March 19, 2024

Daily Wrap

DJIA  –74.73 (-0.56%) to 13,170.72;  S&P 500 -9.03 (-0.63%) to 1,419.45;  NASDAQ -21.65 (-0.72%) to 2,992.16;

Today starting mixed with the markets bouncing from slightly negative to positive and back but around 11 am EST the S&P 500 turned lowered and continued to drift the remainder of the day finally closing down just over 9 points and filling the gap from 12/10/12.  We did have economic data that was better than forecasts (including a 343K Jobless Claims number) but I think it wasn’t so strong that it alone could push the market higher.

The stock of today in my opinion was Best Buy (BBY) which was up over 15% on reports that the founder and currently the largest shareholder, Richard Schulze, will be bringing a buyout proposal by the end of this week.  The report continued stating that Schulze plans to make a $5-6B bid with private equity firms Cerberus Capital Management LP, Leonard Green & Partners LP and TPG Capital LP.  Best Buy refused to comment on the report.  I had highlighted this stock as one I was looking to see a new low on which would likely then be divergent to look at possible longs and unfortunately it never came.

Also in the news was Sprint (S) who offered to acquire the remaining 49% stake of Clearwire (CLWR) it doesn’t already own.  The price proposed was $2.90 and CLWR closed today at $3.16 which implies the market thinks S will have to come to the table with more.

Charles River Laboratories International Inc. (CRL) received two upgrades this morning.  JP Morgan upgraded the name to Overweight with a $42 price target and Wells Fargo upgraded CRL to Outperform with a $40-42 price target.  This is coming off a day where we say CRL drop by roughly 9% on disappointing guidance for 2013.  On today’s move higher on the upgrades, CRL has regained the 200 day MA and yesterday’s low could be a reference point for someone who wanted to get into the name but wanted a clear stop.   You can see that and other analyst notes at the Upgrades/Downgrades section.

As always you can visit the Event’s Calendar for the release of economic data, scheduled meetings and other news that could move the market.

According to Briefing.com, the following noteworthy companies are scheduled to report earnings after today’s close so any reaction will be seen tomorrow on the open (or after hours): ADBE, CIS, NDSN, ZQK, PAY

The last two days we have been expecting a dip especially after reaching the targets around 1434 but I also noted how I wanted to “see” the dip and reaction of the market to gauge more.  So far I have to say that the reaction to me has been swift but not necessarily un-orderly.  The cash index held the 50 day moving average around 1416, which also happens to have the 100 day just below and the 23% fib from the 11/16 lows to 12/12 highs.  We posted on StockTwits today a 5 minute chart toward the end of the day with some positive divergence and noted it could be a quick trade and we then got a pop on news out of Washington that Boehner and Obama were meeting to speak.  I also noted that I wouldn’t personally be interested in going home with a position and would prefer to just treat it as a quick intraday trade.  Going forward my bias remains to play the individual stock names that I think have the best patterns and avoid taking major positions in the market itself with all of this headline risk but as I review the S&P I think we will likely see lower levels but as long as we remain above 1400 it still seems like the action is more of a correction than something more.  Looking over the chart we have the 35% fib from the 11/16 lows to 12/12 highs which comes in at 1402 and then a swing low from 12/05 at 1398 and lastly the psychological 1400 level so that confluence (light blue box) may ultimately be a target for this correction and would still remain bullish in tone.  If that level was lost on a strong move then I would then watch the 38% fib of the larger retracement which correlated nicely with the 50% from the smaller retracement (11/16 lows to 12/12 highs).

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