David Moenning�s Daily State of the Markets 06/19
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Resistance Looms, But Will It Matter?
Good Monday morning and welcome back to the game. Despite the quadruple witching expiration day, Friday was pretty much a day of rest as both teams may have been exhausted from the recent volatility. Thus, the key question facing the markets this week is whether last week�s blast higher was just a bounce or something more sustainable?
The bears argue that the bounce up from the waterfall decline and extremely oversold levels was the easy part. The glass is half-empty crowd will also suggest that the bounce is likely to have run its course given the resistance that looms overhead and that a retest of the recent lows is the next order of business.
On the other side of the aisle, however, the bulls argue that Friday was simply a day to digest the recent gains and the fact that stocks did not give back any of the Wednesday/Thursday gains has to be considered a positive.
While the arguments from both teams are plausible, as usual, we will avoid taking sides at the moment and let the market dictate the best strategy for the next move.
However, we do have to admit that the bear case is strengthened somewhat by the action in the bond market lately, where rates moved up rather dramatically last week. For example the yield on the 10-year went from 4.96% on Tuesday to 5.14% by Friday�s close. Part of this move can be explained by the ongoing hawkish comments from Fed governors. And then on Friday, Lehman came out with a report saying it expects Fed Funds to move up to 5.75% by the 10/24 Fed Meeting and sees core inflation continuing to move above the Fed�s stated comfort zone.
On Friday, we heard from the Fed�s William Poole and David Kohn, whose comments seemed to both fall in with the party line with regard to fearing inflation. The bond market may have also been spooked a bit by the fact that the University of Michigan�s Consumer Sentiment numbers came in well above the consensus estimate. The thinking here is that if consumer spending remains robust, the Fed may be more likely to keep hiking down the measured path.
Looking to the week ahead, it would appear that summer will be in full swing as there is very little in the way of Economic data scheduled for release. Here�s the schedule for the week:
- Tuesday � May Housing Starts
- Thursday � May Leading Economic Indicators
- Friday � May Durable Goods
In addition, this week we will get some additional Fedspeak. This morning we will hear from Jack Guynn at 9:30 and then Cleveland President Susan Pianalto is scheduled to speak on Thursday.
Turning to this morning, it looks like the bulls will try to continue running with the ball in the early going on the back of improvement in tensions with Iran, lower oil prices, and a move higher in European markets.
Running through the rest of pre-game indicators, overseas markets are mixed with Asia finishing in the red while Europe is enjoying solidly green screens. Gold is trading lower by $9.0 to $572.30 at the moment. Oil is moving a little lower this morning as Iran says that they are ready to consider limiting their nuclear program. Crude futures are currently trading off by $0.50 to $69.38. Interest rates are continuing to move a little higher this morning as the 2-year is currently trading at 5.17% while the 10-yr is quoted at 5.14% right now. And finally, with about an hour before the bell, stock futures in the U.S. are heading higher. The Dow futures are currently up by 31 points; the S&Ps are ahead by 5.40, and the NASDAQ is sporting an increase of about 8 points.
Stocks �In Play� This Morning:
Intel (INTC) � Upgraded at UBS
Genworth (GNW) � Upgraded at JPM
F5 Networks (FFIV) � Upgraded at RW Baird
Corn Products (CPO) � Upgraded at Deutsche
Monster Worldwide (MNST) � Upgraded at Morgan Stanley
Vulcan Materials (VMC) � Upgraded at Goldman Sachs
Martin Marietta Mat (MLM) � Upgraded at Goldman Sachs
Microsemi (MSCC) � Mentioned positively at Lehman Bros
Goldman Sachs (GS) � M.S. says buy on weakness
Bear Stearns (BSC) � M.S. says buy on weakness
Capital One (COF) � Mentioned positively in Barron�s
Boeing (BA) � Mentioned positively in Barron�s
Kimberly Clark (KMB) � Downgraded at Lehman
Procter & Gamble (PG) � Upgraded at Lehman
Circuit City (CC) � Reports $0.03 vs. $0.01, Revenues $2.62B vs. $2.48B, Same Store Sales were above estimates
Qualcomm (QCOM) � Files complaint against Nokia with ITC
Positions in stocks mentioned: MNST, GS, BSC, COF, CC
** 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 Monday morning and welcome back to the game. Despite the quadruple witching expiration day, Friday was pretty much a day of rest as both teams may have been exhausted from the recent volatility. Thus, the key question facing the markets this week is whether last week�s blast higher was just a bounce or something more sustainable?
