David Moenning�s Daily State of the Markets:
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Back on Track
Good morning. After spending a few days last week worrying about the state of the economy and what might come of the elections, stocks now appear to be back on track. While yesterday�s victory for the bulls was not nearly as resounding as the one the Democrats wound up with in Tuesday�s elections, the Dow did manage to finish at a fresh all-time high and there was an abundance of green numbers seen in the major indices.
Once again, yesterday�s market action might have been a little difficult to get one�s arms around. For example, if investors were truly worried about the election, wouldn�t it have made sense for traders to sit on their hands until the outcome of the Virginia senate race was known? And with the likelihood of the Democrats winding up with a majority in both the House and the Senate, shouldn�t this have sent shivers down the spines of big business? While there was a bit of weakness in the Drugs and Defense stocks, all in all, investors basically shrugged off the election and got back to the business of putting money to work in stocks.
It certainly didn�t hurt that Mr. Bush recognized the message sent by the public and instantly let Mr. Rumsfeld walk. And the fact that the new kids on Capital Hill quickly issued statements saying that investors needn�t worry about defense and drugs getting hit definitely helped the mood. But in reality, most investors are banking on the idea that neither team in Washington is going to be able to get anything done over the next two years, which is music to the bulls� ears.
In the bigger picture, there are lots of positives being bandied about in the bull camp right now. For example, it is positive that the bulls emerged victorious in an environment that could have easily gone the bears� way. It is positive that the recent corrective phase was a lame duck affair. It is positive that stocks moved up yesterday despite a hefty move in oil. And it is definitely positive the volume rose on the advance and that breadth wound up decidedly positive.
Turning to this morning, the NASDAQ is getting a boost in the early going from Cisco�s earnings. During tech�s heyday, you may recall that Cisco was notorious for �beating� the estimates by a penny. And while the numbers did appear to be a bit massaged in order to produce the desired result, it now appears that Cisco�s new game is to beat by $0.02. In any event, the stock is trading significantly higher (+9.2%) in the pre-market.
On the economic front, Import prices came in weaker than expected at -2% versus expectations for a drop of -1%. In addition, the Trade Deficit narrowed in September to $64.3 Billion from last month�s reading of $69 Billion and a consensus of $66 Billion. Neither number has been a market mover so far. Finally, we will hear from the University of Michigan later this morning (9:45 am EST) on Consumer Sentiment.
Running through the rest of the pre-game indicators, the major overseas markets are mixed this morning with most indices hovering around breakeven. Gold futures are moving higher so far and are quoted at $624.50 right now. Crude futures are continuing to move up today with the latest quote showing oil up $0.74 to $60.57. Interest rates are moving slightly higher this morning with the 2-year currently quoted at 4.76% while the 10-yr is trading with a yield of 4.64% right now. And finally, with about an hour before the bell, stock futures in the U.S. are mixed. The Dow futures are currently about even with fair value; the S&Ps are up by a point, while the NASDAQ is sporting a gain of about 9 points at the moment on the back of Cisco�s report.
Stocks �In Play� This Morning:
Cisco (CSCO) � Reported $0.31 vs. $0.29
Goodyear Tire (GT) � Reported $0.42 vs. $0.24
Urban Outfitters (URBN) � Reported $0.21 vs. $0.18
JC Penney � Reported $1.26 vs. $1.23
TXU Corp (TXU) � Reported $2.10 vs. $1.95
Southwestern Energy (SWN) � Mentioned positively in Barron�s
Harley Davidson (HOG) � Upgraded at AG Edwards, Downgraded at RW Baird
Palm (PALM) � BofA begins coverage with a Buy
American Tower (AMT) � BofA reiterates Buy rating
Goldcorp (GG) � Upgraded at CIBC World Markets
Tektronix (TEK) � Added to Goldman�s Conviction Buy List
SAP (SAP) � Jefferies begins coverage with a Buy
FirstEnergy (FE) � Downgraded at Jefferies
NYT (NYT) � Downgraded at Morgan Stanley
Lowes (LOW) � Downgraded at Stifel Nicolaus
Intel (INTC) � UBS reiterates Buy rating
Sirius Satellite Radio (SIRI) � Downgraded at Wachovia
Long positions in stocks mentioned: CSCO, TEK, GS, MS, JCP
** 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. After spending a few days last week worrying about the state of the economy and what might come of the elections, stocks now appear to be back on track. While yesterday�s victory for the bulls was not nearly as resounding as the one the Democrats wound up with in Tuesday�s elections, the Dow did manage to finish at a fresh all-time high and there was an abundance of green numbers seen in the major indices.
