David Moenning�s Daily State of the Markets: 11/28
Tweet
Share
E-mail
Pass the Tums
Good morning. Last week�s warm and fuzzy feeling, which was undoubtedly turkey-induced, gave way to queasiness yesterday as stocks encountered their worst day in more than four months. The reasons for the decline were varied and actually quite valid, but in reality, it appeared that the bulls simply stood aside yesterday and let their opponents have their fun.
Until Friday, the Dow had enjoyed a long uninterrupted run higher in which there were no fewer than 19 new all-time highs seen during the whopping 1602 point move, which had begun on July 14. However, what makes this run even more impressive is that the venerable Dow managed to march higher on a daily basis without so much as a single correction of even 2% over the course of four and one-half months. Thus, it is little wonder that their might be a few ticked off bears with some pent up selling demand at the moment.
Just about everybody in the bull camp recognized that the game had become completely one-sided lately and that unless the other team had curled up into the fetal position and quit, there was a counterattack coming at some point. Therefore, when Monday�s selling got started in earnest, the bulls decided to give the bears their due and proceeded to focus on their cyber-shopping.
We call such an event a �stand aside day� where one team simply allows their opponents to enjoy an overdue victory. The thinking is that it might be a bad idea to try and keep the bears at bay every single session. Thus, it is probably best to let them get the selling out of their system before attempting to do any significant buying.
While this is all well and good, the bears will argue that yesterday�s 158 point dive was more than simple profit taking. Our furry friends remind us that the greenback is in a world of hurt against the Euro. They point out that Wal-Mart experienced their first November sales decline in a decade, which is something that could reflect badly on the shopping season. And the bears suggest that oil prices moving back over $60 might be a problem going forward.
While these are all valid points, the simple fact of the matter is that the bears were overdue to win a contest and as such, they made the most of their opportunity yesterday.
Turning to this morning, the Dollar is still falling against the Euro and the foreign markets saw red. However, we�ve got some economic data to review today, which is likely to take center stage.
For starters, the report on Durable Goods, which is an extremely volatile data series, reversed last month�s 8.7% gain with an -8.3% loss. While this sounds shocking, let�s keep in mind that orders for aircraft are themselves very volatile due to the extreme cost of each plane. When you strip out transportation, the numbers still look a little weak with decline of -1.7%, which was lower than the consensus estimate for an increase of +0.2%.
However, with Consumer Confidence, Existing Home Sales, and the Richmond Fed Index all due out later today, it looks like traders are not panicking just yet.
Running through the rest of the pre-game indicators, the major overseas markets are all lower. Gold futures are down a smidge this morning and are quoted at $638.80 right now. Crude futures are continuing to move higher this morning, with the latest quote showing the December contract up $0.36 to $60.68. Interest rates are moving down on the weak Durable Goods data, with the 2-year currently quoted at 4.67% while the 10-yr has broken to a new low and is trading with a yield of 4.49% right now. And finally, with an hour before the bell, stock futures in the U.S. are looking lower. The Dow futures are currently off by 27 points, the S&Ps are down about 5 points, and the NASDAQ looks to be about 8 points below fair value at the moment.
Stocks �In Play� This Morning:
Research In Motion (RIMM) � Downgraded at BMO Capital
Merrill Lynch (MER) � BofA renews Buy
New York Times (NYT) � Downgraded at Citigroup
Southwestern Energy (SWN) � Downgraded at Goldman Sachs
Longs Drug Stores (LDG) � Goldman starts with Neutral
Electronic Data Systems (EDS) � Upgraded at Lehman
Freeport McMoRan (FCX) � Upgraded at Lehman
Palm Inc. (PALM) � Downgraded at Merrill, Target reduced at Bear Stearns
Apple Computer (AAPL) � UBS reiterates Buy rating
Phelps Dodge (PD) � Downgraded at UBS
Nokia (NOK) � Reduces target for margins
Google (GOOG) � YouTube to provide content to Verizon customers
Long positions in stocks mentioned: LEH, BSC, JPM, MER
** For More of David Moenning�s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning�s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM�s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
Good morning. Last week�s warm and fuzzy feeling, which was undoubtedly turkey-induced, gave way to queasiness yesterday as stocks encountered their worst day in more than four months. The reasons for the decline were varied and actually quite valid, but in reality, it appeared that the bulls simply stood aside yesterday and let their opponents have their fun.
