Week in Review

DJIA +17.21 (+0.13%) to 13,488.43; S&P 500 -0.07 (+0.00%) to 1,472.05; NASDAQ +3.88 (+0.12%) to 3,125.64

Today’s action started with the S&P 500 moving lower but recovering to essentially close flat while the Dow and Nasdaq managed to squeak our small gains.  Not to shabby after just making new 5 year closing highs.

In the news today was Best Buy Co.’s (BBY) which didn’t wow people with its same-store sales which were down 1.4% but what did impress and send the stock over 16% higher was the improvement in the US.  The US is a mor focus for the BBY turn around and today’s move took the stock back to where it was for the one day pop it received on speculation an offer was about to come in.  I previously took BBY off the watch list after a one day pop over takeover speculation.  If BBY can build on this momentum then it should provide additional opportunity.

J.C. Penney Co.’s (JCP) closed over 4.5% lower on a report out of UBS that the turnaround at JCP will need to be revised or reworked due to a deteriorating earnings picture.  JCP is still a name I will be watching as I like what I am seeing in the turn around of the stores and if they can continue to roll out the new lok I think it can bring people back into the store for something other than a sale.

Dendreon Corp. (DNDN) received an upgrade at Bernstein based on favorable urologists feedback that indicates increasing Provenge use and reduced expectations. The price target was raised to $10 from $7.  Considering DNDN closed around $5 the day before the upgrade, that was a significant move and even with the close on Friday of $6.17 there seems to be a lot of room if Bernstein is correct.

KBR Inc. (KBR) closed nearly 8% lower on news they lowered its full-year earnings guidance.  KBR had a big level around $32 which it couldn’t break but now $28 becomes a support on the downside and then $26 or else KBR could be facing an even stronger decline.

There were actually a lof of stocks in the news today but I try and cover the ones I think there is an opportunity.  Often you can get lost in the headlines and I find it beter to focus on the ones that you can see a clear reason to be around.  Last one for today is Philip Morris (PM) which was upgraded to Conviction Buy at Goldman Sachs with a $103 price target.  If you know how the Conviction Buy list works, first it is Goldman’s Top US Equities List and second to add a name they generally remove a name and being removed to make way for PM was Campbell Soup (CPB) which was downgraded to Buy from Conviction Buy.  A reminder, you can see that and other analyst notes at the  Upgrades/Downgrades section.

Week in Review:

Monday’s trading we noted that  after a down day the broad trend still seems to be strongly in-tact and right now it looks like that small divergence might just be setting up for a MACD recycle.  SolarCity (SCTY) was initiated with a few Buys today including one from Goldman Sachs with an $18 price target.  More positive solar sector news piggy backing on the Buffet investment.  The big news was ten banks reach an $8.5 billion settlements/agreement with the Fed and Office of the Comptroller of the Currency.  The funds are broken down into $3.3B direct payments to eligible borrowers and $5.2B in other assistance like loan modifications.  This agreement includes Aurora, Bank of America (BAC), Citibank (C), JPMorgan Chase (JPM), MetLife Bank (MET), PNC (PNC), Sovereign, SunTrust (STI), U.S. Bank (USB), and Wells Fargo (WFC).

Tuesday’s action was a continuation of Monday’s consolidation and ended up marking the intraday lows of the week.  In the news was Signet Jewelers (SIG) which gained over 9% on news that holiday season same-store sales rose 3.3% and also on earnings guidance that Wall Street must have liked.  Trading lower today on same-store sales was GameStop (GME) which lost over 6%.  Medicines Company (MDCO) gained over 11% after announcing positive results for its Phase 3 clinical trial of cangrelor.  Cypress Semiconductor (CY) shares were over 8% lower on disappointing Q4 earnings estimates.  Also on the downside today was Fusion-io (FIO) which lost over 9.5%  on a downgrade at William Blair.

Wednesday’s action starte higher but as the day wore on we drifted lower and while we didn’t head into negative territory we  closed with only a small gain going into Thursday’s Jobs data.  A stock of the day was Apollo Group Inc.’s (APOL) which traded lower after reporting Net Income that was 11% lower than the previous year but still beat on the top and bottom line.  The problem was APOL again lowered estimates for the coming year as well as declining enrollment and a potential accreditation issue.  In additional, APOL saw a few downgrades.  DigitalGlobe Inc. (DGI) repoted receiving antitrust clearance from the U.S. Department of Justice for its deal to acquire (more a combination than acquisition it seems) of GeoEye Inc. (GEOY).  Adding some drama for those involved, Dish Network Corp. (DISH) made an unsolicited bid to acquire Clearwire Corp. (CLWR), offering $3.30 a share or a roughly 11% premium to Sprint’s (S) offer.

Thursday took us back off to the races after the consolidation.  Even though the jobs data was slightly worse than expected it the market seemed to shrug it off and move.  The big stock of today was Nokia (NOK) which gained nearly 20% on better-than-expected result in the fourth quarter which was attributed to better than expected Lumia sales and lower operating expenses.  Also moving higher was Ford (F) which gained over 2.5% on Thursday after the company announced it doubled its quarterly dividend to 10 cents.  Urban Outfitters (URBN) reported holiday sales which were 15% higher than the same period last year.  Piggy backing on the news, Piper Jaffray raised their price target on URBN to $51.  On the downside, Molycorp (MCP) closed down over 22% after reporting a disappointing forecast for 2013 in both revenue and cash flow.

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.

Major averages 5 day results:

Dow Jones Industrial:

S&P 500:

Nasdaq:

The market continues to drift higher and even pressed through a slightly negative Unemployment report focusing more on the good export data out of China.  This next week will really start to kick back up the earnings reports and we will see if the corporations can continue to prompt investors to want to own shares.  I will be focusing on if companies continue to miss on revenues and beat on the bottom line.  I have to imagine the ability to keep managing EPS with what seems to be either lower demand or the need to discount cannot keep continuing and that companies have likely exasperated many of those “income smoothing” options.  I will also be watching forecasts and projections as many are calling for 2013 – 14 to be a tough period for earnings.  In the midst of all this the market has closed at 5 year highs and have the intraday highs in its sights.  I mentioned before that I would personally start scaling back on size.  I would not want to give up and of the hard fought gains but why scale back instead of move completely on the sidelines is that calling an exact top is very difficult and by moving entirely on the sidelines, you can miss opportunity.  Otherwise the trend is your friend and for now the trend is pointed higher.