Bulls fight back after a gap down
Index & Sector performance 11/13/13
The Market:
Losses after a gap down on the open were completely recouped in the first hour of trading. After a brief consolidation, the S&P 500 moved strongly higher into the close posting a 14 point up day but from trough to peak the moved covered 22 points.
In economic data the Federal Budget Balance came in better than expected with a -91.6B vs expectations of -104.3B. Tomorrow there is more economic data including the usual Unemployment Claims which we have an estimate of 331K. Another noteworthy even is that Janet Yellen testifies tomorrow at 10am EST. Her comments could help move markets.
Story Stocks:
Starbucks (SBUX) was no worse for the wear after an arbitrator rules yesterday the company owed Kraft (KRFT) $2.7B for breaking a contract. Interestingly KRFT stated the proceeds from the decision would go to Mondelez (MDLZ) who then stated the funds would be used to repurchase stock. SBUX & KRFT closed up roughly 1% while MDLZ gained 2.71%.
Facebook (FB) had their “friend request” denied after offering $3B for Snapchat and being denied.
In earnings news, Macy’s (M) gained 9.39% after beating EPS (47c vs 39c) and revenue ($6.28B vs $6.19B). Equally impressive, PotBelly (PBPB) gained over 9% after beating EPS (15c vs 9c) and revenue ($78M vs $77.8M). On the downside, Perry Ellis (PERY) closed nearly 23% lower after missing EPS and lowering 2013 guidance.
The following noteworthy companies are scheduled to report earnings before tomorrow’s open: WMT, VIAB, TYC, KSS, HP
Analyst Comments:
Instead of the regular Analysts comments, I will focus on one tonight and that is from Goldman Sachs. Goldman upgraded Qualcomm (QCOM) from Buy to Conviction Buy with an $80 price target and the technicals look to support the upgrade. Watch the triangle that QCOM is carving and look for a break with volume.
It looks as though the pattern will provide a pullback before heading higher but it may be small and not as deep as the recent drops.
Game Plan:
The strong action continues and while it would not be much of a handle for a cup and handle formation it is interesting to see if it played out it would target right near 1800 in the S&P 500 cash which could be the next major psychological number to the upside. Stops can go below 1760 as the pattern should not meander and should move steadily higher if in play.
