David Moenning�s Daily State of the Markets: 11/09
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The Bell Tolls for Housing
Toll Brothers, which is one of the nation�s premiere luxury homebuilders, threw a bucket of cold water on the crowd of bulls yesterday. The company updated earnings and revenue guidance before the bell Tuesday morning and certainly got everybody�s attention in the process. The company is scheduled to report earnings on 12/8, and it appears they will be stellar. The company said that revenues will be outstanding and that the both 2006 and 2007 will produce record profits.
The problem is the stock dropped -14% on the day and dragged the rest of the homebuilders, as well as almost anything related to housing and the consumer, down with it. Record profits, revenues on the rise, and yet the stock plummets � what gives? The fly in the ointment is the fact that Toll revised their guidance on expected home sales in 2006 to a range of 9500 � 10,200 from 10,200 � 10,600.
While this is certainly a reason for the stock to drop, a plunge of 14% still seems a bit extreme. The real problem came from the conference call. The company cited some �softness in the market,� which they claimed was �across the board� and said that they expect the pace of price increases to moderate. Ahhh�
But in reality, stocks were due for a pause, and that is exactly what we got yesterday. The Dow pulled back by 46 points, which was in line with the other indices. However, the move meant little, if anything, to the current trend. Volume was light on the decline, which once again suggests that there is little selling interest at the present time. In addition, bonds rallied on the day, which took the yield on the 10-year to 4.55% from Monday�s close of 4.63%.
Turning to this morning, there is little movement so far and it looks to be a rather flat opening. Crude is trading down -$0.23 to 59.48 in front of the weekly inventory numbers. Bonds are down a little, putting the yield on the 10-yr at 4.57%. AIG is getting some attention as it says it will have to review its financial numbers again after finding errors. And stock futures are currently pointing slightly lower.
Stocks "In Play" This Morning:
(NYSE: TXN) � Bear Stearns cautious on stock
(NYSE: HD) � Upgraded at Piper Jaffray
(NASDAQ: SYNC) � Higher on takeover talk
(NYSE: AIG) � 10-Q will be delayed
(NASDAQ: RIMM) � China service may be delayed
(NASDAQ: CSCP) � Reports after the close
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
Toll Brothers, which is one of the nation�s premiere luxury homebuilders, threw a bucket of cold water on the crowd of bulls yesterday. The company updated earnings and revenue guidance before the bell Tuesday morning and certainly got everybody�s attention in the process. The company is scheduled to report earnings on 12/8, and it appears they will be stellar. The company said that revenues will be outstanding and that the both 2006 and 2007 will produce record profits.
The problem is the stock dropped -14% on the day and dragged the rest of the homebuilders, as well as almost anything related to housing and the consumer, down with it. Record profits, revenues on the rise, and yet the stock plummets � what gives? The fly in the ointment is the fact that Toll revised their guidance on expected home sales in 2006 to a range of 9500 � 10,200 from 10,200 � 10,600.
While this is certainly a reason for the stock to drop, a plunge of 14% still seems a bit extreme. The real problem came from the conference call. The company cited some �softness in the market,� which they claimed was �across the board� and said that they expect the pace of price increases to moderate. Ahhh�
But in reality, stocks were due for a pause, and that is exactly what we got yesterday. The Dow pulled back by 46 points, which was in line with the other indices. However, the move meant little, if anything, to the current trend. Volume was light on the decline, which once again suggests that there is little selling interest at the present time. In addition, bonds rallied on the day, which took the yield on the 10-year to 4.55% from Monday�s close of 4.63%.
Turning to this morning, there is little movement so far and it looks to be a rather flat opening. Crude is trading down -$0.23 to 59.48 in front of the weekly inventory numbers. Bonds are down a little, putting the yield on the 10-yr at 4.57%. AIG is getting some attention as it says it will have to review its financial numbers again after finding errors. And stock futures are currently pointing slightly lower.
Stocks "In Play" This Morning:
(NYSE: TXN) � Bear Stearns cautious on stock
(NYSE: HD) � Upgraded at Piper Jaffray
(NASDAQ: SYNC) � Higher on takeover talk
(NYSE: AIG) � 10-Q will be delayed
(NASDAQ: RIMM) � China service may be delayed
(NASDAQ: CSCP) � Reports after the close
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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