S&P 500 holds 1800
Index & Sector performance 12/10/13
The Market:
On what amounted to only a small down day with the S&P 500 losing roughly 5 points, the index was able to hold the $1800 level as well as the 20 day SMA which it recently regained after a one day close below on 12/5/13.
It was a light economic data day with the NFIB Small Business index coming in as expected posting a 92.5 with expectations at 92.7 and the previous reading 91.6. Wholesale inventories were higher than expected with a 1.4% reading when consensus was 0.3%. The previous month’s reading was also raised to 0.5% from the previously reported 0.4%. Tomorrow Treasury Secretary Lew speaks at 10am, Crude Inventories are announced at 10:30 am, there is a 10 year bond auction around 1pm and at 2 the Federal Budget Balance is announced.
Story Stocks:
General Motors (GM) received news that a large shareholder will be exiting the stock. This can often have a negative effect on a stock but in this case the shareholder is the US Treasury and marks an end to the bailout and restructure. This is a big step for GM putting that mark in their history behind them and moving forward. Also making news tied to GM is that the CEO who already had a succession plan in place will be moving up his end date as Dan Akerson will step down as of 1/15/14. The reason for the accelerated change is due to Mr. Akerson’s wife being diagnosed with advanced stage cancer. Our heartfelt thoughts and prayers go out to the Akerson family.
Also making changes at the top albeit under different circumstances is lululemon (LULU) announcing that former President of TOMS Shoes, Laurent Potdevin, will replacing Chip WIlson as CEO.
In healthcare news Cardinal Health (CAH) and CVS Caremark (CVS) announced a joint venture aimed at sourcing generic drugs. CAH was the bigger winner gaining X% while CVS posted a respectable X%.
Small Canadian trucking company, Vitran Corporation (VTNC) gained X% after agreeing to be acquired for $6.00 per share.
On the downside was Lumber Liquidators (LL) which has been on a tear in 2012 and 2013. Even with today X% loss on disappointing earnings guidance, LL is up X% YTD. Wedbush came to the defense of LL and reiterated their Outperform rating and $125 price target. After such a strong run this stock may have been priced for perfection. There may be opportunity in the name on the long side but trader/investors may also be able to wait and pay lower.
The following noteworthy companies are scheduled to report earnings before tomorrow’s open: JOY
Analyst Comments:
Upgrades 12/10/13
Downgrades 12/10/13
Initiations 12/10/13
Price Target Changes 12/10/13
The Game Plan:
The shorter term support and resistance levels are now set and a breach could lead to a much stronger and further move in that direction. What traders need to be aware of is a head fake where the breach is short lived and turns the opposite way. As we note on the chart, it may be more prudent for traders to consider waiting for the first bounce or pullback after the break to then consider entries. This might cause missed opportunity but also protect against the potential whips. Lastly, and this is again on the chart, and that is to not be surprised to see these boundaries each tested again before the market decides which direction to go. That means the coming days might see more small moves.
Also worth noting tonight the ES chart which if it cannot get above 1806ES might look to target the lower support Pivots overnight or tomorrow. Those come in at 1799ES and 1794.75ES.
