David Moenning�s Daily State of the Markets: 03/30
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Tech Takes the Lead
A day after traders threw a temper tantrum over the worries that the Fed might be overdoing it; technology leadership and some end-of-quarter window dressing arrived to save the day (and perhaps the quarter).
Technology led the way higher yesterday as traders went gaga over Google�s inclusion in the S&P 500 and snapped up shares of Apple and Qualcomm. Perhaps traders recognized that tech tends to be less rate-sensitive. Perhaps the outlook for capex (capital expenditures) is indeed improving. Or perhaps the gains represented a celebration of the new technology leadership. But in any case, it was fun to see tech jump back to the front of the pack.
The move in Techland helped the blue chip indices recover much, if not all of Tuesday�s Fed-induced drop and obviously helped the NASDAQ, which popped up to a new five-year high. But it also propelled the Russell 2000 and both the S&P Small and Mid Cap indices to new all-time highs.
Several news outlets talked about the rebound being a reflection of investors� collective optimism about the state of the economy. However, we prefer a slightly more cynical view and will point to the calendar as a primary factor in yesterday�s well-timed bounce. Let�s remember that historically speaking, the end-of-quarter window dressing tends to go in the direction of the quarter�s return. Thus, an up quarter (like we are seeing now) generally produces buying in the last few days and vice versa.
In any event, the bulls are quick to point out that stocks stepped lively in spite of the increases seen in both bond yields and crude oil yesterday. Oil futures rose again on the back of the biggest drawdown in gasoline inventories in the last two and one-half years, while bond prices moved down on the Fed�s view of a stronger economy. Crude finished at $66.45 while bond yields settled at 4.80%, which was the highest close since June 14, 2004.
Turning to this morning, the early indicators suggest a flat open for stocks. Conflicting company news is keeping a lid on any upside at the moment as the positive from Nokia�s announcement of increased growth prospects is being offset by crude prices rising above $66.50 and Google�s secondary offering announcement (they are selling shares to index funds to help facilitate the inclusion in the S&P 500).
On the economic front, the final revision for the fourth quarter�s GDP came in right on target (which is hardly surprising, since it�s the third try) at 1.7%. However, the Prices component was reported higher than expected at 3.5% versus the consensus of 3.3%. Bonds are moving modestly lower in response as rates continue to rise.
Running through the rest of the pre-game indicators, overseas markets are higher across the board. Oil futures are moving up again and are currently trading up $0.15 to $66.60. Natural Gas is trading up by $0.09 to $7.55 in front of today�s inventory numbers. Bond yields are moving up this morning with the 10-yr currently trading at 4.83%. And finally, stock futures in the U.S. were a little above fair value an hour before the bell.
Stocks �In Play� This Morning:
GOOG � Announces secondary to provide shares to index funds
NDAQ � No longer making offer to acquire London Stock Exchange
FCX � Upgraded at Morgan Stanley
NOK � Raises growth guidance for 2006
AMD � DailyTech reports AMD�s dual-core processor may be delayed
SANM � Downgraded at Morgan Stanley
DF � To replace MYG in S&P 500
BIDU � Trading higher on rumor of GOOG acquisition
TIVO � Patent case against DISH begins
HET � Price target raised at Citigroup
BBY � Reports $1.29 vs. $1.29, Revenues $10.69B vs. $10.53B
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: QCOM, AMD
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.
A day after traders threw a temper tantrum over the worries that the Fed might be overdoing it; technology leadership and some end-of-quarter window dressing arrived to save the day (and perhaps the quarter).
Technology led the way higher yesterday as traders went gaga over Google�s inclusion in the S&P 500 and snapped up shares of Apple and Qualcomm. Perhaps traders recognized that tech tends to be less rate-sensitive. Perhaps the outlook for capex (capital expenditures) is indeed improving. Or perhaps the gains represented a celebration of the new technology leadership. But in any case, it was fun to see tech jump back to the front of the pack.
The move in Techland helped the blue chip indices recover much, if not all of Tuesday�s Fed-induced drop and obviously helped the NASDAQ, which popped up to a new five-year high. But it also propelled the Russell 2000 and both the S&P Small and Mid Cap indices to new all-time highs.
Several news outlets talked about the rebound being a reflection of investors� collective optimism about the state of the economy. However, we prefer a slightly more cynical view and will point to the calendar as a primary factor in yesterday�s well-timed bounce. Let�s remember that historically speaking, the end-of-quarter window dressing tends to go in the direction of the quarter�s return. Thus, an up quarter (like we are seeing now) generally produces buying in the last few days and vice versa.
In any event, the bulls are quick to point out that stocks stepped lively in spite of the increases seen in both bond yields and crude oil yesterday. Oil futures rose again on the back of the biggest drawdown in gasoline inventories in the last two and one-half years, while bond prices moved down on the Fed�s view of a stronger economy. Crude finished at $66.45 while bond yields settled at 4.80%, which was the highest close since June 14, 2004.
Turning to this morning, the early indicators suggest a flat open for stocks. Conflicting company news is keeping a lid on any upside at the moment as the positive from Nokia�s announcement of increased growth prospects is being offset by crude prices rising above $66.50 and Google�s secondary offering announcement (they are selling shares to index funds to help facilitate the inclusion in the S&P 500).
On the economic front, the final revision for the fourth quarter�s GDP came in right on target (which is hardly surprising, since it�s the third try) at 1.7%. However, the Prices component was reported higher than expected at 3.5% versus the consensus of 3.3%. Bonds are moving modestly lower in response as rates continue to rise.
Running through the rest of the pre-game indicators, overseas markets are higher across the board. Oil futures are moving up again and are currently trading up $0.15 to $66.60. Natural Gas is trading up by $0.09 to $7.55 in front of today�s inventory numbers. Bond yields are moving up this morning with the 10-yr currently trading at 4.83%. And finally, stock futures in the U.S. were a little above fair value an hour before the bell.
Stocks �In Play� This Morning:
GOOG � Announces secondary to provide shares to index funds
NDAQ � No longer making offer to acquire London Stock Exchange
FCX � Upgraded at Morgan Stanley
NOK � Raises growth guidance for 2006
AMD � DailyTech reports AMD�s dual-core processor may be delayed
SANM � Downgraded at Morgan Stanley
DF � To replace MYG in S&P 500
BIDU � Trading higher on rumor of GOOG acquisition
TIVO � Patent case against DISH begins
HET � Price target raised at Citigroup
BBY � Reports $1.29 vs. $1.29, Revenues $10.69B vs. $10.53B
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: QCOM, AMD
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.
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