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

Do The Bulls Have a Case?

Daily State of the Markets 
Wednesday Morning - January 4, 2012

Good Morning. Back before you needed to know the debt-to-GDP ratio and the corresponding level of interest rates in every European country, investors focused on such relatively mundane issues such as corporate profits, inflation, the direction of interest rates, and the state of the economy. But, as you are no doubt aware, these data points have largely taken a back seat over the past year as worry has become the watchword and just about any headline was a reason to run a sell program or three.

The reason behind the seemingly bearish predisposition these days is obviously tied to the dour outlook toward our neighbors across the Atlantic. In short, the glass-is-half-empty crowd argues that there is no quick or easy answer to a problem that involves too much debt - especially when nobody wants to lend to you anymore. Our furry friends assume that this situation will end in a flood of banking tears and that the economies of the globe will go down in flames.

Well, okay, perhaps that assessment is a little overly dramatic. But ask any bear what they think about the macro view and I'm fairly confident you'll hear about the prospects for a global depression and a little something involving the banks and a house of cards.

Although I clearly "get" the primary points being espoused by the nattering nabobs of negativism and I can actually agree on some of the points made, I always get nervous when everybody I talk to is singing the same song. For example, from a market geek's perspective, one of the great things about the holidays is you get to hear lots of views from people who don't spend their days digesting headlines and/or fretting over every wiggle and giggle on the charts.

So, I ask you; during the course of your holiday gatherings, was there a single positive conversation involving the U.S. economy, jobs, or the stock market? Did a single individual have anything even remotely positive to offer? I'm guessing the answer is no. And I'm also guessing that if the topic of the markets came up, just about everyone could recite the bear case in the time it took to have your champagne glass refilled.

Maybe then, it is indeed time to give the bull case a good listen. In my humble opinion, this is especially true after a year that saw the stock markets of just 10 countries finish in the green. And according to Bespoke Investment, this means that there were 68 countries that finished in the red in 2011 (with 25 countries seeing losses of more than 20%).

I fully recognize that it may be uncomfortable to look at the other side of the fence for a while. However, I will note that (a) the venerable DJIA has enjoyed a decent stretch of late, (b) the index is now a mere 3% away from its 2011 high point, and (c) that these two points alone might warrant at least a brief exercise in optimism.

Without further ado then, I present to you the bull camp's laundry list of reasons to be upbeat about the New Year:

  • Low interest rates and an accommodative Fed ("Don't fight the Fed" - Especially when they are on a mission!)
  • Low inflation (and little on the horizon)
  • Record corporate earnings
  • U.S. economic recovery gaining traction
  • U.S. consumers still like to shop
  • No "Lehman moments"
  • China's slowdown looking manageable
  • A huge degree of negativity regarding the macro outlook


There, was that really so bad?

Before you start thinking I've lost my mind, I am definitely not a full-fledged bull at the present time. However, as I opined yesterday, I think one of the real keys to 2012 is to remain flexible. So, if the bulls suddenly do regain their mojo in the near future and can somehow find a way to keep on keepin' on, I for one don't want to be surprised or caught flatfooted.

Turning to this morning... Okay, never mind. The bears appear to have returned this morning as renewed worries about the banking system in Europe as well as an unconfirmed story (without citing a source, of course) that Spain is considering asking the EU/IMF for bailout loans are pushing stocks in the major European indices and U.S. futures to fresh morning lows as I type.

On the Economic front... We'll get a Factory Orders at 10:00 am eastern.

Thought for the day... Remember to say hello when opportunity knocks...

Pre-Game Indicators

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


  • Major Foreign Markets:
    • Australia: +2.03%
    • Shanghai: -1.36%
    • Hong Kong: -0.80%
    • Japan: +1.24%
    • France: -0.98%
    • Germany: -0.86%
    • Italy: -1.66%
    • Spain: -1.97%
    • London: -0.23%

  • Crude Oil Futures: -$0.76 to $102.20
  • Gold: +$0.10 to $1600.60
  • Dollar: lower against the Yen, higher vs. Euro and Pound
  • 10-Year Bond Yield: Currently trading at 1.944%
  • Stock Futures Ahead of Open in U.S. (relative to fair value):
    • S&P 500: -4.52
    • Dow Jones Industrial Average: -32
    • NASDAQ Composite: -6.16


Positions in stocks mentioned: None

For more of Mr. Moenning's thoughts 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 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. One 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.