David Moenning�s Daily State of the Markets: 11/01

Here At Last

After struggling with one of the worst October�s in a while (well, up until the last 2 days that is) there seems to be a general feeling of relief that November has finally arrived. While it is becoming more widely known by the day, November is historically the year�s second best month behind January. And every trader who has ever studied history at all knows that the November thru January period is usually the best three-month time frame to own stocks.

Up until the last fifteen minutes of the session yesterday, stocks appeared to be continuing the rebound which began on Friday. And why not? Friday�s rally was triggered by news that the economy had survived the hurricanes and was actually doing better than most had expected. And since yesterday we got more news supporting this view, it wasn�t surprising to see stocks continue to breathe a sigh of relief.

The other issue that is here at last is �neutrality� in the Fed Funds rate. Unless you live in a cave, you undoubtedly know that the Fed is meeting today and is expected to raise rates yet again by 0.25% at 2:15 pm. Today�s inevitable rate hike will take the Fed Funds rate to 4%, which is a level where, according to something called the Taylor Rule, neutrality is finally achieved. Thus, if you believe Mr. Taylor�s rule, any rate hikes after today puts the Fed in the antagonist�s role. And if this is indeed the case, it means life gets tougher for the bulls because one of the oldest adages on Wall Street is: �Don�t fight the Fed.�

Turning to this morning, all eyes will be on the Fed as well as the continued stream of earnings reports. Speaking of earnings, Dell did, in fact, disappoint yesterday, which leaves the NASDAQ gasping for air this morning. However, Asian markets were up strong, bond yields are steady, oil is flat on the day, and the futures are pointing to a mixed open (Dow +35, S&P -1.80, and NASDAQ -5.50).

The big question of the day is what the Fed will have to say this afternoon. Will they admit that neutrality is here at last, or just keep on marching down the measured path?

Stocks "In Play" This Morning:
(NASDAQ: DELL) � Disappoints by $0.01, guides revs lower
(NYSE: HPQ) � Downgraded at AmTech
(NYSE: CL) � Reports earnings in-line with FirstCall estimates
(NYSE: TXN) � Gets Buy rating from AG Edwards
(NYSE: VIA.B) � Beats by $0.02

Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: TXN

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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