David Moenning�s Daily State of the Markets 07/26

Finding the Mojo?

Good morning. The stock market spent the vast majority of yesterday�s session meandering back and forth across the breakeven mark as traders reacted to the good, the bad, and the ugly in terms of earnings. Disappointing results from the likes of UPS and 3M brought out the sellers while stellar numbers from McDonalds and AT&T encouraged some buying. By mid-afternoon, the feeling was that the game had become a stalemate and the much sought after follow-through would once again go missing.

However, the bulls appeared to find their mojo in the last hour and stocks popped higher into the close. The reasons for the move remain elusive, but for the first time in what seems like a long time, our barnyard buddies strutted their stuff for a second straight day and are acting like they just might have something going here.

The bulls could put lower oil prices and the economic data in their column yesterday, however neither seemed to be the catalyst for the late rally. Consumer Confidence came in about a point better than expected, which is impressive in the face of higher gasoline prices. The numbers helped allay fears that the consumer is going to bury their wallets in the sand and never find their way to the malls again.

It was also positive that the data on Existing Home Sales wasn�t nearly as bad as had been expected. With interest rates rising, the fear has been that the housing market might fall on very hard times, which, in turn, would spark fear in the hearts of the consumer. However, yesterday�s data supported the idea of a more modest pullback in the housing market and stoked discussion of a soft landing.

There was also talk of technical action being responsible for the increased mojo level among the bulls. The S&P moving back above its 200 day moving average and the recent resistance areas seemed to spark some buying. It is probably a safe bet that there were at least a few shorts that threw in the towel when these levels were breached as well as a few bulls that jumped on the bandwagon for the last hour run.

In reality, there was no real reason for the late day heroics. But after the shellacking the bulls have taken lately, they will smile and look for more of the same today.

Turning to this morning, there is no economic news scheduled for release today and the markets are doing very little in the early going. GM�s results are encouraging for the blue chips while Amazon�s miss and reduced forecast is likely to discourage tech and consumer related areas.

Running through the rest of the pre-game indicators, with the exception of Japan, overseas markets are up a smidge. Gold futures are a bit lower this morning and are currently exchanging hands at $616.50. Oil is moving up this morning and crude futures are currently trading higher by $0.32 to $74.07. Interest rates are also heading a little higher this morning with the 2-year currently quoted at 5.12% while the 10-yr is trading with a yield at 5.07% right now. And finally, with about an hour before the bell, stock futures in the U.S. are hovering around breakeven. The Dow futures are currently off by a single point; the S&Ps are down a fraction, and the NASDAQ is showing a drop of less than a point.

Stocks �In Play� This Morning:
General Motors (GM) � Reports $2.03 vs. $0.52
Reynolds American (RAI) � Reports $2.51 vs. $2.05, Announces split, Increases dividend
Corning (GLW) � Reports $0.26 vs. $0.25
Amazon (AMZN) � Reports $0.05 vs. $0.07
Ciena (CIEN) � Upgraded at UBS
BellSouth (BLS) � Upgraded at BofA, BMO Capital, Downgraded at Stifel
AT&T (T) � Upgraded at RW Baird, Downgraded at Stifel Nicolaus
Moodys (MCO) � Upgraded at JP Morgan
HCA Inc (HCA) � London Times reports additional offers in works
Sun Microsystems (SUNW) � Upgraded at Bear Stearns
McGraw Hill (MHP) � Upgraded at Merrill Lynch
Williams Sonoma (WSM) � Downgraded at BofA
Choice Hotels (CHH) � Downgraded at Bear Stearns
Archstone Smith (ASN) � Upgraded at Deutsche
Qlogic (QLGC) � Upgraded at Friedman Billings Ramsey
Southwest Airlines (LUV) � Upgraded at HSBC
Bed Bath & Beyond (BBBY) � Upgraded at JP Morgan

Positions in stocks mentioned: GS, BSC, RAI, BLS, ASN

** 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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