Has Anything Changed?
Portfolio Strategy, ETF investing, Long/Short Equity
Seeking Alpha Analyst Since 2009
David Moenning is founder and Chief Investment Officer at Heritage Capital Research, a Registered Investment Advisor. Heritage is an independent, privately owned, investment management firm located in the Denver area. Mr. Moenning has more than 33 years of portfolio management experience and focuses on a risk-managed approach to capital markets via modernized portfolio development and dynamic adaptation to ever-changing macro environments. Most recently Chief Investment Officer for a $1.3 billion RIA firm.
|
Daily State of the Markets Good Monday morning and welcome back. Unlike the majority of last week, Friday's trading session had a plethora of data inputs to weigh before decisions could be made. There were earnings from some big names, GDP numbers out of China, inflation at the consumer level in the U.S., not one, but two reports on U.S. manufacturing, and a report on the state of the consumer from the University of Michigan. Toss in the usual concerns about a country or two across the pond, rising oil prices, and an options expiration event, and one might have expected some fireworks. Although there was a bit of volatility during the day as the boys did play with their computer toys a little in the early going, the fact that an abundance of questions remain unanswered left traders to wonder if anything had really changed. While nobody but the fast-money crowd enjoys a range-bound market, the fact that there is still a fair amount of uncertainty on any number of topics appears to be keeping the indices from straying too far in either direction at the present time. For example, while the bears tried to make the most of a couple of high profile misses from the likes of Bank of America (BAC) and Google (GOOG), the positive data from the Empire Manufacturing index, which reveals the state of the manufacturing sector in the New York region, and the University of Michigan's Consumer Sentiment data both managed to improve the mood during the session. However, with concerns still running high regarding the impact of oil- and commodity-induced inflation on both the consumer and corporate America, the bulls were unable to move the needle very far on Friday. In short, the thinking/worry on the Street is that the momentum of earnings and the economic recovery may be peaking. So, given that the bull market is now more than two years old, a peak in growth on either the economic or corporate front could very well become a problem. How can we tell if this is happening, you ask? First off, you can let the market "tell you" by watching the price action and the charts. The bottom line here is if the S&P 500 were to break below 1260, there could be some serious downside seen. But first, the bears would have to push the index through the 1300 level. And if this occurs, we will go to high alert status from a risk management perspective. Next, investors will want to listen to the "message" from the earnings season. This time, the top- and bottom-line numbers may actually be much less important than the company commentary and the guidance going forward. You will want to pay particular attention to any mention of increased costs, lower profit margins, or talk of cost pass-through's to the consumer. Rest assured taht any of the above will likely cause traders to hit the sell button with regularity. Investors will also want to pay attention to any and all economic data from the month of April. The worry is that the combination of the spike in oil prices, the unrest in the MENA region, and the triple tragedies in Japan will cause the U.S. economy to hit a speed bump (aka a "soft patch"). Should the evidence begin to point to this occurring, again, things could get dicey. So, while we are NOT suggesting that any of this bad stuff will occur, we thought you might want to know what to watch out for. Turning to this morning... The mood has turned sour in the pre-market in reponse to more talk of Greece needing to restructure its debt (which would mean a technical default), rising rates at Spain's T-Bill auction, another hike in the Reserve Requirement for Chinese Banks (the fourth this year and seventh since October), and a downgrade of Irish banks (not a real surprise). On the Economic front... There is no data to reveiw before the bell but we will get a report on NAHB Housing Market Index at 10:00 am eastern. Thought for the day: Will you make time for you today? Pre-Game Indicators Here are the Pre-Market indicators we review each morning before the opening bell...
Wall Street Research Summary Upgrades:
|
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.