Until Friday, the Dow had enjoyed a long uninterrupted run higher in which there were no fewer than 19 new all-time highs seen during the whopping 1602 point move, which had begun on July 14. However, what makes this run even more impressive is that the venerable Dow managed to march higher on a daily basis without so much as a single correction of even 2% over the course of four and one-half months. Thus, it is little wonder that their might be a few ticked off bears with some pent up selling demand at the moment.
Just about everybody in the bull camp recognized that the game had become completely one-sided lately and that unless the other team had curled up into the fetal position and quit, there was a counterattack coming at some point. Therefore, when Monday�s selling got started in earnest, the bulls decided to give the bears their due and proceeded to focus on their cyber-shopping.
We call such an event a �stand aside day� where one team simply allows their opponents to enjoy an overdue victory. The thinking is that it might be a bad idea to try and keep the bears at bay every single session. Thus, it is probably best to let them get the selling out of their system before attempting to do any significant buying.
While this is all well and good, the bears will argue that yesterday�s 158 point dive was more than simple profit taking. Our furry friends remind us that the greenback is in a world of hurt against the Euro. They point out that Wal-Mart experienced their first November sales decline in a decade, which is something that could reflect badly on the shopping season. And the bears suggest that oil prices moving back over $60 might be a problem going forward.
While these are all valid points, the simple fact of the matter is that the bears were overdue to win a contest and as such, they made the most of their opportunity yesterday.
Turning to this morning, the Dollar is still falling against the Euro and the foreign markets saw red. However, we�ve got some economic data to review today, which is likely to take center stage.
For starters, the report on Durable Goods, which is an extremely volatile data series, reversed last month�s 8.7% gain with an -8.3% loss. While this sounds shocking, let�s keep in mind that orders for aircraft are themselves very volatile due to the extreme cost of each plane. When you strip out transportation, the numbers still look a little weak with decline of -1.7%, which was lower than the consensus estimate for an increase of +0.2%.
However, with Consumer Confidence, Existing Home Sales, and the Richmond Fed Index all due out later today, it looks like traders are not panicking just yet.
Running through the rest of the pre-game indicators, the major overseas markets are all lower. Gold futures are down a smidge this morning and are quoted at $638.80 right now. Crude futures are continuing to move higher this morning, with the latest quote showing the December contract up $0.36 to $60.68. Interest rates are moving down on the weak Durable Goods data, with the 2-year currently quoted at 4.67% while the 10-yr has broken to a new low and is trading with a yield of 4.49% right now. And finally, with an hour before the bell, stock futures in the U.S. are looking lower. The Dow futures are currently off by 27 points, the S&Ps are down about 5 points, and the NASDAQ looks to be about 8 points below fair value at the moment.
Stocks �In Play� This Morning:
Research In Motion (RIMM) � Downgraded at BMO Capital
Merrill Lynch (MER) � BofA renews Buy
New York Times (NYT) � Downgraded at Citigroup
Southwestern Energy (SWN) � Downgraded at Goldman Sachs
Longs Drug Stores (LDG) � Goldman starts with Neutral
Electronic Data Systems (EDS) � Upgraded at Lehman
Freeport McMoRan (FCX) � Upgraded at Lehman
Palm Inc. (PALM) � Downgraded at Merrill, Target reduced at Bear Stearns
Apple Computer (AAPL) � UBS reiterates Buy rating
Phelps Dodge (PD) � Downgraded at UBS
Nokia (NOK) � Reduces target for margins
Google (GOOG) � YouTube to provide content to Verizon customers
Long positions in stocks mentioned: LEH, BSC, JPM, MER
** For More of David Moenning�s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning�s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM�s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
You May Also Be Interested In
- After-Hours Movers: AMAT, DLO, GLOB, YSS, ETON
- After-Hours Movers: CSCO, COHR, HLIT, CBRS, STUB, ENS
- After-Hours Movers: CRWV, NBIS, SMCI, LITE, CAVA, HRB
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
