David Moenning's Daily State of the Markets 05/30
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Some Squinting Required
If you look really hard, and it may even require some squinting, you will notice that Friday�s gain actually marked the third straight day of the bulls� rebound effort. However, given the advent of a long holiday weekend, the volume on Friday�s 68 point move was less than inspiring.
With the bears recognizing that the requisite rebound was underway, it is likely that our furry friends simply decided to get an early start on the weekend. And with little opposition available, the bulls were able to keep the bounce alive. But then again, with volume totaling just 1.3 billion shares, it is easy to argue that most everybody was simply trying to get out of town prior to the closing bell.
In light of the fact that traders have now become addicted to any and all economic data, it is little wonder that stocks found their way to higher ground on Friday. The report on Personal Income and Spending from the Commerce Department provided the bulls with enough evidence to further the notion that the Fed may indeed pause at the June meeting. However, the report also provided some data on the inflation front that caused some furrowed brows among true Fed watchers. You see, the annualized rate of Core PCE � one of the Fed�s favorite measures of inflation � came in at 2.1%, which is a tenth above the Fed�s stated comfort zone.
In short, for Friday anyway, the data tilted the game in the bulls� favor.
However, we need to remember that it is the economic data that will likely become the key to each and every session for awhile. And so, with little evidence to suggest that the bulls will be able to continue to run with the ball, the bulls will be forced to simply book Friday�s gains and shift their focus on the week ahead.
In looking at the calendar for this week, things start off slow but then really heat up later in the week as we get the big Kahuna, the jobs report, on Friday morning.
Tuesday � May Consumer Confidence (10:00 a.m.) Wednesday � May Chicago Purchasing Managers Index Thursday � Q1 Productivity Report, ISM Manufacturing Report, Construction Spending, Pending Home Sales Friday � May Employment Report, Factory Orders
Turning to this morning, speculation on Treasury Secretary Snow�s replacement is causing dollar weakness. There are conflicting reports as to whether the White House prefers Donald Evans or Goldman Sachs� CEO Henry Paulson. However, the dollar is sharply lower on word that Evans prefers a weaker greenback. This, combined with Iran�s continuation of their nuclear program and talk of Venezuela cutting oil production, has put the bears back in the spotlight this morning.
Running through the pre-game indicators, the screens are decidedly red on both the foreign markets and here in the U.S. Oil futures are moving up again this morning and are trading almost a dollar higher at $72.25 right now. Gold is also moving a bit higher this morning and is currently quoted up $0.50 to $651.50. Interest rates are a little higher as well this morning with the 2-year currently trading at 4.95% while the 10-yr is quoted at 5.06% right now. And finally, with about an hour before the bell, stock futures in the U.S. are moving lower. The Dow futures are currently off by 52 points; the S&Ps are lower by 4.90, while the NASDAQ is sporting a decline of almost -10.
Thus, the key question of the day is if this morning�s action will mark the return of the bears, or if the bulls will be able to dig in and defend their turf?
Stocks �In Play� This Morning:
Lam Research (LRCX) � Mentioned cautiously in Barron�s
Sandisk (SNDK) � Mentioned cautiously in Barron�s
Philips Elec (PHG) � Mentioned positively in Barron�s
Total (TOT) � Mentioned positively in Barron�s
Telefonica (TEF) � Mentioned positively in Barron�s
China Mobile (CHL) � In discussions with MICC Apple
(AAPL) � AppleInsider says company is developing new Mac for education
Applied Materials (AMAT) � Upgraded at RBC Capital
CIBC Kinder Morgan (KMI) � Management makes offer to acquire company
Wal-Mart (WMT) � Guides May to lower end of range
Cerner (CERN) � Upgraded at Friedman Billings
Nasdaq (NDAQ) � Price target raised at Morgan Stanley
General Motors (GM) � Downgraded at Deutsche
Sirius Satellite Radio (SIRI) � Upgraded at Lehman
Research in Motion (RIMM) � Vodafone Germany introduces Blackberry
Vodafone (VOD) � Reports smaller than expected loss, Raises dividend
Advanced Micro Devices (AMD) � ThinkEquity reiterates a Sell recommendation
Positions in stocks mentioned: CHL, AMAT, MS, LEH
** 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.
If you look really hard, and it may even require some squinting, you will notice that Friday�s gain actually marked the third straight day of the bulls� rebound effort. However, given the advent of a long holiday weekend, the volume on Friday�s 68 point move was less than inspiring.
