David Moenning Daily State of the Markets: 1/25
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Better, But�
Good morning. The bulls will argue that yesterday�s action was better and showed that the market has stabilized after Friday�s unnerving drop. But unfortunately, the 21 point advance on Monday and the 23 point gain on Tuesday have to be considered modest at best, and have done little to reverse Friday�s damage.
Sure the action was better and it is nice to see the indices move up on increased volume. It was also good to see the likes of McDonalds, United Technologies, and Lexmark report good earnings numbers. But, generally the bulls tend to show a little more spunk in their rebound efforts after a big drop. And then for every good earnings report it seems there has been a disappointing report to offset it.
And while we�re talking earnings, the theme of �better, but� also seems to apply here. The bulls are quick to point out that we should wind up seeing another solid earnings season. Analysts expect S&P earnings to come in with gains of 11.6% this quarter (as compared to a year ago), which remains well above the historical average of 7.6%. The bears counter with the fact that the rate of earnings growth is slowing and that the numbers will be below last year�s gains of 13.2%.
But this time, everyone already knows that earnings will be solid and it is important to remember that stocks rarely are rewarded for what is already known. Right now, the real questions that traders are looking to have answered are (1) what are the impacts of higher costs (think oil)? and (2) what does the outlook for the future look like?
So far at least, the earnings season has been a see-saw affair. Lots of companies have been �better� (i.e. they�ve exceeded expectations), but in general, the guidance for the upcoming quarter has been uninspiring. The trend seems to be that companies are either saying that earnings are better, but revenues are light; or that earnings are good, but the future looks a bit softer. And in short, this creates uncertainty (and we all know how the market loves uncertainty).
Turning to this morning, once again there is no economic news to guide traders before the opening bell, but we will get the report on Existing Home Sales at 10:00 eastern. In terms of today�s stock market, so far at least, stocks have a fairly firm feel to them as oil prices are lower, traders are encouraged by some big cap earnings (CL and BMY) as well as the deal between Disney and Pixar, and European markets are moving higher.
Running through the pre-game numbers, Gold is currently trading up $6.30 to $564.30, Oil is pulling back again and is down -$0.51 to $66.55 on warmer than normal temps in the Northeast, Natural Gas is rebounding on +$0.04 to $8.72 (and although this doesn�t seem to jive with oil�s move, keep in mind that the Nat Gas market has seen massive shorts recently, so there may be some �selling of the fact� going on in terms of the weather), the 2-yr note is currently trading at 4.40% and the 10-yr is at 4.42%, and stock futures are up nicely at the moment (Dow +26, S&P +3.80, NASDAQ +10).
So after a couple of rebounds that can best be described as �better, but�� it will be interesting to see if the bulls will be able to get this party started soon - because if they don�t get something going pretty darned quick, the bears may have an opportunity.
Stocks "In Play" This Morning:
COP � Reports $2.69 vs. $2.65, revenue of $52.2B vs. $49.02B
CL � Reports $0.69 vs. $0.69, looking for double digit growth in 2006
BMY � Reports $0.31 vs. $0.28, revenue of $5.02B vs. $5.12B
STJ � Reports $0.41 vs. $0.40, remains rumored takeover target
CKFR � Reports $0.44 vs. $0.41
DIS � To acquire Pixar
DO � Declares special dividend of $1.50 payable on 2/3
GDT � Officially accepts BSX bid
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 or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
Good morning. The bulls will argue that yesterday�s action was better and showed that the market has stabilized after Friday�s unnerving drop. But unfortunately, the 21 point advance on Monday and the 23 point gain on Tuesday have to be considered modest at best, and have done little to reverse Friday�s damage.
Sure the action was better and it is nice to see the indices move up on increased volume. It was also good to see the likes of McDonalds, United Technologies, and Lexmark report good earnings numbers. But, generally the bulls tend to show a little more spunk in their rebound efforts after a big drop. And then for every good earnings report it seems there has been a disappointing report to offset it.
And while we�re talking earnings, the theme of �better, but� also seems to apply here. The bulls are quick to point out that we should wind up seeing another solid earnings season. Analysts expect S&P earnings to come in with gains of 11.6% this quarter (as compared to a year ago), which remains well above the historical average of 7.6%. The bears counter with the fact that the rate of earnings growth is slowing and that the numbers will be below last year�s gains of 13.2%.
But this time, everyone already knows that earnings will be solid and it is important to remember that stocks rarely are rewarded for what is already known. Right now, the real questions that traders are looking to have answered are (1) what are the impacts of higher costs (think oil)? and (2) what does the outlook for the future look like?
So far at least, the earnings season has been a see-saw affair. Lots of companies have been �better� (i.e. they�ve exceeded expectations), but in general, the guidance for the upcoming quarter has been uninspiring. The trend seems to be that companies are either saying that earnings are better, but revenues are light; or that earnings are good, but the future looks a bit softer. And in short, this creates uncertainty (and we all know how the market loves uncertainty).
Turning to this morning, once again there is no economic news to guide traders before the opening bell, but we will get the report on Existing Home Sales at 10:00 eastern. In terms of today�s stock market, so far at least, stocks have a fairly firm feel to them as oil prices are lower, traders are encouraged by some big cap earnings (CL and BMY) as well as the deal between Disney and Pixar, and European markets are moving higher.
Running through the pre-game numbers, Gold is currently trading up $6.30 to $564.30, Oil is pulling back again and is down -$0.51 to $66.55 on warmer than normal temps in the Northeast, Natural Gas is rebounding on +$0.04 to $8.72 (and although this doesn�t seem to jive with oil�s move, keep in mind that the Nat Gas market has seen massive shorts recently, so there may be some �selling of the fact� going on in terms of the weather), the 2-yr note is currently trading at 4.40% and the 10-yr is at 4.42%, and stock futures are up nicely at the moment (Dow +26, S&P +3.80, NASDAQ +10).
So after a couple of rebounds that can best be described as �better, but�� it will be interesting to see if the bulls will be able to get this party started soon - because if they don�t get something going pretty darned quick, the bears may have an opportunity.
Stocks "In Play" This Morning:
COP � Reports $2.69 vs. $2.65, revenue of $52.2B vs. $49.02B
CL � Reports $0.69 vs. $0.69, looking for double digit growth in 2006
BMY � Reports $0.31 vs. $0.28, revenue of $5.02B vs. $5.12B
STJ � Reports $0.41 vs. $0.40, remains rumored takeover target
CKFR � Reports $0.44 vs. $0.41
DIS � To acquire Pixar
DO � Declares special dividend of $1.50 payable on 2/3
GDT � Officially accepts BSX bid
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 or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
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