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Daily State of the Markets Sometimes how the market reacts to the little things is more telling than a big reaction to some major piece of news. Yesterday was a pretty good example of this theory. The general feeling has been that stocks were likely to fall as the market is extended and the end-of-quarter window dressing period is coming to a close. Now toss in a holiday-shortened week in which traders tend to head to the beach, and you’ve got the makings for some sloppy action. But instead of a selloff that tested the low end of the teeny-tiny trading range that has developed over the past couple of weeks, stocks found a way to move back up to the recent highs. Or put another way, the bears once again squandered an opportunity to do some damage when they had the chance. To be sure, none of Monday’s data inputs were earth shattering. However, the fact that the fistful of modest positives that were presented yesterday moved the market higher tells us that the bad news bears are still sitting on the sidelines and that the bulls remain in possession of the ball. The session started off on the right foot as we learned that Standard & Poor’s had reaffirmed that the UK’s sovereign debt rating remains at ‘AAA’. Yes, yes, we know that S&P kept the outlook at ‘negative’. However, with all the fretting over soverign debt lately, it was nice to see the UK avoid being included in the latest acronym for fiscal malfeasance. Speaking of good things happening across the pond, the fact that Europe’s confidence numbers came in above expectations helped the mood in pre-market trading. Then just after the opening bell rang here in the U.S. we learned that the Dallas Fed Manufacturing Index lept by 7.2%, which was well above the 5.0% that had been expected and last month’s reading of -0.1%. Next up, the chatter about M&A seems to be picking up again. While it didn’t qualify as a “merger Monday,” talk of 5 potential deals reminded traders that valuations must not be too outrageous at this stage of the game. And finally, the fact that Greece was able to auction off 5 billion euros worth of 7-year notes was taken as a sign that the default contagion everyone worried about in February isnt’ likely to happen – at least not right now. While we’re not entirely sure that Monday’s 46 point gain will stick, we will go on record as saying that a modest advance in response to a handful of little things has to be disappointing from the bear camp’s perspective. Turning to this morning… We don’t have any economic data to review before the bell. However, we will get the Case-Shiller House Price Index at 9:00 am and the Conference Board’s report on US Consumer Confidence at 10:00 am eastern. Running through the rest of the pre-game indicators, Asian markets are higher while European bourses are only fractionally above breakeven. Crude futures are up $0.25 to $82.42. On the interest rate front, the yield on the 10-yr closed at 3.86%. Next, gold is moving up $0.30 to $1110.60 and the dollar is lower against the Euro and Pound but higher against the Yen. Finally, with about 90 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 10 points; the S&P’s are up about 2 points, while the NASDAQ looks to be about 6points above fair value at the moment. Wall Street Research Summary Upgrades: |
Hecla Mining (HL) – BofA/Merrill Celgene (CELG) – Target increased at Citi Whole Foods (WFMI) – Mentioned positively at JPMorgan Westlake Chemical (WLK) – JPMorgan Juniper Networks (JNPR) – Initiated overweight at Morgan Stanley Lions Gate (LGF) – Initiated Buy at Soleil Securites
DreamWorks Animation (DWA) – BofA/Merrill Genzyme (GENZ) – Barclays Synaptics (SYNA) – Cowen Airgas (ARG) – Estimates reduced at Jefferies
Long positions in stocks mentioned: none
Try doing something nice for someone today (for no reason at all) and
David D. Moenning
Founder TopStockPortfolios.com
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