Daily Wrap
DJIA -98.99 (-0.74%) to 13,251.97; S&P 500 -10.98 (-0.76%) to 1,435.81; NASDAQ -10.17 (-0.33%) to 3,044.36;
Today started off like it was going to be a tight, low volume consolidation day that held the 76% fib but slightly after the lunch time lull the market started to move toward the lows of the day and then after 2pm est really picked up speed to the downside. We closed just above the prior resistance and now theoretical support of 1434.
General Motors (GM) is a stock of the day today reminiscent of a previous stock of the day AIG because GM is up on news that the Treasury is selling more of their shares in the Auto maker. GM is buying back 200 million shares from Treasury for $5.5 billion. After the transaction, Treasury will have a final position of 300 million shares remaining and the company hopes that the continued decrease in government ownership of shares will help in the court of public appeal and sentiment.
Today we had a little Analyst battle Royal between Craig-Hallum and Cleveland Research in Western Digital (WDC) and Seagate Technology (STX) Craig-Hallum upgraded both names to Buy today with significantly (over 30% from previous close) higher price targets while Cleveland Research was cautious on both names. Considering both names close up over 4% I would said Craig-Hallum was the winner but there is a chance for Cleveland Research as their statements were regarding channel checks on retail hard drives remaining soft and expected below company estimates which will not be known for sure until the next earnings report. You can see that and other analyst notes at the Upgrades/Downgrades section.
Keeping with a good fight today was Herbalife (HLF) and Bill Ackman. Ackman came out with a report calling HLF’s business a pyramid scheme and Bogus as well as that he was taking a major short position. The HLF CEO fired back stating HFL has millions of customers and a real business model. He also called for the SEC to take action and stop this “market manipulation”.
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 or pre-open tomorrow so any reaction will be seen tomorrow on the open: ACN, BBBY, MLHR, JBL, PAYX, SCS, AM, KMX, CCL, CAG, DRI, DFS, KBH, MCS, NEOG, RAD, SCHL, WGO
As I noted above, originally today looked like it was going to be a low volume tight consolidation day but midday weakness morphed into an end of day sell off. While today did not do deep damage to the current uptrend from 11/16, it does seem to somewhat muddy the picture. We are about to go into holiday trading and likely even lower volumes which normally can lead to a drift higher. On the downside I will be watching the 1434 level in the S&P 500 index which was previous resistance and then after that the 12/16 lows which if breached would negate the trend of higher highs and higher lows.
