia begins coverage with Outperform rating. Also NAV, IR
Bristol Myers (BMY) � Reports indicate SGP is considering purchase
Tenet Healthcare (THC) � Mentioned positively in Barron�s
Walgreen (WAG) � Mentioned positively in Business Week
Omnicare (OCR) � Mentioned positively in Business Week
Microsoft (MSFT) � Price target raised at Goldman Sachs
Cox Radio (CXR) � Downgraded at Goldman Sachs
Adobe Systems (ADBE) � Upgraded at Goldman Sachs, UBS restates Buy rating
Apple (AAPL) � iPhone expected to launch in Jan 2007 according to ThinkSecret
Fifth Third Bancorp (FITB) � Downgraded at Bernstein
Comcast (CMCSK) � Estimates increased at Citigroup
Openwave (OPWV) � Downgraded at Lehman
Sherman Williams (SHW) � Downgraded at JP Morgan
Tellabs (TLAB) � Estimates reduced at Susquehanna
International Game Tech (IGT) � Mentioned positively at William Blair
Ford Motor (F) � Downgraded at Merrill Lynch
Long positions in stocks mentioned: CMI, IGT
** 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 Happy Friday to all. Stocks spent the majority of Thursday�s session watching and waiting for clues on the economy. And while there was a fair amount of fresh economic data to sift through yesterday, with the CPI and PPI reports as well as the Fed meeting all on tap within the next few days, there didn�t seem to be any reason to drive prices very far in either direction.
In short, the data that was available to investors yesterday was fairly benign and didn't provide a sufficient catalyst to take action. The report on retail sales was better than expected, thanks to higher numbers for vehicle sales. But when you strip out autos, the report came in below expectations � so that one�s a wash. Weekly jobless claims continued to be strong, Business Inventories were better than consensus, and Import Prices were also stronger than expected. One might have thought that the report on Import Prices might have caused a stir, however, since the gains were due primarily to higher energy prices � a situation that has since changed � market participants responded with a yawn.
Not even another drop in oil prices could get the bulls fired up. Crude fell for the eighth time in the last nine days and the October contract finished at $63.22. However, everybody knows that the Fed still holds the key to the market�s next move. And with the Fed concerned about inflation, there just wasn�t any reason to place a bet with the reports so close to being released.
Let�s also remember that the market is no longer oversold and is now bumping into some pretty important technical levels. With the Dow and S&P a stone�s throw away from the highs for the year and the DJIA flirting with its all-time high water mark, it is probably going to take something more than an oversold condition to push prices through these levels. So, unless the bulls can find the clues they need to propel prices higher, the bears might seize the opportunity to run with the ball for a while.
Turning to this morning, it�s time to unwrap another important clue to the game. The CPI report has just been released, so let�s take a peek. Analysts were looking for a gain of +0.2% in both the headline and Core numbers and (drum roll please�) that�s exactly what they got. This may bode well for the stock market as there were no surprises in the numbers � which means the Fed may not have any reason to return to the hiking trail. Stock futures bounced higher immediately following the report, but we�ll have to wait and see if traders are willing to continue to buy in front of the Fed.
Running through the rest of the pre-game indicators, for the most part, the overseas markets also appeared to be waiting on the US inflation data, as there was little change overnight. Gold futures are continuing to struggle this morning and are quoted at $583.80 right now. Crude futures are little changed and are currently exchanging hands just $0.10 higher at $63.32. Interest rates are moving lower this morning with the 2-year currently quoted at 4.83% while the 10-yr is trading with a yield of 4.78% right now. And finally, with about an hour before the bell, stock futures in the U.S. are moving higher. The Dow futures are currently about 48 points ahead of fair value, the S&Ps are higher by more than 5, and the NASDAQ is sporting a gain of 9.20 at the moment.
Stocks �In Play� This Morning:
Motorola (MOT) � Mentioned positively at CIBC
Cummins (CMI) � Wachovia begins coverage with Outperform rating. Also NAV, IR
Bristol Myers (BMY) � Reports indicate SGP is considering purchase
Tenet Healthcare (THC) � Mentioned positively in Barron�s
Walgreen (WAG) � Mentioned positively in Business Week
Omnicare (OCR) � Mentioned positively in Business Week
Microsoft (MSFT) � Price target raised at Goldman Sachs
Cox Radio (CXR) � Downgraded at Goldman Sachs
Adobe Systems (ADBE) � Upgraded at Goldman Sachs, UBS restates Buy rating
Apple (AAPL) � iPhone expected to launch in Jan 2007 according to ThinkSecret
Fifth Third Bancorp (FITB) � Downgraded at Bernstein
Comcast (CMCSK) � Estimates increased at Citigroup
Openwave (OPWV) � Downgraded at Lehman
Sherman Williams (SHW) � Downgraded at JP Morgan
Tellabs (TLAB) � Estimates reduced at Susquehanna
International Game Tech (IGT) � Mentioned positively at William Blair
Ford Motor (F) � Downgraded at Merrill Lynch
Long positions in stocks mentioned: CMI, IGT
** 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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