BUYERS’ 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:
The major indexes charge higher as the first heavy batch of earnings reports rolls in.
Of about 25% of the S&P 500 companies reporting, approximately 67% of companies beat expectations.
The market is undoubtedly benefiting from the seasonal infusion of pension fund money.
With new highs across multiple sectors, we maintain our bullish bias.
Distribution on the Nasdaq could lead to a possible cooling of Tech stocks.
But the tone has been offset with accumulation in the Dow and S&P 500.
The Dow Industrial Average
($INDU), + 2.8%, blasts its way to a new high.
The S&P 500
($SPX), + 2.2%, hits a multi-year high.
($COMPQ), + 1.4%, barely makes a multi-year high.
($RUT), + 1.1%, inches its way to a new high, though shows some relative weakness on the week. s
Volume indications tilt to the as the Dow and S&P 500 make two days of accumulation. However, the Nasdaq does not confirm, posting three days of distribution.
Key chart action for the week:
Charts courtesy of Stockcharts.com
The U.S. Dolar Index slides to a low not seen since early 2005.
The Gold & Silver Miners Index ($XAU) sits poised to breakout of a year-long base, which also serves as a multi-year head-and-shoulders-pattern. We love to see this generic technical analysis patterns get screwed up.
The Consumer Index ($CMR) hits a new high.
The Cyclical Index ($CYC) hits a new high.
The Technology Index ($DJUSTC) forms what may be the right side of a base, failing to hit a new high with the rest of the market.
The Software Index (GSO) and Telecom Index (XTC) hit new highs.
The Semiconductor ($SOX) inches to a new high as it breaks north of a six-month base.
The Banking Index ($BKX) rebounds off lows, though fails to make a new high. With many banks reporting earnings for the week, subprime woes appear to have been digested.
The Broker Dealer Index ($XBD) appears firm as it makes its way toward regaining a new high.
The Retail Index ($RLX) also appears firm as it makes its way toward regaining a new high.
The Healthcare Index ($HCX) Biotechnology Index ($BKX) and Pharmaceutical Index hit new highs.
The REIT Index ($DJR) shows relative weakness as it consolidates below its 50-day MA.
The Transportation Index ($TRAN) hits a new high.
The Airline Index ($XAL) shows weakness as it declines below its major moving averages.
The Defense Index ($DFX) hits a new high.
The Energy Index ($IXE) hits a new high, though remains unchanged for the week.
What Was Important About Last Week
- Google (GOOG) reported Q1 (Mar) earnings of $3.68 per share, excluding non-recurring items, $0.37 better than the Reuters Estimates consensus of $3.31. Revenues including Traffic Acquisition Costs fell 99.8% year/year to $3.7 mln vs the $3.57 bln consensus.
- Advanced Micro Devices (AMD) reported Q1 (Mar) loss of $0.90 per share, excluding non-recurring items, $0.43 worse than the Reuters Estimates consensus of ($0.47). Revenues fell 7.4% year/year to $1.23 bln vs the $1.23 bln consensus.
- American Express (AXP) reported Q1 (Mar) earnings of $0.88 per share, includes three gains and three charges, does not appear comparable to the Reuters Estimates consensus of $0.79.
- Washington Mutual (WM) reported Q1 (Mar) earnings of $0.86 per share, $0.02 better than the Reuters Estimates consensus of $0.84.
- Capital One Financial (COF) reported Q1 (Mar) earnings of $1.62 per share, $0.35 worse than the Reuters Estimates consensus of $1.97. Revenues rose 12.0% year/year to $3.43 bln vs the $4.07 bln consensus. Co lowered guidance for FY07, sees EPS of $7.00-7.40 vs. $7.68 consensus.
- International Business Machines (IBM) reported Q1 (Mar) earnings of $1.21 per share, in line with the Reuters Estimates consensus of $1.21. Revenues rose 6.6% year/year to $22.03 bln vs the $21.85 bln consensus.
- Intel Corp. (INTC) reported Q1 (Mar) earnings of $0.22 per share, excluding $0.05 gain from tax settlement, in line with the Reuters Estimates consensus of $0.22. Revenues fell 1.0% year/year to $8.85 bln vs the $8.96 bln consensus.
- Yahoo! (YHOO) reported Q1 (Mar) earnings of $0.10 per share, includes $0.07 in option expense that analysts were including in their estimates, $0.01 worse than the Reuters Estimates consensus of $0.11. Revenues rose 8.7% year/year to $1.18 bln vs the $1.21 bln consensus.
