March 28, 2024

Week in Review

DJIA -40.86 (-0.28%) to 14,565.25; S&P 500 -6.70 (-0.43%) to 1,553.28; NASDAQ -21.12 (-0.65%) to 3,203.86

The March unemployment data came in well below expectations (88K vs 198K expectations) which send the market gaping lower and down over 1% in early trading.  This took the S&P 500 toward the 50 day SMA and into a range of support which is used to rally off the lows ultimately only closing down slightly for the day.

Big loser on the day was F5 Networks (FFIV) which lose over 19% after announcing Q2 earnings that were below analyst expectations.  The company blamed the lower results on decreasing telecom and government sales.  There was a slew of analyst comments on FFIV after the announcement.  Some firms used the news to downgrade the name while others stated this drop was a opportunity to buy.  One interesting note I focused on was from Needham who recommended looking at Citrix Systems (CTXS) which was taken down in sympathy but they believe FFIV’s issues are company specific.  CTXS closed well off the day’s lows but that does provide a level to trade against especially if you can time a buy on a pullback to decrease risk.

In M&A news EnergySolutions (ES) gained over 10% after announcing a revised merger agreement with Energy Capital Partners which upped the price to $4.15 per share.  Also moving higher was NII Holdings (NIHD) after announcing they will sell their Nextel Peru unit for $400M (rumored earlier in the week).

Radware (RDWR) down over 22% after earnings fell short of analyst expectations.

In analyst notes today, Celgene (CELG) was upgraded to Buy at Deutsche Bank and the price target was upped to $143 from $105.  Facebook (FB) was upgraded to Buy from Hold at Argus with a $36 price target.  Besides the slew of downgrades on FFIV, Juniper (JNPR) and Mattel (MAT) were other notable names also receiving downgrades.  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.

Week in Review:

Monday started higher and then ultimately swooned after the release of ISM numbers but as I noted Monday it seemed more like a time to sell off after a fantastic first quarter and even more after the Thursday rally which closed the week higher.  Apple Computers (AAPL) lost over 3% taking out a potential inverse H&S pattern. Tesla Motors (TSLA) on the other had gained on news that they will be profitable in the 1st quarter and that the model S had higher sales than estimates.  DFC Global (DLLR) was down over 20% after lowering estimates.  While Monday was DLLR’s lows, I am not sure the downside is over so I would trade using stops.  In M&A news American Greetings (AM) agreed to be acquired for $18.35 per share.  There were many big name companies in the Upgrades/Downgrades list including Molson Coors (TAP) which was upgraded to Conviction Buy at Goldman Sachs.

Monday closed down but provided the markets an out with a late day rally which ultimately laid way to a higher move Tuesday.  In M&A News BGC Partners (BGCP) agreed to sell its eSpeed treasury trading platform to Nasdaq OMX Group (NDAQ) and Obagi Medical (OMPI) received unsolicited proposal to acquire the company for $22 per share.  Hertz (HTZ) moved higher on earnings guidance out to 2015 while Delta (DAL) moved lower on a gain in operating performance and Q1 revenue estimates but not enough for Wall Street.  Healthcare stocks continued their climb after the proposed Medicare Advantage changes and an analyst note I read highlighted a few names that should benefit most: Humana (HUM), WellCare (WCG), Health Net (HNT), Universal American (UAM), and UnitedHealth (UNH).  Goldman Sachs downgraded AAPL from Conviction Buy to Buy and Hewlett-Packard (HPQ) to Sell from Neutral.

Wednesday was the worst day the of the week for the market with Friday being a close second.  Wednesday’s drop was on ADP numbers and the realization that Friday’s report might greatly disappoint.  This sent analysts revising their numbers lower.  Zynga (ZNGA) closed higher after announcing U.K. subscribers to gamble money in two new games, ZyngaPlusPoker and ZyngaPlusCasino.  In M&A news NII Holdings (NIHD) gained on the day after a Peruvian Paper reported the company as close to selling a unit for $500M (later in the week I believe this was officially announced).  In analysts news, Alexza Pharmaceuticals (ALXA) was upgraded by Piper Jaffray with a $10 price target and Goldman Sachs added Six Flags (SIX) to the Conviction Buy list with an $83.50 target.

Thursday the market clawed back some of Wednesday’s losses but still left the market looking weak going into Friday’s report.  The big news of the day was the Bank of Japan announcing an aggressive 2% inflation target and that they will be doubling their monthly bond purchases to try and achieve the target.  Facebook (FB) finally announced a step in their mobile plan, “Facebook Home”, which is a deeply rooted set of apps in Google’s (GOOG) Android platform.  In the announcement Mark Zuckerberg noted that he was looking to change the way we use are phone and put “people” at the focus.  Best Buy (BBY) reported they plan to create Samsung (SSNLF) devoted sections in the store.  In M&A news Sterling Bancorp (STL) and Provident New York Bancorp (PBNY) announced a deal to merge in an all stock transaction.   Lazard initiated Apple (AAPL) with a Buy and a $540 target and Goldman Sachs added Panera (PNRA) to the Conviction Buy list.

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.  

Major averages 5 day results:

Dow Jones Industrial:

S&P 500:

Nasdaq:

One idea has been that this year will look like last with a rally into the Easter holiday and then a period of underperformance to follow.  So far that idea has played out reasonably well.  One thing to also consider is that in 2012 the market pullback ultimately lead to a higher year end close.  The historic stats about a positive Q1 would lead us to believe we will likely close higher this year but it is very possibly that the middle months will look ugly and could be difficult to trade even if that formula does prove to be true.  Friday took us into an area of support nearing the 50 day SMA and long term uptrend lines which the market used to bounce making the loss on the day palatable but we will have to see if we can build on that positive action starting next week or if the bumpy road will continue.

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