Midday Action: May 13
May 13, 2008
Out-the-gate gains are taking a backseat to intraday
profit-taking as fresh and not-so-fresh reminders enter the market
picture. As of 10:47 ET the SPYder" (
SPY) and "Cubes" (
QQQQ) are fractionally mixed from a decliner of .17% to a
rather flat gainer of .2% on increased, but not yet deceased May
volume.
Tuesday started off on a pleasant note for bulls as key retail
sales data came in better than expected and good for reversing some
premarket profit-taking for the Opening Bell ceremonies. Data from
the report showed an in-line decliner of .2% for the headline read.
However, factoring out autos a surprise jump of .5% and
three-tenths beat was seen. As important, with a startling decrease
of .4% gas sales also announced, the overall message is that the
consumer is still alive and managing to spend a little something
away from the pump.
The bulls could also take some solace in news out of Hewlett
Packard (
HPQ), just not profits. The computer giant followed up
yesterday afternoon''s buzz of a deal for EDS (
EDS) with actual confirmation the company will purchase the IT
Services concern for $13.9B. In conjunction with the acquisition,
Hewlett preannounced its quarterly report which boasted of
better-than-expected earnings and sales, as well as finding
management raising its full-year outlook. Unfortunately for the
bulls already involved in Hewlett and the Dow (
DIA), short-term machinations of such deal-making are making
for a leaner and meaner brand of shareholder value. Intraday,
shares of HPQ are off 2.85 at 43.98 as daily and weekly chart
supports near the 62% level are tested.
After one day of drilling lower and locking in their own profits,
the bulls in oil are at it again and pressuring equities. The US
Oil fund (
USO) is up 1.60 at 101.71 and back near record highs set during
last week''s percentage climb. Equity bulls once again able to
moan about the price pinch at the pump as news of Iran weighing the
possibility of cutting supplies is the day''s top headliner
for that instrument.
Not helping matters, a slug of Fed officials spearheaded by
BernankeSpeak has failed to inspire the bulls. A speech on
liquidity measures talked of credit market conditions improving but
still "far from normal." At the same time, the update
didn''t really offer any pleasant surprises; which might be
viewed as a disappointment after the market''s climb from its
March lows.
Clearly not aiding the bulls, analyst Meredith Whitney at
Oppenheimer is once again cutting the financials (
XLF) after a few weeks of relative quiet. The firm cut its
profit outlook through 2009 on Goldman (
GS), Merrill (
MER), Lehman (
LEH) and Morgan Stanley (
MS) citing an overly optimistic market versus their outlook on
the capital markets and their expectation of a ''revenue
reversal'' due to a FASB rule for those Broker / Dealer
names.
In other corporate news, shares of Wal-Mart (
WMT) are acting as a bit of a market drag as well. The company
announced a profit and sales beat and Q2 earnings range of .78 to
.81 per share versus Street views of .78. However, with WMT just
removed from multi-year highs, Tuesday''s 1.25 decliner to
56.77 might be appreciated as being likely tied to dashed
expectations, rather than any real concerns for the world''s
largest discount retailer.
Amidst a week filled with key reports, a negative reaction out of
Nuance Communications (
NUAN) and mixed responses from the sometimes sizzling solar
space in the likes of LDK Solar (
LDK) and Canadian Solar (
CSIQ) are thought to be the latest bits of evidence hinting at
not getting too bullied up at this juncture.
For its part, a well-constructed daily handle in NUAN has been
slightly dismantled technically. The company posted in-line profits
of .18 per share on a 63% and better-than-expected sales climb of
$219.9M versus estimates of $214.3M. Additionally, an overall
bullish-sounding message from management hasn''t enjoyed any
classic responses from breakout players. With shares off 1.45 at
19.56 another group of bulls dedicated to buying supports is
currently in the picture, but the end-game still undetermined at
this point in time.
Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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