Daily State of the Markets 
Thursday Morning – November 5, 2009

Good morning. As a rule, I try not to read too terribly much into a “Fed Day” as there is usually a big batch of volatility that may or may not mean much of anything come the dawn of the next day. Maybe, it’s just me. Or maybe there are others that find themselves inclined to simply stand aside and watch the nuttiness from the sidelines on “Fed Days.” But in any event, the volatility after a Fed announcement, while fun to watch, may not be telling as to what to expect in the future.

But if volatility is the name of your game, then yesterday’s “Fed Day” was your kind of day. We got a rally of nearly 150 points out of the gate then a dive after the Fed statement, a quick bounce back up of 90 points to the high of the day, and then a plunge of 125 into the close. And anyone other than those trading on a 15-minute bar chart was left shaking their heads.

The day got started off on the right foot on the back of rallies in Asia and Europe. The World Bank provided a boost to the bulls’ cause by upping their 2010 GDP forecast in China. And the political types were out telling anyone that would listen that the gubernatorial victories by the republicans in New Jersey and Virginia were a big reason for the early rally. There was talk of a mandate lost by the administration and that the idea of a second economic stimulus bill was suddenly out the window.

Traders may have also been breathing a little easier in front of the Fed announcement as it was becoming clear that this Fed was not in the business of taking Wall Street by surprise. Thus, the worry that Bernanke and friends would drop the ball or do something silly seemed to fade as traders covered some shorts.

Everything seemed to be going along swimmingly through the Fed announcement and it looked like the bulls might have another “melt up” on their hands. The Fed had left rates alone and said that (a) the economy was looking a little better, (b) inflation was nonexistent, (c) they would continue with their current quantitative easing programs until the end of the first quarter, and (d) that they had no intentions of raising rates anytime soon.

In short, the Fed statement was little changed from last time and you had to hunt hard to find even single word changes, let alone any new messages or clues about the future. Thus, those traders looking for a sign as to when the Fed would begin to implement their “exit strategy” went home disappointed.

Speaking of disappointment, the financials tanked hard in the last hour or so and took the rest of the market down with it. And while the dollar did rally a smidge during that timeframe, we really can’t blame this move on the greenback. However, we did see a quick spike in interest rates after the Fed meeting as the yield on the 10-year moved up from 3.51 to 3.55 in short order. So, perhaps there were some sell programs tied to move as rising rates is also a bad thing for the dollar carry trade. But we’re going to chalk it up to fun with computers on a Fed Day while everyone else was simply watching from the sidelines.


Turning to this morning, we had a good report from Cisco (CSCO) after the bell, which has helped improve the mood a bit. On the news front, both the BOE and the ECB left interest rates unchanged earlier this morning and we’ve got the nation’s retailers reporting same-store sales comparisons this morning. For example, Target (TGT) just reported a October comps of -0.1%, which was below the StreetAccount estimate for +0.3%

On the economic calendar, we see that Initial Claims for Unemployment for the week ending October 31st were reported at 512K; below the consensus estimate for 522K. The prior week’s numbers were revised higher to 532K from 530K. Continuing claims for Unemployment Insurance for came in at 5.749M; in line with consensus 5.75M.

In addition, Q3 Nonfarm Productivity was reported up 9.5%; well above the consensus of 6.5%. Unit Labor Costs (a measure of wage inflation) fell by -5.2%; more than the consensus estimate of -4.2%. Last quarter’s Nonfarm Productivity was revised to 6.9% from 6.6% and Unit Labor Costs were revised to -6.1% from -5.9%.

Running through the rest of the pre-game indicators, the foreign markets are mixed with Europe fractionally lower. Crude futures are unchanged with the latest quote showing oil trading lower by $0.01 to $80.39. On the interest rate front, we’ve got the yield on the 10-yr trading at 3.55%, 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. are pointing to a stronger open. The Dow futures are currently ahead by about 77 points; the S&P’s are up by about 8 points, while the NASDAQ looks to be about 16 points above fair value at the moment.

Earnings After The Bell



Allstate ALL $0.99 $1.01
Cisco Systems CSCO $0.36 $0.31
Corrections Corp CXW $0.33 $0.31
Evergreen Solar ESLR -$0.09 -$0.08
Goldcorp GG $0.19 $0.16
Health Care REIT HCN $0.77 $0.77
J2 Global JCOM $0.43 $0.45
Kimco Realty KIM $0.30 $0.31
Liberty Global LBTYA -$0.45 $0.06
Microchip MCHP $0.24* $0.21
Medivation MDVN -$0.42 -$0.39
Murphy Oil MUR $0.98 $0.99
99 Cents Only NDN $0.14 $0.07
News Corp NWSA $0.22 $0.18
Prudential Financial PRU $1.59 $1.34
Qualcomm QCOM $0.48 $0.52
Sunstone Hotel SHO $0.14 $0.14
Whole Foods WFMI $0.20 $0.18
Earnings Before The Bell



Cardinal Health CAH $0.54 $0.42
Cigna CI $1.13 $1.03
CVS Caremark CVS $0.65 $0.64
Dr. Pepper Snapple DPS $0.54 $0.49
Dynegy DYN -$0.25* $0.03
Holly Corp HOC $0.47 $0.45
Imax IMAX $0.06 $0.01
King Pharmaceuticals KG $0.29 $0.27
Nasdaq OMX Group NDAQ $0.42 $0.42
MetroPCS Communications PCS $0.21* $0.09
Spectra Energy SE $0.30 $0.26
Sara Lee SLE $0.32* $0.15
Scotts Miracle-Gro SMG -$0.23 -$0.33
Teradata TDC $0.38 $0.29
Telephone & Data TDS $0.33 $0.43
Time Warner Cable TWC $0.76 $0.76
Wendy’s/Arby’s Group WEN $0.06 $0.06

Wall Street Research Summary


Palm (PALM) – Barclays Brinker Intl (EAT) – Bernstein Deutsche Telekom (DT) – Citi Medtronic (MDT) – Credit Suisse Companhia Vale do Rio Doce (VALE) – Deutsche Bank Dominion (D) – Jefferies TRW Automotive (TRW) – KeyBanc Aqua America (WTR) – Macquarie Research ON Semiconductor (ONNN) – Piper Jaffray El Paso (EP) – RBC Capital Eldorado Gold (EGO) – RBC Capital Baker Hughes (BHI) – Weeden Allis-Chalmers Energy (ALY) – Wells Fargo


Olympic Steel (ZEUS) – Added to Conviction Sell list at Goldman Molson Coors (TAP) – Goldman Sachs FEMSA (FMX) – HSBC Terex (TEX) – Morgan Stanley Garmin (GRMN) – RBC Capital

Long positions in stocks mentioned: PALM, TAP, CSCO, CVS

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

Make the decision to have a great 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.