David Moenning Daily State of the Markets: 12/20
Tweet
Share
E-mail
Is Santa Still Coming?
Once again yesterday, stocks opened on the high side but for the fifth straight session, succumbed to selling in the afternoon. And while many will argue that the trend of afternoon selling is simply some year-end profit taking and a sign that traders are biding their time before the Santa Claus rally, this time the bulls had no defense. Worries over consumer spending overran the holiday spirit and a tech downgrade helped push the indices and market breadth solidly into the red.
While the market has been able to handle most of the bouts of profit taking lately, the combination of higher natural gas prices and a lousy report on housing brought out the Ebenezer Scrooge spirit. First, the NAHB Housing Market Index fell 4 points to its lowest reading since April 2003. The report showed that buyer traffic suffered its biggest monthly decline since 9/11 and that three out of four builders were experiencing some �buyer resistance� to current prices. The report indicated that builders were forced to offer concessions to buyers in order to maintain sales volumes and would seem to confirm that the long awaited slowdown in the housing market may indeed be upon us.
Next, stocks seemed to really get going the wrong direction as the Natural Gas contract ticked to new highs. With most Americans now having paid at least one heating bill, the increased cost of keeping the kids warm at night is surely getting people�s attention.
Turning to this morning, a snowstorm in New York may foster a lot of talk about retailing today. However, the PPI report is really the main event and may help entice Santa to visit the corner of Broad and Wall.
The November Producer Price Index fell a surprising -0.7%, which was an even bigger decline than the -0.5% that had been expected. The Core Rate (ex. food and energy) also came in below expectations with a gain of just +0.1%, when a gain of +0.2% was the consensus estimate. And because it is the Fed�s focus, even more important is the year-over-year Core Rate number, which was another positive surprise, falling to an annual rate of +1.7%. This is well below the summer peak rate of 2.8% and also down from last month�s reading of +1.9%. In short, these numbers should help convince the Fed to think twice before continuing to march down the measured path.
The other economic news this morning comes from the housing market. And while yesterday�s report from the NAHB may have put a damper on the overall outlook, this morning�s numbers suggest that we shouldn�t write off the housing market just yet. Housing starts came in at 2.12 million, which was better than the 2.018 million estimate. Also, Building Permits rose by 2.5% and were better than expected.
This morning�s data has helped the stock futures move up a bit. And running through the rest of the pre-game indicators, oil is trading up a dime to $57.41 right now while natural gas is moving lower on predictions of warmer weather in the Northeast. Gold is rallying by $2.90 to $509. Bond yields have shown little movement to the economic data this morning, with the 10-yr currently at 4.46%. And finally, stock futures are pointing to yet another positive opening (Dow +19, S&P +2.20, and NASDAQ +4).
So with stocks again looking to open higher, the real question of the day is if Santa will make his scheduled appearance sometime this week?
Stocks "In Play" This Morning:
MWD � Reported $1.42 vs. $1.10
AMGN � Merrill Lynch names company top large cap biotech for 2006
NOK � Citigroup sees strength in global handsets
RIMM � ThinkEquity reiterates Sell
MRVL � Estimates raised at AmTech
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: AMGN
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
Once again yesterday, stocks opened on the high side but for the fifth straight session, succumbed to selling in the afternoon. And while many will argue that the trend of afternoon selling is simply some year-end profit taking and a sign that traders are biding their time before the Santa Claus rally, this time the bulls had no defense. Worries over consumer spending overran the holiday spirit and a tech downgrade helped push the indices and market breadth solidly into the red.
While the market has been able to handle most of the bouts of profit taking lately, the combination of higher natural gas prices and a lousy report on housing brought out the Ebenezer Scrooge spirit. First, the NAHB Housing Market Index fell 4 points to its lowest reading since April 2003. The report showed that buyer traffic suffered its biggest monthly decline since 9/11 and that three out of four builders were experiencing some �buyer resistance� to current prices. The report indicated that builders were forced to offer concessions to buyers in order to maintain sales volumes and would seem to confirm that the long awaited slowdown in the housing market may indeed be upon us.
Next, stocks seemed to really get going the wrong direction as the Natural Gas contract ticked to new highs. With most Americans now having paid at least one heating bill, the increased cost of keeping the kids warm at night is surely getting people�s attention.
Turning to this morning, a snowstorm in New York may foster a lot of talk about retailing today. However, the PPI report is really the main event and may help entice Santa to visit the corner of Broad and Wall.
The November Producer Price Index fell a surprising -0.7%, which was an even bigger decline than the -0.5% that had been expected. The Core Rate (ex. food and energy) also came in below expectations with a gain of just +0.1%, when a gain of +0.2% was the consensus estimate. And because it is the Fed�s focus, even more important is the year-over-year Core Rate number, which was another positive surprise, falling to an annual rate of +1.7%. This is well below the summer peak rate of 2.8% and also down from last month�s reading of +1.9%. In short, these numbers should help convince the Fed to think twice before continuing to march down the measured path.
The other economic news this morning comes from the housing market. And while yesterday�s report from the NAHB may have put a damper on the overall outlook, this morning�s numbers suggest that we shouldn�t write off the housing market just yet. Housing starts came in at 2.12 million, which was better than the 2.018 million estimate. Also, Building Permits rose by 2.5% and were better than expected.
This morning�s data has helped the stock futures move up a bit. And running through the rest of the pre-game indicators, oil is trading up a dime to $57.41 right now while natural gas is moving lower on predictions of warmer weather in the Northeast. Gold is rallying by $2.90 to $509. Bond yields have shown little movement to the economic data this morning, with the 10-yr currently at 4.46%. And finally, stock futures are pointing to yet another positive opening (Dow +19, S&P +2.20, and NASDAQ +4).
So with stocks again looking to open higher, the real question of the day is if Santa will make his scheduled appearance sometime this week?
Stocks "In Play" This Morning:
MWD � Reported $1.42 vs. $1.10
AMGN � Merrill Lynch names company top large cap biotech for 2006
NOK � Citigroup sees strength in global handsets
RIMM � ThinkEquity reiterates Sell
MRVL � Estimates raised at AmTech
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: AMGN
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
You May Also Be Interested In
- After-Hours Stock Movers: NKE, BE, STZ, RIG
- After-Hours Stock Movers: AVAV, PRAX, VSH, CNXC, SHAZ
- Comcast, Viridian Therapeutics jump premarket; Doximity slips
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
