SELLERS’ EDGE INTACT
In this week’s edition you will find:
- Where We Are
- What Was Important About Last Week
- What We Are Watching For This Week
- A Word On Discipline
Where We Are:
Taking a look at the broader market:
More blood for the Bears bath.
The S&P 500 sunk below its 200-day moving average.
Financials lead the charge down.
The 200-day average serves as support for the majority of sectors.
Despite all the carnage, we still see a number of issues holding uptrends, most of them in tech.
It’s not our job to predict where and when a bounce or return of the Bull returns.
As breakout players all we need to know is now is not the time to buy.
The Dow Industrial Average
($INDU), -0.6%, hits a new three-month low and closes below its 50-day moving average.
The S&P 500
($SPX), -1.8%, hits a new three-month low and closes below its 50 and 200-day moving averages.
($COMPQ), -2.0%, hits a new three-month low and closes below its 50-day moving average.
($RUT), -2.9%, comes just shy of a new low for the year as it leads to the downside.
Volume indications stay tipped to the Bears with two more distribution days added to the major indexes.
Key chart action for the week:
Charts courtesy of Stockcharts.com
The U.S. Dolar Index ($DXC) holds a downtrend below its major moving averages.
The Gold & Silver Miners Index ($XAU) consolidates just above its major moving averages.
The Consumer Index ($CMR) consolidates on its 200-day moving average, which is below its 50-day average.
The Cyclical Index ($CYC) consolidates below its 50-day moving average and above its 200-day average.
The Technology Index ($DJUSTC) closes just below its 50-day average.
The Semiconductor ($SOX) also closes just below its 50-day average.
The Software Index ($GSO) bounces off its 200-day average, closing below its 50-day average.
Telecom Index ($XTC) trades just below its 50-day average as it trades above its 200-day average.
The Banking Index ($BKX) falls further below its major moving averages.
The Broker Dealer Index ($XBD) also falls further below its major moving averages.
The Retail Index ($RLX) also falls further below its major moving averages.
The Healthcare Index ($HCX) consolidates below its 200-day average.
Biotechnology Index ($BKX) falls further below its major moving averages.
Pharmaceutical Index ($DRG) also falls further below its major moving averages.
The REIT Index ($DJR) also falls further below its major moving averages.
The Transportation Index ($TRAN) closes below its 200-day moving average for the first time since spring.
The Airline Index ($XAL) falls further below its major moving averages.
The Defense Index ($DFX) consolidates on its 50-day moving average.
The Energy Index ($IXE) drifts below its 50-day moving average.
What Was Important About Last Week
- Activision (ATVI) reports Q1 (Jun) earnings of $0.11 per share, $0.03 better than the Reuters Estimates consensus of $0.08. Revenues rose 163.4% year/year to $495.5 mln vs the $454.1 mln consensus. Co issued downside guidance for Q2, sees loss of -$0.03 vs. -$0.01 consensus.
- Network Appliance (NTAP) lowers Q1 revs and EPS guidance. Revenues are expected to be in the range of $684-688 mln, Reuters consensus is $751, prior guidance was $745-753 mln.
- Take-Two Interactive (TTWO) announced it reducing its fiscal 2007 guidance primarily to reflect the movement of the launch of Grand Theft Auto IV for the PlayStation3 computer entertainment system and the Xbox 360 video game and entertainment system from the fourth quarter of fiscal 2007 to fiscal 2008, due to additional development time required to complete the title.
- Walt Disney (DIS) reported Q3 (Jun) earnings of $0.58 per share, $0.03 better than the Reuters Estimates consensus of $0.55. Revenues rose 6.7% year/year to $9.04 bln vs the $9.05 bln consensus.
- Las Vegas Sand (LVS) reported Q2 (Jun) earnings of $0.23 per share, $0.02 worse than the Reuters Estimates consensus of $0.25. Revenues rose 18.5% year/year to $612.9 mln vs the $566 mln consensus.
- Electronic Arts (ERTS) reported Q1 (Jun) loss of $0.22 per share, excluding non-recurring items, $0.12 better than the Reuters Estimates consensus of ($0.34).
- Starbucks (SBUX) reported Q3 (Jun) earnings of $0.21 per share, in line with the Reuters Estimates consensus of $0.21. Revenues rose 142008.4% year/year to $2.36 bln vs the $2.39 bln consensus.
- Chipotle Mexican Grill (CMG) reported Q2 (Jun) earnings of $0.60 per share, $0.16 better than the Reuters Estimates consensus of $0.44. Revenues rose 34.3% year/year to $274.3 mln vs the $262.9 mln consensus.
- Non-farm payrolls increased 92,000 in July while revisions to May and June subtracted 8,000 from payroll growth. The consensus expected a gain of 127,000.
- Private sector payrolls increased 120,000 in July with upward revisions to May and June adding another 33,000. This means private sector payrolls were 153,000 higher in July than reported in June.
- The unemployment rate increased to 4.6% (4.647% un-rounded), the highest level since August 2006.
- The ISM non-manufacturing business barometer (a measure of production growth in the services sector) declined to 55.8 in July. The consensus expected a decline to 59.0 from the June level of 60.7. Levels above 50 signal expansion and levels below 50 signal contraction in the services sector.
- The ISM Manufacturing index declined to 53.8 in July from 56.0 in June. The consensus expected the index to drop to 55.0. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)
What We’re Looking For This Week
Key earnings releases:
- MONDAY: j2 Global Communications (JCOM)
- TUESDAY: BioMarin Pharmaceutical Inc. (BMRN), Cell Genesys (CEGE), Dean Foods (DF), Harrah’s Entertainment (HET), King Pharmaceuticals (KG)
- WEDNESDAY: American International Group (AIG), Barr Pharmaceuticals, Inc. (BRL), Goodrich Petroleum (GDP), Hansen Natural (HANS), Toll Brothers (TOL)
- THURSDAY: California Pizza Kitchen (CPKI), Infocrossing (IFOX), Urban Outfitters (URBN)
- FRIDAY: none
On the economic front we have potential market movers with:
- MONDAY: none
- TUESDAY: Productivity–Prel, FOMC policy statement, Consumer Credit
- WEDNESDAY: Wholesale Inventories, Crude Inventories
- THURSDAY: Initial Claims
- FRIDAY: Export Prices ex-ag., Import Prices ex-oil, Treasury Budget
- The Growth Stock Landscape
- What We Like – What We Have
- This Week’s Scans: • SETUPS • BREAKOUTS • BASE BUILDING • SHORTS
This Week’s Word On Discipline:
“Knowledge comes, but wisdom lingers. It may not be difficult to store up in the mind a vast quantity of face within a comparatively short time, but the ability to form judgments requires the severe discipline of hard work and the tempering heat of experience and maturity. ” – Calvin Coolidge