|
Daily State of the Markets Investors not tuned in to the minute-to-minute happenings in the market over that past two sessions may be starting to get a sinking feeling about the prospects for any further upside. For the second day in a row, stocks started higher in impressive fashion only to turn tail and run lower around mid-day. This has provided the glass-is-half-empty crowd with an opportunity to yammer on about the horrible price action and how the market is starting to look tired. While we will readily admit that stocks are overbought and due for a rest, the reality is traders aren’t stupid people. So, when the markets were presented with the news that a South Korean naval ship had suddenly sunk after an explosion had ripped it in half while in waters that are contested by its less-than friendly northern neighbors, well, you can see how some selling based on geopolitical issues might ensue. Although South Korea quickly said that it did not appear likely that its naval ship was hit by a torpedo, the fact that the South Korean President quickly convened an emergency meeting of senior defense and security officials would seem to argue otherwise. Now toss in the fact the North Koreans have been talking some trash lately about starting a fight and it is little wonder that the hot money decided to sell first and ask questions later. Thus, the “bad price action” of the past two days has actually been driven by news events. On Thursday, it was the ECB’s Jean Claude Trichet suggesting that the EU should take care of its own business and leave the IMF out of it that caused traders to believe that the “done deal” for Greek assistance may not be done after all. Then on Friday, that sinking feeling investors may have felt was actually caused by another sinking – something that navy warships aren’t prone to do on their own. There were two other factors that may have been responsible for some selling on Friday. First is the fact that we’ve got a holiday-shortened week on tap and trading might just be a little thin this week. And with the Big Kahuna of economic reports scheduled for release on Friday when the markets are closed due to the observance of Good Friday, this alone might have been enough for short-term traders to bank some profits and focus on their travel plans. Second, the fact that interest rates have been movin’ on up lately may be giving traders reason to pause. Higher rates are most definitely not a welcome sight as the increased funding costs could put a strain on the economy. Although the bears weren’t able to actually push the Dow or S&P into the red at the close on Friday, we will acknowledge that the price action of the last two days hasn’t been stellar from a chart perspective. True chartists don’t give a hoot about the news; it’s how the market reacts to the news that counts. And the fact that stocks gave up nice gains two days in a row means the bears may be on the prowl. So, watch those support zones carefully this week. Turning to this morning… S&P has affirmed UK’s sovereign debt rating at ‘AAA’ but says the outlook is still a concern due to deficits. On the economic front, Personal Incomes were unchanged in February, which was below the consensus expectations for an increase of +0.1%. January’s reading was revised upward to +0.3% from +0.1%. On the spending side, Personal Spending was in line with expectations +0.3% while January’s reading for spending was revised down a tenth to +0.4%. Finally, the PCE Core was unchanged in February while the PCE Deflator (a measure of inflation) was up 1.8% over the past year. Running through the rest of the pre-game indicators, with the exception of Japan, Asian markets are higher while European bourses are hovering above breakeven. Crude futures are up $0.36 to $80.97. On the interest rate front, we’ve got the yield on the 10-yr trading at 3.88%. Next, gold is moving up $9 to $1113.30 and the dollar is lower against the Yen and Pound but higher against the Euro. Finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a higher open. The Dow futures are currently ahead by about 40 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. Wall Street Research Summary Upgrades: |
Solarfun Power (SOLF) – Barclays Global Partners (GLP) – BofA/Merrill Vale SA (VALE) – Canaccord Adams American Campus (ACC) – Citi Precision Castparts (PCP) – Goldman Sachs, Target increased at JPMorgan CB Richard Ellis (CBG) – Added to Conviction Buy at Goldman Sachs Essex Property (ESS) – Removed from Conviction Sell at Goldman Southwestern Energy (SWN) – Added to Conviction Buy Goldman Sachs Patterson-UTI (PTEN) – Goldman Sachs Cypress Semiconductor (CY) – Mentioned positively at Jefferies Syniverse Technologies (SVR) – Jefferies Boeing (BA) – Target increased at JPMorgan Spirit Aero (SPR) – Target increased at JPMorgan Talbots (TLB) – Lazard Archer-Daniels (ADM) – Morgan Stanley Viacom (VIA.B) – Morgan Stanley Progressive (PGR) – Oppenheimer Best Buy (BBY) – Societe Generale Schlumberger (SLB) – Stephens
PG&E (PCG) – Estimates reduced at Bernstein Bank of America (BAC) – Estimates reduced at Bernstein Kellog (K) – BMO Capital Lincare Holdings (LNCR) – Deutsche Bank Lorillard (LO) – Deutsche Bank Power Integrations (POWI) – Deutsche Bank Molson Coors (TAP) – Deutsche Bank Synovus (SNV) – FBR Capital Rockwell Collins (CoL) – Goldman Sachs Dresser-Rand (DRC) – Goldman Sachs BRE Properties (BRE) – Added to Conviction Sell at Goldman Sachs VeriSign (SRSN) – Jefferies O’Reilly Auto (ORLY) – JPMorgam CONSOL Energy (CNX) – UBS lowers Target and long-term gas price forecast
Long positions in stocks mentioned: none
Best of luck today and
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.