Once again, yesterday�s market action might have been a little difficult to get one�s arms around. For example, if investors were truly worried about the election, wouldn�t it have made sense for traders to sit on their hands until the outcome of the Virginia senate race was known? And with the likelihood of the Democrats winding up with a majority in both the House and the Senate, shouldn�t this have sent shivers down the spines of big business? While there was a bit of weakness in the Drugs and Defense stocks, all in all, investors basically shrugged off the election and got back to the business of putting money to work in stocks.
It certainly didn�t hurt that Mr. Bush recognized the message sent by the public and instantly let Mr. Rumsfeld walk. And the fact that the new kids on Capital Hill quickly issued statements saying that investors needn�t worry about defense and drugs getting hit definitely helped the mood. But in reality, most investors are banking on the idea that neither team in Washington is going to be able to get anything done over the next two years, which is music to the bulls� ears.
In the bigger picture, there are lots of positives being bandied about in the bull camp right now. For example, it is positive that the bulls emerged victorious in an environment that could have easily gone the bears� way. It is positive that the recent corrective phase was a lame duck affair. It is positive that stocks moved up yesterday despite a hefty move in oil. And it is definitely positive the volume rose on the advance and that breadth wound up decidedly positive.
Turning to this morning, the NASDAQ is getting a boost in the early going from Cisco�s earnings. During tech�s heyday, you may recall that Cisco was notorious for �beating� the estimates by a penny. And while the numbers did appear to be a bit massaged in order to produce the desired result, it now appears that Cisco�s new game is to beat by $0.02. In any event, the stock is trading significantly higher (+9.2%) in the pre-market.
On the economic front, Import prices came in weaker than expected at -2% versus expectations for a drop of -1%. In addition, the Trade Deficit narrowed in September to $64.3 Billion from last month�s reading of $69 Billion and a consensus of $66 Billion. Neither number has been a market mover so far. Finally, we will hear from the University of Michigan later this morning (9:45 am EST) on Consumer Sentiment.
Running through the rest of the pre-game indicators, the major overseas markets are mixed this morning with most indices hovering around breakeven. Gold futures are moving higher so far and are quoted at $624.50 right now. Crude futures are continuing to move up today with the latest quote showing oil up $0.74 to $60.57. Interest rates are moving slightly higher this morning with the 2-year currently quoted at 4.76% while the 10-yr is trading with a yield of 4.64% right now. And finally, with about an hour before the bell, stock futures in the U.S. are mixed. The Dow futures are currently about even with fair value; the S&Ps are up by a point, while the NASDAQ is sporting a gain of about 9 points at the moment on the back of Cisco�s report.
Stocks �In Play� This Morning:
Cisco (CSCO) � Reported $0.31 vs. $0.29
Goodyear Tire (GT) � Reported $0.42 vs. $0.24
Urban Outfitters (URBN) � Reported $0.21 vs. $0.18
JC Penney � Reported $1.26 vs. $1.23
TXU Corp (TXU) � Reported $2.10 vs. $1.95
Southwestern Energy (SWN) � Mentioned positively in Barron�s
Harley Davidson (HOG) � Upgraded at AG Edwards, Downgraded at RW Baird
Palm (PALM) � BofA begins coverage with a Buy
American Tower (AMT) � BofA reiterates Buy rating
Goldcorp (GG) � Upgraded at CIBC World Markets
Tektronix (TEK) � Added to Goldman�s Conviction Buy List
SAP (SAP) � Jefferies begins coverage with a Buy
FirstEnergy (FE) � Downgraded at Jefferies
NYT (NYT) � Downgraded at Morgan Stanley
Lowes (LOW) � Downgraded at Stifel Nicolaus
Intel (INTC) � UBS reiterates Buy rating
Sirius Satellite Radio (SIRI) � Downgraded at Wachovia
Long positions in stocks mentioned: CSCO, TEK, GS, MS, JCP
** 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.
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