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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
  • No Peak In Sight 0 comments
    Apr 21, 2010 8:53 AM

    Daily State of the Markets 
    Wedesday Morning - April 21, 2010

    Good morning. In Colorado, one of our favorite pastimes is to hike to the top of the state's "fourteeners" (mountains with peaks exceeding 14,000 feet in elevation). Many of these peaks are easily accessed by public hiking trails and do not require any technical climbing or scrambling to reach the summit. When trekking to the top of a "fourteener" it is always a happy time when the peak finally comes into sight. However, in the stock market, seeing the peak (this time in earnings growth) is not at all a good thing. And the fact that the peak appears to still be off in the distance was one of the reasons cited for the bulls resurgence on Tuesday.

    Okay, I will admit that the comparison of the stock market's steady climb over the past year to the long trail to the top of a mountain might be a bit of a stretch. However, the bottom line is that some of the earnings reports being released right now make it clear that the peak in earnings growth is NOT a consideration right now. And that, like finally spotting the end of your trail, is a good thing.

    Stocks moved higher right out of the gate yesterday morning on the back of word that the SEC's decision to sue Goldman Sachs (NYSE:GS) for fraud was not unanimous (history shows that the SEC likes to have a unanimous decision in order to bring action against a high profile firm). This and the fact that SEC commissioner Shapiro voted against the action seemed to squelch the idea that the SEC's suit might be the first of many or part of a larger effort by the administration to punish the banks.

    With potential worries about a litigation contagion seeming to subside, traders returned their attention to the earnings front. And with Bloomberg reporting yesterday that 82% of the S&P 500 companies reporting have beaten the estimates so far - the most since 1993 - the stock market appeared to get back on the summit trail.

    The bears will argue that the recent highs now represent overhead resistance on the charts and that the bulls will have a hard time breaking on through to the other side. And while we will admit that the chances for the market having entered a consolidation phase remains high, we must also recognize that nothing has been able to detract the bulls from their quest of late. So, while we'll be watching last week's highs closely, we should probably continue to give this stubborn bull the benefit of the doubt.

    Turning to this morning... Once again, we don't have any economic data to review before the bell. Despite a steady stream of upbeat earnings reports from the likes of Apple (NASDAQ:AAPL), Seagate (NASDAQ:STX), Huntington Bancshares (NASDAQ:HBAN), McDonalds (NYSE:MCD), and Morgan Stanley (NYSE:MS), worries over Greece and now Portugal are keeping the enthusiasm in check in the pre-market session.

    Running through the rest of the pre-game indicators, the major overseas markets are mixed with European bourses now moving lower on worries over Portugal. Crude futures are down $0.03 to $83.82. On the interest rate front, the yield on the 10-yr is currently trading at 3.79%. Next, gold is up $0.90 to $1140.10 and the dollar is lower against the Pound but higher against the Yen and Euro. Finally, with about 45 minutes before the bell, stock futures in the U.S. are pointing to a relatively flat open. The Dow futures are currently off by about 3 points; the S&P’s are ahead fractionally, while the NASDAQ looks to be about 9 points above fair value at the moment on the back of earnings from Apple.

    Remember to check the happiness box today...

    Yesterday's Earnings After The Bell

    Company

    Symbol

    EPS
    Reuters
    Estimate
    Apple AAPL $3.33 $2.46
    Altera ALTR $0.50 $0.40
    Cree CREE $0.47 $0.44
    Gilead Sciences GILD $0.99 $0.97
    Juniper Networks JNPR $0.27 $0.29
    Nabors Industries NBR $0.21 $0.20
    Seagate Technology STX $1.03 $0.93
    Stryker SYK $0.80 $0.78
    Total SystemTSS $0.26 $0.23
    Yahoo! YHOO $0.22* $0.09


    Earnings Before The Bell

    Company

    Symbol

    EPS
    Reuters
    Estimate
    Abbott LabsABT $0.81 $0.80
    Boeing BA $0.70 $0.66
    ComericaCMA -$0.46* -$0.28
    Quest Diagnostics DGX $1.00 $0.98
    EMC EMC $0.26 $0.24
    Freeport-McMoRan FCX $2.00 $1.90
    Huntington Bancshares HBAN $0.01* -$0.16
    KeyCorpKEY -$0.11 -$0.30
    Laboratory Corp LH $1.30 $1.31
    Lockheed MartinLMT $1.45 $1.41
    McDonald's MCD $1.03 $0.95
    Moody's MCO $0.47 $0.44
    Altria MO $0.42 $0.41
    Morgan StanleyMS $1.03 $0.58
    Ryder System R $0.24 $0.20
    SunTrust BanksSTI -$0.46 -$0.58
    St. Jude MedicalSTJ $0.73* $0.68
    AT&T T $0.59 $0.65
    United Technologies UTX $0.93 $0.90
    Wells Fargo WFC $0.45 $0.40


    * Report includes items that make comparisons to the consensus estimate questionable

    Wall Street Research Summary

    Upgrades:

    • RPM Intl (NYSE:RPM) - BofA/Merrill
       
    • VMware (CMW) - BofA/Merrill, JMP Securities
       
    • Career Education (NASDAQ:CECO) - Barclays
       
    • Trimble Navigation (NASDAQ:TRMB) - JPMorgan
       
    • USG Corp (NYSE:USG) - Macquarie Research
       
    • Arkansas Best (ABFS) - Pipter Jaffray
       
    • Host Hotels (NYSE:HST) - RW Baird
       
    • Apple (AAPL) - Scotia Capital
       
    • Goldcorp (NYSE:GG) - TD Newcrest
       
    • Xilinx (NASDAQ:XLNX) - Estimates increased at UBS
       
    • Parker-Hannifin (NYSE:PH) - UBS
       
    • Gaylord Entertainment (GET) - Wells Fargo

       

      Downgrades:

    • Strayer Education (NASDAQ:STRA) - Barclays
       
    • Marshall & Ilsley (NYSE:MI) - Bernstein
       
    • Regions Financial (NYSE:RF) - Bernstein
       
    • Transocean (NYSE:RIG) - Credit Suisse
       
    • New Oriental Education & Tech (NYSE:EDU) - Removed from Conviction Buy at Goldman
       
    • Forest Labs (NYSE:FRX) - Oppenheimer
       
    • Gilead Sciences (NASDAQ:GILD) - Pipter Jaffray
       
    • Ciena (NYSE:CIEN) - Soleil Securities
       
    • Exelon (NYSE:EXC) - Soleil Securities
       
    • Supervalu (NYSE:SVU) - Short-term buy rating removed at UBS

       

      Long positions in stocks mentioned: AAPL, CREE, FCX

      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: AAPL
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