David Moenning's Daily State of the Markets 02/08
Tweet
Share
E-mail
David Moenning�s Daily State of the Markets:
Concerns Converge
Good morning. Stocks had a rough go of it yesterday as the glass suddenly became half-empty on several fronts. Concerns over the state of the housing market, the potential for oil company earnings, the usual chatter over what the Fed might do next, the future of the internet, and the demand for U.S. Treasuries converged to create a day of selling in the market.
Despite a $2 drop in the price of oil, traders hit the sell button early and often yesterday. And it was selling in the oil patch that was one of the primary drivers of the action. For some time now, investors have enjoyed listening to each and every earnings report that came out of the oil sector. For some time now, investors have expected the earnings to blow away the expectations. And for some time now, this has been the case.
However, yesterday a major integrated oil company, British Petroleum, did the unthinkable. The company missed their profit projections and in short, this just wasn�t supposed to happen. Remember, traders don�t like surprises, unless they are to the upside. So the group-think among the hedge fund community went as follows. If BP can miss, perhaps the estimates in the sector have finally caught up to reality and have gotten too high.
Toss in a downgrade of the drillers at Merrill Lynch and before too long, you�ve got an awful lot of selling on your hands. Some sellers represented �weak hands� that may have just recently bought. This group was probably scared out by the volatility. Some sellers were indeed taking big profits in oil. We should remember that the oil sector (as measured by the XLE) jumped almost 15% in January alone. And finally, believe me when I say that some sellers were of the short-sale variety as hedge funds saw an opportunity to take the other side of this trade for a while.
Next up, the bell apparently rang to sell Toll Brothers yesterday. The luxury homebuilder reduced their sales forecasts for 2006 which prompted more worry on the state of the housing market and, in turn, the consumer.
Then there was the weak auction of 3-Year note. If you ever want to see investors shake in their boots, just bring up the idea that foreigners might lose their appetite for our debt at some point. While this was most certainly NOT the case yesterday, the weak bid-to-cover ratio and a widening tail, added to yesterday�s concerns.
When it was all said and done, the major indices had a pretty crummy day and appear to be now searching for support. This is always a tricky issue, so we will need to pay close attention to the action going forward.
Turning to this morning, there is once again no economic data before the bell an nothing on the calendar during the trading session. Cisco�s earnings report may be a bright spot as the company continued the tradition of �beating by a penny.� The company provided an upbeat forecast after playing the �lower expectations� game lately and the stock is trading up $1.40 or +7.7% before the opening bell.
In addition, although there is distinct lack of economic data to ponder, there is some M&A activity to pique traders� interests. Both PFE and Borland are making noise about doing deals this morning.
Running through the rest of the pre-market indicators, Overseas markets are all lower; Gold is down this again morning by -$4.80 to $550. Oil continues to move lower and is off by -$0.19 to $62.90; Natural Gas is up a couple pennies to $7.86; the yield curve remains inverted with the 2 yr at 4.61% and 10 yr at 4.57%; and finally, stock futures in the U.S. are leaning higher before the bell (Dow +18, S&P +3.10, and NASDAQ +8.0).
Stocks "In Play" This Morning:
PFE � Reports indicate company may sell consumer products division
CI � Reported $1.98 vs. $1.66 Revenues $4.2B vs. $4.02B Guides lower
PEP� Reported $0.65 vs. $0.65 Revenues $10.10B vs. $9.58B
BMC � Reported $0.30 vs. $0.27 Revenues $380.0M vs. $387.5M
CAKE � Reported $0.29 vs. $0.29 Revenues $328.3M vs. $331.2M
CSCO � Reported $0.26 vs. $0.25 Revenues $6.63B vs. $6.62B Upgraded at RW Baird and Oppenheimer
AMAT � Upgraded at Banc of America
INTC � Downgraded at ThinkEquity
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: INTC, CSCO, CI, AMAT
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) 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.
