March 29, 2024

Daily Wrap

DJIA -111.66 (-0.76%) to 14,550.35; S&P 500 -16.56 (-1.05%) to 1,553.69; NASDAQ -36.26 (-1.11%) to 3,218.60

Today in the pre-market we were essentially flat/slight higher and even after a poor ADP number the S&P 500 was able to open slightly higher but that was short lived and the rest of the day we saw market declines which at the lows approached down 20 points in the S&P 500 or over 1%.  Along with the weak ADP and general concerns on slower global growth we also had two other event weighing on the markets.  First the U.S. Defense Secretary, Chuck Hagel, stated that the U.S. is sending a missile defense system to Guam North Korea represents a clear and present danger to the U.S. and Asian allies.  Secondly, John Williams, the President of the Federal Reserve of San Francisco stated that we may see an end to FED purchases this year.  As many have actually noted, today’s move seemed more about selling winners and changing posture than possibly something directly tied to an immediate threat in the news.  In my opinion, often traders/investors will use headlines to start a sell off and at that point it can build on itself like we saw today.

Easy come easy go today for Tesla Motors (TSLA) after gaping higher after announcing they would be profitable for Q1 and beating sales estimates for the new Model S.  Today there was news about regarding a leasing plan for the Model S but this seemed more about the market deciding what valuation they want to put on TSLA and possibly a too far too fast moment.  Hats of to Pacific Crest.  I don’t have the analysts name but they put out a research note stating the gain was on a one time warrant event and that this move was overdone in their opinion.  We will see if they are correct in the long term but so far listening to them would have made/saved someone long TSLA.

Moving higher today was NII Holdings (NIHD) after a Peruvian Paper reported the company as close to selling a unit for $500M.  I didn’t see the company comment on the matter and the stock gained over 21% today.  NIHD is a VERY beaten name with positive divergence abound, so if there is about to be an inflow of capital it could get rolling as a potential speculative bottoming play.  I would try and get a pullback and then use the recent lows as my stop level.

Mindspeed (MSPD) lost 16.28% after forecasting lower revenue for Q2.  In the same vein Global Payments (GPN) lost over 9% after reporting Q3 earnings that missed analyst expectations for EPS and revenue.  RW Baird came out in defense of GPN and reiterated their Outperform rating with a $57 target but CLSA came out and downgraded the name to Underperform and also lowered their price target to $49 from $54 (which is above where the stock closed today).  GPN is sitting right on its 200 day SMA so if it wants to get some traction it should try while it has support here.

Last one for names in the new today is Zynga (ZNGA) which closed up over 15% after announcing that they will allow U.K. subscribers to gamble money in two new games, ZyngaPlusPoker and ZyngaPlusCasino.

The following noteworthy companies are scheduled to report earnings before tomorrow’s open: RPM, ISCA, DDC, JOSB, GBX

In analyst notes today, there was an interesting upgrade on a small Pharmaceutical stock Alexza Pharmaceuticals (ALXA) by Piper Jaffray who also saddled the stock with a $10 price target which is impressive for a stock that closed today at $4.57.  Goldman Sachs was again active with a few changes including adding Six Flags (SIX) to the Conviction Buy list with an $83.50 target, downgrade Caterpillar (CAT) to Neutral from Buy with $101 target and in energy they upgraded Niska Gas (NKA), NextEra Energy (NEE) and Xcel Energy (XEL) while downgrading Northeastern Utilities (NU), Duke Energy (DUK), and Great Plains Energy (GXP).  Some of these and other upgrades and downgrades for the day can be found each morning when I post my 9 @ 9 in the Upgrades/Downgrades section.

Yesterday I noted that we held the 20 Day MA’s and that it looked like the S&P 500 wanted to get to its intraday all time high level.  Unfortunately we didn’t get there before this sell of which did then finally violate the 20 day SMA which has been support for the majority of the recent rally.  As the discussion here has been, unless you think we are heading for an up 40-50% year, then you have to assume that the following quarters will not be as robust as the 1st quarter was and due to that you have to have stops in place and a generally defensive posture.  The market just started to build some positive MACD divergence on the shorter term intraday charts which could help a small rally overnight or into tomorrow morning but how much and how long it can last is something that will have to be seen.  Otherwise the 50 day SMA currently comes in around 1530 in the S&P 500 cash index and has a decent slope to it which I would expect to provide support, at least of the first test.

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