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

The Argument

Daily State of the Markets 
Monday Morning – July 19, 2010

Good morning. Casting aside the wild movements created by the HFT (high frequency trading) boys and their shiny computer toys, it appears that the stock market currently finds itself in the midst of a good old-fashioned argument about what to expect from the future.

On one side of the table, those who like to look at the world through rose colored glasses seemed to get some attention last week with their point that there are simply no signs of recession at the present time. Sure, everybody can see that the growth rate of the economy appears to be slowing down or simply hitting a "soft patch" at the present time, but other than an indicator here or there, there just aren't a lot of telltale signs suggesting that the GDP of the U.S. is about to go negative anytime soon.

On the other side of the debate, the glass-is-half-empty gang doesn't have much good to say about much of anything. The economic slowdown sprang up surprisingly fast, the jobs picture remains worse than expected, housing is still a problem, the "austerity movement" means a slowdown across the pond, China is tapping the brakes, the administration is raising taxes and appears to be anti-business (which isn't exactly good for the jobs outlook) and the consumer here in the U.S. is not interested in increasing expenditures.

Speaking of the consumer, the big point from the bear camp is that with all of the bad news flowing these days and 401(k) statements hitting mailboxes right about now, John and Jane Q. Public may be tempted to pull in the reins a bit and simply "do less" again until the economy improves. And if your next thought is that this appears to be a chicken-and-the-egg situation, feel free to award yourself a gold star this fine Monday morning.

To counter this disturbing point, our heroes in horns suggest that talk of the U.S. consumer "doing less" is mere conjecture at this point in time. The bulls encourage their opponents to get out of their dank dens and fo out to a ballgame, to a movie, or to the mall, where they are likely to see pretty solid activity these days. Sure, this is purely anecdotal evidence. But then again, with restaurants filling back up again on the weekend, it sure doesn't feel like there is a recession happening.

The "argument" between our two teams is showing itself rather plainly on stock charts everywhere. One minute the S&P is falling for 10 straight days on fears of recession and the next, it is rallying for 7 straight sessions. Then on Friday, the bears made their point rather emphatically with the Philly Fed, the Empire Manufacturing, and the UofM Confidence index all coming in below expectations. However, given that it was an options expiration event and a sleepy Friday in July, the bulls will suggest that maybe, just maybe the decline could have been overdone.

Turning to this morning... Despite a downgrade of Ireland's debt by Moody's and the announcement that the EU/IMF have pulled funding from Hungary (to prove a point to the new governmnet) things are looking up before the bell.

Finally, consider having a mind that is open to anything...

Pre-Game Indicators

Here are the important indicators we review each morning before the opening bell...

  • Major Foreign Markets:
    • Australia: -1.45%
       
    • Shanghai: +2.11%
       
    • Hong Kong: -0.79%
       
    • Japan: closed
       
    • France: +0.61%
       
    • Germany: +0.34%
       
    • London: +0.29%

     

  • Crude Oil Futures: - $0.06 to $75.95
     
  • Gold: - $0.40 to $1187.80
     
  • Dollar: lower against Euro, higher vs Pound
     
  • 10-Year Bond Yield: Currently trading higher at 2.96%

     

  • Stocks Futures Ahead of Open in U.S. (relative to fair value):
    • S&P 500: +4.62
       
    • Dow Jones Industrial Average: +40
       
    • NASDAQ Composite: +1.7

       

Wall Street Research Summary

Upgrades:

  • Teekay Tankers (NYSE:TNK) - BofA/Merrill
     
  • Juniper Networks (NYSE:JNPR) - Canaccord Genuity
     
  • Atheros Communications (NASDAQ:ATHR) - FBR Capital
     
  • King Pharmaceuticals (KG) - Goldman
     
  • Covidien (COV) - Morgan Keegan
     
  • Lattice Semiconductor (NASDAQ:LSCC) - Morgan Stanley
     
  • Yahoo! (YHOO) - ThinkEquity
     
  • Microsoft (NASDAQ:MSFT) - Estimate increased at UBS
     
  • Cousins Properties (NYSE:CUZ) - Wells Fargo
     
  • Duke Realty (NYSE:DRE) - Wells Fargo
     
  • ProLogis (NYSE:PLD) - Wells Fargo

     

    Downgrades:

  • F5 Networks (NASDAQ:FFIV) - Canaccord Genuity
     
  • Endo Pharmaceuticals (NASDAQ:ENDP) - Goldman
     
  • Perrigo (NASDAQ:PRGO) - Goldman
     
  • First Horizon (NYSE:FHN) - Keefe, BRuyette & Woods
     
  • First Potomac Realty (NYSE:FPO) - Wells Fargo

     

    Earnings Before The Bell

    Company

    Symbol

    EPS
    Reuters
    Estimate
    Halliburton HAL $0.52 $0.37
    Hasbro HAS $0.29 $0.24

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

    Long positions in stocks mentioned: None

    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. (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