October 17, 2017

Daily Wrap

DJIA +138.46 (+0.92%) to 15,254.03;S&P 500 +9.68 (+0.59%) to 1,640.42;NASDAQ +9.03 (+0.30%) to 2,990.79

The S&P 500 started the morning higher but spent the majority of the midday in negative territory before turning positive around 2pm EST and rallying into the close.  The Nasdaq had roughly the same pattern but the Dow was able to remain positive the entire day due to the strong moves by Merck (MRK) and also Intel (INTC).  In economic news, ISM came in light with a 49 reading which was below estimates and also the lowest reading in roughly 4 years.

The aforementioned MRK was up today on positive news regarding their cancer treatment lambrolizumab as the company announced that initial data warrants an expansion of clinical development.  INTC received positive news as Samsung confirmed a plan to use their chips in upcoming Galaxy tablets and FBR Capital upgraded INTC to Outperform with a $28 price target.

Often times when job cuts are announced a stock will rise because it can show the company is righting the ship as well as cost cuts can add to the bottom line but that wasn’t the case with Zynga (ZNGA) which closed down over 12% today after the company announced they will be cutting staff by 18%.  The company also noted that their games were underperforming with the exception of Farmville.

The following noteworthy companies are scheduled to report earnings before tomorrow’s open: DG, AMWD

In analyst notes today, Best Buy (BBY) was upgraded to Buy at SunTrust with a $35 price target.  Goldman Sachs reiterated their Conviction Buy rating on both Visa (V) and Bristol-Myers (BMY) with a $200 and $55 price target respectively.  On the downside, Canadian Natural (CNIQ) was downgraded to Sell at Goldman Sachs.  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.

Tonight I am attaching a chart of the McClellan Oscillator which has reached oversold territory but what has been bothering me is that often we see a more sold off level when looking at stocks trading below their 10 day MA.  Due to the strength of the recent rally we have not really had many names close below their 10 day yet and it could be that we won’t but it gives me pause and would prefer to see a reading below 50 for the S&P 500 on a closing basis.  What is interesting is near today’s lows we had a reading of roughly 60 but I cannot track intraday reading and only closes so I am left waiting to see if ultimately this rally was just a respite before lower levels are seen.

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