Daily Wrap
DJIA +125.95 (+0.89%) to 14,253.77; S&P 500 +14.59 (+0.96%) to 1,539.79; NASDAQ +42.10 (+1.32%) to 3,224.13
Up up and away the market went today with the Dow closing at record highs. Starting the week I had the expectation that this week would be a consolidation week but then as Monday started, something bothered me. The 4 hour emini S&P 500 chart. It didn’t just look bullish it look destined to head higher. I posted it over at StockTwits (WSConsensus) and again in my nightly recap. The way the markets closed and also started the next day seemed to be confirming the pattern and today we broke out and ran to the R2 pivot on the futures which also coordinated with some over bought intraday indicators which helped the markets sell off slightly into the close. Fighting the bullish theme is the negative MACD divergence on the Daily charts but my only issue is who cannot see those at this point. Does that render them worthless? Absolutely not but it is also something we need to acknowledge as the market loves to trap people. We will look more at the technicals below to see what the game plan should be.
Interesting stock in the news today and has been a name of focus recently is JC Penny (JCP). JCP lost over 10% today after 10M shares were sold in a block trade. There were reports that the shares were sold by Vornado Realty Trust (VNO) which is JCP’s second-biggest shareholder. If VNO was the seller then I read that would represent roughly half of their holdings in the company. The Wall Street Journal reported that the directors and activist investor Bill Ackman could look to replace CEO Ron Johnson or push to put the company up for sale if the tide does not turn this year. I think JCP might offer some trading opportunities as there will now likely be expectation and swings based on rumors and “leaks” etc. For people who can handle a quick mover and are willing to go long and short you might want to watch this one going forward.
Everyday has stories abound but I would have expected more on a day the Dow closed at new highs, especially in some of the Dow names. The leaders today for the Dow percentage wise were Cisco Systems (CSCO) and United Technologies (UTX) but using CNBC’s Dow Impact scale the top 5 stocks driving the Dow point wise today were United Technologies (UTX), Boeing (BA), International Business Machines (IBM), American Express (AXP) and 3M (MMM). These 5 stocks roughly equated to 43% of today’s move higher or 54 of the 125.95 point move.
Moving lower today was a name we have had in the recaps before and it is CommonWealth REIT (CWH) which lost just over 3% on news that a court denied an attempted to block their equity offering. There has been an attempt to take the company over and buy the remaining shares before the offering and I imagine the attempt was to try and push the company to the table with the potential acquirer. even with today’s drop, CWH has held the large recent gap higher. If this is really disappointing I would imagine this will have a strong negative affect on the name but so far it hasn’t which could meant the stock is destined to go higher n the long run. I wouldn’t fron run the offering though.
The following noteworthy companies are scheduled to report earnings before tomorrow’s open: AEGR, CTCM, LINC, SPLS, BFA
New names added today to the Watch List: CLD, BBBY, CHK, CTCM, C, AKAM
Today’s rally was not surprising but I cannot also help shake that it would have been more constructive to consolidate a little longer before a move. It could be that this is the last push higher into what will be the top range of a topping process which takes us lower into Summer. Last year we made highs the week of Good Friday and didn’t recapture those highs until September. This year Good Friday is about a week earlier coming in at 3/29/13. I don’t like to blindly say that one period will be like another but the current fractal, as I have noted before, reminds me of last year and the grind higher. I will still trade this current time-frame on its own merits and that may render the fractal discussion useless but something I will personally keep my eye on.