Concerns Converge
Good morning. Stocks had a rough go of it yesterday as the glass suddenly became half-empty on several fronts. Concerns over the state of the housing market, the potential for oil company earnings, the usual chatter over what the Fed might do next, the future of the internet, and the demand for U.S. Treasuries converged to create a day of selling in the market.
Despite a $2 drop in the price of oil, traders hit the sell button early and often yesterday. And it was selling in the oil patch that was one of the primary drivers of the action. For some time now, investors have enjoyed listening to each and every earnings report that came out of the oil sector. For some time now, investors have expected the earnings to blow away the expectations. And for some time now, this has been the case.
However, yesterday a major integrated oil company, British Petroleum, did the unthinkable. The company missed their profit projections and in short, this just wasn�t supposed to happen. Remember, traders don�t like surprises, unless they are to the upside. So the group-think among the hedge fund community went as follows. If BP can miss, perhaps the estimates in the sector have finally caught up to reality and have gotten too high.
Toss in a downgrade of the drillers at Merrill Lynch and before too long, you�ve got an awful lot of selling on your hands. Some sellers represented �weak hands� that may have just recently bought. This group was probably scared out by the volatility. Some sellers were indeed taking big profits in oil. We should remember that the oil sector (as measured by the XLE) jumped almost 15% in January alone. And finally, believe me when I say that some sellers were of the short-sale variety as hedge funds saw an opportunity to take the other side of this trade for a while.
Next up, the bell apparently rang to sell Toll Brothers yesterday. The luxury homebuilder reduced their sales forecasts for 2006 which prompted more worry on the state of the housing market and, in turn, the consumer.
Then there was the weak auction of 3-Year note. If you ever want to see investors shake in their boots, just bring up the idea that foreigners might lose their appetite for our debt at some point. While this was most certainly NOT the case yesterday, the weak bid-to-cover ratio and a widening tail, added to yesterday�s concerns.
When it was all said and done, the major indices had a pretty crummy day and appear to be now searching for support. This is always a tricky issue, so we will need to pay close attention to the action going forward.
Turning to this morning, there is once again no economic data before the bell an nothing on the calendar during the trading session. Cisco�s earnings report may be a bright spot as the company continued the tradition of �beating by a penny.� The company provided an upbeat forecast after playing the �lower expectations� game lately and the stock is trading up $1.40 or +7.7% before the opening bell.
In addition, although there is distinct lack of economic data to ponder, there is some M&A activity to pique traders� interests. Both PFE and Borland are making noise about doing deals this morning.
Running through the rest of the pre-market indicators, Overseas markets are all lower; Gold is down this again morning by -$4.80 to $550. Oil continues to move lower and is off by -$0.19 to $62.90; Natural Gas is up a couple pennies to $7.86; the yield curve remains inverted with the 2 yr at 4.61% and 10 yr at 4.57%; and finally, stock futures in the U.S. are leaning higher before the bell (Dow +18, S&P +3.10, and NASDAQ +8.0).
Stocks "In Play" This Morning:
PFE � Reports indicate company may sell consumer products division
CI � Reported $1.98 vs. $1.66 Revenues $4.2B vs. $4.02B Guides lower
PEP� Reported $0.65 vs. $0.65 Revenues $10.10B vs. $9.58B
BMC � Reported $0.30 vs. $0.27 Revenues $380.0M vs. $387.5M
CAKE � Reported $0.29 vs. $0.29 Revenues $328.3M vs. $331.2M
CSCO � Reported $0.26 vs. $0.25 Revenues $6.63B vs. $6.62B Upgraded at RW Baird and Oppenheimer
AMAT � Upgraded at Banc of America
INTC � Downgraded at ThinkEquity
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: INTC, CSCO, CI, AMAT
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) 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.
You May Also Be Interested In
- After-Hours Movers: TEAM, NET, TWLO, DOCS, FROG, DV, TTD, ABNB, DKNG, SG, RKT
- After-Hours Stock Movers: PLTR, SNAP, ON, ICHR, WGS, WHR
- After-Hours Movers: SPCX, AMD, ANET, PINS, APPS, UPST, ZETA, BKNG, LCID, CPNG, MTCH
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
