David Moenning�s Daily State of the Markets 06/20
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Devoid of Data
Good morning. Despite the brief respite provided by last week�s blast higher, yesterday�s action gave traders the impression that the correction may decide to stick around for a while. With the market devoid of any economic data and the Fed meeting just a week away, stocks once again succumbed to selling yesterday.
While it was the sour housing data that actually triggered the move down, the relentless yapping by Fed officials seems to be keeping traders on edge. Yesterday, it was Atlanta Fed President Jack Guynn who reiterated that the risks of inflation are elevated. And although the speech was an instant replay of his 6/7 efforts, the result, in terms of market reaction, was the same.
With an exceptionally light calendar of economic data, the NAHB Housing Market Index received much more attention than usual. While everyone expects the housing market to continue to display weakness, the fact that the NAHB Index fell to its lowest level since April 1995 certainly got some attention. In short, the data makes it fairly obvious that rising interest rates and declining affordability are taking their toll. This, of course, is easily extrapolated to both the consumer and the overall economy, and before you could look up what NAHB actually stands for, stocks were heading south.
Continued weakness in the metals was also a factor in Monday�s sloppy session. As you will recall, until just recently, the metals were the darlings of the market and appeared to hold no bounds in terms of their profit potential. And while volatility is definitely part of the game when playing the metals market, whenever leaders reverse course to this degree, it definitely affects the psyche of traders.
So with no real data on the horizon, it was fear of the Fed overdoing it and of the economy heading southward that became the major focal point of the session. The good news, if there is any, is the fact that volume was not especially strong, which, according to the bull camp is not indicative of strong selling pressure.
The bulls are also quick to remind us that after a strong bounce, a retest of the lows is completely normal. Therefore, it will be important to watch the action this week for clues as to whether the recent lows will hold.
Turning to this morning, the day�s economic numbers came in a bit better than expected and may help offset the mood in the housing market. Housing Starts for May were reported at 1.957 million units, which was certainly stronger than the expectations for 1.86 million units. However, Building Permits fell by -2.1% and were a bit below the consensus. So far, there has been little reaction in the markets.
Running through the rest of pre-game indicators, overseas markets were red across the board. Gold is doing little so far today and is trading off by $0.40 right now to $572.00. Oil is moving a little higher this morning on all the saber rattling with regards to North Korea's purported missile testing. Crude futures are currently trading higher by $0.62 to $69.60. Interest rates are little changed this morning as the 2-year is currently trading at 5.19% 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 a smidge above breakeven. The Dow futures are currently ahead by 14 points; the S&Ps are up 1.50, and the NASDAQ is sporting an increase of about a point.
Stocks �In Play� This Morning:
Motorola (MOT) � Chosen to provide wireless in Bangladesh
UnitedHealth (UNH) � Judge dismisses 700 doctor class action suit
Agnico Eagle Mines (AEM) � Upgraded at Merrill Lynch
Applied Materials (AMAT) � Upgraded at Prudential
Martin Marietta Materials (MLM) � Added to favorites list at Goldman
Nvidia (NVDA) � Estimates cut at Deutsche
Nortel (NT) � NY times article suggests company is takeover target
Intl Business Machines (IBM) � Company set to announce breakthrough in chip speed
F5 Networks (FFIV) � Mentioned positively at WR Hambrecht
Intersil (ISIL) � Upgraded at Credit Suisse
MGM Mirage (MGM) � Downgraded at Morgan Stanley, Also HST, GTK
Mattson Technologies (MTSN) � Upgraded at Prudential
EW Scripps (SSP) � Downgraded at Deutsche
Nokia (NOK) � Downgraded at RBC Capital
Costco Wholesale (COST) � Upgraded at JP Morgan
Remember to take time to enjoy your day and until next time, �may the bulls be with you!�
Positions in stocks mentioned: GS, IBM
** 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. Despite the brief respite provided by last week�s blast higher, yesterday�s action gave traders the impression that the correction may decide to stick around for a while. With the market devoid of any economic data and the Fed meeting just a week away, stocks once again succumbed to selling yesterday.
While it was the sour housing data that actually triggered the move down, the relentless yapping by Fed officials seems to be keeping traders on edge. Yesterday, it was Atlanta Fed President Jack Guynn who reiterated that the risks of inflation are elevated. And although the speech was an instant replay of his 6/7 efforts, the result, in terms of market reaction, was the same.
With an exceptionally light calendar of economic data, the NAHB Housing Market Index received much more attention than usual. While everyone expects the housing market to continue to display weakness, the fact that the NAHB Index fell to its lowest level since April 1995 certainly got some attention. In short, the data makes it fairly obvious that rising interest rates and declining affordability are taking their toll. This, of course, is easily extrapolated to both the consumer and the overall economy, and before you could look up what NAHB actually stands for, stocks were heading south.
Continued weakness in the metals was also a factor in Monday�s sloppy session. As you will recall, until just recently, the metals were the darlings of the market and appeared to hold no bounds in terms of their profit potential. And while volatility is definitely part of the game when playing the metals market, whenever leaders reverse course to this degree, it definitely affects the psyche of traders.
So with no real data on the horizon, it was fear of the Fed overdoing it and of the economy heading southward that became the major focal point of the session. The good news, if there is any, is the fact that volume was not especially strong, which, according to the bull camp is not indicative of strong selling pressure.
The bulls are also quick to remind us that after a strong bounce, a retest of the lows is completely normal. Therefore, it will be important to watch the action this week for clues as to whether the recent lows will hold.
Turning to this morning, the day�s economic numbers came in a bit better than expected and may help offset the mood in the housing market. Housing Starts for May were reported at 1.957 million units, which was certainly stronger than the expectations for 1.86 million units. However, Building Permits fell by -2.1% and were a bit below the consensus. So far, there has been little reaction in the markets.
Running through the rest of pre-game indicators, overseas markets were red across the board. Gold is doing little so far today and is trading off by $0.40 right now to $572.00. Oil is moving a little higher this morning on all the saber rattling with regards to North Korea's purported missile testing. Crude futures are currently trading higher by $0.62 to $69.60. Interest rates are little changed this morning as the 2-year is currently trading at 5.19% 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 a smidge above breakeven. The Dow futures are currently ahead by 14 points; the S&Ps are up 1.50, and the NASDAQ is sporting an increase of about a point.
Stocks �In Play� This Morning:
Motorola (MOT) � Chosen to provide wireless in Bangladesh
UnitedHealth (UNH) � Judge dismisses 700 doctor class action suit
Agnico Eagle Mines (AEM) � Upgraded at Merrill Lynch
Applied Materials (AMAT) � Upgraded at Prudential
Martin Marietta Materials (MLM) � Added to favorites list at Goldman
Nvidia (NVDA) � Estimates cut at Deutsche
Nortel (NT) � NY times article suggests company is takeover target
Intl Business Machines (IBM) � Company set to announce breakthrough in chip speed
F5 Networks (FFIV) � Mentioned positively at WR Hambrecht
Intersil (ISIL) � Upgraded at Credit Suisse
MGM Mirage (MGM) � Downgraded at Morgan Stanley, Also HST, GTK
Mattson Technologies (MTSN) � Upgraded at Prudential
EW Scripps (SSP) � Downgraded at Deutsche
Nokia (NOK) � Downgraded at RBC Capital
Costco Wholesale (COST) � Upgraded at JP Morgan
Remember to take time to enjoy your day and until next time, �may the bulls be with you!�
Positions in stocks mentioned: GS, IBM
** 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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