Week in Review

DJIA +10.37 (+0.07%) to 14,547.51; S&P 500 +13.64 (+0.88%) to 1,555.25; NASDAQ +38.51 (+1.40%) to 2,780.46

In Thursday night’s recap I noted that the bears were not yet in total control but the bulls needed to get the index moving or there could be a further imminent drop.  Friday was able to firm up and take back some control but you wouldn’t know it by watching the Dow which only pressed into positive territory within the last hour of trading.  The broader indices were much stronger.

Weighing on the Dow were three big names which reported EPS that were not met with great approval by Wall Street.  McDonald’s (MCD) lost just under 2%, General Electric (GE) just over 4%, and by far the worst was IBM (IBM) which closed down 8.28%.  It is somewhat surprising the Dow was able to close positive at all with those declines but overall the rest of the index was up, minus a few other stragglers, and was lead by American Express (AMEX) and Microsoft (MSFT) which gained 3.39% and 3.38% respectively.

In the Dell (DELL) saga there was another development as Blackstone (BX) withdrew its bid.  DELL lost nearly 4% on the news and this likely makes Michael Dell’s offer the front runner.

Moving higher in today’s session was Vertex Pharmaceuticals (VRTX) on positive data from a trial of a cystic fibrosis drug candidate.  This news also prompted analysts to upgrade the name further propelling the move.  VRTX closed up an astonishing 61.45% on the day.

Also moving higher but in this case on earnings was Chipotle (CMG).  CMG beat revenue and EPS estimates but not all analysts were impressed.  RBC Capital raised their price target to $350 from $320 but maintained a Sector Perform rating.  Considering that CMG closed at $366.35 that is essentially a downgrade.  Even more bearish is Jefferies who maintained their Underperform rating and while they raised their price target, it went to $265 from $250 (over $100 lower than Friday’s close).  On the other side RW Baird rated the stock an Outperform and raised targets to $460 from $435.  We will see over time who wins between the bull, the bear and the fence sitter.

Week in Review:

Monday was a bad day for the markets over all but got worse when horrible news came out of Boston as two bombs were detonated near the finish line of the Boston Marathon.  While the markets were already in a slide for the day, the news didn’t help and throughout the week the nation was glued to the ongoing investigation/manhunt which as I write has come to and end but I am sure there are more questions, namely why, still left unanswered.  My thoughts and prayers go out to everyone affected by Monday’s horrific event.   The day started with merger news with DISH Network (DISH) offering $17.3B cash and $8.2B in DISH stock to acquire Sprint (S) (roughly $7 per share) and Life Technologies (LIFE) agreed to be acquired by Thermo Fisher (TMO) for $76.00 in cash per share.  Citigroup (C) was a major financial reporting earnings and beat both revenues and EPS.

Tuesday provided a snap back rally in the market which regained slightly more than 50% of the previous day’s losses.  As I noted Monday and then again Tuesday was how Monday’s lows also correlated with the 50 Day SMA in the S&P 500 cash & futures which one might expect the first test to be support.  Both Coca-Cola (KO) and Johnson & Johnson (JNJ) moved the Dow higher after positive earnings reports.  Major financials continued to report with Blackrock (BLK), Goldman Sachs (GS) and U.S. Bancorp (USB) all reporting pre-open.

Wednesday’s general market action essentially gave back all Tuesday’s gains while stock talk was Apple Computers (AAPL) as it briefly traded below $400 on the day before closing just above.  AAPL went on to close the week below $400.  The news attributed to the move on Wednesday was a poor revenue outlook given by an iPhone supplier Cirrus Logic (CRUS).  Later in the week Verizon provided information in their report showing strong sign-ups which could have better iPhone read through.  Regardless the question will be answered 4/23 when AAPL reports.  Bank of America (BAC) beat consensus revenues but missed EPS which sent the stock over 4% lower on the day but the big earnings loser for Wednesday was Textron (TXT) closing down over 13% on a miss and guide lower.

Thursday continued on Wednesday’s action but not before showing some upside trading after a generally muted Unemployment claims number which came roughly as expected (352K).  Morgan Stanley (MS) reported what seemed to be a strong quarter which was lead by Wealth Management while Investment Banking (IB) dipped.  It seems Wall Street wasn’t too impressed with the results but that also might be that they want to see more momentum before buying including an improvement in IB and I also saw a comment about wanting the Morgan Stanley Smith Barney deal to be finalized.  MS has already rallied nicely since the July ’12 lows and looks like a name to watch on this consolidation for future trades but I would like to see the $20 level hold as support.  Peabody Energy (BTU) moved higher and took many coal names with it after reporting earnings which were likely not as bad as analysts feared.  Friday BTU essentially lost all Thursday’s gains showing that the bottom in coals will be more of a process but I still hold that they could look like refiners from a few years ago when everyone wrote them off.  It will just take time.

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:

From Thursday’s recap I noted that the bears were not yet in total control but the bulls needed to get the market going on the upside to keep a positive tone and that is what happened with the S&P having a strong up day.  It looks as thought the index can follow-through on Friday’s action and I would be watching $1565-1575 as a potential resistance zone that needs to be hurdled if the S&P 500 is planning on making another run at the highs.  Especially since on the longer intraday charts (like the 4 hour) you can see a potential Head & Shoulder pattern which would be troubling and would could as low as $1480.  The neckline would be roughly $1540 and could prove to be key support.