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David Moenning is a the Chief Investment Officer at Heritage Capital Management. Dave is also the proprietor of StateoftheMarkets.com, which provides free and subscription-based portfolio services. Dave began his investment career in 1980 and has been an independent money manager since 1987.... More
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Daily State of the Markets
  • Will It Stick? 0 comments
    Dec 28, 2009 8:55 AM | about stocks: AMZN, SLB, HD, LOW, PENN, AAPL

    Daily State of the Markets 
    Monday Morning – December 28, 2009

    Good morning. Despite the holiday-shortened session, the bulls put on a nice show on Thursday. While 50 points isn’t usually something to get terribly fired up about, this particular 50 points may prove to be important as the major indices all finished at new highs for the year and appear to have put the trading range that dominated the action lately in the rearview mirror.

    Although the bears may quibble about the chart of the DJIA, their argument ends there as all of the major indices have managed to clearly break on through to the other side of the trading range that had been in play for more than six weeks. Don’t agree? Take a peek at a chart of the NASDAQ, or the S&P 400 Midcap Index, or the Russell 2000. By perusing charts other than the venerable Dow Jones Industrial Average, the pattern becomes quite clear.

    For those technically inclined readers, it is also worth noting that the S&P was able to finish above the 1121 mark – the number that sits exactly in the middle of the 2007 high and the 2009 low. As such, the glass-is-half-full crowd will suggest that such an achievement will warrant more buying in the not-too distant future.

    The source of the good tidings at the corner of Broad and Wall could certainly have been attributed to the calendar. But then again, in light of the fact that Wall Street is not known as a place one goes to find the warm fuzzies, perhaps the positive economic data points would better explain the session’s upward bias.

    For example, the Labor Department reported that weekly jobless claims fell by 28,000 to a total of 452,000. This was not only well below the expectations for a reading of 470,000, but also the lowest total seen since September 2008 (which was before the Lehman/AIG debacles). In addition, continuing claims for unemployment insurance dropped 127K to 5.076M, which was below the consensus and marked the 12th time the weekly total has dropped in the last 14 weeks.

    Next up was the report on orders for durable goods. Although the headline number came in below the consensus expectations, the numbers were actually pretty decent when you strip out aircraft orders. Orders ex-transportation advanced 2.0%, which was above the expectation for an increase of 1.1%. And the important Nondefense capital goods ex-aircraft number, which is a proxy for business investment, rebounded 2.9% – the most since June. So, while the Durable Goods numbers do tend to be fairly volatile, the report seemed to offer further indications that the economic environment is indeed improving.

    Getting back to the charts, our less-than optimistic friends in fur are quick to point out that this week’s important technical action occurred while no one was looking. So, should the bulls fail to advance the ball from here or worse yet, allow their opponents to turn this thing around, these key technical levels will suddenly become very big resistance points. Therefore, the action over the next couple of weeks will be critical from a technical standpoint.

    Turning to this morning, we don’t have any economic data to review before the bell but we will get the Dallas Fed Manufacturing Index at 10:30 am.

    Running through the rest of the pre-game indicators, the overseas markets are mostly higher in thin trading. Crude futures are up with the latest quote showing oil trading higher by $0.35 to $74.80. On the interest rate front, we’ve got the yield on the 10-yr trading at 3.84% (which is the high end of the range for the year), while the yield on the 3-month T-Bill is currently at 0.05%. In addition, gold is moving higher by $6.00 and the dollar is weaker against the Yen and Pound, but up versus the Euro. Finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a slightly higher open. The Dow futures are currently ahead by about 25 points; the S&P’s are up about 2 points, while the NASDAQ looks to be about 4 points above fair value at the moment.

    Wall Street Research Summary

    Upgrades:

    • Amazon.com (AMZN) – Mentioned positively at Barclays
       
    • Schlumberger (SLB) – Capital One Southcoast
       
    • Home Depot (HD) – Estimates increased at Goldman
       
    • Lowe’s (LOW) – Estimates increased at Goldman
       
    • Penn National Gaming (PENN) – Mentioned positively at Oppenheimer
       
    • Finish Line (FINL) – Sterne, Agee
       
    • Apple (AAPL) – Estimates increased at Thomas Weisel
       
    • H&R Block (HRB) – Mentioned positively at UBS

       

      Downgrades:

    • none

       

      Long positions in stocks mentioned: AMZN, AAPL

      Consider embrace an attitude of gratitude – and until next time, “May the bulls be with you!”

      David D. Moenning
      Founder TopStockPortfolios.com

      For more "top stock" portfolios and research, visit TopStockPortfolios.com

       


      The opinions and forecasts expressed are those of David Moenning, founder of TopStockPortfolios.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. 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 TopStockPortfolios 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. Stocks 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 our websites and TopStockPortfolios publications 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 with the U.S. Securities and Exchange Commission 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.



    Disclosure: AMZN, AAPL
    Stocks: AMZN, SLB, HD, LOW, PENN, AAPL
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