David Moenning Daily State of the Markets: 1/05
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Two for Two
The bulls made it two for two yesterday as a second day of advancing prices confirmed who�s in the charge so far in the New Year. It was basically a day of digestion after Tuesday�s romp, but the positive vibes in response to the view that the Fed is just about done raising rates carried over into yesterday�s session. And, of course, the bulls will argue that Wednesday�s modest drift higher is definitely a good sign.
The Federal Reserve continued to get a lot of attention yesterday. With Alan Greenspan�s last meeting scheduled for January 31st, the question of what the Fed will do next becomes a little more challenging than normal. The minutes from the December 13th meeting seem to indicate that the FOMC would be �one and done� after the January meeting. One more rate hike would put the Fed Funds rate at 4.5%, which is a level that most everyone agrees is, at the very least, a neutral stance. However, with Mr. Bernanke taking the reins at the end of this month, there is still a chance that we could see an additional increase at the March meeting.
Wednesday�s activity was definitely muted as there wasn�t much in the way of news to encourage traders to take action. The report on Factory Orders was mixed as orders rose by 2.5% in November, but the number only met expectation and was driven almost entirely by aircraft orders. In addition, die-hard tech fans were encouraged to learn that global shipments of semiconductors rose 1.7% in November to a record $20.4 billion, on a three-month basis. Shipments were up 7.2% over the year-ago numbers, but the SOX failed to be inspired by the numbers and the index is still below its recent highs.
The bulls should also take heart in the fact that stocks were able to pad the gains from Tuesday in spite of higher oil prices once again. Crude prices advanced for the fifth day in a row and finished up +$0.28 to $63.42. And for those keeping score at home, oil prices are now up about 10% since Christmas. However, traders may be more focused on the price of Natural Gas, which continues to fall, and is near a five-month low at $10.20.
Although yesterday�s action was encouraging, the day�s advance of 33 points did little to change the status of the charts for the major indices. However, the bulls will undoubtedly point out that the S&P did peek its head above the recent highs and both the NYSE and Mid Cap indexes broke out to new all-time highs yesterday afternoon.
Turning to this morning, it looks like stocks will continue to consolidate the recent gains in front of tomorrow�s jobs report. There is no real economic news before the bell, although we will a report the ISM�s Non-Manufacturing index later this morning.
Running down the morning indicators, overseas markets were higher in Asia but are currently waffling in Europe. Gold is lower by $3.60 this morning to $532. Crude oil is down a little and is trading -$0.17 to $63.25. Natural Gas is continuing its dive and is down another -$0.21 to $9.91. Bond yields are moving a little higher with the yield on the 10-yr at 4.38%, while the 2-yr is at 4.32%. And finally, stock futures are mildly in the red at the moment (Dow -29, S&P -2.0, and NASDAQ -3.0).
So with the bulls off to a good start this year, the question of the day is if traders will want to do much of anything in front of the jobs report, or simply be satisfied to wait for the numbers?
Stocks "In Play" This Morning:
GR � Downgraded at Banc of America
BYD � Target raised to $72 at CIBC
STZ � Reported $0.52 vs. $0.50
XLNX � Raises guidance for quarter
AAPL � Notebook using INTC chips to be launched this month according to DigiTimes
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: STZ
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
The bulls made it two for two yesterday as a second day of advancing prices confirmed who�s in the charge so far in the New Year. It was basically a day of digestion after Tuesday�s romp, but the positive vibes in response to the view that the Fed is just about done raising rates carried over into yesterday�s session. And, of course, the bulls will argue that Wednesday�s modest drift higher is definitely a good sign.
The Federal Reserve continued to get a lot of attention yesterday. With Alan Greenspan�s last meeting scheduled for January 31st, the question of what the Fed will do next becomes a little more challenging than normal. The minutes from the December 13th meeting seem to indicate that the FOMC would be �one and done� after the January meeting. One more rate hike would put the Fed Funds rate at 4.5%, which is a level that most everyone agrees is, at the very least, a neutral stance. However, with Mr. Bernanke taking the reins at the end of this month, there is still a chance that we could see an additional increase at the March meeting.
Wednesday�s activity was definitely muted as there wasn�t much in the way of news to encourage traders to take action. The report on Factory Orders was mixed as orders rose by 2.5% in November, but the number only met expectation and was driven almost entirely by aircraft orders. In addition, die-hard tech fans were encouraged to learn that global shipments of semiconductors rose 1.7% in November to a record $20.4 billion, on a three-month basis. Shipments were up 7.2% over the year-ago numbers, but the SOX failed to be inspired by the numbers and the index is still below its recent highs.
The bulls should also take heart in the fact that stocks were able to pad the gains from Tuesday in spite of higher oil prices once again. Crude prices advanced for the fifth day in a row and finished up +$0.28 to $63.42. And for those keeping score at home, oil prices are now up about 10% since Christmas. However, traders may be more focused on the price of Natural Gas, which continues to fall, and is near a five-month low at $10.20.
Although yesterday�s action was encouraging, the day�s advance of 33 points did little to change the status of the charts for the major indices. However, the bulls will undoubtedly point out that the S&P did peek its head above the recent highs and both the NYSE and Mid Cap indexes broke out to new all-time highs yesterday afternoon.
Turning to this morning, it looks like stocks will continue to consolidate the recent gains in front of tomorrow�s jobs report. There is no real economic news before the bell, although we will a report the ISM�s Non-Manufacturing index later this morning.
Running down the morning indicators, overseas markets were higher in Asia but are currently waffling in Europe. Gold is lower by $3.60 this morning to $532. Crude oil is down a little and is trading -$0.17 to $63.25. Natural Gas is continuing its dive and is down another -$0.21 to $9.91. Bond yields are moving a little higher with the yield on the 10-yr at 4.38%, while the 2-yr is at 4.32%. And finally, stock futures are mildly in the red at the moment (Dow -29, S&P -2.0, and NASDAQ -3.0).
So with the bulls off to a good start this year, the question of the day is if traders will want to do much of anything in front of the jobs report, or simply be satisfied to wait for the numbers?
Stocks "In Play" This Morning:
GR � Downgraded at Banc of America
BYD � Target raised to $72 at CIBC
STZ � Reported $0.52 vs. $0.50
XLNX � Raises guidance for quarter
AAPL � Notebook using INTC chips to be launched this month according to DigiTimes
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: STZ
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
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