Weekend Market Notes…

By Gary Kaltbaum- November 27,2016

We can continue to be quite succinct with the market on both the good and the bad.

As far as what has been working, the worst thing we can see is that they are way, way, way overdue to pull in. All are stretched, all are extended and all remain due to revert to some sort of norm off of the post-election rally. We are talking all the major indices, especially the Russell 2000. In fact, since the election, the S&P is up 3.4%, the Nasdaq 3.9% but the Russell is up a whopping 13%! Keep in mind, a lot of the Russell has to do with the many smaller financials inside the index. If ever the financials decide to pull back, the Russell will pull back more. We also make note that while the pre-Thanksgiving trading usually has a bullish bias, the two weeks after usually leans negative.

So…

It is nothing but good when the Dow, S&P, Nasdaq, NDX, Russell 2000 and the Transports are in new yearly high ground. It is nothing but good when all are extended and cannot even muster a pullback.

It is nothing but good when the financials are leading…when the semis are leading and when previous weaker areas have come on like gangbusters…namely industrials,materials,metals, steel, insurance, restaurants and even a bunch of retail.

It is nothing but good when the market starts off quiet and finishes near the highs of the day.

It is nothing but good when extended gets more extended.

Of course, the same areas we have been bearish on…remain bearish, that being the bond market, utilities, real estate, food,drugs,beverage,tobacco,household products, emerging markets, junk bonds, gold/silver some of the mega-cap tech/internet and a few other areas. Keep in mind, just as the strong areas are extended to the upside, these weak areas are extended to the downside and could start bouncing.

So…while there is still enough that aint working, there is plenty that is working…and one should not argue. We will be looking for constructive pulling in of the best areas. We expect any pullback will be controlled and rotational right now.

Cyber Monday Pre-Market Look: Stocks In The News Before The Open

Amazon.com (AMZN), Macy’s (M), Wal-Mart (WMT), Target (TGT), Nordstrom (JWN)— Retail stocks will be on watch Monday as investors react to the latest sales numbers from this past weekend, the traditional kickoff to the holiday shopping season. Current information points to more upbeat numbers for online retailers like Amazon, and less sanguine results for traditional brick-and-mortar retailers.

Boeing (BA) — Boeing is expected to be the target of new World Trade Organization sanctions, according to The Wall Street Journal. The WTO is seen ruling that the aircraft maker was awarded illegal state subsidies for its new 777X jet.

Merck (MRK)— Merck won priority review status from the Food and Drug Administration in its application for a new use for its cancer drug Keytruda.

Walt Disney (DIS) — Disney’s “Moana” topped the Thanksgiving holiday weekend movie box office with $81.1 million in North American ticket sales.

Wells Fargo (WFC) — Wells Fargo has been sued by employees over the mutual funds contained in the bank’s retirement plans. The workers claim that Wells Fargo steered more than $3 billion into expensive funds run by Wells Fargo that underperformed.

Panera Bread (PNRA)— The restaurant chain’s stock was downgraded to “neutral” from “outperform” at Wedbush, although the firm kept the price target at $220. The stock has surged 13.5 percent over the past month.

AT&T (T) — AT&T is unveiling a new streaming service called DirecTV Now today. It will cost $35 per month and offer more than 100 live streaming television channels.

Activision Blizzard (ATVI) — Activision struck a new employment agreement with Chief Executive Officer Bobby Kotick, according to a Securities and Exchange Commission filing. Kotick’s salary will be cut to $1.8 million from $2.4 million as of January 1, but he could make more than $56 million in the video game maker’s shares depending on meeting certain performance targets.

H&R Block (HRB) was downgraded to ‘Sell’ from ‘Hold’ at BTIG LLC with a 12-month target price of $18.

Hilton Worldwide Holdings (HLT) and Marriott International (MAR +0.56%) were both downgraded to ‘Hold’ from ‘Buy’ at Evercore ISI.

Citigroup (C) was downgraded to ‘Hold’ from ‘Buy’ at Jeffries.

Darden Restaurants (DRI) was downgraded to ‘Hold’ from ‘Buy’ at Maxim.

Finisar (FNSR) was upgraded to ‘Strong Buy’ from ‘Buy’ at Needham & Co with a 12-month target price of $42.

ConocoPhillips (COP) was upgraded to ‘Buy’ from ‘Neutral’ at Goldman Sachs with a price target of $54.

Fiat Chrysler Automobiles NV (FCAU) was upgraded to ‘Buy’ from ‘Sell’ at Evercore ISI.

