18 Oct 2012 AMC

18 Oct 2012

Market Summary 

 

Google was the main reason why NASDAQ performed so terrible yesterday. Together with Intel, they dragged NASDAQ below 1% yesterday. 

While on the DOW, JNJ, VZ and TRV were able to offset the downwards movement by AXP and IBM. 

That's the earnings season... Volatile... Currently only 13.1% of the S&P 500 companies reported their earnings. Prepare for more volatility ahead! I'm still cautiously bullish for this week... 

Moving the Market

Weekly initial claims: 388K actual versus 360K consensus, 342K prior.

Continuing claims: 3.252 million actual, 3.281 million prior.

Existing Home Sales (10): Briefing 4.90M, consensus 4.70M, prior 4.82M

Market Internals

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It's quite apparent that it's really a flat day...

Leaders and Laggards

Without a doubt, IT is the biggest laggard while Telco is being led by Verizon...


Technical Updates

Commentaries 

Stock Market Update 16:15 ET Dow -8.06 at 13548.94, Nasdaq -31.25 at 3072.87, S&P -3.57 at 1457.34 :[BRIEFING.COM] Stocks opened modestly lower after today's weekly initial claims report missed expectations by 28,000. The early weakness was erased before midday as the major averages rallied to their respective session highs. However, the slim gains were short-lived as disappointing quarterly results from Google (GOOG 695.00, -60.49) hit the wires early and weighed on the markets. The tech-heavy Nasdaq saw the biggest impact, as the index tumbled to fresh session lows before closing with a loss of 1.0%. Google fell 8.0% after its earnings were reported at $9.03, which fell $1.63 short of the Capital IQ consensus estimate. Meanwhile, revenues came in at $11.87 billion, which represents a shortfall of about $540 million when compared to the Capital IQ analyst forecast. The results were met with heavy selling which took the stock down to its early September levels. In addition, many large tech stocks were also pressured. A number of other technology components saw weakness following earnings. Mellanox(MLNX 77.98, -20.16) sank 20.5% after reporting its third quarter results. The semiconductor manufacturer beat both top and bottom line expectations, but cautious guidance gave investors cause for concern. Cypress Semiconductor (CY 10.06, -0.90) slid 8.2% after reporting in-line earnings and lowering guidance below consensus. Nokia (NOK 2.80, -0.14) slipped 4.8% despite beating on earnings and revenues. Elsewhere, ASML Holdings (ASML 51.34, +1.26) gained 2.5% despite being downgraded to ‘sector perform' from ‘outperform' by RBC Capital. Note that yesterday ASML announced the acquisition of Cymer (CYMI 74.12, +2.67). Telecom stocks were the top performing group as investors displayed caution and turned to defensive stocks. As a result of the risk-off trade, major wireless and landline carriers garnered interest. Verizon Communications (VZ 45.78, +1.06) advanced 2.4% after reporting in-line earnings and revenues. It should be noted that during the conference call, management said that capital expenditures will trend lower in 2013. This announcement is similar to sentiment expressed by numerous major companies which also plan to enact savings measures. Peers AT&T (T 36.02, +0.30), MetroPCS (PCS 11.15, +0.20), and Sprint Nextel (S 5.78, +0.05) all registered gains between 0.8% and 1.8%. The Dow Jones Transportation Average settled higher by 0.2%. Within the complex,Union Pacific (UNP 125.34, +1.61) rose by 1.3% after reporting earnings of $2.19 and revenue of $5.34 billion. The results were mixed as the company's earnings exceeded Capital IQ consensus estimates by $0.02 while revenue fell about $30 million short of the Capital IQ forecast. Peer CSX (CSX 21.36, +0.17) added 0.8% despite being downgraded to ‘hold' from ‘buy' by Deutsche Bank. Southwest Airlines (LUV 8.98, +0.03) rose by 0.3% after reporting in-line earnings and revenues. Other airlines also outperformed as Alaska Air (ALK 38.17, +0.40), Delta AirLines (DAL 10.21, +0.02), and JetBlue Airways (JBLU 5.30, +0.04) all gained between 0.2% and 1.1%. Meanwhile, Overseas Shipholding Group (OSG 3.54, +0.14) was the best performing stock in the transportation average. The shares of the oil tanker operator gained 4.1% after losing nearly 50.0% of their value since last Monday. In today's economic data, the latest weekly initial jobless claims count totaled 388,000, which was higher than the 360,000 that had been expected by the Briefing.com consensus. The tally was above the revised prior week count of 342,000. As for continuing claims, they fell to 3.252 million from 3.281 million. Separately, the Philadelphia Fed Survey rose to 5.7 for October. That comes after September's reading of -1.9. Economists polled by Briefing.com had expected that the Survey would improve to a -0.1 reading for the month of October. Lastly, leading indicators for September increased by 0.6%, which is better than the 0.2% increase that had been widely forecast to follow prior month's decrease of 0.1%. Tomorrow's economic data is limited to September existing home sales which will be announced at 10:00 ET. ..NYSE Adv/Dec 1474/1538. ..NASDAQ Adv/Dec 792/1666.

After Hours

18:36 ET RVBD +11.5%, SNDK +3.3%, PXLW -21.6%, CMG -10.2%, MSFT -1.5% following earnings/guidance :

Stocks opened modestly lower after today's weekly initial claims report missed expectations by 28,000. The early weakness was erased before midday as the major averages rallied to their respective session highs. However, the slim gains were short-lived as disappointing quarterly results from Google (GOOG 695.00, -60.49) hit the wires early and weighed on the markets. The tech-heavy Nasdaq saw the biggest impact, as the index tumbled to fresh session lows before closing with a loss of 1.0%.

Today after the close the following companies are scheduled to report earnings: COF, ACTG, AMD, ASBC, ATHN, BGS, BLDR, CBST, CMG, COBZ, CPHD, CYN, CYT, EFII, EGP, ETFC, FFIN, FWRD, INDB, LSCC, MSFT, NCR, PBCT, PGI, RMBS, SNDK, WAL, BXS, HWAY, RHI, RVBD, VASC, VMI, FLEX

Futures are lower after hours: S&P 500 futures are -1.86 from fair value of 1452.66 and Nasdaq100 futures are -5.07 from fair value of 2738.32.

Tomorrow morning before the open no economic reports are scheduled to be released.

Tomorrow before the open the following companies are scheduled to report earnings: SHAW, KSU, MMR, BPOP, HON, TCB, BHI, FHN, GE, IDXX, IR, MAN, SLB, SXT, MCD, APD, CBE, FDML, FNFG, CALL, PH

Commodities

Treasuries

Another down day for the treasuries again... 

On friday, i believe the main mover will be the existing home sales. Traditionally, Oct is known as the Jinx month and the worst six months of the year. However, we're likely to see some divergence this month. And the expiration Friday is traditionally bearish. However the expiration week is traditionally bullish. So I reckon the Friday is going to be another up day... 

Market Call: Flat to upside

Date: 18 Oct 2012