David Moenning's Daily State of the Markets: 09/06

Black Gold, Texas Tea

Good morning. The bulls managed to squeeze out yet another small gain yesterday as traders apparently couldn�t find a reason to hustle back to their posts. While there weren�t any major news stories to drive trading and volume remained on the light side, the bulls could point to positive sentiment stemming from one of the biggest oil discoveries in U.S. history as the focal point of the session.

While it was a little more complicated than Jed Clampet�s work, the joint venture between Chevron, Devon Energy, and Statoil produced a massive oil find in the Gulf of Mexico, which is expected to boost U.S. oil and gas reserves by as much as 50%. This, of course, pushed down the price of oil (more supply = lower prices), which, in turn, gave investors hope that we�ve seen the worst of the advance in crude.

Now toss in another crummy report on the state of the housing market and it is easy to project that the Fed is likely to stay off the hiking trail for a while. This fact alone seems to have emboldened the bulls and although there weren�t any major reasons to buy, the bears have been unable to produce any kind of a comeback to the latest low-volume breakout on the charts. So, unless our furry friends can get their act together soon, it looks like it�s the bull�s game to lose for now.

The game got interesting after the bell however, as Intel announced a major restructuring, which will include more than 10,000 job cuts, and Ford finally made a �bold move� by introducing a new CEO. Neither news story is likely to drive trading in shares outside of the specific companies, but the moves do indicate that this is not an environment where companies can simply stand still.

Turning to this morning, we have some economic data to work with but the story of the morning seems to be new concerns about U.S. economic growth and consumer spending. Why this is cropping up now is a mystery, but the foreign markets are falling on the concept.

On the economic front, Non-Farm Productivity for the second quarter came in pretty much in line with expectations, but Unit Labor Costs were a problem at 4.9% versus expectations in the 4% range. This is the first inflationary data in some time and the bears are trying to capitalize on the report right now.

Running through the pre-game indicators, as we mentioned, the major overseas markets are lower across the board. Gold futures are pulling back after yesterday�s big run higher and are currently down by more than $4 this morning. Crude futures are continuing to fall and are trading down by another $0.56 this morning to $68.04. Interest rates are moving a little higher again this morning with the 2-year currently quoted at 4.82% while the 10-yr is trading with a yield of 4.81% right now. And finally, with about an hour before the bell, stock futures in the U.S. solidly lower. The Dow futures are currently off by 40 points, the S&Ps are down 5.80, and the NASDAQ is sporting a decline of about 10 points.

Stocks �In Play� This Morning:

Panera Bread (PNRA) � Reduced sales guidance for Q3
Qualcomm (QCOM) � Upgraded at AG Edwards
Lyondell Chemical (LYO) � Mentioned positively in Barron�s
Steel Dynamics (STLD) � Moody�s raises credit rating
Valero (VLO) � Downgraded at Citigroup
Sunoco (SUN) � Downgraded at Citigroup
Global Signal (GSL) � Upgraded at BofA
AFLAC (AFL) � Upgraded at BofA
Hartford Financial (HIG) � Upgraded at BofA
Ford � Upgraded at Citigroup
Devon Energy (DVN) � Upgraded at Deutsche Bank
Pfizer (PFE) � Upgraded at HSBC
Veritas (VTS) � Downgraded at Deutsche Bank, Jefferies
Netflix (NFLX) � Upgraded at JP Morgan
Realty Income (O) � Upgraded at JP Morgan
Laboratory Corp (LH) � Downgraded at Wachovia
Intel (INTC) � Estimates reduced at Bear Stearns

Long positions in stocks mentioned: STLD, SUN, LH

** For More of David Moenning�s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.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 of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM�s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

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