Daily Wrap
DJIA -5.69 (-0.04%) to 14,572.85; S&P 500 -7.02 (-0.45%) to 1,562.17; NASDAQ -28.35 (-0.87%) to 3,239.17
Today started with a small move higher in the morning as the 2nd quarter got its start but that optimism soon waned and after a weak ISM number we saw a quick swoon lower in the broad markets with the small caps and techs leading the way lower. I think today’s action had more to do with the upward bias into the holiday and quarter end finally being over than with the ISM number itself but as much as this market has rallied and I noted over the weekend that unless you think we are going to see a 40-50% higher year, the following quarterly must underperform the one that just closed. While volume was light it was definitively lower with decliners outpacing advancers 3 to 1.
Apple Computers (AAPL) closed down over 3% today and was a chart I noted over the weekend instead of my regular S&P 500 index and I was highlighting the potential inverse Head & Shoulder pattern that AAPL was building but needed to hold the left shoulder which we lost today. AAPL could still be carving out a bottom here but just a different set-up. AAPL would have had a much bigger effect on the Nasdaq if it wasn’t for Priceline (PCLN)an and Google (GOOG) both moving higher on the day and closing up 1.1% and 0.88% respectively.
Tesla Motors (TSLA) gaped higher and while closed off the highs, held the gap even with the dip in the broad markets. TSLA’s move was due to positive comments from the company noting they expect to be profitable in the first quarter after their new Model S sales exceeded estimates. Interesting note out of Pacific Crest said that much of the earnings upside is due to a one time reversal of warrant liability renegotiated from the Department of Energy loan which wasn’t laid out in the press release and they feel the move is overdone.
In merger news American Greetings (AM) agreed to be acquired by the family of its Chairman for $18.35 per share which represented an over 12% gain from Friday’s close. I find this very interesting as this is a greetings card company which happens to be an industry you might assume was dead after the invention of the internet but we will like getting cards….not e-cards.
Also making news today and moving higher was Quicksilver Resources (KWK) closing up over 15% after agreeing to sell a 25% interest in its Barnett Shale oil and gas assets to a subsidiary of Tokyo Gas for $485M.
DFC Global (DLLR) was a name on the most downs list today closing over 20% lower after the company lowered its earnings estimates for the full year.
The following noteworthy companies are scheduled to report earnings before tomorrow’s open: MKC
From the Analyst notes today, Molson Coors (TAP) closed over 6% higher after being upgraded to Conviction Buy at Goldman Sachs. eBay (EBAY) caught positive comments from Goldman (and their reiterated the Conviction Buy rating) and also got an upgrade to Buy with a $67 target at Canaccord. Goldman Sachs then removed SunCoke Energy (SXC) from the Conviction Buy list but maintained a Buy and $20 target. Yahoo (YHOO) caught a downgrade to Hold with a $26 price target at Pivotal Research and Intel (INTC) was downgraded to Market Perform at JMP Securities. As a reminder that you can review the 9 @ 9 which is the top upgrades and downgrades I find posted by 9am EST in the Upgrades/Downgrades section.
I noted over the weekend that the first thing I would be looking for is a dip that wasn’t bought up and continued higher. Today the first dip was bought and the market pressed higher like usual and then after the ISM it fell hard and continued lower until a late day rally scrapped back some of the losses. While today was a bad down day, the major indices are still above their 20 day SMA’s so I want to take all of this in stride. Let’s see what they do tomorrow and if the Bears can build on today’s action.
