David Moenning Daily State of the Markets: 03/02
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Back >From Whence We Came
The concerns raised during Tuesday�s surprise sell off were largely reversed during yesterday�s session as investors continued to react strongly to each batch of economic data. The fact that it was the first day of the month didn�t hurt either as reinvestment demand and leadership from some old favorites helped the market pop back up 60 points.
Traders appear to be hypersensitive to the economic news at the moment. Each bit of data is put under a microscope in an attempt to discern what the Fed is thinking. With Mr. Bernanke�s crew having made the point that a return to neutrality has been achieved, any tightening measures after the March meeting have to be interpreted as the Fed having moved to the enemy camp. And most strategists worth their salt know that it rarely pays to �fight the fed� when they are trying to combat inflation or slow the economy.
Yesterday�s economic data was largely positive. This was in direct contradiction to the bevy of reports from Tuesday, which were disappointing across the board. Wednesday�s Personal Income and Spending report showed incomes slightly above expectations, although this was largely attributable to special adjustments. The report also showed that while spending was slightly below consensus, the year-over-year core PCE (Personal Consumption Expenditures) index fell to 1.8%. Traders took this as a positive since the annual number pulled back a bit from the top end of the Fed�s stated comfort zone of between 1% and 2%.
On the manufacturing front, yesterday�s ISM (Institute of Supply Management) Manufacturing Index came in above expectations, which was the first increase in four months, and provided an offset to Tuesday�s punk number from the Chicago PMI. More importantly, the Prices Paid component (a measure of inflation) was a bit lower than expectations.
So with two reports showing that inflation is actually pulling back instead of accelerating, managers decided to spend the cash that flows in at the first of every month. And then with the sudden resurgence from some old favorites such as Cisco, Oracle, and Juniper, stocks returned from whence they came Wednesday.
While yesterday�s rebound was enjoyable, volume failed to increase and the overhead resistance remains intact. However, the bull camp is pounding the table about the fact that the Russell 2000, the S&P Small Cap, and S&P Mid Cap indices all moved to new all-time highs yesterday. And so now that we�ve gotten a rebound to offset the recent weakness, we return to Monday�s question of the day � Can the bulls find the strength to break out to new highs?
Turning to this morning, in the early going it looks like stocks appear to once again be returning from whence they came. With deadlines approaching rapidly in the Iran situation, there are concerns about the ramifications of the country being referred to the UN. In addition, an interest rate increase in Europe, some chatter about the same thing happening soon in Japan, and same-store sales that are less than stellar are all combining to put some pressure on stocks in the early going.
Running through the pre-game indicators, overseas markets are a mixed bag. Oil futures are moving up again this morning with crude currently trading +$0.73 to $62.70. Natural Gas is quoted higher by $0.06 at $6.79 right now. Gold futures are down a fraction to $565.40. Bond yields are flat this morning with the 2-yr yield currently quoted at 4.69% while the 10-yr is at 4.59%. And finally, stock futures in the U.S. are pointing lower at the moment with the Dow currently -24, the S&P�s are down by -2.30, and the NASDAQ is off by +3.50.
Stocks "In Play" This Morning:
GOOG � WSJ says company�s lack of guidance adding to uncertainty and volatility
ADCT � Reports $0.09 vs. $0.09 Revenues of $280.2M vs. $282.1M
COST � Reports $0.62 vs. $0.59 Revenues of $1.38B vs. $1.385B
FLR � Reports $0.64 vs. $0.69 Revenues of $3.96B vs. $3.28
AAPL � CNET reports company to release security patch for OSX
T � UBS believes merger of T and BLS is possible
CIEN � Reports -$0.01 vs. -$0.02 Revenues $120.4M vs. $120.3M
AMD � Morgan Stanley says GOOG may use AMD-based servers
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: AMD, FLR, ADCT
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) 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
The concerns raised during Tuesday�s surprise sell off were largely reversed during yesterday�s session as investors continued to react strongly to each batch of economic data. The fact that it was the first day of the month didn�t hurt either as reinvestment demand and leadership from some old favorites helped the market pop back up 60 points.
Traders appear to be hypersensitive to the economic news at the moment. Each bit of data is put under a microscope in an attempt to discern what the Fed is thinking. With Mr. Bernanke�s crew having made the point that a return to neutrality has been achieved, any tightening measures after the March meeting have to be interpreted as the Fed having moved to the enemy camp. And most strategists worth their salt know that it rarely pays to �fight the fed� when they are trying to combat inflation or slow the economy.
Yesterday�s economic data was largely positive. This was in direct contradiction to the bevy of reports from Tuesday, which were disappointing across the board. Wednesday�s Personal Income and Spending report showed incomes slightly above expectations, although this was largely attributable to special adjustments. The report also showed that while spending was slightly below consensus, the year-over-year core PCE (Personal Consumption Expenditures) index fell to 1.8%. Traders took this as a positive since the annual number pulled back a bit from the top end of the Fed�s stated comfort zone of between 1% and 2%.
On the manufacturing front, yesterday�s ISM (Institute of Supply Management) Manufacturing Index came in above expectations, which was the first increase in four months, and provided an offset to Tuesday�s punk number from the Chicago PMI. More importantly, the Prices Paid component (a measure of inflation) was a bit lower than expectations.
So with two reports showing that inflation is actually pulling back instead of accelerating, managers decided to spend the cash that flows in at the first of every month. And then with the sudden resurgence from some old favorites such as Cisco, Oracle, and Juniper, stocks returned from whence they came Wednesday.
While yesterday�s rebound was enjoyable, volume failed to increase and the overhead resistance remains intact. However, the bull camp is pounding the table about the fact that the Russell 2000, the S&P Small Cap, and S&P Mid Cap indices all moved to new all-time highs yesterday. And so now that we�ve gotten a rebound to offset the recent weakness, we return to Monday�s question of the day � Can the bulls find the strength to break out to new highs?
Turning to this morning, in the early going it looks like stocks appear to once again be returning from whence they came. With deadlines approaching rapidly in the Iran situation, there are concerns about the ramifications of the country being referred to the UN. In addition, an interest rate increase in Europe, some chatter about the same thing happening soon in Japan, and same-store sales that are less than stellar are all combining to put some pressure on stocks in the early going.
Running through the pre-game indicators, overseas markets are a mixed bag. Oil futures are moving up again this morning with crude currently trading +$0.73 to $62.70. Natural Gas is quoted higher by $0.06 at $6.79 right now. Gold futures are down a fraction to $565.40. Bond yields are flat this morning with the 2-yr yield currently quoted at 4.69% while the 10-yr is at 4.59%. And finally, stock futures in the U.S. are pointing lower at the moment with the Dow currently -24, the S&P�s are down by -2.30, and the NASDAQ is off by +3.50.
Stocks "In Play" This Morning:
GOOG � WSJ says company�s lack of guidance adding to uncertainty and volatility
ADCT � Reports $0.09 vs. $0.09 Revenues of $280.2M vs. $282.1M
COST � Reports $0.62 vs. $0.59 Revenues of $1.38B vs. $1.385B
FLR � Reports $0.64 vs. $0.69 Revenues of $3.96B vs. $3.28
AAPL � CNET reports company to release security patch for OSX
T � UBS believes merger of T and BLS is possible
CIEN � Reports -$0.01 vs. -$0.02 Revenues $120.4M vs. $120.3M
AMD � Morgan Stanley says GOOG may use AMD-based servers
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: AMD, FLR, ADCT
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) 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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