David Moenning's Daily State of the Markets: 7/23

Do I Hear 12?

Although the Dow and S&P 500 finished with slight declines on Wednesday, the NASDAQ was able to keep on keepin’ on for an 11th straight day. And while I didn’t look up the official stats, I believe that the last 11-day win streak for the NASDAQ was something on the order of thirteen years ago. So, to say that stocks have had a decent run of late (during which time the NASDAQ has popped up an impressive +10.3%) and/or that the market has become a bit overbought along the way might be a bit of an understatement.

Wednesday’s session was another back-and-forth affair with stocks being pushed and pulled by the various earnings news. While the majority of reports continue to come in with results that are a bit better than expected, the reason behind those earnings “beats” has come up for debate. Although traders react with buy orders for companies that exceed expectations, analysts note that it is primarily cost-cutting measures that have been responsible for the upbeat results. Thus, while we are clearly speaking in generalities here, we are seeing very few companies sporting increases in revenues.

Of course, the bulls contend “it is what it is” and the companies that reports better than expected results deserve higher stock prices – regardless of the reasons behind the numbers. However, on the other side of the aisle, the bears suggest that cost cutting measures can only go so far and last so long, and that unless we see actual improvement in the economy and a corresponding uptick in revenue streams, the current run for the roses is likely to be short-lived.

Speaking of things pessimistic in nature, a little known report from the American Institute of Architects suggests that all is not well on the nonresidential construction front. The group’s billing index plunged 5.2 points in June, which was the biggest drop since last September, to its lowest level in four months. In short, the report points to very weak commercial real estate construction activity over the next nine months.

Getting back to the present stock market, it is the technology sector in general and the likes of Apple (AAPL) in particular, that have traders wondering if we’ll see a 12th straight up day today. In case you haven’t heard, Apple came in with earnings that blew the doors off of the estimates again, which has in no small part aided the positive sentiment in the sector.

Turning to this morning, weekly jobless claims came in at 554,000, which was a smidge below the estimates for 557K but above last week’s total of 522K. Continuing Claims fell to 6.22M, which was also a bit better than the estimates for 6.39M. We’ll also get a report on US Existing Home Sales at 10:00 am eastern.

Running through the rest of the pre-game indicators, the major overseas markets are mixed by region with Asia up and Europe down. Crude futures are moving down with the latest quote showing oil trading off by $0.22 to $65.16. On the interest rate front, we’ve got the yield on the 10-yr trading higher at 3.52%, while the yield on the 3-month T-Bill is trading at 0.17%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a modestly higher open. The Dow futures are currently ahead by about 30 points; the S&P’s are up by about 3 points, while the NASDAQ looks to be about 2 points below fair value at the moment.

Yesterday’s Earnings After the Bell:

Alcon (ACL) – Reported $1.94 vs. $1.71
CR Bard (BCR) – Reported $1.23 vs. $1.21
Chipotle Mexican Grill (CMG) – Reported $0.37 vs. $0.28
Citrix Systems (CTXS) – Reported $0.39 vs. $0.38
eBay (EBAY) – Reported $0.37 vs. $0.36
Equifax (EFX) – Reported $0.57 vs. $0.47
E*Trade (ETFC) – Reported -$0.22 vs. -$0.31
Human Genome (HGSI) – Reported -$0.48 vs. -$0.36
Intuitive Surgical (ISRG) – Reported $1.62 vs. $1.27
Knight Transportation (KNX) – Reported $0.15 vs. $0.15

Mosaic (MOS) – Reported $0.33 vs. $0.07
Noble Corp (NE) – Reported $1.54 vs. $1.50
Qualcomm (QCOM) – Reported $0.54 vs. $0.51
Raymond James (RJF) – Reported $0.36 vs. $0.23
SanDisk (SNDK) – Reported $0.36 vs. -$0.17
Steel Dynamics (STLD) – Reported -$0.08 vs. -$0.12
Terex (TEX) – Reported -$0.38 vs. -$0.28
TriQuint Semiconductor (TQNT) – Reported $0.08 vs. $0.03

Today’s Earnings Before the Bell:

ABB Limited (ABB) – Reported $0.29 vs. $0.28
Alexion Pharmaceuticals (ALXN) – Reported $0.23 vs. $0.17
Bristol-Myers (BMY) – Reported $0.56 vs. $0.47
Cooper Industries (CBE) – Reported $0.58 vs. $0.56
CME Group (CME) – Reported $3.37 vs. $3.23
Danaher (DHR) – Reported $0.89 vs. $0.87
Diamond Offshore (DO) – Reported $2.79 vs. $2.72
EMC (EMC) – Reported $0.18 vs. $0.16
ITT Educational (ESI) – Reported $1.87 vs. $1.73
Fifth Third (FITB) – Reported $1.15 vs. -$0.32
Ford (F) – Reported -$0.21 vs. -$0.50
FLIR Systems (FLIR) – Reported $0.35 vs. $0.35
Goodrich (GR) – Reported $1.40 vs. $1.12
Huntington Bancshares (HBAN) – Reported -$0.40 vs. -$0.17
Starwood Hotels (HOT) – Reported $0.22 vs. $0.17
Hershey (HSY) – Reported $0.43 vs. $0.35
Interactive Data (IDC) – Reported $0.34 vs. $0.35
Jet Blue (JBLU) – Reported $0.05 vs. $0.01
Kimberly-Clark (KMB) – Reported $0.97 vs. $0.98
L-3 Communications (LLL) – Reported $1.90 vs. $1.77
Manpower (MAN) – Reported $0.36 vs. $0.10
McDonald’s (MCD) – Reported $0.97 vs. $0.97
3M (MMM) – Reported $1.20 vs. $0.94
NCR Corp (NCR) – Reported $0.13 vs. $0.08
Newmont Mining (NEM) – Reported $0.43 vs. $0.44
NII Holdings (NIHD) – Reported $0.81 vs. $0.61
Northrop Grumman (NOC) – Reported $1.21 vs. $1.29
Omnicom (OMC) – Reported $0.75 vs. $0.74
Occidental Petroleum (OXY) – Reported $0.84 vs. $0.77
Phillip Morris (PM) – Reported $0.83 vs. $0.77
PNC Bank (PNC) – Reported $0.14 vs. $0.44
Potash (POT) – Reported $0.62 vs. $0.65
Ryder System (R) – Reported $0.43 vs. $0.38
Reynolds American (RAI) – Reported $1.29 vs. $1.16
Raytheon (RTN) – Reported $1.24 vs. $1.13
IMS Health (RX) – Reported $0.44 vs. $0.38
Sigma-Aldrich (SIAL) – Reported $0.68 vs. $0.68
AT&T (T) – Reported $0.54 vs. $0.51
Thermo Fisher Scientific (TMO) – Reported $0.74 vs. $0.67
Terra Industries (TRA) – Reported $0.81 vs. $0.99
Union Pacific (UNP) – Reported $0.78 vs. $0.74
UPS (UPS) – Reported $0.49 vs. $0.49
Watsco (WSO) – Reported $0.61 vs. $0.62
Wyeth (WYE) – Reported $0.98 vs. $0.85
Xerox (XRX) – Reported $0.16 vs. $0.12
Zimmer Holdings (ZMH) – Reported $1.00 vs. $0.
Zoll Medical (ZOLL) – Reported $0.07 vs. $0.07

Upgrades/Downgrades/Brokerage Research

F5 Networks (FFIV) – Upgraded at BofA/Merrill
MEMC Electronic Materials (WFR) – Upgraded at BofA/Merrill
Cree (CREE) – Upgraded at Canaccord Adams
Robert Half (RHI) – Upgraded at Citi
Sanmina (SANM) – Upgraded at Credit Suisse
Credit Suisse (CS) – Upgraded at Deutsche Bank
Ann Taylor (ANN) – Upgraded at Goldman
Aeropostale (ARO) – Downgraded at Goldman
NetApp (NTAP) – Upgraded at Piper Jaffray
Under Armour (UA) – Mentioned cautiously at UBS
Advance Auto Parts (AAP) – Initiated neutral at Wedbush Morgan
AutoZone (AZO) – Initiated neutral at Wedbush Morgan
O’Reilly Auto (ORLY) – Initiated neutral at Wedbush Morgan

Long positions in stocks mentioned: AAPL, ORLY, ARO, DO, OXY

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.TopStockPortfolios.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.

You May Also Be Interested In

• Ryman Hospitality raises ~$658M in stock offering for Orlando deal
• Alexandria Real Estate prices $1B junior subordinated notes due 2057
• Delek Logistics launches $175M common unit public offering