David Moenning's Daily State of the Markets 09/22

Too Cold?

Good morning. The bulls� attempt to �party like its 1999� (well, in the DJIA at least) ran into a brick wall of resistance yesterday. Instead of continuing to celebrate the Goldilocks scenario, where the economy is neither too hot to produce inflation nor too cold to cause concerns over a �hard landing,� traders took one look at the Philly Fed Index, remembered what month it was, and headed for the exits.

Until yesterday, the markets had been making a mockery of September�s seasonal tendencies as the Dow had risen more than 230 points during what is traditionally the calendar�s worst month. But, yesterday�s economic data rekindled worries that the economy might be �moderating� too quickly.

Yesterday�s first bit of data showed that the Index of Leading Economic indicators fell -0.2% in August, which was in line with expectations. The problem was that this marked the second straight month of decline for the index. And the old school crowd will recall that 3 straight monthly declines used to be indicative of an economic slowdown.

However, traders appeared to initially take the LEI numbers in stride. Well, until the Philly Fed report was released, anyway. The economic summary of the Philadelphia region came in at -0.4, which, unfortunately, was a far cry from analysts� projections for a reading of 14.0. This was the first negative reading since April of 2003, and when taken in conjunction with the LEI, it didn�t take long for the bears to begin to growl.

Even the usually level-headed group in the bond pits seemed to jump onto the worry wagon. The yield on the 10-year dropped precipitously after the reports and finished at 4.65%, which was the lowest yield since March 2nd.

Stocks retreated in a broad fashion as investors were reminded that the outlook for the economy continues to be murky at best. But in reality, the LEI has been anything but a leading indicator for quite some time and the Philly Fed report has a tendency to be volatile. So before we head to the lifeboats, it might be a good idea to remember that stocks had become very overbought and were overdue for a pullback.

Turning to this morning, there is no economic data scheduled for release today. But in the early going at least, it appears that the bears are going to try and push for a second straight win as the �too cold� theme appears to be taking hold around the globe.

So with foreign markets down across the board and bond yields continuing to fall (the yield on the 10-year is currently trading at 4.62%) the question of the day is if the dip-buyers will try and do their thing today or simply start the weekend early?

Stocks �In Play� This Morning:

Apple Computer (AAPL) � Piper analyst believes the company will roll out iPhone in 3-6 mos
Lincoln National (LNC) � Price target increased at UBS
Schering Plough (SGP) � Mentioned positively in Business Week
Newell (NWL) � Mentioned positively in Business Week
Cerner (CERN) � Mentioned positively at Piper Jaffray
Halliburton (HAL) � Authorizes increase in share repurchase program
Palm (PALM) � Downgraded at Bear Stearns
Oracle (ORCL) � Downgraded at Bernstein
Comcast (CMCSA) � Price target increased at Credit Suisse
Dollar General (DG) � Downgraded at Goldman Sachs, Defended at Citigroup
Lowes (LOW) � Mentioned positively at Goldman Sachs
Walgreens (WAG) � Downgraded at JP Morgan
Wachovia (WB) � Downgraded at Merrill
Legg Mason (LM) � Debt upgraded at Moody�s
Boston Scientific (BSX) � Downgraded at Morgan Stanley, Prudential, UBS, BofA
BP (BP) � Upgraded at Morgan Stanley
Anheuser Busch (BUD) � Downgraded at Stifel, Nicolaus
Cisco Systems (CSCO) � Mentioned positively at AG Edwards

Long positions in stocks mentioned: CSCO, ORCL

** 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.

You May Also Be Interested In

• After-Hours Movers: CRWV, NBIS, SMCI, LITE, CAVA, HRB
• After-Hours Movers: P, RIOT, BW, RKLB, HIMS, UPWK
• After-Hours Stock Movers: WDC, SNDK, FIG, APP, HUBS, SOUN, DASH, XYZ, Z, FLNC