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David Moenning
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David Moenning is a the Chief Investment Officer at Heritage Capital, which focuses on active risk management of the U.S. stock market. Dave is also the proprietor of StateoftheMarkets.com, which provides free and subscription-based portfolio services. Dave began his investment career in 1980... More
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Daily State of the Markets
  • Indicators Suggest A Pullback Might Be Near, But... 0 comments
    Jul 17, 2014 8:07 AM

    Daily State of the Markets
    Thursday, July 17, 2014

    One of Dave M's partners at Numetrix Capital, Paul Schatz, is filling in for Dave this morning. Here are Paul's latest thoughts on the "state of the markets."

    Good morning. The Dow hit yet another all time high yesterday and there hasn't been a 10%+ correction in 35 months. When stocks opened sharply lower on July 10th, the bears came roaring out of hibernation calling for everything from a 10% correction to the end of the bull market. It was a sea of ugly red prices on my screen due to Portuguese bank worries, and weak China data. That decline didn't even last a full day. Nor did the decline based on the -2.9% GDP print or Yellen's previous press conference or a host of other headlines that were quickly absorbed.

    I just cannot understand why more people are not excited about this market. It has truly been a bull market for the ages. The masses just keep hating and disavowing and predicting doom and gloom while the rest of us are smiling ear to ear for as long as we can. Bull markets do not end overnight and while this one continues to be old and wrinkly, it is generally healthy.

    Because I am running out of ways to celebrate after all these years, I thought I would spend some time exposing some of small cracks in the pavement.

    What can the bears hang their hats on?

    For now, the S&P 400 and Russell 2000 are seriously lagging the Dow, S&P and Nasdaq. High yield bonds, a major canary in the coal mine, have been lagging for almost a month. The NYSE advance/decline line has not confirmed the recent all time highs and has been lagging all month.

    Is that enough to end the bull market? Hardly, but it could certainly spell market pullback at any given time. Have we had these types of warnings before? Yes, many, many times during this bull market with most common outcome being a short-term pullback.

    Weakness remains a buying opportunity and the Dow should continue to power higher to 17,500, 18,000 and perhaps even higher before all is said and done.

    Paul Schatz

    Paul Schatz is President and Chief Investment Officer of Heritage Capital, LLC, in Woodbridge, CT. Paul developed and manages all eight of the firm's currently offered investment programs.


    Looking For Investment Management Help?

    Check out Heritage Capital Research's NextGen Active Risk Manager
    Or call Heritage for more information at (847) 807-3590


    Turning to This Morning...

    Just after yesterday's close, the U.S. and EU announced further sanctions against Russia in response to Russia's alleged support of separatists fighting in the Ukraine. Russian President Putin said sanctions would take U.S./Russia relations into a dead end and cause very serious damage. As a result, Russia's RTS stock market fell -3% Thursday, leaving it down -5.4% on the week. As one might expect, oil and gold are moving up and bond yields are down this morning. However, none of the moves are alarming at this stage. European bourses have declined on the new sanctions and U.S. futures are following suit, with the bears appearing to gain momentum in the last hour.

    Pre-Game Indicators

    Here are the Pre-Market indicators we review each morning before the opening bell...

    Major Foreign Markets:
    - Japan: -0.06%
    - Hong Kong: -0.01%
    - Shanghai: -0.55%
    - London: -0.61%
    - Germany: -0.80%
    - France: -0.99%
    - Italy: -1.35%
    - Spain: -1.06%

    Crude Oil Futures: +$1.25 to $102.45

    Gold: +$2.40 at $1302.70

    Dollar: lower against the yen, higher vs. euro and pound.

    10-Year Bond Yield: Currently trading at 2.516%

    Stock Futures Ahead of Open in U.S. (relative to fair value):
    - S&P 500: -8.97
    - Dow Jones Industrial Average: -49
    - NASDAQ Composite: -21.00

    Thought For The Day...

    Great things don't emanate from the comfort zone...

    Positions in stocks mentioned: none

    Follow Me on Twitter: @StateDave


    The opinions and forecasts expressed herein are those of Mr. David Moenning 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 StateoftheMarkets.com 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. One 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 this report 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 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.

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