9 Nov 2012 AMC
Market Summary
Friday session started with a bullish bias that carries through till lunch. After that, the market started taking profit off the table after such volatile week. With the market up slightly, the VIX also edged up as well.
Let's take a quick look at the earnings so far as the earning season is coming to an end.
Out of the S&P 500 companies,
440 Companies have announced their earnings.
278 63.2% Companies beats their estimate.
10.7% met their estimate
25.7% missed their estimate.
Comparing to the previous quarter,
59.4% of the S&P 500 companies beat estimates
11.6% met estimate,
28.9% missed estimate.
it seems that the results are slightly better in this quarter. We are likely to experience a retracement first before going into the Santa Claus rally this year.
Market Internals
Looking at the internals, it is definitely supporting the tough fight between the bulls and the bears on the last session of the week.
Leaders and Laggards
the consumer discretionary and utilities are the biggest losers of the day while tech managed to lock in a gain of 0.48%.
Technical Updates
On the technical updates, Both DOW and SPX found a support after the massive wash down. I believe the main indices are likely to make a retracement soon. Looking at the main news of the week, I think the news would have much impact for the week. However, Helicopter Ben, who managed to keep his job under the Obama administration, will be speaking on Thursday. So i'm gonna avoid trading during that period...
Commentaries
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Commodities
Treasuries
Looking at the treasuries, the day is definitely more bearish than bullish. With the VIX and the treasuries supporting the fact, I believe Monday will be a up day with the bearish sentiment in the market. Since the market is already at the support level, we will be looking at some bounce before going down further.
Weekly Analysis
Week 44
Technical Updates
Commentaries
Weekly Wrap
Dow +4.07 at 12815.39, Nasdaq +9.29 at 2904.87, S&P +2.34 at 1379.85
Stocks began the day in the red after equity futures showed considerable pre-market weakness. The S&P 500 spent the opening minutes just below its flat line. However, the benchmark average began climbing after the Washington Post reported that a plan for a middle class tax freeze will be proposed by the president at this afternoon's press conference. In addition, today's preliminary Michigan Consumer Sentiment Survey was reported at 84.9, which was its highest level since July 2009. The S&P 500 continued advancing through the morning and marked its highs ahead of the president's speech. President Obama's statement called for consensus building, and he stated that spending cuts must be combined with new revenue. The remarks failed to inspire investor confidence and the S&P 500 headed back near its flat line before ending with a slim gain of 0.2%. Note that today's close was one point below the 200-day moving average.
Shares of Apple (AAPL 547.06, +9.31) rebounded from recent weakness, and the stock ended higher by 1.7%.
Elsewhere in technology, Kayak Software (KYAK 39.67, +8.63) surged 27.8% after agreeing to be acquired by Priceline (PCLN 625.87, -2.00). Per the agreement, PCLN will pay $40.00 per share of KYAK, representing a 28.9% premium to Kayak's Thursday closing price.
The consumer discretionary sector was a notable underperformer. J.C. Penney (JCP 20.64, -1.05) lost 4.8% after reporting disappointing earnings. The retailer announced a third quarter loss of $0.93, while the Capital IQ consensus called for earnings of $0.02. Meanwhile, the company's revenue of $2.93 billion fell short of the expected $3.29 billion. Also of note, the company reported a same-store sales decrease of 26.0%. The expectations called for a 17.0% decline.
Elsewhere, Groupon (GRPN 2.76, -1.16) slid 29.6% following another round of earnings which failed to please investors. The online coupon site's revenue of $568.6 million fell short of the expected $592.06 million. GRPN is down nearly 90.0% since its initial public offering last year.
For-profit education stocks saw weakness after two names reported disappointing earnings. Career Education (CECO 2.93, -0.48) slid 14.1% after the company reported a third quarter loss of $0.47 on $332.8 million in revenue. CECO's bottom line was $0.04 worse than the Capital IQ consensus estimate while its revenue exceeded estimates. Total new student starts fell 23.0% year-over-year and the company announced plans to eliminate approximately 900 positions.
Elsewhere, Strayer Education (STRA 46.51, -9.66) plunged 17.2%. The company beat their earnings expectations by $0.05, but downside guidance weighed on the stock. Strayer reported a 5.0% decrease in fall 2012 enrollment. Following earnings, Stifel Nicolaus downgraded the stock to ‘hold' from ‘buy.'
The Dow Jones Transportation Average slipped 0.7%. The five airlines which are a part of the average saw broad weakness. JetBlue Airways (JBLU 5.31, -0.09) and Southwest Airlines (LUV 9.06, -0.12) saw respective losses of 1.7% and 1.3%.
