David Moenning Daily State of the Markets: 12/29

Returning to Familiar Territory

After a day of focusing on the yield curve, yesterday the market returned its attention to familiar territory � the price of oil. While the issue of an inverted yield curve is still a lingering concern, as the curve again inverted for a bit yesterday morning, the highlight of the session had to be the jump in crude oil.

Stocks opened higher and were heartened by the Conference Board�s report on Consumer Confidence. The report showed that confidence rose by 5.3 points in December to 103.6, but was below the consensus estimates of 105.0.

With Tuesday�s drop feeling a bit artificial and the end of the year quickly approaching, this data probably was enough to spark a recovery in stock prices. However, OPEC�s view on oil prices definitely put a damper on the holiday spirit.

Iran�s deputy oil minister, Hadi Nejad-Hosseinian, said yesterday that the oil cartel should actually cut production by as much as a million barrels a day in order to �keep prices stable.� (So we can probably give up on any hopes that OPEC will continue to pump as much as possible in order to push prices lower.) Crude futures shot higher in reaction, and saw increases of $2 before settling with a gain of $1.66 to $59.82.

So when the dust settled (although to be fair, with just over a billion shares traded, which is about 60% of normal, there wasn�t a lot of dust), the markets were left with a very modest bounce on very modest volume that did little-to-nothing for the health of the market from a chart standpoint.

Turning to this morning, the markets are on the quiet side at the moment. We will get a report on Existing Home Sales later this morning, but other than that the data calendar is blank. Running through the pre-game indicators, the Dollar index is up slightly; oil prices are down a smidge to $59.78; Natural Gas prices are still falling and are currently trading down -$0.087 to $11.55; bonds aren�t showing much movement and there is a positive spread between the 2-yr and the 10-yr of currently 0.004%; and stock futures are languishing around breakeven with an hour before the bell (Dow +2, S&P -0.50, and NASDAQ +1).

So with investors preparing to pack it in for the year, the only real question is which way will the programs be run later today?

Stocks "In Play" This Morning:
MSFT � Reiterated outperform at Thomas Weisel
PR � Initiated market performer at Raymond James
MRK � Morgan Stanley raised target to $38 from $34
T � WSJ reports plans of a massive ad campaign
UPS � Reiterated outperform at RW Baird

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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