March 19, 2024

The Taper begins…

Index & Sector performance 12/18/13

The Market:

A strong day in the market with the gains all coming after the 2 pm EST FOMC report.   The S&P 500 was in a holding pattern until just before the report when it started to drop lower.  After the report there was a quick spike lower (likely on the headline of bond buying decreasing) and the S&P 500 tagged the 50 day SMA where the index then bottomed and ripped higher.

From Peak to Trough the S&P 500 gained rouhgly43 points!

In economic news today we saw Housing Starts handily beat expectations (1.09M vs 0.95M).  Also beating was building permits (1.01M vs 0.99M) and of course we have the aforementioned FOMC report.  This was the highlight of the week but tomorrow there are still important reports on the table with Unemployment claims, Existing Home Sales and Philly Fed Manufacturing.

Story Stocks:

Ford (F) was a big loser on the day closing down 6.35% after reporting 2014 estimates which included flat sales, lower operating margin and lower pre-tax profit.

FedEx (FDX) reported EPS ($1.57 vs. $1.64) and revenue ($11.4B vs. $11.43B) that misses expectations but managed to close slightly higher after raising growth expectations.  The rising market tide didn’t hurt either.

In merger news, Valassis (VCI) agreed to be acquired by Harland Clarke Holdings for $34 per share in cash.

CVS Caremark (CVS) closed about 4% higher after raising the company’s dividend and authoring a $6B share repurchase program.  As of the close CVS had a near $81B market Cap so the buyback represents, at current levels, about 7.5% of outstanding shares.

Jabil Circuit (JBL) got crushed closing down 20.66% on disappoint earnings.

The following noteworthy companies are scheduled to report earnings before tomorrow’s open: ACN, DRI, ATU, NEOG, PIR

Analyst Comments:

Upgrades 12/18/13

Downgrades 12/18/13

Initiations 12/18/13

Price Target Changes 12/18/13

The Game Plan:

Today’s rip off the 50 day SMA is reminiscent of when the emini did it a few days earlier in Sunday’s overnight session.  The Bulls will want to build on this positive action and hold the $1770 level which represents a level of breakout which held on today’s back-test.  If lost it is possible that the bears could gain traction.  Something they have been unable to do of late.  Over the recent highs and the S&P could look to target $1840-50 short term.

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