David Moenning Daily State of the Markets: 12/12

Same Old, Same Old

Stocks rebounded a bit on Friday as the bulls attempted to find a way to revive their beloved year-end rally. And while the markets did cheer the University of Michigan�s Consumer Sentiment numbers, the primary drivers of the market action continue to be the same old things � oil prices and the guessing game of what the Fed is gonna say next.

With the benefit of hindsight, one can say that the bulls were mildly successful in their bid to get things moving in the right direction again on Friday, as the indices did move up across the board. However, the combination of lower oil prices (crude dropped -$1.27 to $59.39) and improving consumer sentiment (the University of Michigan�s consumer sentiment index came in above consensus) probably should have been able to provide more spark than 23 measly points on the Dow. And one glance at the volume totals tells us that this wasn�t exactly an enthusiastic session.

But with traders on pins and needles over the exact verbiage Mr. Greenspan will decide to include in the statement accompanying the announcement that the FOMC is raising rates again, the bottom line is that a gain 0.2% is all the bulls could muster.

To review, the Fed meets on Tuesday afternoon, and at 2:15 p.m. eastern they will announce the fourteenth straight increase in the Fed Funds rate. However, the real key to the meeting will be whether or not the words �measured pace� continue to grace the Fed�s statement. At issue is the question of when the Fed will cease and desist with their hike down the measured path. Mr. Greenspan told us last week that while one can never be exactly sure where �neutral� might be; it does appear the monetary policy is once again in the neighborhood of neutrality. Thus, logic would dictate that with one, or maybe two, more rate hikes, the Fed could stand up, brush off their hands and announce, �Our work here is done.�

Turning to this morning, in the very early going, the indicators are pointing to a nice open for stocks. While there is no economic news to report, word that ConocoPhillips is seeking to acquire Burlington Resources for $30 billion is certainly keeping the merger game going. Next, the fact that CSFB reportedly raised their price target for GOOG to $475 based on acceleration in online advertising, has the NASDAQ buzzing.

In addition, OPEC says that the cartel will keep production quotas at current levels for the time being. The Saudi Oil Minister also offered encouraging words by suggesting that �supply is a little ahead of demand, but that�s not bad going into winter.� However, crude is trading higher by $0.83 to $60.22 at the present time.

Running through the rest of the morning indicators, bond yields are little changed at the moment with the yield on the 10-yr at 4.52%, foreign markets are higher almost across the board, and stock futures are pointing higher an hour before the bell (Dow +41, S&P +4.60, NASDAQ +5.50).

So with stocks looking to open higher, the question of the day is if those are sleigh bells that traders are hearing off in the distance?

Stocks "In Play" This Morning:

BR � COP seeking to acquire BR for $30B
GOOG � CSFB raises price target to $475
AAPL � Bloomberg reports AAPL may unveil PCs with INTC chips as early as January
KR � Prudential downgrades Food Retail Sector but keeps KR overweight
OATS � Downgraded at PRU

Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: none

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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