David Moenning Daily State of the Markets: 12/22

�Fool Me Once, Shame on You��

There is one thing for certain on Wall Street; traders, like elephants, don�t forget. So after being blindsided with a loss of almost 400 Dow points during the first few of weeks of January this year, the battle cry right now seems to be, �Fool me once, shame on you. But, fool me twice � shame on me!�

This is likely the reason that traders are currently selling any and all rallies. You see, everyone remembers the pain of starting this year with hefty losses all too well. So the goal right now is to lock in some gains BEFORE the calendar turns this time. And yesterday was no exception, as stocks encountered a serious bout of afternoon selling for the seventh day in a row.

In addition to the spate of M&A deals, the bulls also benefited from the �not too hot, not too cold� view provided by the GDP report. While it is true that the growth rate for the economy in the third quarter did come in below expectations, investors welcomed the slightly slower growth as a sign that the Fed will find little reason to raise rates further.

The good news seemed to spur the much anticipated Santa Rally. But the fear of another �January Defect� and another advance in oil prices spurred some serious selling after lunch. While the session was really never at risk of turning red, the bout of profit-taking did knock about 80 points off the day�s gains. And this time, stocks recovered a bit into the close to finish the day with modest gains.

Turning to this morning, things are fairly quiet before the open. On the economic front, the report on November Personal Income and Spending came in pretty much in-line with expectations. Personal Income rose by the expected amount of +0.3% while Spending was a little light at +0.3% versus expectations of +0.4%. The Core PCE deflator, which is one of Mr. Greenspan�s favorite inflation indicators, rose just 0.1%, which was lower than the 0.2% that had been anticipated. The year-over-year number also moderated to +1.8% and is another argument against further rate hikes.

Running down the pre-game indicators, Asian markets were lower while European bourses are moving higher; the Dollar is trading a bit higher this morning; Oil is climbing again and is currently trading up $0.44 to $59.00; Natural Gas is moving to the downside by $0.391 to $13.88; Bond Yields are moving a bit lower with the 10-yr exchanging hands at 4.46; and finally, Stock Futures are up slightly at the moment (Dow +9, S&P +1.30, and NASDAQ +1).

So with just six trading days left in the year and the indices now looking like they will all finish on the plus side for 2005, the only real questions are: Is your holiday shopping done and will we will see some portfolio padding over the next few days?

Stocks "In Play" This Morning:
GOOG � Price Target raised to $575 at JMP Securities
ABS � Halts talks with investor group
PD � CSFB initiates with �outperform�
GIS � Reports $1.02 vs. $0.99
AAPL � Piper reports buyers may be delaying purchases of Macs until new INTC-based machines are available
FDX � Estimates raised at UBS

Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: FDX, IBM, PD

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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