David Moenning's Daily State of the Markets: 10/12
Tweet
Share
E-mail
Not Your Traditional "W"
Good morning. Although earnings season began on a disappointing note and the Fed minutes displayed a rather hawkish tone, the bulls were actually able to put up another �W� yesterday. Despite the fact that prices finished modestly in the red, by not folding up their tents in the face of an overbought market and some bad news, the bulls gained some respect and came away with what has to be considered a moral victory.
It would have been very easy for the session to get very ugly very fast. With stocks sitting right at the recent highs, it appeared that most traders had positioned themselves for the Fed to remain on the sidelines and another positive earnings season. So with Alcoa and Genentech starting things off on a down note, the bears should have been able to rally the troops and knock the indices lower.
At first blush, it appeared that the bears might have gotten some help from the Fed as well yesterday. In short, the minutes from the September meeting showed that the FOMC was a bit more concerned about inflation than many had believed. Although Mr. Bernanke and company admitted that inflation expectations should moderate going forward, they said �the uncertainties around that forecast were skewed toward higher rather than lower inflation rates.� This caused traders to question the idea of the Fed lowering rates any time soon and put the concept of additional hikes back on the table.
Then there was the speech from Fed Governor Jeffrey Lacker, which might have been viewed as constructive toward the glass-is-half-empty crowd. Mr. Lacker, who has cast two dissenting votes against the pause in the rate hike campaign, suggested that if inflation persists near current levels, more policy firming (i.e. rate hikes) would be required.
And finally, the plane crash in Manhattan gave our furry friends an opportunity as the TV feeds reminded traders that terrorists have not gone away. Although the crash was deemed an accident, the conflicting headlines that were flashed immediately following the event gave the bears an opening.
But, through it all, the bulls managed to hang tough yesterday. They pointed to lower oil prices (crude finished down another $0.93 to $57.59) as a big plus and suggested that the M&A activity and stock buybacks point to fair valuations in the market. So while it wasn�t your normal win for the Bulls yesterday, it was a win all the same.
Turning to this morning, it appears that the bulls continue to remain in charge in the early going as the futures are sporting modest gains. On the economic front, the Trade Balance number came in a bit above expectations at $69.86 Billion versus the consensus estimate for $66.5 Billion. The report has had little impact on the markets so far.
Running through the pre-game indicators, with the exception of Japan, the major overseas markets are a little higher across the board. Gold futures are moving up a smidge again this morning and are quoted at $576.80 right now. Crude oil futures are continuing to move lower so far and are currently off by $0.13 at $57.46. Interest rates are heading in a southerly direction at the moment with the 2-year currently quoted at 4.84% while the 10-yr is trading with a yield of 4.76% right now. And finally, with an hour before the bell, stock futures in the U.S. are a trading above fair value. The Dow futures are currently ahead by more than about 33 points, the S&Ps are 3 points above fair value, and the NASDAQ is sporting a gain of about 5 points.
Stocks �In Play� This Morning:
Costco (COST) � Reported $0.75 vs. $0.73
Pepsico (PEP) � Reported $0.88 vs. $0.86
Tesoro (TSO) � Upgraded at Bear Stearns
Global Signal (GSL) � Downgraded at Bear Stearns
Sandisk (SNDK) � Downgraded at CIBC
BCE (BCE) � Downgraded at Citigroup
Medimmune (MEDI) � Upgraded at Deutsche Bank
CNET Networks (CNET) � Downgraded at Goldman Sachs
Universal Health (UHS) � Upgraded at Goldman Sachs
Harrahs Ent (HET) � Upgraded at Morgan Stanley
Manulife (MFC) � Upgraded at Morgan Stanley
Chesapeake Energy (CHK) � Upgraded at Prudential
BMC Software (BMC) � Upgraded at Stifel Nicolaus
McAfee (MFE) � Upgraded at UBS
ASML Holdings (ASML) � Upgraded at UBS
Harley Davidson (HOG) � Reported $1.20 vs. $1.10
Long positions in stocks mentioned: SNDK
** 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.
www.TopGunsTrading.com
Good morning. Although earnings season began on a disappointing note and the Fed minutes displayed a rather hawkish tone, the bulls were actually able to put up another �W� yesterday. Despite the fact that prices finished modestly in the red, by not folding up their tents in the face of an overbought market and some bad news, the bulls gained some respect and came away with what has to be considered a moral victory.
