Daily Wrap
DJIA -7.45 (-0.06%) 12,788.51 S&P 500 +0.92 (+0.07%) 1,387.81 NASDAQ +0.61 (+0.02%) 2,916.68
Yesterday we said it was a classic “Gap and Go” day and today was a classic consolidation day after a big move. We did see a pretty decent drop intraday on comments from Ben Bernanke noting that the Fed does not have the tools to counter act the fiscal cliff but those losses were quickly recouped and the S&P was able to close moderately higher along with the Nasdaq and the Dow not too far behind.
Two stocks in the News today moving in the same direction but for different reasons were Hewlett-Packard (HPQ) and Best Buy (BBY). Both down on the day, HPQ’s move was due to the announcement that a British company it bought for $9.7 billion last year lied about its finances, resulting in a massive write-down of the value of the business. This company seems to be unable to get out of their own way and in a way I feel sorry for Meg Whitman. I imagine the task of turning around HPQ is enough without these added distractions. HPQ is actually now on my radar. Am I rushing into the name on margin? Not in the least, I have no position but I do believe this could be a 2014 story and stocks will bottom in advance. I will be looking for a set-up like what we have been seeing in DECK and will look for a low to trade against.
BBY was down due to earnings. BBY is actually a name that has been on the radar but also nothing I have dipped into yet. I was really surprised when AMZN announced the “locker” project with SPLS because I always thought BBY made sense for that exact same effort. Maybe AMZN disagreed or tried and didn’t get anywhere but BBY does have many options, roughly $2 per share cash and earning some money although less than analysts expected.
From the Event’s Calendar for tomorrow:
8:30 AM Unemployment Claims; 9:00 AM Flash Manufacturing PMI; 9:55 AM Revised Consumer Sentiment; 9:55 AM Revised Inflation Expectations; 10:00 AM CB Leading Index m/; 10:30 AM Crude Oil Inventories; 12:00 PM Natural Gas Storage
According to Briefing.com, the following noteworthy companies are scheduled to report earnings before tomorrow’s open: DE, DCI, GLOG, KID, TNP
Moving back to the markets and the S&P 500 we have a potential inverse Head & Shoulders patterns which would count to the 1424-1430 level but I still cannot make that the primary pattern as I noted on StockTwits today (WSConsensus). I think there is a great deal of resistance between here and there and I then have to ignore the horrible MACD on the daily and the downward sloping 20 Day SMA and soon to be downward sloping 50 Day SMA and I am just not prepared to do that. I am remaining of the bias that we have not bottomed and as the market is targeting my rally region I am leaning toward a short of a 20 Day SMA touch.