- The Consumer Price Index (CPI) increased 0.6% in March, exactly as the consensus expected. The CPI is up 2.8% versus a year ago.
- Energy prices increased 5.9% in March. Excluding food and energy, the core CPI was up 0.1% in March and 2.5% versus a year ago, both lower than the consensus expected.
- Core CPI inflation was held down by apparel and lodging away from home (hotels). Apparel prices dropped 1.0% (the second largest decline in more than seventeen years) and lodging away from home dropped 2.3%. Without these two components, the core CPI would have been up 0.2%, as expected.
- Industrial production declined 0.2% in March versus a consensus expectation of zero change. In the past twelve months, industrial production is up 2.3%. All of weakness in production is attributable to a huge weather-related 7.0% drop in utility output, the second largest drop in seventeen years.
- Manufacturing production increased 0.7% in March, the largest gain in three months, although production growth was revised down for both January and February.
- Manufacturing output is up 2.6% versus a year ago. The production of high-tech equipment grew 3.2% in March and is up 24.7% versus a year ago.
- Capacity utilization declined to 81.4% from a downwardly revised 81.6% in February. The consensus forecast was 81.9%. In the manufacturing sector, capacity utilization increased to 80.1%.
- Housing starts increased 0.8% in March to 1.518 million units at an annual rate. The consensus had expected a slower 1.495 million rate.
- Nationwide, single-family starts rose 2.0% and multiple-unit starts dropped 3.8%. By region, the rise in starts was entirely due to activity in the Midwest, where starts jumped 44.5%. Starts declined in every other region.
- New building permits rose 0.8% in March to 1.544 million units at an annual rate, better than the consensus expected decline of 1.4%. All of the increase in building permits was attributable to single-family units. Building permits were down 25.9% versus March 2006.
- March retail sales increased 0.7% overall and 0.8% excluding autos, both close to consensus expectations. February retail sales were revised to show a 0.5% gain, after originally being reported as up just 0.1%. Retail sales are up 3.8% from a year ago, 3.9% excluding autos.
- The largest gains in retail sales were in gasoline, building materials, clothing and accessory stores, general merchandise stores (which includes department stores), and restaurants and bars. The rebound in building materials was the largest gain since January 2006.
What We’re Looking For This Week
Key earnings releases:
- MONDAY: Altera Corporation (ALTR), Amgen (AMGN), Boston Scientific Corporation (BSX), Plum Creek Timber (PCL), Texas Instruments (TXN),
- TUESDAY: AT&T (T), Chicago Mercantile Exchange Holdings Inc. (CME), Coach, Inc. (COH), DuPont (DD), The Cheesecake Factory (CAKE).
- WEDNESDAY: Affymetrix (AFFX), Allegheny Technologies (ATI), Apple Inc. (AAPL), General Dynamics (GD), Pulte Homes Inc. (PHM), Raytheon (RTN), Xilinx, Inc. (XLNX), XTO Energy Inc. (XTO).
- THURSDAY: Beazer Homes USA Inc. (BZH), Boyd Gaming (BYD), Broadcom (BRCM), BUNGE LIMITED (BG), Countrywide Financial Corporation (CFC), Diamond Offshore Drilling Inc. (DO), ExxonMobil Corporation (XOM), Ford Motor Company (F), Microchip Technology (MCHP), Microsoft (MSFT), Newmont Mining Corporation (NEM), The Dow Chemical Company (DOW), XM Satellite Radio (XMSR).
- FRIDAY: Baidu (BIDU), Ceradyne (CRDN), Chevron (CVX), Coventry Health Care, Inc (CVH), Ingersoll-Rand Co. Ltd. (IR).
On the economic front we have potential market movers with:
- MONDAY: none
- TUESDAY: Consumer Confidence, Existing Home Sales
- WEDNESDAY: Durable Orders, Existing Home Sales, New Home Sales, Crude Inventories, Fed’s Beige Book
- THURSDAY: Initial Claims, Help-Wanted Index,
- FRIDAY: GDP-Adv., Chain Deflator-Adv., Employment Cost Index, Mich Sentiment-Rev.
- 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:
“Beware of endeavoring to become a great man in a hurry. One such attempt in ten thousand may succeed. These are fearful odds.” – Benjamin Disraeli