David Moenning's Daily State of the Markets: 04/11

Awaiting The Parade

Good morning. To be totally honest, sometimes not much happens in the market and yesterday appears to be one of those days. While it was certainly enjoyable to see the Dow tack on another 5 points, the action was rather lackluster and the volume was less than inspiring.

However, the bulls are quick to point out that the advance did mark the eighth straight day of gains for the Dow and believe it or not, the NYSE index actually managed to close at a new all-time high. So, if the market is going to have a quiet day, our horned heroes will take this kind every time.

There were no economic reports to digest during the session, no earnings to review, and nothing new on the geopolitical front. Thus, traders were pretty much left to their own devices while awaiting the earnings parade. And while Alcoa’s report is considered the official starting point and did report a pretty good quarter after the bell, traders know that the parade really starts to roll next week.

About the only newsy items yesterday were a couple of comments from Fed Governors Mishkin and Fisher. Mishkin said Tuesday that inflation expectations remain “well anchored” and that inflationary pressures have been “falling back.” On the other hand, baseball aficionado and Dallas Fed President Richard Fisher said that inflation remains stubbornly high and the economy appears to be growing at a slower rate. Neither comment was terribly enlightening and as such, traders didn’t really react.

But with the markets advancing, albeit at a painstakingly slow rate as traders await the parade, one could argue that the market is beginning to discount a solid reporting season. At this stage everyone knows that the growth rate of the economy is slowing. Therefore, traders might be able to put up with a correspondingly small slowdown in earnings. However, in all probability, it will be the outlook for the future that holds the key to the next move in the market.

Turning to this morning, once again there is no economic data to review before the bell. However, traders will be waiting on the release of the minutes from the March 21st Fed meeting today at 2:00 pm.

Running through the pre-game indicators, the major foreign markets are a little higher across the board. Gold futures are trading up again, this time by $1.70 to $683.20. In the oil pits, crude futures are up $0.21 with the latest quote at $62.10. Interest rates aren’t moving much this morning as the yield on the 10-year is currently trading at 4.72%. And finally, with about an hour before the bell, stock futures in the U.S. are sitting at about breakeven compared to fair value. The Dow futures are currently ahead by 10 points while fair value is at +11.85; the S&P’s are a fraction below fair value, while the NASDAQ looks to be sitting right on its fair value at the moment

Stocks “In Play” This Morning:

Alcoa (NYSE: AA) – Reported $0.79 vs. $0.76
Western Refining (NYSE: WNR) – Downgraded at Bear Stearns
American Express (NYSE: AXP) – Mentioned positively at CIBC World Markets
Salesforce.com (NYSE: CRM) – Downgraded at Cowen
BorgWarner (NYSE: BWA) – Downgraded at Deutsche Bank
American Axle & Mfg (NYSE: AXL) – Downgraded at Deutsche Bank
TD Ameritrade (Nasdaq: AMTD) – Upgraded at Friedman Billings
Infosys Technologies (Nasdaq: INFY) – Upgraded at Goldman Sachs
Mosaic Co (NYSE: MOS) – Upgraded at Goldman Sachs
Health Net (NYSE: HNT) – Downgraded at Merrill Lynch
Shuffle Master (Nasdaq: SHFL) – Downgraded at Prudential
FMC Technologies (NYSE: FTI) – Downgraded at UBS
Gap Inc (NYSE: GPS) – Upgraded at Wachovia

Mr. Moenning holds Long positions in stocks mentioned: GS, FTI

Note: All earnings reports compared to Reuter’s consensus estimates

** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

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