David Moenning�s Daily State of the Markets: 10/31
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Donning the Bull Costume
Stocks powered higher on Friday on the back of a better-than-expected GDP report and nearly everyone wound up wearing a bull costume by the end of session. The GDP report showed that the economy has not yet experienced any ill effects from the double whammy of Katrina and Rita and in short, the economy is "doing just fine, thank you."
Investors breathed a sigh of relief that neither the hurricane season, nor the effects of persistently high energy prices, nor even the weakening consumer outlook has taken a toll on economic growth. The government�s first guess of economic growth in the third quarter showed that the economy motored ahead at a 3.8% annual clip, which was higher than the expectations of a 3.6% rate. And yet, although growth was stronger, there were no real signs of a pickup in inflation. Although Friday did bring more bad news on the consumer sentiment front, traders figured the mood was temporary, donned their bull masks, and bought with both hands.
Unfortunately however, Friday�s buying binge really didn�t really change the current trend much at all. The move basically returned the Dow, S&P, and NYSE back to the high end of the current range, where the indices find themselves bumping into resistance. Thus, the bulls are going to need everyone to stay in costume for the move to have meaning.
Turning to this morning, the report on Personal Income and Spending came in stronger than expected. The 1.7% increase in income was much better than the expectations for an increase of 0.3% and represented a strong rebound from August�s decline of -0.9%. However, the majority of the upswing came from revisions to factors stemming from the hurricanes as wage and salaries rose by just 0.3% in September. Spending came in in-line with expectations as personal consumption rose by 0.5%.
Running thru the morning indicators, it appears that traders have indeed shown up for work wearing the bull costume, complete with pointy horns. Overseas markets were all up strong, oil is lower by -$0.62 to $60.60, bonds are slightly lower with yields at 4.58%, and stock futures are pointing to a higher open. The question of the day, of course, is which costume will traders be wearing when the closing bell sounds?
Stocks "In Play" This Morning:
(Nasdaq: CHIR) � NVS to buy remaining shares it doesn�t own for $45
(NYSE: K) � Reported $0.66 vs. $0.64
(NYSE: ADM) � Mentioned positively at C
(NYSE: ABX) (NYSE: PDG) � ABX makes hostile bid of $9.2 Billion for PDG
(NYSE: VLO) � Beats estimates $4.37 vs. $4.23
(NYSE: OXY) � Beats by $0.02
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: ADM, VLO
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
Stocks powered higher on Friday on the back of a better-than-expected GDP report and nearly everyone wound up wearing a bull costume by the end of session. The GDP report showed that the economy has not yet experienced any ill effects from the double whammy of Katrina and Rita and in short, the economy is "doing just fine, thank you."
Investors breathed a sigh of relief that neither the hurricane season, nor the effects of persistently high energy prices, nor even the weakening consumer outlook has taken a toll on economic growth. The government�s first guess of economic growth in the third quarter showed that the economy motored ahead at a 3.8% annual clip, which was higher than the expectations of a 3.6% rate. And yet, although growth was stronger, there were no real signs of a pickup in inflation. Although Friday did bring more bad news on the consumer sentiment front, traders figured the mood was temporary, donned their bull masks, and bought with both hands.
Unfortunately however, Friday�s buying binge really didn�t really change the current trend much at all. The move basically returned the Dow, S&P, and NYSE back to the high end of the current range, where the indices find themselves bumping into resistance. Thus, the bulls are going to need everyone to stay in costume for the move to have meaning.
Turning to this morning, the report on Personal Income and Spending came in stronger than expected. The 1.7% increase in income was much better than the expectations for an increase of 0.3% and represented a strong rebound from August�s decline of -0.9%. However, the majority of the upswing came from revisions to factors stemming from the hurricanes as wage and salaries rose by just 0.3% in September. Spending came in in-line with expectations as personal consumption rose by 0.5%.
Running thru the morning indicators, it appears that traders have indeed shown up for work wearing the bull costume, complete with pointy horns. Overseas markets were all up strong, oil is lower by -$0.62 to $60.60, bonds are slightly lower with yields at 4.58%, and stock futures are pointing to a higher open. The question of the day, of course, is which costume will traders be wearing when the closing bell sounds?
Stocks "In Play" This Morning:
(Nasdaq: CHIR) � NVS to buy remaining shares it doesn�t own for $45
(NYSE: K) � Reported $0.66 vs. $0.64
(NYSE: ADM) � Mentioned positively at C
(NYSE: ABX) (NYSE: PDG) � ABX makes hostile bid of $9.2 Billion for PDG
(NYSE: VLO) � Beats estimates $4.37 vs. $4.23
(NYSE: OXY) � Beats by $0.02
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: ADM, VLO
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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