David Moenning Daily State of the Markets: 12/09
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Running for Cover
After enjoying a nice 4-day run to the downside, the shorts wound up running for cover yesterday afternoon. By the close on Tuesday, it looked like the bears had pushed our barnyard buddies into a corner. But the cavalry arrived just in the nick of time yesterday in the form of a couple earnings surprises, lower oil, some M&A activity, and a little help from the technicians.
Stocks opened higher right out of the gate yesterday on the back of what was being hailed as �the return of Cisco.� The networker became famous in the late 1990�s for its ability to consistently �beat by a penny� each and every quarter. After playing the lowered expectations game and being left for dead lately, Mr. Chambers and company returned to prominence yesterday with an earnings report that once again beat estimates by a penny. But more importantly, this time CSCO also had good things to say about the future.
This was music to the bulls� ears and the old guard was off to the races. Cisco�s stock popped at the open and held on to a gain of +7.2%. Dell, whose chart could also be classified as left-for-dead, caught an upgrade and joined the party with a gain of +6.2%. This obviously helped the NASDAQ and got the bears moving toward the exits.
The positive vibes from a few M&A deals and another drop in oil prices also helped convince the shorts that it was time to cover. Then the bulls got a hand from the chartists late in the day as the S&P managed to claw its way back through the 1260 area, which was viewed as an important resistance zone. Once the resistance gave way, the bears recognized that it was time to take their profits. The added buying caused by shorts covering helped propel the major indices to a nice gain on the day.
However, now that the bulls got their oversold rally, the pressure is on to see if they can put something of substance together. While volume and breadth statistics were decent yesterday, they weren�t anything to write home about. Thus, the bulls will need to make a statement soon in order to convince the opposing team that they mean business. And with the leading issues having taken it on the chin lately, the outcome of this particular game is by no means a given.
Turning to this morning, it would appear that the bulls may have an opportunity to try and keep things going before the bell. The report on weekly jobless claims was a non-event, although the downward trend in unemployment remains intact and the 4-week average remains at its lowest levels since 2000. And while this has not been matched by an increase in jobs lately, the data bears watching.
The positive tone this morning can be attributed to stronger earnings from EDS, Aetna, and Marriott International, as well as a report that AIG has agreed to a $1.6 Billion settlement with the government over fraud charges.
Running through the rest of the pre-market indicators, Overseas markets are higher; Gold is rebounding this again morning with a gain of more than $7 to $561. Oil is bouncing a bit higher this morning and is currently trading up +$0.34 to $62.89; Natural Gas is down less than a penny to $7.73; the yield curve remains inverted with the 2 yr at 4.64% and 10 yr at 4.56%; and finally, stock futures in the U.S. are moving a little higher before the bell (Dow +19, S&P +2.80, and NASDAQ +6.0).
Stocks "In Play" This Morning:
AIG � Company has reportedly reached settlement of $1.6B
AKAM � Reported $0.16 vs. $0.15 Revenues $82.7M vs. $78.9M
EAT � Raised guidance
EDS � Reported $0.25 vs. $0.22 Revenues $5.15B vs. $5.10B
MVK � Reported $1.54 vs. $1.34 Revenues $484.6M vs. $498M
NAPS � Reported -$0.40 vs. -$0.61
PRU � Reported $1.46 vs. $1.33 Revenues $5.82B vs. $5.85B
WFMI � Reported $0.41 vs. $0.41 Revenues $1.67B vs. $1.66B
WHR � Downgraded at FTN Midwest
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: CSCO, PRU
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.
After enjoying a nice 4-day run to the downside, the shorts wound up running for cover yesterday afternoon. By the close on Tuesday, it looked like the bears had pushed our barnyard buddies into a corner. But the cavalry arrived just in the nick of time yesterday in the form of a couple earnings surprises, lower oil, some M&A activity, and a little help from the technicians.
Stocks opened higher right out of the gate yesterday on the back of what was being hailed as �the return of Cisco.� The networker became famous in the late 1990�s for its ability to consistently �beat by a penny� each and every quarter. After playing the lowered expectations game and being left for dead lately, Mr. Chambers and company returned to prominence yesterday with an earnings report that once again beat estimates by a penny. But more importantly, this time CSCO also had good things to say about the future.
This was music to the bulls� ears and the old guard was off to the races. Cisco�s stock popped at the open and held on to a gain of +7.2%. Dell, whose chart could also be classified as left-for-dead, caught an upgrade and joined the party with a gain of +6.2%. This obviously helped the NASDAQ and got the bears moving toward the exits.
The positive vibes from a few M&A deals and another drop in oil prices also helped convince the shorts that it was time to cover. Then the bulls got a hand from the chartists late in the day as the S&P managed to claw its way back through the 1260 area, which was viewed as an important resistance zone. Once the resistance gave way, the bears recognized that it was time to take their profits. The added buying caused by shorts covering helped propel the major indices to a nice gain on the day.
However, now that the bulls got their oversold rally, the pressure is on to see if they can put something of substance together. While volume and breadth statistics were decent yesterday, they weren�t anything to write home about. Thus, the bulls will need to make a statement soon in order to convince the opposing team that they mean business. And with the leading issues having taken it on the chin lately, the outcome of this particular game is by no means a given.
Turning to this morning, it would appear that the bulls may have an opportunity to try and keep things going before the bell. The report on weekly jobless claims was a non-event, although the downward trend in unemployment remains intact and the 4-week average remains at its lowest levels since 2000. And while this has not been matched by an increase in jobs lately, the data bears watching.
The positive tone this morning can be attributed to stronger earnings from EDS, Aetna, and Marriott International, as well as a report that AIG has agreed to a $1.6 Billion settlement with the government over fraud charges.
Running through the rest of the pre-market indicators, Overseas markets are higher; Gold is rebounding this again morning with a gain of more than $7 to $561. Oil is bouncing a bit higher this morning and is currently trading up +$0.34 to $62.89; Natural Gas is down less than a penny to $7.73; the yield curve remains inverted with the 2 yr at 4.64% and 10 yr at 4.56%; and finally, stock futures in the U.S. are moving a little higher before the bell (Dow +19, S&P +2.80, and NASDAQ +6.0).
Stocks "In Play" This Morning:
AIG � Company has reportedly reached settlement of $1.6B
AKAM � Reported $0.16 vs. $0.15 Revenues $82.7M vs. $78.9M
EAT � Raised guidance
EDS � Reported $0.25 vs. $0.22 Revenues $5.15B vs. $5.10B
MVK � Reported $1.54 vs. $1.34 Revenues $484.6M vs. $498M
NAPS � Reported -$0.40 vs. -$0.61
PRU � Reported $1.46 vs. $1.33 Revenues $5.82B vs. $5.85B
WFMI � Reported $0.41 vs. $0.41 Revenues $1.67B vs. $1.66B
WHR � Downgraded at FTN Midwest
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: CSCO, PRU
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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