October 22, 2018

4 days down and counting…..

Index & Sector performance 9/24/13

The Market:

The S&P 500 came into the day trying to snap a 3 day losing streak with even the smallest of gains but was unable to and after spending some time in positive territory, eventually lost ground and closed down for the 4th day in a row.

In economic news the Case Shiller Index showed prices come in at the expected 12.4% increase year over year and slightly above expectations with a 1% month over month reading.  Richmond Manufacturing was well below expectations but generally not considered significant to the market and Consumer Confidence came in slightly below expectations of 79.8 with a79.7 reading.  As a reminder, August posted an 81.5 reading.  Tomorrow we get Durable Goods and New Home Sales which will both be watched closed but overall light compared to Thursdays Unemployment Claims and GDP.

Leading Sector from the WSC Scoreboard in today’s trading was the Industrials closing slightly higher and being led by Illinois Tool Works (ITW) and Parker Hannifin (PH) closing up 2.32% and 2.22% respectively.

Story Stocks:

Not only did we see a relatively strong Cash Shiller number but also KB Home (KBH) and Lennar (LEN) both reported earnings that beat consensus expectations.  Both charts should be watched for trading opportunities after the earnings reaction has been digested.

In merger news, Applied Materials (AMAT) agreed to merge with Tokyo Electron.  AMAT shareholders will own roughly 2/3rds of the newly formed entity and the 9% gain in AMAT shares today seems to imply Wall Street likes the deal too.  AMAT has been on a tear YTD up over 42% and longs may want to consider using this recent strength to realize some of those paper gains.  As I saw Motley Fool note, this is a merger between the #1 and #3 chipmakers so there COULD be regulatory issues that arise.

Another merger for Tuesday was Greenway Medical (GWAY) agreed to be taken over by Vitera Healthcare Solutions.  The deal values GWAY at $20.35 per share which is an over 18% premium from Monday’s closing price.

The following noteworthy companies are scheduled to report earnings before tomorrow’s open: AZO

Analyst Comments:

Upgrades 9/24/13

Downgrades 9/24/13

Initiations 9/24/13

Price Target Changes 9/24/13

The Game Plan:

4 days down on the S&P 500 has left the door open for a potential bounce Wednesday before Thursday’s Unemployment Claims and GDP data or possibly after a good report.  What will have to be seen is with uncertainty still in the market including the debt ceiling looming at the end of the this month can any bounce be more than just a bounce and actually the beginning of a new leg higher.  News out of Moody’s today that a Government shutdown would not likely affect the US credit rating sounds good but a shutdown could have much broader affects on investor confidence, sentiment and the economy.

The MACD on the Daily looks like it could use more work before higher prices are seen and found resistance at the longer term downtrend line which has been an area of focus.  Ideally there would be a recycle toward the zero line before any further rallies.  Longs can be patient for opportunities as this market does not look vulnerable to the upside….. not yet at least.

Tonight we are showing the Moon phases on the chart.  Blue is New and Black represents Full and if the event was over the weekend then it is placed on the next closest trading day.  The recent high correlated perfectly with a Full Moon and we have a new moon 10/4/13 and the next Full moon on 10/18/13.

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