The bears argue that the bounce up from the waterfall decline and extremely oversold levels was the easy part. The glass is half-empty crowd will also suggest that the bounce is likely to have run its course given the resistance that looms overhead and that a retest of the recent lows is the next order of business.
On the other side of the aisle, however, the bulls argue that Friday was simply a day to digest the recent gains and the fact that stocks did not give back any of the Wednesday/Thursday gains has to be considered a positive.
While the arguments from both teams are plausible, as usual, we will avoid taking sides at the moment and let the market dictate the best strategy for the next move.
However, we do have to admit that the bear case is strengthened somewhat by the action in the bond market lately, where rates moved up rather dramatically last week. For example the yield on the 10-year went from 4.96% on Tuesday to 5.14% by Friday�s close. Part of this move can be explained by the ongoing hawkish comments from Fed governors. And then on Friday, Lehman came out with a report saying it expects Fed Funds to move up to 5.75% by the 10/24 Fed Meeting and sees core inflation continuing to move above the Fed�s stated comfort zone.
On Friday, we heard from the Fed�s William Poole and David Kohn, whose comments seemed to both fall in with the party line with regard to fearing inflation. The bond market may have also been spooked a bit by the fact that the University of Michigan�s Consumer Sentiment numbers came in well above the consensus estimate. The thinking here is that if consumer spending remains robust, the Fed may be more likely to keep hiking down the measured path.
Looking to the week ahead, it would appear that summer will be in full swing as there is very little in the way of Economic data scheduled for release. Here�s the schedule for the week:
- Tuesday � May Housing Starts
- Thursday � May Leading Economic Indicators
- Friday � May Durable Goods
In addition, this week we will get some additional Fedspeak. This morning we will hear from Jack Guynn at 9:30 and then Cleveland President Susan Pianalto is scheduled to speak on Thursday.
Turning to this morning, it looks like the bulls will try to continue running with the ball in the early going on the back of improvement in tensions with Iran, lower oil prices, and a move higher in European markets.
Running through the rest of pre-game indicators, overseas markets are mixed with Asia finishing in the red while Europe is enjoying solidly green screens. Gold is trading lower by $9.0 to $572.30 at the moment. Oil is moving a little lower this morning as Iran says that they are ready to consider limiting their nuclear program. Crude futures are currently trading off by $0.50 to $69.38. Interest rates are continuing to move a little higher this morning as the 2-year is currently trading at 5.17% while the 10-yr is quoted at 5.14% right now. And finally, with about an hour before the bell, stock futures in the U.S. are heading higher. The Dow futures are currently up by 31 points; the S&Ps are ahead by 5.40, and the NASDAQ is sporting an increase of about 8 points.
Stocks �In Play� This Morning:
Intel (INTC) � Upgraded at UBS
Genworth (GNW) � Upgraded at JPM
F5 Networks (FFIV) � Upgraded at RW Baird
Corn Products (CPO) � Upgraded at Deutsche
Monster Worldwide (MNST) � Upgraded at Morgan Stanley
Vulcan Materials (VMC) � Upgraded at Goldman Sachs
Martin Marietta Mat (MLM) � Upgraded at Goldman Sachs
Microsemi (MSCC) � Mentioned positively at Lehman Bros
Goldman Sachs (GS) � M.S. says buy on weakness
Bear Stearns (BSC) � M.S. says buy on weakness
Capital One (COF) � Mentioned positively in Barron�s
Boeing (BA) � Mentioned positively in Barron�s
Kimberly Clark (KMB) � Downgraded at Lehman
Procter & Gamble (PG) � Upgraded at Lehman
Circuit City (CC) � Reports $0.03 vs. $0.01, Revenues $2.62B vs. $2.48B, Same Store Sales were above estimates
Qualcomm (QCOM) � Files complaint against Nokia with ITC
Positions in stocks mentioned: MNST, GS, BSC, COF, CC
** 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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