June 19, 2019

Daily Wrap

DJIA -138.19 (-0.94%) to 14,618.59; S&P 500 -22.56 (-1.43%) to 1,552.01; NASDAQ -56.43 (-1.99%) to 2,781.98

Yesterday’s rally was short lived as the futures were slightly lower last night after the close and the losses picked up overnight and into the morning’s trading which then lasted the majority of the day not bottoming until just before 1pm EST.  Today was a light economic data day, although there was some fed speak, and sets up into tomorrow with the week’s Unemployment claims number.  I have estimates at 349K going into the number which is roughly where last week’s reading was (346K).

The talk of the day was Apple Computers (AAPL) as it pressed lower and even printed below $400 intraday while managing to close at $402.80.  The move wasn’t tied to anything AAPL said or did but one of their supplies, Cirrus Logic (CRUS).  CRUS estimated that current quarter revenue would be significantly below analyst expectations.  The read through for analysts is that iPhone shipments are likely tracking below expectations.  AAPL will end the speculation when they report their earnings on 4/23.  Otherwise what AAPL needs to get going is a sentiment change.  People have to fear that they are about to miss out on the next move and that just isn’t there.  Possibly the upcoming EPS report will change that.  For someone with a long term view I do believe AAPL ticks many of the boxes for a place in a portfolio.  For a trader, if the sentiment does turn the move will likely provide more than enough opportunities to get in than having to try and pick the exact bottom and if you just cannot resist then options might provide a lower cost way to play.

We had another big financial reporting earnings, Bank of America (BAC).  While revenues topped analyst expectations, EPS missed.  The news, along with a bad day in the market, sent the stock 4.72% lower.  BAC also announced a $500M settlement which will dismiss more cases tied to its Countrywide unit.

Also moving on earnings today was Textron (TXT) which closed down 13.42% after reporting revenues and EPS that missed analyst expectations.  TXT also provided full year 2013 guidance at $1.90-$2.10 which was well below analyst consensus of $2.26.  I am generally not one to try and step in front of a big drop (or pop for that matter) but TXT could start to find support in here with there being a gap just below $25 and previous support levels at both $24 and $23.

If you often look over the most ups list you likely familiar with seeing many pharmaceutical and biotech names which can have big moves after key reports.  Today was no exception including Acura Pharma (ACUR) up nearly 34% and Endo Health (ENDP) up just over 3% after a positive FDA announcement.  Also moving higher was Alkermes (ALKS) after up-beat preliminary results of a depression drug candidate.

The following noteworthy companies are scheduled to report earnings before tomorrow’s open: VZ, UNP, UNH, MS, DHR, BAX, FCX, BBT, PPG, SHW, OMC, FITB, NUE, APH, KEY

In analyst notes today, Yahoo (YHOO) was upgraded to Buy at Bank of America/Merrill with a $28 price target.  In downgrades Needham downgraded Cirrus Logic (CRUS) from Strong Buy to Buy with a $30 price target and Macquarie downgraded both Deere (DE) and Caterpillar (CAT) albeit both only to Neutral.  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.

The news outlets seemed to be referencing Bank of America’s (BAC) earnings as the catalyst but as I noted last night yesterday’s action seemed very much like a simple snap back after Monday’s big losses and often in those cases the gains are short lives and ultimately give way to further losses.  Pair that with today’s lows correlating nicely with the S&P 500’s 50 day SMA and the recent action seems to make sense with the index giving traders a head fake onto to tag a key support and on the first test [so far] hold and bounce.  Now the key becomes if the index can hold today’s lows or not.  If not then it seems very likely that the cash index could ultimately trade as low as $150 with $150 and $1520 being spots of support along the way.

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