Mentor Graphics (MENT) was downgraded to ‘Neutral’ from ‘Outperform’ at Credit Suisse

Southwestern Energy (SWN) was upgraded to ‘Outperform’ from ‘Market Perform’ at BMO Capital Markets.

Stifel Financial (SF) was downgraded to ‘Neutral’ from ‘Outperform’ at Macquarie Research with a 12-month target price of $51.

Advanced Auto Parts (AAP) was added to the Focus List at JPMorgan Chase.

UDR Inc. (UDR) was upgraded to ‘Buy’ from ‘Hold’ at Evercore ISI with a 12-month target price of $38.

L Brands (LB) was upgraded to ‘Neutral’ from ‘Underweight’ at Piper Jaffray with a 12-month target price of $67.

Source: BarChart, CNBC, Bloomberg, FoxBusiness, Reuters

The Morning Look

Market Update:

Stock futures are lower ahead Monday’s open as traders return from a shortened holiday week. Looking forward, the highlights for this week are: OPEC’s next meeting, End of Month, and the always fun (and fake) jobs report.

Gary’s Thoughts: Can’t be! Futures are down? Thought market never going down again!

Economic Calendar:

  • Dallas Fed Mfg Survey 10:30 AM ET
  • 4-Week Bill Announcement 11:00 AM ET
  • 3-Month Bill Auction 11:30 AM ET
  • 6-Month Bill Auction 11:30 AM ET

Highlights:

  • Black Friday Online Sales Soared; While Brick and Mortar Store Sales Lagged
    Gary’s Thoughts:  Either or! 
  • Trump’s Tough Talk on Castro and Cuba Shows Big Shift From Obama
    Gary’s Thoughts: We will have our thoughts on Castro and importantly, the assinine reaction to Castro’s death by the few that have no clue and don’t get it…or maybe they just like brutal dictators…as long as they were not the recipients.

The Closing Look

Stocks were mixed on Wednesday as investors digested the latest round of economic data, including minutes from the Federal Reserve’s November meeting.  The Minutes showed the Fed still wants to raise rates in December. Separately, Durable Goods rose by +4.8%, beating estimates for +1.5%.

Gary’s Thoughts: 100% certainty of rate hike. Happy Thanksgiving to everyone.

Friday’s Pre-Market Look: Stocks In The News Before The Open

JCPenney (JCP) — JCPenney kicked off in-store Black Friday on Thanksgiving Day, opening its doors at 3 p.m. to long lines of shoppers. This year, the retailer offered to match customer purchases of over $10 and up to $500.

Wal-Mart (WMT) — The retailer’s shares edged higher in pre-market trading as Wal-Mart began offering Cyber Monday deals on Friday, coming off the announcement that it would significantly increase its online inventory. In other news, A Federal jury late Wednesday found that Wal-Mart failed to pay hundreds of California truck drivers minimum wage and awarded them $54 million in damages.

Amazon.com (AMZN) — Amazon’s shares rose slightly in thin pre-market trading as the online retailer offered a range of discounted electronics and other amenities to Black Friday shoppers.

Macy’s (M) — The department store welcomed some 16,000 shoppers to its Herald Square flagship location when it opened at 5 p.m. on Thursday, 1,000 more than last year.

Target (TGT) — Target saw its biggest day ever, experiencing double-digit growth as millions of shoppers visited its stores in-person and online to take advantage of some of the best deals the retailer has ever offered on select items. Shares inched higher in pre-market trading.

Nordstrom (JWN) — The fashion retailer opens at 8 a.m. on Black Friday, offering discounts of over 50 percent on select items like shoes and dresses.

Wells Fargo (WFC) — Wells Fargo asked a U.S. court to ask dozens of customers suing the bank for sales malpractices to resolve their disputes in private settlements outside of court.

Lufthansa — The German airline cancelled 830 flights in the third day of a pilots’ strike, bringing the total cancelled flights to over 2,600. Approximately 315,000 passengers have been affected.

Deutsche Bank AG (DB) — House Democrats warned federal watchdog agencies that President-elect Donald Trump might give special treatment to Deutsche Bank, the only major Wall Street institution that lends to him. The bank is in the midst of seeking a $14 billion settlement with the Justice Department.

Johnson & Johnson (JNJ) — The health care giant approached a Swiss biotechnology company, Actelion Limited, about a possible acquisition, Bloomberg reported Thursday.

Yum China (YUMC)— The newly spun off China unit of Yum Brands is in talks to purchase Daojia.com, a China-based food delivery company, for $200 million, according to Reuters.

