David Moenning Daily State of the Markets: 11/18
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The Breakout Buzz
As the closing bell rang yesterday, the buzz was all about breakouts. Google moved over $400, the Dow breeched the top end of recent trading range (albeit by a smidge), and the NASDAQ stepping lively to a new 52-week and bull market high. So with everyone buzzing about breakouts, the key question is: Is it time to celebrate and jump on the bandwagon for another move up?
While there are definitely some positive things happening in the market, not the least of which was oil�s big drop yesterday, there are also some concerns that remain. Yesterday was a microcosm of the environment as we got a combination of good news and bad news at just about every turn.
It was certainly positive that the NASDAQ moved to a new cycle high, the Mid Caps made a fresh new all-time high, and that the DJIA managed to nudge above the top end of the trading range, which has been in place since March. However, let�s keep in mind that the S&P 500, the NYSE, and the Russell 2000 have not yet joined in on the fun. And then there is the subject of volume. While there is still time for the volume to build, breakouts are normally accompanied by very strong volume. And although yesterday�s totals weren�t bad, they were far from impressive.
On one hand, it was certainly positive that traders are buzzing about the breakout action and it is good to see the year-end rally possibly picking up steam. But on the other hand, we need to keep in mind that it�s an expiration week and that the calendar may be giving this rally a bit of a boost as managers are anxious to make their year.
Turning to this morning, the bulls appear ready to try and keep things going. There are no economic reports to deal with and it should be noted that it is an expiration Friday. Running down the pre-game indicators we find oil tussling with its 200 day moving average and currently trading lower by -$0.14 to $56.20. We see the yield on the 10-yr moving slightly higher at 4.48%. We see green numbers on the overseas markets. And we see solid gains so far in the futures (Dow +29, S&P 2.50, and NASDAQ +4.50) on the back of Hewlett Packard�s strong report.
So is it time to jump on the bandwagon? Sure, nimble traders should definitely get on board the end-of-the-year run. However, if you do decide to hop on bandwagon here, be sure that you are seated near the back so that the jumping off won�t cause any serious damage.
Stocks "In Play" This Morning:
CSCO � To buy SFA for $43
XOM � Prudential initiates Integrated Oils with Favorable rating � XOM at overweight
QSII � Will replace SSNC in S&P Small Cap 600 on 11/22
BA � Bloomberg reports China Aviation Supplies ordering 150 BA 737s worth $9B
GE � Increases dividend to $0.25 from $0.22 and raises Full Year 2006 EPS guidance
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: CSCO
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
As the closing bell rang yesterday, the buzz was all about breakouts. Google moved over $400, the Dow breeched the top end of recent trading range (albeit by a smidge), and the NASDAQ stepping lively to a new 52-week and bull market high. So with everyone buzzing about breakouts, the key question is: Is it time to celebrate and jump on the bandwagon for another move up?
While there are definitely some positive things happening in the market, not the least of which was oil�s big drop yesterday, there are also some concerns that remain. Yesterday was a microcosm of the environment as we got a combination of good news and bad news at just about every turn.
It was certainly positive that the NASDAQ moved to a new cycle high, the Mid Caps made a fresh new all-time high, and that the DJIA managed to nudge above the top end of the trading range, which has been in place since March. However, let�s keep in mind that the S&P 500, the NYSE, and the Russell 2000 have not yet joined in on the fun. And then there is the subject of volume. While there is still time for the volume to build, breakouts are normally accompanied by very strong volume. And although yesterday�s totals weren�t bad, they were far from impressive.
On one hand, it was certainly positive that traders are buzzing about the breakout action and it is good to see the year-end rally possibly picking up steam. But on the other hand, we need to keep in mind that it�s an expiration week and that the calendar may be giving this rally a bit of a boost as managers are anxious to make their year.
Turning to this morning, the bulls appear ready to try and keep things going. There are no economic reports to deal with and it should be noted that it is an expiration Friday. Running down the pre-game indicators we find oil tussling with its 200 day moving average and currently trading lower by -$0.14 to $56.20. We see the yield on the 10-yr moving slightly higher at 4.48%. We see green numbers on the overseas markets. And we see solid gains so far in the futures (Dow +29, S&P 2.50, and NASDAQ +4.50) on the back of Hewlett Packard�s strong report.
So is it time to jump on the bandwagon? Sure, nimble traders should definitely get on board the end-of-the-year run. However, if you do decide to hop on bandwagon here, be sure that you are seated near the back so that the jumping off won�t cause any serious damage.
Stocks "In Play" This Morning:
CSCO � To buy SFA for $43
XOM � Prudential initiates Integrated Oils with Favorable rating � XOM at overweight
QSII � Will replace SSNC in S&P Small Cap 600 on 11/22
BA � Bloomberg reports China Aviation Supplies ordering 150 BA 737s worth $9B
GE � Increases dividend to $0.25 from $0.22 and raises Full Year 2006 EPS guidance
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: CSCO
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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