It would have been very easy for the session to get very ugly very fast. With stocks sitting right at the recent highs, it appeared that most traders had positioned themselves for the Fed to remain on the sidelines and another positive earnings season. So with Alcoa and Genentech starting things off on a down note, the bears should have been able to rally the troops and knock the indices lower.
At first blush, it appeared that the bears might have gotten some help from the Fed as well yesterday. In short, the minutes from the September meeting showed that the FOMC was a bit more concerned about inflation than many had believed. Although Mr. Bernanke and company admitted that inflation expectations should moderate going forward, they said �the uncertainties around that forecast were skewed toward higher rather than lower inflation rates.� This caused traders to question the idea of the Fed lowering rates any time soon and put the concept of additional hikes back on the table.
Then there was the speech from Fed Governor Jeffrey Lacker, which might have been viewed as constructive toward the glass-is-half-empty crowd. Mr. Lacker, who has cast two dissenting votes against the pause in the rate hike campaign, suggested that if inflation persists near current levels, more policy firming (i.e. rate hikes) would be required.
And finally, the plane crash in Manhattan gave our furry friends an opportunity as the TV feeds reminded traders that terrorists have not gone away. Although the crash was deemed an accident, the conflicting headlines that were flashed immediately following the event gave the bears an opening.
But, through it all, the bulls managed to hang tough yesterday. They pointed to lower oil prices (crude finished down another $0.93 to $57.59) as a big plus and suggested that the M&A activity and stock buybacks point to fair valuations in the market. So while it wasn�t your normal win for the Bulls yesterday, it was a win all the same.
Turning to this morning, it appears that the bulls continue to remain in charge in the early going as the futures are sporting modest gains. On the economic front, the Trade Balance number came in a bit above expectations at $69.86 Billion versus the consensus estimate for $66.5 Billion. The report has had little impact on the markets so far.
Running through the pre-game indicators, with the exception of Japan, the major overseas markets are a little higher across the board. Gold futures are moving up a smidge again this morning and are quoted at $576.80 right now. Crude oil futures are continuing to move lower so far and are currently off by $0.13 at $57.46. Interest rates are heading in a southerly direction at the moment with the 2-year currently quoted at 4.84% while the 10-yr is trading with a yield of 4.76% right now. And finally, with an hour before the bell, stock futures in the U.S. are a trading above fair value. The Dow futures are currently ahead by more than about 33 points, the S&Ps are 3 points above fair value, and the NASDAQ is sporting a gain of about 5 points.
Stocks �In Play� This Morning:
Costco (COST) � Reported $0.75 vs. $0.73
Pepsico (PEP) � Reported $0.88 vs. $0.86
Tesoro (TSO) � Upgraded at Bear Stearns
Global Signal (GSL) � Downgraded at Bear Stearns
Sandisk (SNDK) � Downgraded at CIBC
BCE (BCE) � Downgraded at Citigroup
Medimmune (MEDI) � Upgraded at Deutsche Bank
CNET Networks (CNET) � Downgraded at Goldman Sachs
Universal Health (UHS) � Upgraded at Goldman Sachs
Harrahs Ent (HET) � Upgraded at Morgan Stanley
Manulife (MFC) � Upgraded at Morgan Stanley
Chesapeake Energy (CHK) � Upgraded at Prudential
BMC Software (BMC) � Upgraded at Stifel Nicolaus
McAfee (MFE) � Upgraded at UBS
ASML Holdings (ASML) � Upgraded at UBS
Harley Davidson (HOG) � Reported $1.20 vs. $1.10
Long positions in stocks mentioned: SNDK
** 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.
www.TopGunsTrading.com
You May Also Be Interested In
- Midday movers: PepsiCo, JetBlue fall; GM, Danaher and UPS rise
- After-hours movers: Cadence Design Systems, Cleveland-Cliffs, Riot Platforms, and more
- Midday movers: Tesla, Boeing rise; Uber, Old Dominion Freight fall
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
