Week in Review
DJIA -158.20 (-1.21%) to 12,938.11; S&P 500 -15.67 (-1.10%) to 1,402.43; NASDAQ -25.60 (-0.86%) to 2,960.31;
Thursday’s late day rally was something we were skeptic of and today started immediately with a gap lower in the S&P which did rally, not quite to even, but after 2pm EST the market started to drop and continued lower for the remainder of the day closing at lows of the day. Why? Forget the technicals for a minute. Monday is the 31st, Tuesday is a Holiday for the market and the first of the year which leaves this weekend as very important for anyone believing Washington needs to resolve the fiscal cliff/taxes before the New Year. There have been pundits and even Congressmen(women) noting that technically the 1st isn’t the deadline and they can actually go a few weeks into the New Year etc. but it is logical to see the 1st as a sentiment date. Also we have heard the go over cliff and then come back scenario reminiscent of the Clinton/Newt 90’s situation. So how much do you want to own into the weekend? This reminds me of when markets were moving violently to European news and each night and especially weekend you had to decide what you wanted to have and therefore makes sense, to me, traders chose to square up and even possibly take some shorts albeit likely small.
A few names in the news today included NTS Realty Holdings LP (NLP) which agreed to be taken private by its chairman and CEO for $7.50 per share.
MagicJack VocalTec Ltd. (CALL) gained over 10% on news of appointing a new CEO, Gerald Vento, to replace the founder Daniel Borislow who will now focus on marketing and product development. Often a difficult and occasionally ugly transition with the old owner not wanting to leave and accept they might not be the right CEO anymore, it seems like CALL and Mr. Borislow did a nice job.
Research In Motion Ltd. (RIMM) sold a unit (“NewBay”) focused on cloud service to Synchronoss Technologies Inc. (SNCR) for $55.5 million. This is almost half the $100 million RIMM paid for NewBay just last year but this likely represents a plan by RIMM to focus their efforts and attention in a different and streamline their processes.
Week in Review:
Monday we didn’t provide a recap due to travel but it was a lackluster inside consolidation day after Friday’s gap down. The market was only open for a half day closing early due for Christmas Eve.
Tuesday was closed in observance of Christmas day.
Wednesday was the first full day of trading for that market since Friday 12/21 and the markets picked up where Friday left off by heading lower. In the news, Marvell Technology (MRVL) technology received bad news as a jury found in favor of Carnegie Mellon University in their patent dispute. The order is for MRVL to pay a reported 1.17B in damages. Also, many retail names were under pressure on reports that the holiday shopping season was weaker than analysts may have expected. Notable decliners were Coach (COH) which was down nearly 6%, Michael Kors (KORS) which was down over 6% and American Eagle (AEO) down roughly 4%. On the upside was Research in Motion (RIMM) which gained 11% on what seems to be more about the technicals than news.
What did Thursday’s action look like? Picture a bowl. Opened roughly even and then dipped 20 points in the S&P 500, spend the midday bottoming and rallied almost closing even. This left a candle with a long tail but as we noted in Thursday’s recap it didn’t look all that promising and Friday’s action ultimately went right back down to the lows from Thursday. In the news, Deckers Outdoor (DECK) gained over 9% on rumors that Ugg sales bucked the trend and were better than expected. Toyota Motor Corp. (TM) put the 2009-10 recall debacle behind them by agreeing to pay over $1 billion to settle the class action lawsuit. Lastly, Smith & Wesson Holding (SWHC) which gained over 3% on news that the board approved a $15 million stock buyback.
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. Also in that section are Dividends and Splits.
Also, you can see analyst comments for the day or view the archive from the Upgrades/Downgrades section. Last week was very quiet but I think Monday should start to see more analysts action.
Major averages 5 day results:
Dow Jones Industrial:
S&P 500:
Nasdaq:
As mentioned above, Monday is the last day of the year and Washington does not seem to be making significant gains on talks regarding the fiscal cliff. I feel the headline risk is great but then just looking at the technicals I would be leaning to some lower trading here. The S&P 500 has a fib right around the 200 Day SMA which could provide a confluence of support. On the 60 minute SPY chart we have the beginning of potential MACD divergence but also a reminder of the unfilled gap left from the 11/16-11/19 period.