Shipper Matson (MATX 22.67, +0.25) was the top performer within the transportation average. The stock trades gained 1.1%. Meanwhile, the other shipping stock, Kirby Group (KEX 53.89, -0.92), was one of the weakest performers in the 20-stock complex and lost 1.7%.
Homebuilders were weaker today and the SPDR S&P Homebuilders ETF (XHB 25.67, -0.29) dipped 1.1%. KB Home (KBH 15.69, -0.54) and PulteGroup (PHM 16.80, -0.57) saw notable losses as the two stocks both slid 3.3%.
Before Monday's open, two homebuilders will report their quarterly results. The Capital IQ consensus estimate expects Beazer Homes (BZH 16.64, -0.36) to report a loss of $1.05 on $336.66 million in revenue. Elsewhere, DR Horton (DHI 20.60, -0.37) is expected to announce earnings of $0.30 on revenue of $1.38 billion.
Wholesale inventories increased by 1.1% in October. That was higher than the increase of 0.4% which had been forecast by the Briefing.com consensus.
Export prices, excluding agriculture, increased by 0.2% in September after they had increased by 0.7% in the prior month. Excluding oil, import prices rose by 0.3%, which follows the 0.2% increase experienced in the prior month.
Week in Review: Stocks Plunge with Presidential Election in the Rear-view Mirror
On Monday, the session began on a mixed note. The S&P 500 spent the majority of the day in negative territory as cautious trade took place ahead of Tuesday's presidential election. However, late afternoon buying drove the benchmark average to a higher finish by 0.2%. Apple (AAPL 547.06, +9.31), gained 1.4% after reporting that sales of its iPad 4 and iPad mini have reached three million units during the first three days of sales. Also of note, shortly before the close reports indicated that the company may be considering a switch from Intel (INTC 20.80, -0.03) processors. Following the news, Intel shares surrendered their gains, while AMD (AMD 2.03, +0.05) and ARM Holdings (ARMH 33.86, +0.04) spiked higher.
Tuesday began on a slightly higher note. The early gains were doubled after an erroneous report on the Cincinnati Enquirer Website suggested Mr. Romney had a considerable lead over Mr. Obama in Ohio. The newspaper promptly retracted the claim, and said that the page accidentally showed a template with dummy data. However, the S&P 500 held the bulk of its gains into the late afternoon before ending higher by 0.8%. Office Depot (ODP 2.86, +0.10) and OfficeMax (OMX 7.97, -0.03) both reported mixed third quarter results. The two office store operators beat on their respective bottom lines, and fell short of the consensus revenue expectations. However, it should be noted that a Bloomberg article discussed a possible merger between the two. As a result of the M&A speculation, Office Depot and OfficeMax soared 19.1% and 12.0%, respectively.
On Wednesday, stocks began the day firmly in the red after Barack Obama was reelected to a second term as president. Contributing to the bearish sentiment were comments from European Central Bank President Mario Draghi who said that the European debt crisis is starting hurt the German economy. The negative outlook was confirmed by this morning's Eurozone Autumn Forecast, which also pointed to an expected slowdown in the German economy. Further, the country's industrial production report showed a 1.8% month-over-month decrease, while the reading was expected to reflect a more palatable decline of 0.5%. The S&P 500 spent the first two hours of the session in a steady sell-off, before stabilizing near the 1,400 level and ending with a loss of 2.4% on heavy volume.
The financial sector saw the widest losses, and the SPDR Financials Select Sector ETF (XLF 15.50, +0.02) fell 3.3%. Among the majors, Morgan Stanley (MS 16.61, +0.09) and Bank of America (BAC 9.43, +0.04) were two of the weakest names as they settled lower by 8.6% and 7.1%, respectively.
Equities began Thursday's session on a slightly higher note. However, the bullish bias was dispelled during the opening hour. After marking its session high at 1,401, the S&P 500 reversed and slid to its 200-day moving average near the 1,380 area. The index followed the move with a seven point bounce, before late-day selling drove the index back below the 200-day moving average. As a result, the benchmark average settled lower by 1.2%. Apple (AAPL 547.06, +9.31) continued its recent weakness and ended lower by 3.6%.
Next Week In View
the main mover for the coming week will be the Phily Fed, PPI, Retail Sales report. Monday will be a holiday for the US so don't wonder why the market did not open on Monday.
The biggest mover the coming week will the Ben Bernake's speech on Thursday.
For the week, I reckon the market to be flat and volatile this week.
Market Call(Weekly): Flat
Market Call(11 Nov 2012): UP
Market Call(11 Nov 2012): UP
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