David Moenning's Daily State of the Markets: 08/20
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A Surgical Strike
Stocks soared on Friday in response to Ben Bernanke's cut of the discount rate. In what many have called a “surgical strike,” the Fed restored confidence to the markets and suggested that it stands ready to do whatever is necessary to maintain order in the credit markets.
Because of the fact that no one has borrowed at the discount window since 9/11, the move is considered to be more symbolic than real. But the primary point that Bernanke was making with the move is that the Fed does not have its head in the sand with regard to subprime and liquidity problems.
In a rare statement which accompanied the move, the FOMC noted that downside risks to the economy have increased appreciably. This statement spoke volumes to Fed watchers and most believe the Fed is now signaling that (1) the Fed has changed their bias and (2) the FOMC will cut rates at their September 18th meeting.
Stock traders cheered the move and the shorts were forced to cover on an options expiration Friday. And although stocks closed well off the opening highs of the day, most believe the tide may have turned for the stock market – at least from a near term perspective.
Turning to this morning, the mood continues to be positive as Asian stocks soared on the news.
We don’t have any economic news to review before the bell; however the Index of Leading Economic Indicators will be released at 10:00 am eastern.
Running through the rest of the pre-game indicators, the overseas markets are higher across the board with Hong Kong up +5.93% and Japan higher by
+3.00%. Crude futures are falling this morning as Hurricane Dean does
+not
appear to be a threat to oil installations in the Gulf. Interest rates are a tad higher this morning as the 10-yr is trading with a yield of 4.69% right now. And finally, with about 2 hours before the bell, stock futures in the U.S. are looking to open a little higher. The Dow futures are currently up by about 29 points; the S&Ps are about 2.10 above breakeven, and the NASDAQ looks to be a point over fair value at the moment.
Stocks "In Play" This Morning:
News, Upgrades/Downgrades/Brokerage Research:
Wild Oats Market (Nasdaq: OATS) – Downgraded at Bear Stearns
Lamar Advertising (Nasdaq: LAMR) – Upgraded at Bear Stearns
Darden Restaurants (NYSE: DRI) – Upgraded at CIBC
Borg Warner (NYSE: BWA) – Upgraded at Goldman
Micron Technology (NYSE: MU) – Upgraded at Goldman
Novellus (Nasdaq: NVLS) – Upgraded at Goldman
JB Hunt Transportation (Nasdaq: JBHT) – Upgraded at Wachovia
Dollar Tree Stores (Nasdaq: DLTR) – Upgraded at Wachovia
Mr. Moenning holds Long positions in stocks mentioned: None
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.
Stocks soared on Friday in response to Ben Bernanke's cut of the discount rate. In what many have called a “surgical strike,” the Fed restored confidence to the markets and suggested that it stands ready to do whatever is necessary to maintain order in the credit markets.
Because of the fact that no one has borrowed at the discount window since 9/11, the move is considered to be more symbolic than real. But the primary point that Bernanke was making with the move is that the Fed does not have its head in the sand with regard to subprime and liquidity problems.
In a rare statement which accompanied the move, the FOMC noted that downside risks to the economy have increased appreciably. This statement spoke volumes to Fed watchers and most believe the Fed is now signaling that (1) the Fed has changed their bias and (2) the FOMC will cut rates at their September 18th meeting.
Stock traders cheered the move and the shorts were forced to cover on an options expiration Friday. And although stocks closed well off the opening highs of the day, most believe the tide may have turned for the stock market – at least from a near term perspective.
Turning to this morning, the mood continues to be positive as Asian stocks soared on the news.
We don’t have any economic news to review before the bell; however the Index of Leading Economic Indicators will be released at 10:00 am eastern.
Running through the rest of the pre-game indicators, the overseas markets are higher across the board with Hong Kong up +5.93% and Japan higher by
+3.00%. Crude futures are falling this morning as Hurricane Dean does
+not
appear to be a threat to oil installations in the Gulf. Interest rates are a tad higher this morning as the 10-yr is trading with a yield of 4.69% right now. And finally, with about 2 hours before the bell, stock futures in the U.S. are looking to open a little higher. The Dow futures are currently up by about 29 points; the S&Ps are about 2.10 above breakeven, and the NASDAQ looks to be a point over fair value at the moment.
Stocks "In Play" This Morning:
News, Upgrades/Downgrades/Brokerage Research:
Wild Oats Market (Nasdaq: OATS) – Downgraded at Bear Stearns
Lamar Advertising (Nasdaq: LAMR) – Upgraded at Bear Stearns
Darden Restaurants (NYSE: DRI) – Upgraded at CIBC
Borg Warner (NYSE: BWA) – Upgraded at Goldman
Micron Technology (NYSE: MU) – Upgraded at Goldman
Novellus (Nasdaq: NVLS) – Upgraded at Goldman
JB Hunt Transportation (Nasdaq: JBHT) – Upgraded at Wachovia
Dollar Tree Stores (Nasdaq: DLTR) – Upgraded at Wachovia
Mr. Moenning holds Long positions in stocks mentioned: None
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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