David Moenning

About the Author David Moenning

David Moenning is a the Chief Investment Officer at Heritage Capital, which focuses on active risk management of the U.S. stock market. Dave is also the proprietor of StateoftheMarkets.com, which provides free and subscription-based portfolio services. Dave began his investment career in 1980 and has been an independent money manager since 1987. Thus, Dave has been live on the firing line and investing for a living for more than 25 years.

Daily State of the Markets: The Drama Continues But The Real Question Is…


Today’s market action continues to be all about Greece. As is typically the case on a Friday, there has been a flurry of headlines from both sides of the debate today. For example, it is being reported that the ECB is preparing for a Greek exit from the Eurozone and that the central bank’s staff is developing contingency plans regarding how the rest of the currency bloc could be kept together. And of course, the ECB has declined to comment on the report. On the other side of the aisle, Greek Prime Minister Tsipras said in a statement to Reuters that he is certain that a request for a six-month loan agreement extension with conditions will be accepted. And then European Commission spokeswoman Margaritis Schinas said at a daily news briefing that Greece and Europe could reach a deal if all parties are reasonable on their demands (feel free to insert eye roll here). And so it goes.

The key issue remains whether or not Greece will be required to continue with the current bailout program. Recall that the Greeks argue the old bailout plan has been cancelled while the Germans insist that a deal is a deal. And while this appears to be largely an issue of semantics and exact verbiage, it is still the crux of of the situation.

In other news, the flash reading of the Euro area composite PMI rose to 53.5 in February from 52.6 in January, which was ahead of consensus for a reading of 53.0. The services component was apparently the key to the improvement as the index increased to 53.9 from 52.7.

Here at home, there is still no settlement in the West Coast ports dispute, despite pressure from US Labor Secretary Tom Perez. More discussions are planned for today and Perez has reportedly told both sides that talks will be forced to move to Washington if no deal can be reached today. With this situation now dragging on, there are concerns about the potential impact to the nation’s GDP.

Looking ahead to today’s trade, U.S. stock futures are quiet in the early going, suggesting that investors may continue to be at the mercy of the headlines out of Europe today.

Current Market Environment

From a short-term perspective, it appears that there is a bit of a “discussion” going on in the stock market. On one hand you have the argument that traders are waiting on the outcome of the latest Greek drama before committing additional funds. Exhibit A here would be the action of the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) and Dow Jones Industrial Average (INDEXDJX:DJI) over the last few days, which suggests that the most recent rally has stalled out. Yet on the other hand, you have the action of the NASDAQ, NASDAQ 100 (INDEXNASDAQ:NDX), and Midcap indices, which lean bullish and suggest that the only thing to fear at the present time is fear itself. As a tie breaker, we turn to the readings of our major market models, which tell us to side with the bulls but to play the game with a bit more caution than normal here.

Technical Take

Thursday’s lackluster trade once again did nothing to resolve the question of the day in the stock market. At issue, of course, is whether or not the market has broken free of the sideways trading range that has been in place for the better part of the last three months. The good news is that the NASDAQ and Midcap indices suggest that the range has indeed been resolved to the upside and it is only a matter of time before the Dow and S&P join the breakout party. However, with the drama in Europe continuing to dominate the headlines, it may be a while before this situation is put to bed. For now, we will continue to watch the key lines in the sand on the charts of the blue chip indices.

S&P 500 – Daily