Deere & Co. (DE) was upgraded to ‘Neutral’ from ‘Underperform’ at Longbow Research.

Molson Coors (TAP) was downgraded to ‘Neutral’ from ‘Buy’ at Bryan Garnier.

Eli Lilly (LLY) was downgraded to ‘Neutral’ from ‘Overweight’ at Atlantic Equities LLP.

Juno Therapeutics (JUNO) was downgraded to ‘Hold’ from ‘Buy’ at SunTrust.

Ctrip.com (CTRIP) reported Q3 adjusted EPS of 17 cents, better than consensus of 11 cents, and said it will buy Skyscanner in a $1.74 billion deal.

Lockheed Martin (LMT) received a $1,28 billion down payment from the Pentagon to continue production of the F-35 jet while negotiations continue a contract for 90 aircraft, worth as much as $7.19 billion.

Insteel Industries (IIIN) jumped over 5% in after-hours trading after it was announced that it will replace Littelfuse in the S&P SmallCap 600 Index as of the close of trading Monday, November 28.

Airgain (AIRG) fell 5% in after-hours trading after it announced a release of lock-up restriction on shares of common stock that will take effect after the close of trading Monday, November 28 and it will offer $40 million shares on behalf of selling holders.

Corbus Pharmaceuticals Holdings (CRBP) dropped almost 7% in after-hours trading after it filed an agreement to offer as much as $35 million in common stock via Cantor Fitzgerald.

 

The Morning Look

Market Update:

Stock futures are higher ahead of the open as consumers all over the country flock to the stores trying to grab Black Friday deals. The market will close early (at 1pm EST) today. When you have a chance, check out copper (JJC), check out FCX, check out AKS, NUE, X…check out BHP,RIO,SCCO…it is a commodity fest on this recent move as commodity prices are soaring. Our guess is this won’t be fleeting and could possibly have some legs but better wait (hope) for some pulling in.

Gary’s Thoughts:

Economic Calendar:

  • Weekly Bill Settlement
  • 2-Yr FRN Note Settlement
  • International Trade in Goods 8:30 AM ET
  • PMI Services Flash 9:45 AM ET
  • NYSE Early Close: 1:00 PM
  • Fed Balance Sheet 4:30 PM ET
  • Money Supply 4:30 PM ET

Highlights:

  • Black Friday Merchants See Americans Exhaling After Election
    Gary’s Thoughts:  You mean spending!
  • Venezuela’s Currency Just Had the Biggest Monthly Collapse Ever
    Gary’s Thoughts: Yet people still like Bernie Sanders and his socialism.

The Morning Look

Market Update:

Stock futures are relatively quiet ahead of Wednesday’s open one day after the major indices hit fresh record highs and topped psychologically important levels. The stock market will be closed all day on Thursday (in observance of Thanksgiving) and close at 1pm EST on Friday.

Gary’s Thoughts: Futures down…nah, that can’t be. Market never going down again. BIIB and LLY smoked on negative drug news. We remain bearish on drugs/biotech. DE reports earnings down, sales down…but MUCH BETTER NUMBERS THAN EXPECTED. Up 10% pre market.

Hope all have a terrific Thanksgiving. Do something for someone you need absolutely nothing from.

Economic Calendar:

  • MBA Mortgage Applications 7:00 AM ET
  • Durable Goods Orders 8:30 AM ET
  • Jobless Claims 8:30 AM ET
  • FHFA House Price Index 9:00 AM ET
  • PMI Manufacturing Index Flash 9:45 AM ET
  • Bloomberg Consumer Comfort Index 9:45 AM ET
  • New Home Sales 10:00 AM ET
  • Consumer Sentiment 10:00 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • EIA Natural Gas Report 12:00 PM ET
  • 7-Yr Note Auction 1:00 PM ET
  • FOMC Minutes 2:00 PM ET

Highlights:

  • Dow and S&P 500 Top 19k and 2,200 respectively
    Gary’s Thoughts: Yippee!
  • Judge blocks Obama administration rule extending overtime pay
    Gary’s Thoughts: Another mandate shot down. We have had just about enough of government dictating everything in sight.

The Closing Look

Stocks rallied on Tuesday helping the Dow trade above 19,000 and the S&P 500 top 2,200 for the first time ever. These are “round” numbers and important psychological levels to watch going forward. Existing home sales jumped to a 9.5 year high. Steel stocks continued to surge and act very well.

