Daily Wrap
DJIA -265.86 (-1.79%) to 14,599.20; S&P 500 -36.49 (-2.30%) to 1,552.36; NASDAQ -59.01 (-2.07%) to 2,797.47
Today was a very active day in the markets but it is appropriate to take the time to stop and send well wishes and prayers to those involved in the Boston Marathon incident which as I write is still unfolding with not many details but clearly today people were hurt and my prayers go to them and their family.
The market began with a small gap lower on weak Chinese data and overall global outlook concerns which continued to snowball into larger losses which were not just tied to the incident in Boston and was gaining steam and moving lower even before. The biggest news of the day was Gold which was absolutely crushed and sent over 9% lower on the day. I saw a note this was Gold metals worst two day loss in 30 years. I noted over the weekend that sometimes stocks or other trading vehicles will break a key psychological level or support to then turn and mark a bottom but that was not that case for Gold and the 1500 level as it just fueled the sell off. This is a good lesson about getting int the way of a strong move or trend. Guy Adami of CNBC often talks about how he got started in Gold trading and that the metal can have erratic moves without much notice. This will likely become his featured example.
I also noted that if I were to focus on a name, I would likely focus on Silver which is generally higher beta than gold but one reason I like it more is due to the industrial uses. Silver lost over 13% on the day but would still be the commodity I watch if I did decide to play. As I have mentioned before I don’t generally pick tops or bottoms so any dip into either Gold or Silver for me would be after a bounce and I had clear level to trade against.
In other news we had a Merger Monday with DISH Network (DISH) offering $17.3B cash and $8.2B in DISH stock to acquire Sprint (S). This deal values S at roughly $7 per share. ALso in merger news Life Technologies (LIFE), closed up 7.51% after agreeing to be acquired by Thermo Fisher (TMO) for $76.00 in cash per share.
As we are now pressing more and more into earnings season we had another large bank reporting results and the banks have been on everyone’s radar as a sector to watch this earnings season. Citigroup (C) beat EPS and revenue estimates and while it closed off the highs, C managed to remain positive for the day closing 0.60% higher. Tomorrow the focus on financials will continue with Goldman Sachs (GS), Blackrock (BLK) and U.S. Bancorp (USB) reporting pre-market.
As would be expected, many commodity link stocks were underperforming not only on the market sell off but as their commodity declines sharpy. Gold, Silver, Oil all lost more than the S&P 500 and in the case of Gold & Silver it was significantly more.
The following noteworthy companies are scheduled to report earnings before tomorrow’s open: JNJ, KO, GS, USB, BLK, GWW, NTRS, CMA, MBWM, AMTD
In analyst notes today we were not lacking for big names. On the upside both UBS and Wedbush upgraded Chipotle (CMG) with UBS being the most bullish going to Buy with a $390 price target. Also receiving duplicate upgrades was Sherwin-Williams (SHW). In downgrades we saw a few commodity names including Barrick Gold (ABX), Freeport McMoRan (FCX) and Harmony Gold (HMY). Just because something is low doesn’t mean it won’t go lower but I don’t think I will follow them on this one. 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.
Over the weekend I noted that we had two clear reference points in the S&P 500 cash, $1597.35 on the upside and $1579.97 on the downside. I felt a breach either way would be very telling. Now, I will be focusing on the 50 day moving averages on the S&P 500, especially if we press lower toward them in the futures overnight and therefore in early trading tomorrow. Level on the cash is $1540 and the futures roughly $1534. Lastly, again prayers and well wishes to those affected by today’s events as well as their family and loved ones.
