David Moenning's Daily State of the Markets: 10/18
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Down But Not Out
Good morning. While stocks were down on the day yesterday and the action looked it might get downright ugly in the morning, the bulls were far from out. In short, despite the red ink at the close, our barnyard buddies were able to claim a moral victory as the bears were once again unable to do much with their opportunity.
Stocks started lower on the back of the PPI report that showed core inflation popped up +0.6%, which was significantly higher than anticipated and the biggest monthly increase since January 2005. While the bond market has already discounted the idea that the Fed is unlikely to ease rates any time soon by moving yields up from 4.55% to 4.8%, the PPI data initially seemed to act as a wake up call for stock traders as the Dow found itself down more than 90 points before lunch.
However, upon further review, the remainder of the day�s economic data seemed to support the soft landing, or Goldilocks, scenario as Industrial Production fell by the biggest amount in a year and the NAHB Housing Market report suggested that the decline in housing may stabilizing. And while stock traders may have spent some the morning fretting about inflation, the bond market seemed to be taking things in stride.
So with the bond market behaving and oil prices falling (crude dropped
$1.01 to $58.93), the bulls were able to shake off the inflation fears and at the end of the day, the illustrious DJIA was just 30 points lower.
Thus, despite the overbought condition of the market, the bulls were able to sidestep what could have been a painful session.
After the close, the bulls also got a boost on the earnings front as both IBM and Intel reported quarters that exceeded expectations. But the news wasn�t all positive as both Motorola and Yahoo�s results came up shy of what the Street was expecting.
Turning to this morning, the second half of the all-important inflation data shows that the headline CPI number was once again lower than expected (-0.5% vs. -0.3%) while the Core rate came in right in line with expectations at +0.2%. On a year-over-year basis, the Core rate continues to remain above the Fed�s comfort zone with an annual increase of +2.9%.
However, the numbers have been viewed as a modest positive so far.
Running through the pre-game indicators, the major overseas markets are higher across the board on U.S. earnings from INTC and IBM. Gold futures are little changed from this point yesterday and are quoted at $596.30 right now. Crude oil futures are currently off by $0.29 to $58.64 as traders continue to question the rumored production cut from OPEC.
Interest rates are a little higher after the CPI report with the 2-year currently quoted at 4.87% while the 10-yr is trading with a yield of 4.79% right now. And finally, with an hour before the bell, stock futures in the U.S. are looking higher. The Dow futures are currently ahead by 31, the S&Ps are up 2.70, and the NASDAQ is sporting a gain of about 5 points.
Stocks �In Play� This Morning:
Intel (INTC) � Reported $0.22 vs. $0.17
Intl Business Machines (IBM) � Reported $1.45 vs. $1.35, Downgraded at Merrill Lynch, Target increased at Credit Suisse, Upgraded at Goldman Sachs
Motorola (MOT) � Reported $0.32 vs. $0.33
JP Morgan (JPM) � Reported $0.92 vs. $0.86
Yahoo (YHOO) � Reported $0.11 vs. $0.11, Downgraded at Piper Jaffray
Johnson & Johnson (JNJ) � Upgraded at Prudential
Nokia (NOK) � Mentioned positively in Barron�s
Chicago Mercantile Exch (CME) � Downgraded at Morgan Stanley, Upgraded at Citigroup
EMC Corp (EMC) � Downgraded at Citigroup
Network Appliances (NTAP) � Downgraded at Goldman Sachs
Staples (SPLS) � Downgraded at Goldman Sachs
Progressive Corp (PGR) � Upgraded at HSBC
NY Times (NYT) � Downgraded at JP Morgan
UAL Corp (UAUA) � Downgraded at Prudential
American Eagle Outfitters (AEOS) � Downgraded at UBS
Kinder Morgan Energy Part (KMP) � Upgraded at Wachovia
Long positions in stocks mentioned: IBM, MER, JNJ, MS
** 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.
Good morning. While stocks were down on the day yesterday and the action looked it might get downright ugly in the morning, the bulls were far from out. In short, despite the red ink at the close, our barnyard buddies were able to claim a moral victory as the bears were once again unable to do much with their opportunity.
Stocks started lower on the back of the PPI report that showed core inflation popped up +0.6%, which was significantly higher than anticipated and the biggest monthly increase since January 2005. While the bond market has already discounted the idea that the Fed is unlikely to ease rates any time soon by moving yields up from 4.55% to 4.8%, the PPI data initially seemed to act as a wake up call for stock traders as the Dow found itself down more than 90 points before lunch.
However, upon further review, the remainder of the day�s economic data seemed to support the soft landing, or Goldilocks, scenario as Industrial Production fell by the biggest amount in a year and the NAHB Housing Market report suggested that the decline in housing may stabilizing. And while stock traders may have spent some the morning fretting about inflation, the bond market seemed to be taking things in stride.
So with the bond market behaving and oil prices falling (crude dropped
$1.01 to $58.93), the bulls were able to shake off the inflation fears and at the end of the day, the illustrious DJIA was just 30 points lower.
Thus, despite the overbought condition of the market, the bulls were able to sidestep what could have been a painful session.
After the close, the bulls also got a boost on the earnings front as both IBM and Intel reported quarters that exceeded expectations. But the news wasn�t all positive as both Motorola and Yahoo�s results came up shy of what the Street was expecting.
Turning to this morning, the second half of the all-important inflation data shows that the headline CPI number was once again lower than expected (-0.5% vs. -0.3%) while the Core rate came in right in line with expectations at +0.2%. On a year-over-year basis, the Core rate continues to remain above the Fed�s comfort zone with an annual increase of +2.9%.
However, the numbers have been viewed as a modest positive so far.
Running through the pre-game indicators, the major overseas markets are higher across the board on U.S. earnings from INTC and IBM. Gold futures are little changed from this point yesterday and are quoted at $596.30 right now. Crude oil futures are currently off by $0.29 to $58.64 as traders continue to question the rumored production cut from OPEC.
Interest rates are a little higher after the CPI report with the 2-year currently quoted at 4.87% while the 10-yr is trading with a yield of 4.79% right now. And finally, with an hour before the bell, stock futures in the U.S. are looking higher. The Dow futures are currently ahead by 31, the S&Ps are up 2.70, and the NASDAQ is sporting a gain of about 5 points.
Stocks �In Play� This Morning:
Intel (INTC) � Reported $0.22 vs. $0.17
Intl Business Machines (IBM) � Reported $1.45 vs. $1.35, Downgraded at Merrill Lynch, Target increased at Credit Suisse, Upgraded at Goldman Sachs
Motorola (MOT) � Reported $0.32 vs. $0.33
JP Morgan (JPM) � Reported $0.92 vs. $0.86
Yahoo (YHOO) � Reported $0.11 vs. $0.11, Downgraded at Piper Jaffray
Johnson & Johnson (JNJ) � Upgraded at Prudential
Nokia (NOK) � Mentioned positively in Barron�s
Chicago Mercantile Exch (CME) � Downgraded at Morgan Stanley, Upgraded at Citigroup
EMC Corp (EMC) � Downgraded at Citigroup
Network Appliances (NTAP) � Downgraded at Goldman Sachs
Staples (SPLS) � Downgraded at Goldman Sachs
Progressive Corp (PGR) � Upgraded at HSBC
NY Times (NYT) � Downgraded at JP Morgan
UAL Corp (UAUA) � Downgraded at Prudential
American Eagle Outfitters (AEOS) � Downgraded at UBS
Kinder Morgan Energy Part (KMP) � Upgraded at Wachovia
Long positions in stocks mentioned: IBM, MER, JNJ, MS
** 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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