Daily Wrap
DJIA -35.79 (-0.26%) to 13,982.91; S&P 500 +0.90 (+0.06%) to 1,520.33; NASDAQ +10.39 (+0.33%) to 3,196.88
The markets continued to climb what seems to be the wall of worry and I heard many speculating that something the President might say would affect the current trend but yet again another perceived milestone is passed and we continue higher yet again. The Nasdaq finally participated in the rally as Apple Computers (AAPL) while down for the day was only slightly so and didn’t pull down the broad index much but it was the Dow that didn’t participate and that was due to McDonald’s (MCD) which closed down over 1% although JP Morgan (JPM), Boeing (BA) and Caterpillar (CAT) also didn’t help today’s cause.
Comcast (CMCSA) topped today’s news as after the close yesterday they announced earnings that topped Wall Street EPS estimates posting 56c vs the consensus of 53c. Revenues seemed to be slightly light but Wall Street didn’t seem to care as they sent the stock up $1.16, or 2.98%, to $40.13. Along with the EPS report, CMCSA announced they will purchase General Electric’s (GE) remaining 49% equity stake in NBC Universal for $16.7B and would acquire $1.4B in real estate assets from GE. Also helping CMCSA’s cause today was Credit Suisse upgraded the name to Outperform and also slapped it with a $48 price target. Unfortunately for me while $48 would be roughly a 20% gain from current levels, I have o pass on the name until I see a consolidation and maybe even a prolonged pullback. The name has been on a tear of late and there is a large potential MACD divergence in place. I just cannot see anything more than quick day trades as a prudent use of capital.
Speaking of GE, their shares gained 81c, or 3.59%, to $23.39. I don’t believe it was as much the news of the sale as it was their announcement of what they will do with the new found wealth, namely, the company said it was raising its share repurchase plan to $35B and accelerating its 2013 share buybacks to about $10B. GE is an absolute front page Watch List name going forward!
Moving lower today was Carnival (CCL) which has been facing the Triumph cruise ship debacle and today the ship was finally towed ashore and the company started to outline the potential costs. While the stock closed down $1.56, or 4%, to $37.46, the overall pattern can still be viewed as constructive and I will have to look over the costs but if they are manageable this could be a name that recovers from this fairly quick.
Also moving lower today was Cliffs Natural (CLF) which closed down $7.32, or 19.99%, to $29.29 after reporting earnings a announcing an over 70% cut in the dividend. CLF was a chart I liked and was surprised by the move but it also never broke out providing us a trade. I do believe the company will and it will remain in my sights. This is also why I do not set new positions around earnings unless it is planned to be a scale in of a long term position and or will be hedged. Yes you can miss out on a potential gap higher but often stocks that gap will provide you additional opportunities to get in afterward and saves you from the large losses that can come from trying to front run the results.
Bankrate (RATE) which closed down $1.93, or 15.59%, to $10.45 did so after a disappointing earnings report. To make matters worse for RATE, Citigroup downgraded them. As a reminder that you can review the list I compile each day as well as an archive of past days in the Upgrades/Downgrades section.
The following noteworthy companies are scheduled to report earnings before tomorrow’s open: DISCA, PEP, TAP, VMC, WM, ALXN, BWA, DVA, DTV, PPL, APA, EOG