Week in Review
DJIA -25.03 (-0.17%) to 14,514.11; S&P 500 -2.53 (-0.16%) to 1,560.70; NASDAQ -9.86 (-0.30%) to 3,249.07
Finally a down day! After 10 straight days higher the Dow and S&P 500 finally has a respite albeit small. Some looking at the SPY today might have thought the markets were lower or noticed a disruption and that is due to the fact that the SPY pays a dividend which it went ex-dividend Friday for roughly $0.70.
In economic data we had CPI which came in slightly hot with a 0.7% increase when 0.5% was expected. When looking at the “core” PCI we met expectations of up 0.2% so the added increase was likely due to food and energy.
The focus of the day was on the financial sector as Thursday night the Federal Reserve announced they approved the capital plans for 14 financial institutions. The only publicly trading financial company whose plan was rejected is BB&T (BBT). JP Morgan (JPM) and Goldman Sachs (GS) received approval with some conditions and they will need to submit new plans at the end of Q3. I would say the big winner of the announcement was Bank of America (BAC) which gained 3% and built on an already impressive rally since 2012. Wall Street was likely most impressed with the approval of a $5B stock buyback program.
Comstock Resources (CRK) gained over 12.78% after announcing the sale of some Permian Basin assets to Rosetta Resources (ROSE). Also moving higher was OGE Energy (OGE) and CenterPoint Energy (CNP) after announcing a partnership where they will be combining $11B in assets.
Week in Review:
I thought Monday was a pretty light news day overall. Citigroup (C) from the Watch List benefited from a phenomenal upgrade at UBS where they went from Neutral to Buy and from a $43 price target to $62! I still chose to close the trade idea out but this is one that is a must watch on pullbacks. Dick’s Sporting Goods (DKS) dropped over 10% after a disappointing earnings report & guidance but DKS was defended by some analysts. DKS bounced off the initial drop’s lows but the bottoming could be more of a process. This is another I would keep on the radar for potential trades. Blackberry (BBRY) saw increased volume and an over 14% move higher after an announcement that AT&T (T) will carry the company’s new Z10 smartphone starting late March. I noted Monday and I still think that any positive results from the new BB10 phones could help fuel takeover or turn around speculation and thus make the stock in play often.
Tuesday I noted how we are in low economic and corporate news territory and in those times we can “drift” in the direction f the trend. This was also options expiration week so it is not uncommon for a trend to continue into OP-EX. Cabela’s (CAB) which sells sporting goods and equipment and closed 12.52% higher Tuesday after being taken down Monday on DKS’ earnings report. Feeling the pressure from the market and DKS’ report, CAB came out today providing positive comments regarding the current business and also noted they expect to beat analyst expectations. CAB has a history of beating (at least recently) so they have “street cred”. Also in the news was Verifone (PAY) and iRobot (IRBT) with IRBT is losing their CFO while PAY their CEO. Both stocks initially moved higher on the news. I think PAY will need more time to set a bottom but IRBT could be a worthwhile name to watch. I won’t be, I have enough but if you like the name there could be something there on a consolidation or dip.
Following up on Monday’s good news, Blackberry (BBRY) announced late in the day that they received an order for 1 million BB10 handsets which is the largest single order in company history. I noted that while BBRY might be setting up to challenge recent pivot highs that there will be fits and starts and one could probably wait to until a clearer base is made to trade from. Also moving Wednesday while presenting at the Bank of America Merrill Lynch conference, JC Penny (JCP) laid to rest some rumors that Ron Johnson would be resigning and stated that they have to continue to transform the business per their plans but also not lose site of their core customers and make sure they are continuing to come back. JCP is a very beaten name that I believe is a takeover or turn around candidate and one I would continue to have on a watch list.
Thursday was all about jobs jobs jobs (remember that da da da Volkswagen commercial?). The weekly Jobless Claims were release and came in lower than expected at 332K which helped the S&P 500 gain over 8 points on the day. E-Trade Financial (ETFC) lost over 8% after Citadel, ETFC’s largest shareholder, announced it was selling its entire stake in the company. ETFC was also down Friday but it looks like all the shares were placed at $11.35 in a spot secondary. I believe it was citadel that was pushing for the company to sell itself a while back and likely now realizing that isn’t happening they are now looking t stay for the potential turn around. Men’s Wearhouse (MW) reported lower than expected earnings but was able to move higher after announcing they hired Jefferies to explore “strategic alternatives” for their K&G stores. Vera Bradley (VRA) was a big name moving lower on earnings and they unfortunately didn’t have the same trump card of “strategic alternatives” that MW used.
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:
Friday’s action seems to have remained inside the previous day’s range and while there was a slight uptick in volume on this down day, there was no deterioration to the longer term uptrend. Coming into this week I noted that I expect the trend to continue into the end of the week as often times if there is a trend going into options expiration, that trend will continue through OP-EX. Friday, or whatever is the last day of the week that week, can sometimes be a wild card as people are doing any final positioning but otherwise I think we got what I expected.