David Moenning�s Daily State of the Markets: 11/10

Stocks stayed in pause mode yesterday and it wound up being a down-up-down affair. The market started lower on worries about consumer confidence, spiked higher at lunch, and then pulled back late in the day after the bombings in Jordan. But all in all, the bulls have to be pleased with the effort as not even another terrorist episode could produce any real momentum for the bears.

Yesterday we got some additional evidence, anecdotal as it may be, to support concern about the state of the consumer. According to AP, Pepsi reduced its year-end forecast for earnings and said it would cut jobs in a restructuring effort. The stock initially headed lower on the news but then recovered by the end of the session. And as such, this doesn�t seem to be much of a concern to traders. But the news is disconcerting from a big picture standpoint. While Toll Brothers caters to the upscale home market and a slowdown in their business isn�t necessarily going to affect the entire economy. Pepsi, on the other hand, has a significantly more broad appeal. Thus, if we start to see Pepsi�s numbers falter, there will be little doubt about the mood of the consumer.

However, with the market in year-end rally mode at the moment, stocks appear to be shrugging off worries and concentrating on green numbers for the year. And on that note, right at 12:00 noon, the market spiked higher for no apparent reason. After digging around, we found that short-covering by a rather large hedge fund was the catalyst for the move higher. Regardless of the trigger, stocks seemed comfortable moving higher and it appeared that after pausing for a day, the bulls would resume the rally.

Turning to this morning, the nation�s trade gap September spiked to a record $66.1B from $59.3B in August. This was due primarily to increased imports of oil after the hurricanes, but the number was still well above the consensus estimates of $61.5B. Given the continued warnings from Mr. Greenspan about the rising twin deficits in the US, the increase will probably raise some eyebrows.

Oil is trading lower this morning by -$0.44 to $58.49. T. Boone Pickens, who has been right on the money with his oil calls recently, went on record yesterday with $50 as the next price target for crude. In addition, this morning the IEA reduced its projection for world demand for the fourth month in a row. Perhaps the Econ 100 textbooks will be right and the concept of higher prices may indeed wind up affecting demand.

Running thru the rest of the morning indicators, world markets are higher, bonds are slightly lower in price with a current yield of 4.62%, and stock futures are pointing to a slightly lower open.

Stocks "In Play" This Morning:
Intel (Nasdaq: INTC) � Raises Dividend by 25%, Announces buyback
Targetr (NYSE: TGT) � Reports $0.49 vs. $0.45 and increases buyback
Yahoo! (Nasdaq: YHOO) � Sources say company dropping out of bidding for AOL
GM (NYSE: GM) � Will restate earnings for 2001
NetFllix (Nasdaq: NFLX) � More rumors of Amazon (Nasdaq: AMZN) bid
Dell (Nasdaq: DELL) � Reports after close

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

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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