by Sam Collins 04/22/08
The financial stocks were victims of profit-taking yesterday, triggered by poor earnings from several key members, and the market put in a mixed day with both the Dow Industrials (DJI) and the S&P 500 (SPX) closing on the negative side.
Before the opening, Bank of America (BAC) announced that Q1 earnings came in at just 23 cents versus an expected 41 cents. National City Corp. (NCC) fell 27% following a Wall Street Journal report that it is close to a deal that would infuse more than $6 billion from a private source plus shareholders with large positions.
Bank of America (BAC), whch was off 2.46%, wasn't the only Dow (DJI) stock that sold lower. Caterpillar (CAT) fell 2.3% after a downgrade from several analysts, and another Dow component, American International Group (AIG), lost 3.5%. But those losses were offset by a 5.66% gain by General Motors (GM) on news that GM car sales in China are doing well.
Nasdaq (NASD) again led the major indices, with technology stocks gaining and semiconductors leading that group -- the Philadelphia Semiconductor Index (SOX) was up more than five points. Texas Instruments (TXN) gained 3.34% in anticipation of a solid earnings report after the closing bell, but buyers may be disappointed that TXN earned only 49 cents. Analysts' mean estimates were 43 cents but there were rumors that the big chipmaker would far exceed that number.
The Dow Jones Industrial Average (DJI) fell 24 points to 12,825, the S&P 500 (SPX) was off two points at 1,388 and the Nasdaq (NASD) gained five points, closing at 2,408.
Nearly 1.1 billion shares traded on the New York Stock Exchange, with breadth at a negative 9-to-7, while on the Nasdaq (NASD), 6.9 million shares were exchanged with decliners ahead of advancers by 5-to-4.
Energy stocks were ahead yesterday, the result of another new high in crude oil prices. The May crude contract gained 79 cents, closing at $117.48 a barrel, and the Amex Energy SPDR (XLE) set a new closing high of $84.54, up 95 cents.
June gold prices had a modest rebound, up $2.40 per troy ounce to $917.60, but the PHLX Gold/Silver Index (XAU) fell $2.14 to $186.36. This is just under its 50-day moving average and slightly higher than its 20-day moving average where the chances are good that it will find support.
What the Markets Are Saying
The overall pattern of the recent bottom is that of an inverse head-and-shoulders formation with a target following the breakout of Dow (DJI) 13,800. But for stocks to achieve that goal, volume must increase if the bulls are to eat through the enormous amount of potential sellers within the 1,000-point range of 12,800 and 13,800.
As for the recent reversal pattern, the volume was just as it should have been -- declining on down days, while buyers picked up the pace with more volume on up days. (This was especially true following the last low made in March.) But it's a bit unnerving to have the NYSE trade just 1.5 billion shares on a Friday -- the big breakout day -- and for the Nasdaq (NASD) to come in under 1 billion.
This phenomenon may indicate that it will take many months to complete the reversal rather than a sudden thrust into the overhead resistance. However, in a "worst-case scenario," it could also develop into a false breakout.
We've seen false breakouts before, and I'm not going to predict that this will turn into one. But unless some key players in the institutional area pick up the pace, it will be difficult for public buyers alone to suddenly overcome the huge overhead that developed during nine months of volatile trading.
Today's Trading Landscape
Earnings to be reported:
Aaron Rents (RNT), AK Steel Holding Corp. (AKS), Alliance Financial (ALNC), Ameriprise Financial (AMP), AmSurg (AMSG), Anadigics (ANAD), Analysts Int'l (ANLY), Anixter Int'l (AXE), Arbitron (ARB), Astec Industries (ASTE), AT&T (T), AU Optronics (AUO), Autoliv (ALV) and Avery Dennison (AVY).
Baker Hughes (BHI), BJ Services (BJS), Brasil Telecom Participacoes (BRP), Brinker Int'l (EAT) and Broadcom (BRCM).