With the bears recognizing that the requisite rebound was underway, it is likely that our furry friends simply decided to get an early start on the weekend. And with little opposition available, the bulls were able to keep the bounce alive. But then again, with volume totaling just 1.3 billion shares, it is easy to argue that most everybody was simply trying to get out of town prior to the closing bell.
In light of the fact that traders have now become addicted to any and all economic data, it is little wonder that stocks found their way to higher ground on Friday. The report on Personal Income and Spending from the Commerce Department provided the bulls with enough evidence to further the notion that the Fed may indeed pause at the June meeting. However, the report also provided some data on the inflation front that caused some furrowed brows among true Fed watchers. You see, the annualized rate of Core PCE � one of the Fed�s favorite measures of inflation � came in at 2.1%, which is a tenth above the Fed�s stated comfort zone.
In short, for Friday anyway, the data tilted the game in the bulls� favor.
However, we need to remember that it is the economic data that will likely become the key to each and every session for awhile. And so, with little evidence to suggest that the bulls will be able to continue to run with the ball, the bulls will be forced to simply book Friday�s gains and shift their focus on the week ahead.
In looking at the calendar for this week, things start off slow but then really heat up later in the week as we get the big Kahuna, the jobs report, on Friday morning.
Tuesday � May Consumer Confidence (10:00 a.m.) Wednesday � May Chicago Purchasing Managers Index Thursday � Q1 Productivity Report, ISM Manufacturing Report, Construction Spending, Pending Home Sales Friday � May Employment Report, Factory Orders
Turning to this morning, speculation on Treasury Secretary Snow�s replacement is causing dollar weakness. There are conflicting reports as to whether the White House prefers Donald Evans or Goldman Sachs� CEO Henry Paulson. However, the dollar is sharply lower on word that Evans prefers a weaker greenback. This, combined with Iran�s continuation of their nuclear program and talk of Venezuela cutting oil production, has put the bears back in the spotlight this morning.
Running through the pre-game indicators, the screens are decidedly red on both the foreign markets and here in the U.S. Oil futures are moving up again this morning and are trading almost a dollar higher at $72.25 right now. Gold is also moving a bit higher this morning and is currently quoted up $0.50 to $651.50. Interest rates are a little higher as well this morning with the 2-year currently trading at 4.95% while the 10-yr is quoted at 5.06% right now. And finally, with about an hour before the bell, stock futures in the U.S. are moving lower. The Dow futures are currently off by 52 points; the S&Ps are lower by 4.90, while the NASDAQ is sporting a decline of almost -10.
Thus, the key question of the day is if this morning�s action will mark the return of the bears, or if the bulls will be able to dig in and defend their turf?
Stocks �In Play� This Morning:
Lam Research (LRCX) � Mentioned cautiously in Barron�s
Sandisk (SNDK) � Mentioned cautiously in Barron�s
Philips Elec (PHG) � Mentioned positively in Barron�s
Total (TOT) � Mentioned positively in Barron�s
Telefonica (TEF) � Mentioned positively in Barron�s
China Mobile (CHL) � In discussions with MICC Apple
(AAPL) � AppleInsider says company is developing new Mac for education
Applied Materials (AMAT) � Upgraded at RBC Capital
CIBC Kinder Morgan (KMI) � Management makes offer to acquire company
Wal-Mart (WMT) � Guides May to lower end of range
Cerner (CERN) � Upgraded at Friedman Billings
Nasdaq (NDAQ) � Price target raised at Morgan Stanley
General Motors (GM) � Downgraded at Deutsche
Sirius Satellite Radio (SIRI) � Upgraded at Lehman
Research in Motion (RIMM) � Vodafone Germany introduces Blackberry
Vodafone (VOD) � Reports smaller than expected loss, Raises dividend
Advanced Micro Devices (AMD) � ThinkEquity reiterates a Sell recommendation
Positions in stocks mentioned: CHL, AMAT, MS, LEH
** 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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