|
Daily State of the Markets |
Stocks fell for a third straight session on Friday as it appears that traders might be losing their appetite for buying the dips. It wasn’t a terribly negative day and it was actually fairly difficult to identify an overriding catalyst for the day’s decline. And while the bears will argue that the times they are a changing’ the bulls will counter with the fact that nary a trendline, an important moving average, or a support zone have been broken so far on this little dance to the downside.
There wasn’t any particular news item that triggered the selling and stocks actually started off to the upside in the first half-hour. But after that, the bears took over and it was just a question of how low they could go on a rather listless Friday afternoon.
I guess we could argue that there might be some hesitancy in the air right now as the earnings parade is about to begin again. After all, a lot of the recent run higher has been tied to improving guidance for the upcoming earnings season and the idea that corporate America just might start to see some top-line revenue growth in the near future.
Or maybe the day’s economic data gave traders a reason to pause and ponder the strength of the economy’s recovery. Although the report on orders for durable goods was a yea-but affair, the report was disappointing all the same. And remember, we are of the opinion that we have moved from the things-are-less-bad stage, through the the-recession-has-ended stage, and are now firmly entrenched in the strength-of-the-recovery phase.
Or perhaps it was the resurgence of geopolitical tensions with Iran that encouraged a little profit taking. Let’s face it; nukes are not a pleasant topic. And the idea of Iran joining “the club” is something most world leaders don’t really want to deal with on their watch. So, with Obama announcing the discovery of a secret nuclear facility, which the U.S., French, and British contend is designed for the production of nuclear weapons, traders may have decided it was time to see how this situation plays out from the sidelines.
Or maybe, just maybe, talk of the Fed possibly changing its tune was reason enough to nix the idea of buying the dips for a few days. While the Fed told us as recently as Wednesday that their intention is to keep interest rates very low for quite some time, Fed Governor and Bernanke advisor Kevin Warsh’s Op-Ed in the Wall Street Journal and then his speech to the Chicago Fed on Saturday would seem to be a first foray into the Fed changing its tune. Thus, there might be some worry cropping up that the Fed could pull the punchbowl too soon.
However at this stage of the game, there is no reason to believe that this little pullback is anything more than your garden variety corrective action. But, should the dip buyers decide to stand down and/or if any of these worries start to gain some traction, the bears might be in business. But for now, we’ll continue to give the bulls the benefit of the doubt.
Turning to this morning, some M&A activity seems to be lifting traders’ spirits as Xerox (XRX) will be buying Affiliated Computer (ACS) for cash and stock.
Running through the rest of the pre-game indicators, the foreign markets are mixed by region with Asia down and Europe fractionally higher. Crude futures are moving higher with the latest quote showing oil trading up by $0.08 to $66.10. On the interest rate front, we’ve got the yield on the 10-yr trading at 3.34%, while the yield on the 3-month T-Bill is currently at 0.09%. And finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a better open. The Dow futures are currently ahead by about 55 points; the S&P’s are up about 6 points, while the NASDAQ looks to be about 10 points above fair value at the moment.
Upgrades/Downgrades/Brokerage Research:
Cisco Systems (CSCO) – Upgraded at Barclays Cameco Corp (CCJ) – Downgraded at Canaccord Adams Accenture (CAN) – Upgraded at Citi Applied Materials (AMAT) – Upgraded at Citi MEMC Electronic Materials (WFR) – Downgraded at Citi Netflix (NFLX) – Estimates reduced at Credit Suisse Juniper Networks (JNPR) – Target increased at Goldman Qualcomm (QCOM) – Target increased at Goldman Nokia (NOK) – Estimates increased at Goldman Grupo Televisa (TV) – Upgraded at Goldman Steel Dynamics (STLD) – Removed from Conviction Buy list Jones Apparel (JNY) – Downgraded at Goldman Liz Claiborne (LIZ) – Downgraded at Goldman TCF Financial (TCB) – Downgraded at Oppenheimer Goldman Sachs (GS) – Estimates reduced at Rochdale Cabot Oil & Gas (COG) – Upgraded at SunTrust Robinson Humphrey Apple (AAPL) – Target increased at Thomas Weisel Wright Express (WXS) – Downgraded at Wells Fargo Starbucks (SBUX) – Mentioned positively at William Blair
Long positions in stocks mentioned: GS, CSCO, AAPL
Regardless of the color on the screen, make every effort to enjoy the day 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.