Gary’s Thoughts: 19,000 dow…most often, these big numbers do not get through easily. Careful here. That said, technicals muchly improved and pullbacks are buyable into support/moving averages in the areas we have mentioned that are bullish.

The Closing Look

The Dow Jones Industrial Average, Nasdaq composite, S&P 500 all hit record highs on Monday. Monday was the first day of the shortened holiday week. The benchmark S&P 500 hit a fresh record high after energy prices rallied 2% on renewed optimism that OPEC would cut production. Apple ($AAPL) and IBM ($IBM) were two big leaders in the Dow and made up most of the Dow’s gain. Elsewhere, Tyson Foods ($TSN) plunged 14% after reporting earnings.

Gary’s Thoughts: OILS now moving out. Add that to list of groups that have popped off of Trump election. What happened to the Trump crash? Maybe later.

Tuesday Pre-Market Look: Stocks In The News Before The Open

Facebook (FB) was upgraded to ‘Buy’ from ‘Hold’ at First Shanghai Securities Ltd with a price target of $135.

FireEye (FEYE) fell 5% in pre-market trading after it was downgraded to ‘Sell’ from ‘Neutral’ at Goldman Sachs.

Sina Corp. (SINA) rose over 2% in after-hours trading after it reported Q3 adjusted EPS of 24 cents, better than consensus of 20 cents, and then said it sees Q4 net revenue of $205 million-$210 million, above consensus of $196.8 million.

Palo Alto Networks (PANW) plunged 11% in pre-market trading after it reported Q1 revenue of $398.1 million, weaker than consensus of $400.1 million, and then forecast Q2 revenue of $426 million-$432 million, below consensus of $439.1 million.

Dycom Industries (DY) tanked 10% in after-hours trading after it reported Q1 contract revenue of $799.2 million, below consensus of $801.2 million, and said it sees Q2 adjusted EPS of 61 cents-73 cents, at the low end of consensus of 71 cents.

Enanta Pharmaceuticals (ENTA) rose 3% in after-hours trading after it reported a Q4 loss of -9 cents per share, a narrower loss than consensus of -14 cents.

Jack in the Box (JACK) slid over 2% in after-hours trading after it lowered guidance on full-year operating EPS to $4.55-$4.75, below consensus of $4.75.

Bright Horizons Family Solutions (BFAM) slipped nearly 2% in after-hours trading after it announced a secondary offering of 2.0 million shares of common stock.

Whiting Petroleum (WLL) rose over 3% in pre-market trading after it said it will sell 50% of its stake in the Robinson Lake natgas processing plant along with a 50% stake in the Belfield natgas plant to Tesoro Logistics Rockies LLC for $700 million.

Hudson Pacific Properties (HPP) lost over 1% in after-hours trading after it announced an underwritten offering of 18.7 million shares

Pennant Park Investment Corp. (PNNT) lost 7% in after-hours trading after it said Q4 net investment income was 21 cents a share, weaker than consensus of 26 cents a share and then it will cut its quarterly dividend to 18 cents per share from 28 cents per share,

Star Bulk Carriers (SBLK) jumped 9% in after-hours trading after it reported Q3 revenue of $59.9 million, higher than consensus of $43.1 million.

Campbell Soup (CPB) — The company best known for soup earned an adjusted $1.00 per share for its latest quarter, five cents a share above estimates. Revenue was also above forecasts. The company said it is optimistic about 2017 given improving trends in the U.S. and other factors.

Dr Pepper Snapple (DPS) — The beverage maker announced a deal to buy privately held Bai Brands for $1.7 billion, including a tax benefit of approximately $400 million. Bai is a maker of antioxidant-infused beverages.

KKR & Co. (KKR) — The private-equity firm is buying Japanese auto parts maker Calsonic from Nissan Motors and its partners for $4.5 billion. Reuters reports that KKR beat out rival private-equity firms Bain and MBK in the bidding.

Medtronic (MDT) — The medical equipment maker earned an adjusted $1.12 per share for its latest quarter, one cent a share above estimates. Revenue came in below forecasts. Medtronic also cut its full-year forecast, as customers delay purchases ahead of new products entering the marketplace.

DSW (DSW) — The shoe retailer came in two cents a share above estimates, with adjusted quarterly profit of 51 cents per share. Revenue was below forecasts, and a comparable-store sales decline of 2.0 percent was larger than the consensus estimate of a 0.6 percent drop. The company does say that better inventory control and tighter expense management will lead to better results going forward.

Source: BarChart, FoxBusiness, Bloomberg, CNBC, Nasdaq.com