David Moenning Daily State of the Markets: 02/02
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Oil STILL in Focus
Good morning. Yesterday morning, the general consensus called for stocks to come under pressure after Google�s gigantic miss. Before the bell, there was talk of big trouble in techland and even discussions of a slowdown in the economy as analysts extrapolated Google�s report in almost every direction. But a funny thing happened on the way to the Wednesday thrashing � it just didn�t happen.
Sure, GOOG got thumped as traders bailed out over the company�s first encounter with disappointment since coming public in 2004. But in reality, the drop of -7.1% wasn�t nearly as bad as the -15% to -20% plunge seen after the report was released Tuesday afternoon and in Wednesday�s pre-market trading. And given that the stock finished at the high of the day, it would appear that there are plenty of investors out there that saw the drop as a buying opportunity.
In the end, instead of running the bulls out of town, it was the bears that actually wound up on the run yesterday as traders focused on surprisingly good earnings from Boeing and oil�s late-day drop. With crude hovering uncomfortably close to the $70 �line in the sand� recently traders have certainly kept one eye on the oil pits. So when oil began to fall in earnest late in the session, the bulls jumped on the opportunity to move prices up. The result was a gain of 89 points on the Dow and less impressive gains for the other indices. However, it was impressive that once again, the NYSE, Russell 2000, S&P Small Caps and Mid Caps all moved to new all-time highs.
In sum, it was positive that the market was able to side-step the Google landmine and move ahead.
On the economic front, yesterday�s data provided us with �more of the same.� The ISM composite came in weaker than expected but the respondents were �generally upbeat.� ISM noted that manufacturing appears to have �recovered from the disruptions and dislocations caused by the hurricanes.� But, at the same time, the prices component of the report showed increased inflation pressures.
Yesterday also brought news from the housing sector, which can also be categorized as �more of the same.� Construction spending rose by 1% in December, which was well above the expectations. And on a year-over-year basis, spending grew by 8.9%. However, pending home sales fell for the fourth consecutive month and were off -5.5% versus a year ago. The reports are consistent with a housing market that is clearly slowing down, but the much feared collapse is nowhere in sight.
Turning to this morning, it looks like the bears may try and make an appearance, at least in the early going. The economic data was slightly disappointing, but isn�t having much impact in the early trade. The government reported that Productivity in the Fourth Quarter actually fell by -0.6% which was lower than expectations for a flat number. In addition, Unit Labor Costs (think wage inflation) was in-line with the consensus at 3.5%. While the data was a bit discouraging, it really wasn�t much of a surprise after the GDP report.
Running through this morning�s pre-game indicators, Gold is higher by $3.70 this morning at $577.70; Oil is lower by -$0.30 to $66.26; Natural Gas is declining on warmer weather and is off -$0.13 to $8.60; Bond yields are continuing to move up in an inverted fashion with the 2 yr at 4.59% and 10 yr at 4.57%; and finally, stock futures in the U.S. are lower before the bell (Dow -35, S&P -3.5, NASDAQ -7).
Stocks "In Play" This Morning:
ALL � Upgraded at Oppenheimer
GR � Reported $0.56 vs. $0.51 Revenues $4.10B vs. $1.35B
CVS � Reported $0.41 vs. $0.40 Revenues $9.73B vs. $9.71B
AZN � Reported $0.77 vs. $0.75 Revenues $6.3M vs. $6.18
ANF � Jan same store sales +33% vs. +15%
AEOS � Jan same store sales +11.3% vs. +7%
EOG � Reported $1.88 vs. $1.87 Revenues $1.21B vs. $1.16B
MUR � Reported $0.82 vs. $0.79
PHM � Reported $2.03 vs. $1.97 Revenues $5.13B vs. $5.14B
TXN � Upgraded at Jeffries
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: none
To see David Moenning�s Trading Record or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
Good morning. Yesterday morning, the general consensus called for stocks to come under pressure after Google�s gigantic miss. Before the bell, there was talk of big trouble in techland and even discussions of a slowdown in the economy as analysts extrapolated Google�s report in almost every direction. But a funny thing happened on the way to the Wednesday thrashing � it just didn�t happen.
Sure, GOOG got thumped as traders bailed out over the company�s first encounter with disappointment since coming public in 2004. But in reality, the drop of -7.1% wasn�t nearly as bad as the -15% to -20% plunge seen after the report was released Tuesday afternoon and in Wednesday�s pre-market trading. And given that the stock finished at the high of the day, it would appear that there are plenty of investors out there that saw the drop as a buying opportunity.
In the end, instead of running the bulls out of town, it was the bears that actually wound up on the run yesterday as traders focused on surprisingly good earnings from Boeing and oil�s late-day drop. With crude hovering uncomfortably close to the $70 �line in the sand� recently traders have certainly kept one eye on the oil pits. So when oil began to fall in earnest late in the session, the bulls jumped on the opportunity to move prices up. The result was a gain of 89 points on the Dow and less impressive gains for the other indices. However, it was impressive that once again, the NYSE, Russell 2000, S&P Small Caps and Mid Caps all moved to new all-time highs.
In sum, it was positive that the market was able to side-step the Google landmine and move ahead.
On the economic front, yesterday�s data provided us with �more of the same.� The ISM composite came in weaker than expected but the respondents were �generally upbeat.� ISM noted that manufacturing appears to have �recovered from the disruptions and dislocations caused by the hurricanes.� But, at the same time, the prices component of the report showed increased inflation pressures.
Yesterday also brought news from the housing sector, which can also be categorized as �more of the same.� Construction spending rose by 1% in December, which was well above the expectations. And on a year-over-year basis, spending grew by 8.9%. However, pending home sales fell for the fourth consecutive month and were off -5.5% versus a year ago. The reports are consistent with a housing market that is clearly slowing down, but the much feared collapse is nowhere in sight.
Turning to this morning, it looks like the bears may try and make an appearance, at least in the early going. The economic data was slightly disappointing, but isn�t having much impact in the early trade. The government reported that Productivity in the Fourth Quarter actually fell by -0.6% which was lower than expectations for a flat number. In addition, Unit Labor Costs (think wage inflation) was in-line with the consensus at 3.5%. While the data was a bit discouraging, it really wasn�t much of a surprise after the GDP report.
Running through this morning�s pre-game indicators, Gold is higher by $3.70 this morning at $577.70; Oil is lower by -$0.30 to $66.26; Natural Gas is declining on warmer weather and is off -$0.13 to $8.60; Bond yields are continuing to move up in an inverted fashion with the 2 yr at 4.59% and 10 yr at 4.57%; and finally, stock futures in the U.S. are lower before the bell (Dow -35, S&P -3.5, NASDAQ -7).
Stocks "In Play" This Morning:
ALL � Upgraded at Oppenheimer
GR � Reported $0.56 vs. $0.51 Revenues $4.10B vs. $1.35B
CVS � Reported $0.41 vs. $0.40 Revenues $9.73B vs. $9.71B
AZN � Reported $0.77 vs. $0.75 Revenues $6.3M vs. $6.18
ANF � Jan same store sales +33% vs. +15%
AEOS � Jan same store sales +11.3% vs. +7%
EOG � Reported $1.88 vs. $1.87 Revenues $1.21B vs. $1.16B
MUR � Reported $0.82 vs. $0.79
PHM � Reported $2.03 vs. $1.97 Revenues $5.13B vs. $5.14B
TXN � Upgraded at Jeffries
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: none
To see David Moenning�s Trading Record or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
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