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Back In The Saddle?

Jan. 25, 2011 8:42 AM ET
David Moenning profile picture
David Moenning's Blog
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Daily State of the Markets 
Tuesday Morning - January 25, 2011

Good morning. It is said that Ms. Market can and will do whatever it takes in order to make the largest number of people possible look foolish. In short, this was definitely the case on Monday. You see, there are any number of indicators suggesting that the bulls are due to take a break. There are the A/D and New High divergences. There is the splintered action between the leaders and the blue chips. There is the overbought condition. There is the over exuberant investor sentiment. All of which traditionally lead to a pullback in the stock market. Heck, I even went so far as to suggest that it just might be time for the bulls to finally take a break from their relentless march higher in the title of yesterday's morning missive.

So, given that just about everybody has been looking for a pullback to retest the all-important 1260 level on the S&P 500, what did Ms. Market decide to do? Yep, you guessed it; rally the Dow to its highest level in more than two years - what else would you expect, right?

Apparently rejuvenated from the weekend and armed with some fresh M&A news, some positive earnings, some upbeat company commentary, and a lack of negative macro news, the bulls sent anyone brave enough to have shorted stocks last week scurrying for cover on Monday. One look at the chart of the DJIA and the story becomes clear: A break? The bulls don't need no stinkin break - It's onward and upward!

With last week's leader-bashing still fresh on the minds of many traders, one might not have expected the news that an outfit named Smurfit-Stone was being bought or that Intel was raising its dividend a smidge (and buying back some stock) to get much attention. No, the way things were going last week, the bears may have laughed off a dividend increase of $0.0012 per quarter and continued to sell INTC short. But with the bulls back in the saddle, such news was viewed as corporations oozing with confidence about their businesses, the economy, and current valuations.

Instead of trepidation in front of yet another Fed meeting (which concludes Wednesday afternoon), the President's State of the Union, an avalanche of earnings reports, and a fistful of economic data (including Q4's GDP reading), it appears that we're back to the all-news-is-good-news environment that had been in place up until last Wednesday.

So, in light of the fact that our objective each morning is to identify the environment, we're going to have to say that unless the bears can relocate the mojo that they enjoyed for a brief period last week, the bulls appear to be riding high - at least as far as the DJIA is concerned. But if you insist on sticking to the idea that stocks don't go up each and every week, we'd suggest you keep an eye first on the S&P (a close above 1295 would be positive) and then the NASDAQ, Midcaps and Russelll 2000. For if the bulls are indeed back in the saddle, they are going to need these indices to follow along as some point soon.

Turning to this morning... It looks like the bears are attempting to provide a rebuttal to yesterday's romp on the back of a disappointing GDP report out of the UK and a revenue miss at JNJ.

On the Economic front... There is no economic news scheduled for release before the bell this morning. But we will get the Case-Shiller Home Price Index at 9:00 and then Consumer Confidence and FHFA House Price reports at 10:00.

Thought for the day: We wish you all the best for a productive and enjoyable day...

Pre-Game Indicators

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


  • Major Foreign Markets:
    • Australia: +0.43%
    • Shanghai: -0.68%
    • Hong Kong: -0.05%
    • Japan: +1.15%
    • France: -0.05%
    • Germany: +0.25%
    • London: -0.38%


  • Crude Oil Futures: -$1.07 to $86.80
  • Gold: -$17.50 to $1327.00
  • Dollar: higher against the Yen, Pound and Euro
  • 10-Year Bond Yield: Currently trading at 3.362%


  • Stocks Futures Ahead of Open in U.S. (relative to fair value):
    • S&P 500: -4.09
    • Dow Jones Industrial Average: -25
    • NASDAQ Composite: -10


Wall Street Research Summary


  • Xilinx (XLNX) - AURIGA
  • Frontline (FRO) - Deutsche Bank
  • Teekay Tankers (TNK) - Deutsche Bank
  • Invesco (IVZ) - Mentioned positively at Deutsche Bank
  • Blackrock (BLK) - Mentioned positively at Deutsche Bank
  • Halliburton (HAL) - Added to Top Picks at FBR Capital
  • Patterson Companies (PDCO) - UBS
  • Radio Shack (RSH) - Wedbush



  • Genco Shipping (GNK) - Deutsche Bank
  • Adobe Systems (ADBE) - Piper Jaffray
  • Exco Resources (XCO) - RBC
  • Norfolk Southern (NSC) - UBS
  • World Wrestling (WWE) - Wedbush


Yesterday's Earnings After the Bell



Amgen AMGN $1.17 $1.10
American Express AXP $0.88 $0.94
Crane CR $0.68 $0.65
CSX Corp CSX $1.14 $1.10
Packaging Corp PKG $0.52 $0.53
STMicroelectronics STM $0.27 $0.24
Texas Instruments TXN $0.64 $0.63
VMware VMW $0.46 $0.44
Zions Bancorp ZION -$0.25 -$0.36

Earnings Before the Bell



Baker Hughes BHI $0.77 $0.65
Peabody Energy BTU $0.85 $0.71
Coach COH $1.00 $0.97
DuPont DD $0.50 $0.32
Quest Diagnostics DGX $0.97* $0.91
EMC EMC $0.42 $0.41
Corning GLW $0.46 $0.47
WW Grainger GWW $1.79 $1.68
Harley Davidson HOG -$0.18 -$0.18
Johnson & Johnson JNJ $1.03 $1.03
KeyCorp KEY $0.33 $0.13
Kimberly-Clark KMB $1.20 $1.15
Meredith MDP $0.88 $0.82
3M MMM $1.28 $1.26
Regions Financial RF $0.03 -$0.13
Sherwin-Williams SHW $0.67 $0.65
Tellabs TLAB $0.02 $0.08
The Travelers Co. TRV $1.89 $1.67
Verizon VZ $0.54 $0.55
Waters WAT $1.38 $1.31
US Steel X -$1.74* -$0.96

Long positions in stocks mentioned: INTC, HOG

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


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. (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.

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