Daily Wrap
DJIA +48.23 (+0.33%) to 14,613.48; S&P 500 +9.79 (+0.63%) to 1,563.07; NASDAQ +18.39 (+0.57%) to 3,222.25
Friday the market gaped lower and traded down roughly 1% in early trading after the weaker than expected Unemployment claims data. That early trading marked the lows and the market rallied the remainder of the day clawing back some of the losses. Today the market built off Friday’s rally and worked higher again today not only closing strongly higher but also closing higher than Thursday’s close before that disappointing data Friday. The takeaway is the bulls fought back.
Starting this morning we had news of a merger with General Electric (GE) taking over Lufkin (LUFK) for $3.3B or $88.50 per share in cash. LUFK is an Oil & Gas services company and the $88.50 price represents an over 37% premium to Friday’s closing price.
Also moving higher on the day was a previous chart I followed and posted on StockTwits which did well, Advanced Micro Devices (AMD). AMD closed up over 13% after a Bloomberg report noting that Microsoft (MSFT) would use an AMD chip in their next Xbox console. AMD is not for the faint of heart but I would watch how the name trades the next few days as it could provide a trading opportunity using today’s lows as a stop.
Recently beaten up retailed, lululemon (LULU) gained 2.22% today after Thornburg capital reported a 10.1% passive stake in LULU’s shares. LULU is another name, especially if the market is going to hold in or press higher, that might be worth a look as a trade. I might personally wait for more clarity in the pattern but the recent low ($61.60) does look like a reasonable level to use as a stop.
Anacor Pharmaceuticals (ANAC) moved 14$ higher on news that they reached a research agreement with the Bill & Melinda Gates foundation. ANAC receivesa payment of $17.7M as well as the foundation will invest $5M in the company’s common stock. For details about the research ANAC will be doing for the Bill & Melinda Gates Foundation you can read the official release HERE.
In analyst notes today, Jefferies intiiated a small Drug Manufacturer, AcelRx (ACRX) with a Buy and $8 target (stock closes at $5.25). In other upgrades Argus went to a Buy on Juniper (JNPR) and Goldman initiated KBR (KBR) with a Buy. Big downgrade today was by JP Morgan when they downgraded Johnson & Johnson (JNJ). This downgrade was mentioned on the CNBC Fast Money halftime show and Josh Brown said he would be a buyer and that he would add under $80. 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.
If we look at the market just after the drop Friday morning, the recent rally has been impressive and seemingly the markets way to try and prove that there are still buyers around. Today’s SPY volume looked very light to me so that is something I want to keep an eye on, otherwise the ability to not only get to but close higher than Thursday’s close, essentially making Friday look like an accident, is impressive. In the shorter term (tomorrow and Wednesday) it is likely we consolidate or pullback from this recent move.
