David Moenning�s Daily State of the Markets: 10/26

Back to Reality

After spending Monday celebrating the prospects for the economy under the direction of Ben Bernanke, traders returned their attention to reality yesterday. What they discovered was the issues that have plagued the market over much of the year hadn�t magically gone away with the nomination of a new Fed chairman. Yesterday�s market was dominated by the reality that oil prices remain stubbornly high and that the consumer is not in a great mood at the moment. Whether or not this mood will extend into the shopping season is up for debate, but the issues of the consumer and oil caused traders to curb their enthusiasm during the session.

The market�s strong recovery in the last hour helped take the edge off the day and allowed commentators to use the phrase �profit taking� to describe the session. However, in reality the day did little to resolve the key questions of the day or the current chart formation. For example, the major indices remain at important resistance zones and the S&P continues to rest just beneath the ever popular 200 day moving average. So while the market is in technically in a rally mode at the moment, the bulls still have some work to do if they want to keep this thing going.

Turning to this morning, interest rates are the focus of the session thus far. Yesterday, the yield on the 10-yr moved thru 4.50% and closed at 4.53%. This seems to have prompted more selling this morning as rates have popped higher and are currently trading at 4.58%. The current level is attracting a lot of attention as it is threatening the March high water mark of 4.64%.Stock futures have taken notice of the move in bonds and have recently reversed lower (Dow -24, S&P -2.10, and NASDAQ -2.50). However, crude is trading down -$0.28 this morning in front of the inventory numbers and overseas markets are mostly higher.

So with stocks at an important technical juncture, it will be interesting to see which way the wind blows today.

Stocks "In Play" This Morning:
(NYSE: BA) � Misses by a mile due to strike but guides full year above consensus
(NASDAQ: AMZN) � Beat expectations but margins and projections are disappointing
(NASDAQ: FLEX) � Missed estimates by $0.02
(NASDAQ: CHIR) � Earnings missed mark by $0.01
(NYSE: CA) � Met EPS expectations but guidance a question
(NYSE: COP) � Reported $2.68 vs $2.57

Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: none

To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI

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