Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Step 1: Admitting You Have a Problem

Daily State of the Markets 
Friday Morning – November 19, 2010

Good morning. Ireland took the first step in its twelve-step program to return to financial health on Thursday when the country's Central Bank said they expect to accept a "very substantial loan" as part of EU-backed bail-out. If you will recall, it had been Ireland's refusal to admit they needed help this week that caused traders to fret about the potential for debt contagion in the region. This coupled with the fear that the Chinese would hit the brakes too hard in an effort to control inflation, were the primary drivers of the recent corrective action in stocks.

However, after Ireland finished playing the "Help? We don't need no stinking help" game, traders were quick to brush aside the concerns that had put a 4% dent in the market over the past 8 days. Suddenly, worries about Europe were gone. Suddenly, the fear that China would do something stupid was history. Suddenly, the divergences on the charts didn't matter. And suddenly, those in the bear camp went from hero to zero.

The bulls also got a hand from the economic calendar on Thursday as the Philly Fed Index, which measures the level of manufacturing activity in the Philadelphia region, came in at nearly five times the consensus and almost 22 points higher than the October reading (it also just happened to be the 7th biggest jump the index has ever seen). And for those of you keeping score at home, the "unfilled orders" component of the report showed its biggest gain since August 2005 while the average workweek surged 16.9 points (the most since December 1998). In addition, the Conference Board's Leading Economic Index wasn't half bad. Thus, the data seemed to take away some fodder from the Negative Nancy's out there.

Speaking of getting a little help from your friends, the glass-is-at-least-half-full crowd was very pleased to see the attacks on Ben Bernanke toned down a bit Thursday. With the recent inflation numbers coming in pretty darned low, Fed Governors were out in force yesterday stepping up their defense of QE II. And while this was unlikely to be the last word we'll hear on the subject, the bulls could be heard arguing that less public pressure on the FOMC means the program will continue.

Lest we forget, the media circus that was GM's IPO also seemed to contribute an emotional lift to our heroes in horns. Although I was thoroughly tired of the story by about 6:00 pm Wednesday, the offering was viewed as a triumphant return of an American icon and may have caused some people to adjust their thinking on valuation levels currently in the market.

From a technical standpoint, yesterday's move did provide the bulls with some relief. Prior to the 170 point bounce, the charts were looking more than a little weak and sitting at very important intermediate-term support. And although the pop higher created a gap on the charts of the S&P and NASDAQ, the support zone would appear to be stronger as a result of the move.

Turning to this morning... It's an options expiration event without any economic news to deal with. In the early going, the futures are down a bit in response to a report that French and German officials are pressing Ireland to increase taxes in return for a bailout.

Finally, best of luck on this Friday and be sure to enjoy the weekend!

Pre-Game Indicators

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

  • Major Foreign Markets:
    • Australia: -0.11%
    • Shanghai: +0.81%
    • Hong Kong: -0.13%
    • Japan: +0.09%
    • France: -0.72%
    • Germany: -0.36%
    • London: -0.75%


  • Crude Oil Futures: - $0.35 to $81.50
  • Gold: - $4.40 to $1348.60
  • Dollar: higher against the Yen and Pound, lower vs. Euro
  • 10-Year Bond Yield: Currently trading at 2.888%


  • Stocks Futures Ahead of Open in U.S. (relative to fair value):
    • S&P 500: -2.60
    • Dow Jones Industrial Average: -31
    • NASDAQ Composite: -7.0


Wall Street Research Summary


  • Nu Skin Enterprises (NYSE:NUS) - BofA/Merrill
  • Thoratec (NASDAQ:THOR) - Barclays
  • DTE Energy (NYSE:DTE) - Barclays
  • RRI Energy (RRI) - Citi
  • DuPont (DD) - Goldman
  • Jabil Circuit (NYSE:JBL) - Mentioned positively at Goldman
  • Deere & Co (NYSE:DE) - UBS



  • Limited Brands (LTD) - BMO Capital
  • Eastman Chemical (NYSE:EMN) - Goldman
  • Treehouse Foods (NYSE:THS) - Stifel Nicolaus
  • Whole Foods (WFMI) - UBS
  • Sasol (NYSE:SSL) - UBS


    Long positions in stocks mentioned: None

    For more "top stock" portfolios and research, visit


    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 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 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. (NASDAQ: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: none