David Moenning Daily State of the Markets: 12/07
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Outside Influences
With no economic news to ponder yesterday and nothing of substance on the horizon for today, the stock market was left to its own devices on Wednesday. This is always an interesting situation as it often allows us to get a peek at the market�s true colors. However, yesterday�s action was primarily controlled by outside influences, so it was tough to get a read on the fundamental picture.
Stocks sank at the open yesterday morning in response to a video aired on al-Jazeera of Al-Qaeda leader al-Zawahiri calling for attacks on oil installations in Islamic countries. The report didn�t have a dramatic effect on the price of oil, but it did remind stock traders that we are one terrorist attack away from potential economic problems at the current time. And if that attack should interrupt the supply of crude in any significant way, well, we�d rather not think about the consequences with the holiday season upon us.
In spite of this new potential threat on supply, oil halted its recent advance in response to the inventory numbers. After trading higher for the past week, crude futures (January contract) wound up falling -$0.74 and closed at $59.21.
Traders could find little reason to buy during much of the session. Then, for the second day in a row, they found a reason to sell at precisely 3:00 pm eastern time when it was reported that shots had been fired aboard an American Airlines flight in Miami. It didn�t take long for traders to connect the dots and decide to sell first and ask questions later.
However, stocks quickly recovered into the close as it was learned that this was NOT a terrorist related incident. So putting emotion aside, in the end, Wednesday�s drop of 46 points has to be considered simply a sloppy day of consolidation after an impressive run higher.
Turning to this morning, stocks continue to slog around without much direction and the talk of the day is centered on next week�s Fed meeting. The discussions are currently focused on what language in the Fed statement will go and what will stay. Most expect the phrase �measured pace� to be removed, while Bill Gross of PIMCO (one of the world�s largest managers of bonds) suggested this morning that the term �accommodative� will get the boot since Mr. Greenspan talked yesterday about the fact that the Fed is approaching a neutral position.
Running through the pre-game indicators, the dollar is lower across the board, bond yields are slightly lower at 4.50%, oil is trading higher by $0.36 to $59.57, and the stock futures are all slightly lower (Dow -5, S&P -1.30, NASDAQ -1.50).
So with little enthusiasm in the market at the moment, will the bulls be able to keep the game alive or will the bears take a shot here? Stay tuned.
Stocks "In Play" This Morning:
CSCO � WSJ reports co sees video on the Web as significant market in next decade
AEM � Upgraded by JP Morgan
INTC � HSBC initiates coverage with Neutral rating � expects semiconductor growth of 7-9% in �06
COST � Reports $0.46 vs. $0.45
YHOO � Reportedly will offer telephone services via its IM system
CVX � Approves $14.8B Capital and Exploration expenditure ($4.9B in U.S.) and $5B repurchase
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: INTC, CSCO, YHOO, CVX
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
With no economic news to ponder yesterday and nothing of substance on the horizon for today, the stock market was left to its own devices on Wednesday. This is always an interesting situation as it often allows us to get a peek at the market�s true colors. However, yesterday�s action was primarily controlled by outside influences, so it was tough to get a read on the fundamental picture.
Stocks sank at the open yesterday morning in response to a video aired on al-Jazeera of Al-Qaeda leader al-Zawahiri calling for attacks on oil installations in Islamic countries. The report didn�t have a dramatic effect on the price of oil, but it did remind stock traders that we are one terrorist attack away from potential economic problems at the current time. And if that attack should interrupt the supply of crude in any significant way, well, we�d rather not think about the consequences with the holiday season upon us.
In spite of this new potential threat on supply, oil halted its recent advance in response to the inventory numbers. After trading higher for the past week, crude futures (January contract) wound up falling -$0.74 and closed at $59.21.
Traders could find little reason to buy during much of the session. Then, for the second day in a row, they found a reason to sell at precisely 3:00 pm eastern time when it was reported that shots had been fired aboard an American Airlines flight in Miami. It didn�t take long for traders to connect the dots and decide to sell first and ask questions later.
However, stocks quickly recovered into the close as it was learned that this was NOT a terrorist related incident. So putting emotion aside, in the end, Wednesday�s drop of 46 points has to be considered simply a sloppy day of consolidation after an impressive run higher.
Turning to this morning, stocks continue to slog around without much direction and the talk of the day is centered on next week�s Fed meeting. The discussions are currently focused on what language in the Fed statement will go and what will stay. Most expect the phrase �measured pace� to be removed, while Bill Gross of PIMCO (one of the world�s largest managers of bonds) suggested this morning that the term �accommodative� will get the boot since Mr. Greenspan talked yesterday about the fact that the Fed is approaching a neutral position.
Running through the pre-game indicators, the dollar is lower across the board, bond yields are slightly lower at 4.50%, oil is trading higher by $0.36 to $59.57, and the stock futures are all slightly lower (Dow -5, S&P -1.30, NASDAQ -1.50).
So with little enthusiasm in the market at the moment, will the bulls be able to keep the game alive or will the bears take a shot here? Stay tuned.
Stocks "In Play" This Morning:
CSCO � WSJ reports co sees video on the Web as significant market in next decade
AEM � Upgraded by JP Morgan
INTC � HSBC initiates coverage with Neutral rating � expects semiconductor growth of 7-9% in �06
COST � Reports $0.46 vs. $0.45
YHOO � Reportedly will offer telephone services via its IM system
CVX � Approves $14.8B Capital and Exploration expenditure ($4.9B in U.S.) and $5B repurchase
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: INTC, CSCO, YHOO, CVX
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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