David Moenning's Daily State of the Markets: 11/23

Thanks For Nothin'

The bulls had little to be thankful for on Wednesday as the bears took our heroes in horns out behind the woodshed once again. The Dow dropped -211 points or 1.6% and closed at a new cycle low. Once again, the brunt of the selling took place in the final hour and this time, pushed the S&P 500 into negative territory for the year. And although the S&P, NASDAQ, and NYSE have not followed suit to new cycle lows just yet, the day definitely did not go according to the historical script.

In short, the grizzly gang continues to get a great deal of mileage out of the credit crisis. On Wednesday, it was GM’s GMAC unit that attracted attention as CEO Richard Waggoner said that GM had no further obligation to inject capital into the firm. And although the talk of “strategic alternatives” actually wound up with GMAC being the buyer, an active rumor mill kept traders leaning on the sell button heading into the holiday.

The bears also got some help from the day’s economic news as the Index of Leading Economic Indicators (AKA the LEI) pointed toward a sharper slowdown than was expected. Although analysts had been looking for a contraction of -0.3%, the final reading of -0.5% was used by the bear camp to suggest that things are getting worse out there.

From a technical standpoint, the fact that the Dow now finds itself sitting below the August lows would seem to suggest that there is more selling to come. And since every rally attempt has been met with selling lately, it is tough to argue against the idea that things may have to get worse before they get better.

Turning to this morning, we don’t have any economic data to review during today’s shortened session (stocks close at 1:00 pm Eastern). However, with scenes of stores being swamped by shoppers on this Black Friday, the pre-market futures are trading higher. Gains in Europe on the back of some fresh M&A chatter as well as an up day in Asia are helping to keep hope alive for a bounce here. And although the volume is likely to be painfully slow today, retail stocks will be a focus as analysts attempt to glean the consumer’s response to the biggest shopping day of the year.

Running through the rest of the pre-game indicators; as we mentioned, the overseas markets are higher. Crude futures are heading lower with the latest quote showing the December contract off $0.86 to $96.43. Interest rates are a little higher this morning with the 10-yr trading at a yield of 4.04% at the moment. And finally, with about an hour before the bell, stock futures in the U.S. are looking to open higher. The Dow futures are currently ahead by about 70 points; the S&Ps are up by about 10 points, while the NASDAQ looks to be about 8 points above fair value at the moment.

Stocks "In Play" This Morning:


News, Upgrades/Downgrades/Brokerage Research:

PetroChina (NYSE: PTR) – Upgraded at Bear Stearns
CNOOC (NYSE: CEO) – Upgraded at Citi
Golden Telecom (Nasdaq: GLDN) – Upgraded at Merrill Lynch

Mr. Moenning holds Long positions in stocks mentioned: MER

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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