Daily State of the Markets 
Friday Morning – November 6, 2009  

With chants of “Dow 10K… Dow 10K” once again rising from the streets at the corner of Broad and Wall yesterday, it is easy to believe that the bulls are back on track and that we’ll soon be looking at new highs for the stock market. And when reviewing the data inputs to yesterday’s 204 point romp, it is also easy to don the Dow10K hat once again and join in on the celebration.

If you detected a modest degree of cynicism in the above statement, you’ve earned a gold star. While yesterday was indeed a strong showing by the bull camp and the reasons behind the rally were solid, I frankly don’t understand the media’s fascination with the Dow Jones Industrial Average and the seemingly magical 10,000 level. It’s as if a close above 10K means everything is right with the world while anything below is an indication that the bears are running the show again.

But getting back to the point, the market’s ability to rebound after a brush with the dark side this week has been impressive. Although the volatility has been high and yesterday’s volume was very lackluster by “melt up” standards, the bulls are to be given credit for recapturing the important technical levels this week. However, there is one summit yet to scale – the old highs.

Yesterday’s run for the roses was sponsored by Cisco (CSCO) and some economic data that, at first blush, wasn’t terribly inspiring. Take the reports from the nation’s retailers for example. While sales at most stores pulled back from September’s impressive levels – leading one to believe that the data was disappointing – it is important to keep in mind that the October sales gains were the best monthly results since July 2008.

Other data points were less confusing. For example, Q3 nonfarm productivity jumped 9.5%, which was well ahead of the expectations for an increase of 6.5%. And it is worth noting that this was the biggest quarterly increase in six years. The source of the improvement was an increase in employee output (up 4%), while employee hours fell by 5% (this was the ninth straight quarterly decline for hours worked). Thus, Unit Labor costs fell 5.2% from last quarter. While this data isn’t so hot from the consumer’s standpoint, Wall Street sees it as improving the backdrop for earnings.

The bulls also got a hand from the always-upbeat John Chambers, CEO of Cisco Systems. Mr. Chambers has made a career out of beating the street estimates by a penny quarter after quarter (well, except during those nasty bear market periods, of course). But this time Cisco came through with an earnings report that beat the street by $0.05. Chambers went to say all the right things including an increase of revenue guidance for the upcoming quarter.

So, are the bulls back on track? In looking at the Dow, we’d have to say that if the rally can avoid stalling out here, the answer is yes. But in looking at the charts of the NASDAQ or Russell 2000, we’ll have to conclude that our heroes in horns still have some work to do. And we should also remember that while the DJIA did manage to bust back above the all-important 10,000 level, the volume left a lot to be desired. However, this is easily explained by the idea of traders waiting to see this morning’s jobs report before jumping back in with both feet.

Turning to this morning, it’s the piece of economic data we’ve all been waiting for – the Big Kahuna – the Jobs Report. The Labor Department reported that Nonfarm Payrolls for the month of October fell by 190,000 jobs, which was worse than the expectations for a decline of 175,000. The good news is that September nonfarm payrolls were revised lower to -219K from -263K. And August’s numbers were also improved; creating a total of 91K fewer jobs lost during August and Sept.

But the big surprise in the report was the Unemployment Rate, which came in at 10.2%; well above the consensus estimate for a reading of 9.9%. The Unemployment Rate is now the highest since April 1983.

Running through the rest of the pre-game indicators, the foreign markets are mixed by region with Asia following Wall Street’s lead while Europe hovering around breakeven. Crude futures are lower with the latest quote showing oil trading down by $1.03 to $78.59. On the interest rate front, we’ve got the yield on the 10-yr trading at 3.46%, while the yield on the 3-month T-Bill is currently at 0.04%. Finally, with about 45 minutes before the bell, stock futures in the U.S. have reversed on the jobs data and are now pointing to a lower open. The Dow futures are currently off by about 50 points; the S&P’s are down by about 5 points, while the NASDAQ looks to be about 9 points below fair value at the moment.

Earnings After The Bell



Activision Blizzard ATVI $0.04 $0.04
Sotheby’s BID -$0.89 -$0.31
CBS Corporation CBS $0.39 $0.22
Choice Hotels CHH $0.56 $0.52
California Pizza Kitchen CPKI $0.24 $0.24
EOG Resources EOG $0.81* $0.66
Fannie Mae FNM $3.47 -$2.14
Hansen Natural HANS $0.60 $0.63
Intl Game Technology IGT $0.20 $0.16
JDS Uniphase JDSU $0.04 $0.02
Millipore MIL $0.95 $0.93
Morton’s Restaurant MRT -$0.16 -$0.07
NVIDIA NVDA $0.19 $0.10
Public Storage PSA $1.44 $1.25
Rovi Corp ROVI $0.33 $0.37
Boston Beer SAM $0.72 $0.40
Starbucks SBUX $0.24 $0.21
Sunoco SUN -$0.29 $0.03
VeriSign VRSN $0.33 $0.32
Earnings Before The Bell



American Intl Group AIG $0.68 $1.98
Brookfield Asset Management BAM $0.17 $0.32
Kelly Services KELYA -$0.35 -$0.24
Fortress Investment FIG $0.09 $0.09
Lifepoint Hospitals LPNT $0.59 $0.56
Scripps Networks Interactive SNI $0.39 $0.37

Wall Street Research Summary


Ternium (TX) – Barclays Canadian Natural Resources (CNQ) – Barclays Amazon.com (AMZN) – Bernstein General Electric (GE) – Bernstein Lennar (LEN) – Credit Suisse Lamar Advertising (LAMR) – Credit Suisse Meritage Homes (MTH) – Credit Suisse Realty Income (O) – Credit Suisse The Travelers (TRV) – Goldman Sachs XL Capital (XL) – Goldman Sachs Con Edison (ED) – Removed from Conviction Sell at Goldman NYSE Euronext (NYX) – HSBC Aqua America (WTR) – HSBC Macy’s (M) – JP Morgan Taser Intl (TASR) – JP Morgan Tractor Supply (TSCO) – Thomas Weisel


Platinum Underwriters (PTP) – Goldman Sachs RenaissanceRe (RNR) – Goldman Sachs WGL Holdings (WGL) – Added to Conviction Sell at Goldman Quicksilver Resources (KWK) – Jefferies ResMed (RMD) – Jefferies Rosetta Stone (RST) – Jefferies Cardinal Health (CAH) – Jefferies Aeropostale (ARO) – UBS

Long positions in stocks mentioned: GS, ARO

* Report includes items that make comparisons to the consensus estimate questionable

Enjoy your Friday, have a pleasant weekend, and until next time, “may the bulls be with you!”

David D. Moenning
Founder TopStockPortfolios.com

For more “top stock” portfolios and research, visit TopStockPortfolios.com


The opinions and forecasts expressed are those of David Moenning, founder of TopStockPortfolios.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. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.

Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

The information contained in our websites and TopStockPortfolios publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.

Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.