C.H. Robinson Worldwide (CHRW), Calamos Asset Management (CLMS), Canadian Pacific Railway (CP), Carlisle Companies (CSL), Carter's (CRI), Cascade Financial (CASB), Cavalier Homes (CAV), CEC Entertainment (CEC), Celanese Corp. (CE), Centene Corp. (CNC), Cerner Corp. (CERN), Chicago Mercantile Exchange Holdings (CME), Coach (COH), Community Bancorp Nev (CBON), Corn Products Int'l (CPO), Cree Inc. (CREE), CSG Systems (CSGS) and Cymer (CYMI).
Delphi Financial Group (DFG), EastGroup Properties (EGP), Edwards Lifesciences (EW), EnCana Corp. (ECA), Endwave (ENWV), Entrust (ENTU), Fifth Third Bancorp (FITB), First Cash (FCFS), First Merchants Corp. (FRME), First Place Financial (FPFC), First Security Group (FSGI), FirstMerit (FMER), Flagstar Bancorp (FBC), Freescale Semiconductor (FSL), Frontier Financial (FTBK) and Fulton Financial (FULT).
Gentex (GNTX), Grupo Kuo S.A.B. de C.V. (KUOB), Grupo Radio Centro S.A. de C.V. (RC), Hancock Holding Co. (HBHC), Harleysville Group (HGIC), Harsco Corp. (HSC), HealthStream (HSTM), Hudson City Bancorp (HCBK), Iberiabank (IBKC), Idex (IEX), II-VI (IIVI), Illumina (ILMN), Infinera Corp. (INFN), Innovative Solutions and Support (ISSC) and Invitrogen Corp. (INFN).
Jacobs Engineering Group (JEC), JetBlue Airways (JBLU), Journal Communications (JRN), Kilroy Realty Corp. (KRC), Kimberly-Clark (KMB), Kinetic Concepts (KCI), KVH Industries (KVHI), LaBranche & Co (LAB), Leadis Technology (LDIS), Lexmark Int'l (LXK), Liberty Property Trust (LRY), Manhattan Associates (MANH), McDonald's Corp. (MCD), Meredith Corp. (MDP) and Molex (MOLX).
Nara Bancorp (NARA), Norfolk Southern Corp. (NSC), Norsk Hydro (NHYDY), NuStar Energy L.P. (NS), Old Dominion Freight Line (ODFL), Omnicom Group (OMC), O'Reilly Automotive (ORLY), Paccar (PCAR), Parker-Hannifin Corp. (PH), Peabody Energy Corp. (BTU), Peapack-Gladstone Financial (PGC), Pentair (PNR), PepsiAmericas (PAS), Pharmaceutical Product Development (PPDI) and Phoenix Technologies (PTEC).
Raymond James (RJF), Rayonier (RYN), RC2 Corp. (RCRC), Robert Half Int'l (RHI), Sherwin-Williams (SHW), Silicon Image (SIMG), Skyworks (SWKS), Smith Int'l (SII), Snap-on (SNA), Sovereign Bancorp (SOV), Stepan Co. (SCL), Sterling Bancshares (SBIB), SunTrust (STI), Synplicity (SYNP), Taubman Centers (TCO), TCF Financial Corp. (TCB), Telefonos de Mexico (TMX), Tellabs (TLAB), Teradyne (TER) and Tupperware Brands (TUP).
And finally, UAL Corp. (UAUA), UMB Financial (UMBF), UnitedHealth Group (UNH), USG Corp. (USG), VMware (VMW), Vocus (VOCS), Waddell & Reed Financial (WDR), Waters Corp. (WAT), Webster Financial Corp. (WBS), WesBanco (WSBC), Western Alliance Bancorporation (WAL), Western Union (WU), XL Capital Ltd. (XL), Yahoo! (YHOO) and Yum! Brands (YUM).
The following economic reports are due today: the International Council of Shopping Centers (ICSC) Chain Store Sales Index, the Redbook Retail Sales Index, March existing home sales (the consensus expects a 2.0% drop), the April Richmond Fed Manufacturing Index and ABC/Washington Post Consumer Confidence survey.
DuPont's (DD) net income rose 26% and its Q1 earnings beat estimates by 3 cents; Wyeth (WYE) and Lockheed Martin (LMT) also beat estimates. Along with earnings, today investors will focus on crude oil prices -- this morning, crude is trading higher.
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