Seeking Alpha

David Moenning's  Instablog

David Moenning
Send Message
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
My company:
StateoftheMarkets.com
My blog:
Daily State of the Markets
  • Playing The Hand You're Dealt 0 comments
    Apr 9, 2010 8:50 AM | about stocks: ESS, ANF, BJ, JCP, DIS, WSM, FSLR, CMI, AEO, TJX, AA, MGM

    Daily State of the Markets 
    Friday Morning - April 9, 2010

    One of my favorite Wall Street clichés is that traders need to trade the market they have, not the one they want. In short, anyone in the bear camp these days had best remember this as the relentless march higher has left many a short seller dead on the side of the road over the past two months.

    Yesterday's action proved that this remains the bulls' game to lose. After succumbing to some selling on Wednesday and then opening lower on Thursday, the bears had a golden opportunity to put some fear back in the market and to score some points for their team. However, despite a mixed bag of data inputs, which included some negative news, our furry friends were simply pushed aside by the big, bad bulls once again.

    On the negative side of the ledger, the bears had the report on Weekly Jobless Claims and further deterioration in Greece to work with. Although the March Jobs report showed that the economy is creating jobs, the weekly update on initial claims for unemployment insurance was seen heading the wrong direction Thursday. Analysts had expected to see the weekly claims number decline to 435K. But instead, the report showed that 460K people had filed for unemployment during the week.

    In addition, the situation in Greece would appear to favor the bear camp these days. While the EU and the IMF have pledged assistance to Greece as a measure of last resort, bond investors aren't buying into the plan and definitely are not playing nice at the moment. Bond yields continue to soar with the Greek 10-year note yield hitting a record high Thursday of 7.5%.

    This one-two punch of negativity pushed stocks down far enough after the open to test the bulls' confidence as the indices flirted with their short-term moving averages and recent support zones. However, just about the time our friends in fur appeared to be making some headway, they appeared to fumble the ball - again.

    The popular press awarded credit for the turnaround in stock prices on the strong same-store sales numbers from the nation's retailers. However, truth be told, these results were available before the opening bell rang. So, despite the fact that sales were indeed strong and better-than-expected across the board, it is hard to argue that this was the catalyst for the reversal of fortunes in stock prices.

    A better explanation for the bulls' comeback was the release of the results from the Treasury's 30-year bond auction. While everybody on the planet is happy to buy up as much short-term paper as the U.S. will print, there has been a good deal of consternation lately about the demand for longer-term debt offerings. And given the focus on sovereign debt ratings and the yields governments are forced to pay in the market to borrow, those seeing the glass as half empty argued that the demand for 30-year bonds just wouldn't be there.

    But, once again, the bear camp got it wrong as the bond auction was actually very well received. Thus, traders were able to breathe a sigh of relief and cover some shorts in the process.

    This is not to say that we feel the market will simply continue to march higher from here. However, I have been around long enough to have seen this type of relentless melt-up before. And the bottom line is that until the bears can come up with a raison d’être, traders must indeed play the hand they are dealt and not the one they want.

    Turning to this morning... We don't have any economic data to review before the bell but we will get a report on Wholesale Inventories at 10:00 am. On the news front, UBS says that Greece may need assistance from the IMF within days while a spokesman from Germany said no one should doubt that the EuroZone and/or the IMF would rescue Greece if needed.

    Running through the rest of the pre-game indicators, the major overseas markets are higher across the board. Crude futures are up $0.62 to $86.01. On the interest rate front, the yield on the 10-yr is currently trading at 3.92%. Next, gold is up $3.90 to $1156.80 and the dollar is lower against the Yen, Euro, and Pound. Finally, with about 60 minutes before the bell, stock futures in the U.S. are pointing to a stronger open. The Dow futures are currently ahead by about 31 points; the S&P’s are up about 4 points, while the NASDAQ looks to be about 6 points above fair value at the moment.

    Wall Street Research Summary

    Upgrades:

    • Essex Property (NYSE:ESS) - BofA/Merrill
       
    • Abercrombie & Fitch (NYSE:ANF) - BofA/Merrill
       
    • Mack-Cali Realty (NYSE:CLI) - BofA/Merrill
       
    • Macerich (NYSE:MAC) - BofA/Merrill
       
    • BJ's Wholesale (NYSE:BJ) - Credit Suisse
       
    • JC Penney (CJP) - Addded to Conviction Buy at Goldman
       
    • Walt Disney (NYSE:DIS) - Estimates increased at Jefferies
       
    • Lincoln Educational (NASDAQ:LINC) - Oppenheimer
       
    • Williams-Sonoma (NYSE:WSM) - Oppenheimer
       
    • First Solar (NASDAQ:FSLR) - Estimates increased at Soleil
       
    • Cummins (NYSE:CMI) - UBS
       
    • DISH Network (NASDAQ:DISH) - UBS

       

      Downgrades:

    • American Eagle (NYSE:AEO) - BofA/Merrill
       
    • TJX Cos (NYSE:TJX) - Removed from Conviction Buy at Goldman
       
    • Celgene (NASDAQ:CELG) - Jefferies
       
    • Alcoa (NYSE:AA) - JPMorgan
       
    • Synaptics (NASDAQ:SYNA) - Lazard
       
    • Dominion (NYSE:D) - Morgan Stanley
       
    • Strayer Education (NASDAQ:STRA) - Oppenheimer
       
    • MGM Mirage (NYSE:MGM) - Soleil
       
    • Zale (NYSE:ZLC) - Soleil

       

      Long positions in stocks mentioned: none

      Enjoy your Friday and have a pleasant weekend...

      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: CMI
    Themes: Market Commentary Stocks: ESS, ANF, BJ, JCP, DIS, WSM, FSLR, CMI, AEO, TJX, AA, MGM
Back To David Moenning's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.