March 19, 2024

Ben to the rescue!

Index & Sector performance 9/18/13

The Market:

The clock struck 2pm EST and it is time for Big Ben and the Fed to put all the recent speculation, at least for now, to rest.  Neither changes to the current $85B bond purchased program nor the fed funds target rate.  That news sparked a near 30 point rally which ultimately closed up 23 points from the announcement.

Besides the Federal Reserve rate decision, in economic data we had building permits and housing starts which both came in lower than the previous month and also below expectations but with all due respect to that data, it didn’t matter, at least not today it didn’t.

Leading today’s rally to the upside was…. everything but leading the most was the Utilities (XLU).  Inside the XLU, it was NextEra Energy (NEE) leading with a 4.49% gain and the laggard was NRG Energy (NRG) which was downgraded from Conviction Buy to Neutral (BIG jump) at Goldman Sachs.

Story Stocks:

Low priced Atossa Genetics (ATOS) gained over X% today on news of a nationwide distribution agreement with McKesson Medical-Surgical to sell and distribute ATOS’ MASCT device.  The stock was over $12 earlier in the year so could have much more room to run if this agreement will equate into sales & profits.

If you were watching Adobe Systems (ADBE) after the close yesterday you likely saw a drop which was related to the company missing both earnings and revenue estimates but that was short lived as the headline told only part of the story and investors ultimately cheered the increase in creative cloud subscriptions.  Some were skeptic when ADBE stated they would move to a subscription model but so far it looks like they have started to bring users on-board and this change could provide much more steady income to ADBE and less product cycle revenue fluctuations.

Walgreens (WAG) announced they will begin providing health insurance to employees through a private health insurance exchange.  If your not familiar with this type of program, companies essentially provide employees a stipend to use for insurance and then employees pick the coverage they want from the marketplace offered by the exchange.  There would be no more plans each employee opts into and the idea is that you can pick only the services you want and need and not have to opt into a set plan that may not suit you.  Other big name companies who have moved this way include Sears (SHLD) and Darden Restaurance (DRI).

The following noteworthy companies are scheduled to report earnings before tomorrow’s open: CAG, IHS, RAD, PIR, SCHL, MCS

Analyst Comments:

Upgrades 9/18/13

Downgrades 9/18/13

Initiations 09/18/13

Price Target Changes 09/18/13

The Game Plan:

The Fed announcement to continue on with Bond purchases at a rate of $85B/mo and also to leave the Fed Funds unchanged helped spark a rally which easily broke through the recent 1710 highs in the S&P 500.  It would not be surprising to see a move like this experience follow through and even higher prices be seen but it feels hard to ignore, especially for shorter term traders, that this recent action is an opportunity to scale back on longs and look to add back later and hopefully at lower prices.  Even longer term investors could look to either scale back longs or sell some premium to benefit from this recent action.

Otherwise the focus remains the same.  The market is in an uptrend and I am particularly watching the MACD to see if it can recycle and help start a new run or if it will lose the zero line start a pullback which could ultimately target the 200 day SMA.  Key levels to watch for longs are the recently broken 1710 level and then 1680.

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