David Moenning Daily State of the Markets: 12/09
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Daily State of the Markets:
All About Oil, And�
Yesterday�s stock market was once again all about oil, and natural gas, and homebuilders, and semiconductors, and well, we might as well toss in the Fed also. With little to no economic news to work with once again, traders kept busy by turning their attention to the weather map and to reports from a couple of key companies.
While there is talk of the NYSE opening 30 minutes earlier sometime next year, the bulls may start to push for an earlier closing time. For the third day in a row and the fifth time in the last six sessions, stocks fared well in the morning but then fell after lunch and extended the losses into the afternoon.
The primary culprit for Thursday�s retreat was the precipitous rise in oil and natural gas. With the middle part of the nation in the throws of an arctic cold spell, concerns over the supply of both heating oil and natural gas are on the rise. Crude futures were stable in the morning but sprung to life as the session wore on. Oil closed with a gain of +1.45 to $60.66. But the real energy story of the day was the 9.4% jump in the price of natural gas, which closed up $1.29 to $14.99. The worry here is very straightforward. Currently we have enough natural gas for a �normal� winter. However, if the temps stay below normal for too long, there could be supply problems. And this worry alone was worth a 9% pop in prices.
Then there was the issue of the housing market. Toll Brothers reported a 72% increase in fourth-quarter profits on a 40% increase in revenue, which certainly sounds like a solid quarter. But you know how this game is played; it isn�t about what just happened, it�s about what will happen next. And basically Mr. Toll disappointed analysts with his projections for 2006 and really got people riled up when he suggested that 2007 could go either way.
And finally, there is certainly some trepidation in front of the Fed�s meeting on Tuesday. While everyone expects another 0.25% rate hike in the Fed Funds rate, there is much discussion about the statement that will accompany the announcement. In light of the fact that Mr. Greenspan has been talking about a �neutral� policy lately, the key question is if the Fed will give us a clue as to their plans for the future. Many analysts expect the now famous phrase �at a pace that is likely to be measured� to be removed from the statement, which would suggest that the Fed is just about done. However, another camp believes that the description of the Fed�s stance as being �accommodative� will go away. Regardless of your personal assessment, this meeting is garnering an awful lot of attention and may be keeping traders a bit tentative at the present time.
Turning to this morning, we will have to wait until 9:45 for our daily dose of economic data when the University of Michigan will provide a preliminary report on December Consumer Sentiment. Expectations are for a reading of 84.0. Anything above will be considered a positive for the shopping season, while a lower reading will undoubtedly bring up the debate on oil�s impact on the consumer.
So with oil on the rise and the Fed meeting on the horizon, it will be interesting to see if the bulls will have any interest in trying to take a stand here.
Stocks "In Play" This Morning:
IBM � Downgraded at UBS
INTC � First Albany says Q1 and Q2 will present difficult comparisons
ERTS � Buying JMBT for $680M and said sales of video games not as strong as expected
AEM � Upgraded at Merrill
NSM � Downgraded at AmTech
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: IBM, INTC
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
All About Oil, And�
Yesterday�s stock market was once again all about oil, and natural gas, and homebuilders, and semiconductors, and well, we might as well toss in the Fed also. With little to no economic news to work with once again, traders kept busy by turning their attention to the weather map and to reports from a couple of key companies.
While there is talk of the NYSE opening 30 minutes earlier sometime next year, the bulls may start to push for an earlier closing time. For the third day in a row and the fifth time in the last six sessions, stocks fared well in the morning but then fell after lunch and extended the losses into the afternoon.
The primary culprit for Thursday�s retreat was the precipitous rise in oil and natural gas. With the middle part of the nation in the throws of an arctic cold spell, concerns over the supply of both heating oil and natural gas are on the rise. Crude futures were stable in the morning but sprung to life as the session wore on. Oil closed with a gain of +1.45 to $60.66. But the real energy story of the day was the 9.4% jump in the price of natural gas, which closed up $1.29 to $14.99. The worry here is very straightforward. Currently we have enough natural gas for a �normal� winter. However, if the temps stay below normal for too long, there could be supply problems. And this worry alone was worth a 9% pop in prices.
Then there was the issue of the housing market. Toll Brothers reported a 72% increase in fourth-quarter profits on a 40% increase in revenue, which certainly sounds like a solid quarter. But you know how this game is played; it isn�t about what just happened, it�s about what will happen next. And basically Mr. Toll disappointed analysts with his projections for 2006 and really got people riled up when he suggested that 2007 could go either way.
And finally, there is certainly some trepidation in front of the Fed�s meeting on Tuesday. While everyone expects another 0.25% rate hike in the Fed Funds rate, there is much discussion about the statement that will accompany the announcement. In light of the fact that Mr. Greenspan has been talking about a �neutral� policy lately, the key question is if the Fed will give us a clue as to their plans for the future. Many analysts expect the now famous phrase �at a pace that is likely to be measured� to be removed from the statement, which would suggest that the Fed is just about done. However, another camp believes that the description of the Fed�s stance as being �accommodative� will go away. Regardless of your personal assessment, this meeting is garnering an awful lot of attention and may be keeping traders a bit tentative at the present time.
Turning to this morning, we will have to wait until 9:45 for our daily dose of economic data when the University of Michigan will provide a preliminary report on December Consumer Sentiment. Expectations are for a reading of 84.0. Anything above will be considered a positive for the shopping season, while a lower reading will undoubtedly bring up the debate on oil�s impact on the consumer.
So with oil on the rise and the Fed meeting on the horizon, it will be interesting to see if the bulls will have any interest in trying to take a stand here.
Stocks "In Play" This Morning:
IBM � Downgraded at UBS
INTC � First Albany says Q1 and Q2 will present difficult comparisons
ERTS � Buying JMBT for $680M and said sales of video games not as strong as expected
AEM � Upgraded at Merrill
NSM � Downgraded at AmTech
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: IBM, INTC
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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