Midday Action: June 5
June 5, 2008
A sunny forecast from retail and economic relief has Wall & Main “mooving” past a bout of June Gloom. As of 10:50 ET, the “SPYder” (SPY) and “Cubes” (QQQQ) are each up approximately 1.20% on mixed levels of real investor appreciation.
Dow components Wal-Mart (WMT) and Home Depot (HD), as well as “value-oriented” purveyors Costco (COST) and BJ’s (BJ) are keeping investors shopping for their own brand of bargains. For its part, shares of the world’s largest “specialty” retailer remains aggressively higher after management announced same-store sales grew by 3.9% and well above the 0.00% to 1.6% analyst range. Additionally and helping the bulls bounce back, Wal-Mart forecasted sales of 2% to 4% for June as consumers are expected to continue shopping at the discounter.
Tallying up the hoarding efforts of late; groceries, health, wellness and entertainment products have all been popular. Or put another way, shampoo, toothpaste, aspirin, diapers and video games have apparently been selling strongly. To boot, some benefit from those incoming stimulus checks were also seen as working their magic; as flat panel TVs and assorted digital wizardry were picked up off the shelves and placed deeper inside those American Dreams. Shares of WMT are up 2 points near 59.70 and hitting fresh multi-year highs out of a six-week / 50-Day support breakout pattern.
On the economic front, weekly claims came in weaker, hence better-than-expected. A figure of 357K versus Street views of 375K acted as incentive to bid up existing giddiness in the pre-market. With the latest data, the four-week moving average slipped to 368,500 and becomes the latest evidence to suggest stabilization within the economy.
Black gold and its whereabouts are also not hurting the bulls this morning. The US Oil Fund (USO) is up 1.10 near the sometimes coveted $100 century marker. After a recent bout of profit-taking, in part predicated on concerns of waning global demand; Thursday’s bid isn’t prone to inducing fresh worries of crimped profits. Aside from likely technical bargain-hunting, bulls in the commodity are finding a weaker US Dollar, courtesy of hawkish rate chatter from Europe, a beneficial support. Also for equity bulls, the influential energy complex (OIH, XLE) forging an even stronger 1.85% regrouping versus crude’s 1.30% has undoubtedly helped consumers focus on being investors.
Airline stocks (UAUA, DAL, LCC and AMR) are receiving a lift on news sounding awfully similar to reports about two weeks back, which grounded the group. Continental (CAL) is soaring by nearly 10% after saying it will cut 3,000 jobs and reduce capacity in order to stave off surging fuel prices. The company also announced the CEO and President will forgo their salaries for the remainder of 2008; in a token gesture that’s unlikely to pinch those wallets.
In passing, M&A news is acting as an additional support. Verizon (VZ) and Vodafone (VOD) are both up on the session by 4% to 6%. The companies announced their joint venture, Verizon Wireless, will acquire rural mobile phone service provider Alltel in a $28.1B deal. Separately and obviously helpful in reclaiming lost turf, a break from financial anchors dragging sentiment and prices lower. After three straight sessions of downgrades, warnings and rumors, some of the recently accused such as Lehman (LEH) and Goldman (GS) are finding bids on the session.
Helping keep “old tech” bulls busy and happy to some extent; shares of graphics-chip specialist NVIDIA (NVDA) are up 3% at 25 after an upgrade by Goldie from “Neutral” to “Buy.” Analysts cite stronger-than-expected near-term business trends and a bit of upside potential related to its chipset products courtesy of Intel’s (INTC) stronger platform sales. For all those technical-based “home gamers” out there, today’s pin action puts all those green and red pixilated candles into a near three-week rare flat base.
And finally, “BOOyah!” anyone? Bueller, Cramer?? Somewhat related to the story above, shares of “new tech” Parker Hannifin (PH) are also making a few home-gamers seeing more “mad money.” The company, a Cramerica favorite of late, is off 3.25 at 78.69 after UBS cut shares to “Sell.”
Analysts at UBS caught doing “their homework” believe the risk / reward profile for machinery, umm “new tech” stocks has deteriorated, citing slowing growth rates, rising costs, limited pricing power and historically stretched valuations amongst it’s chief concerns. “Sell” designations were also doled out to fellow now really Mad Money favorite Caterpillar (CAT) and Kennametal (KMT). Technically speaking and per the observations of this corner’s own version of homework, shares of PH are in “Monbackie!” positioning, if traders believe in combos like Bollinger and 50-Day MA; rather than images found on the boob-tube.
Chris Tyler
Staff Writer & Options Strategist
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.
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