More from Briefing.com:
General Commentary
For quite some time now, we have been focusing mainly on the negatives - there's just been soooo many to pick from it was difficult to do anything else... But today we want to highlight a few of the positives... Not just because the Nasdaq bounced back from early weakness yesterday to close with a modest gain... We predicted as much on this page yesterday... No, we simply want to remind folks that even though it looks very bleak in the markets right now there are some encouraging developments.
Chief among them is the general improvement in the economy... Most noteworthy has been the pick up in business spending, as evidenced by the jump in factory orders, first rise in inventories in 17-months and the rebound in the ISM index... Strength in the trucking industry also a good sign that business activity is on the rise... Given that it was the sharp drop in corporate spending which pushed the economy into recession, improvement on this front is essential to a) a prolonged economic recovery and b) a rebound in earnings... Typically, one would expect the market to be ahead of the economy... Unfortunately, the market noise created by corporate scandals and ongoing global unrest has managed to drown out the favorable changes in the economic backdrop... However, if and when the scandals move off the front page, market attention will eventually shift back to the economy; and when it does, stocks could be in a for a nice lift.
As for earnings, market sold off sharply in advance of Q2 results... Briefing.com notes that it's not unusual for indices to move in the opposite direction of pre-earnings season move... With so much negativity priced into market, even if we don't get a rash of new buying we should at least see some short-covering as the numbers start rolling in -- especially if they aren't terrible... Though it's an admittedly small sample size, the news out of the telecom sector after yesterday's close was good enough to compel shorts to cover, as JNPR, SONS and PWAV posted better than expected sales/earnings numbers.
Other points of interest include the historically high VOX (volatility index) reading and the growing sense of despair -- both are indicative of deeply oversold conditions.
Briefing.com is not suggesting that the bottom is in... However, based on the oversold nature of the market and the potential for some earnings-related short covering, we could see a near-term rebound that retraces between 38-50% of the most recent slide... Longer-term, the market can't ignore the economy forever... If the data continue to improve, so to will the earnings picture... Stock traders will ultimately be forced to take notice.
Robert Walberg, Briefing.com
5:22PM Juniper Networks updates revenue guidance -- Dow Jones (00C0) 7.22 +0.11: -- Update -- Hearing reports that company is projecting Q3 revs of $155-$160 mln vs the current Multex consensus estimate for revs of $118 mln -- sees Q2 net loss of $0.03 per share vs current consensus estimate for operating results of break even -- says it will take a $150-$200 mln charge on Unisphere buy -- note that revised guidance on revs may include Unisphere revs which are likely not included in the current analyst estimates -- at a glance it looks as if some analysts have included Unisphere and some have not -- high end of the current range of estimates is for revs of $170 mln.
5:06PM Dell Computer guides higher for Q2 (DELL) 23.93 +0.26: Sees Q2 earnings of $0.19 per share vs the current Multex consensus estimate of $0.18 per share; sees Q2 revs of $8.2 bln vs the current consensus estimate for revs of $8.2 bln -- company says it "believes it is continuing to gain market share in the midst of weak overall demand."
4:17PM Juniper Networks beats by a penny (JNPR) 7.22 +0.11: Reports Q2 EPS of $0.00, $0.01 better than the Multex consensus; revs were $117.0 mln, vs the consensus of $111.7 mln.
4:15PM Rambus meets Q3 estimates (RMBS) 4.67 +0.20: -- Update -- Reports Q3 EPS of $0.06, in line with the Multex consensus; revs were $23.7 mln, vs the consensus of $23.5 mln.
4:09PM Powerwave beats by two cents (PWAV) 7.60 +0.34: Company reports Q2 earnings of $0.07 per share, $0.02 better than the Multex consensus estimate; Q2 revs came in at $113.4 mln vs the consensus estimate of $106.5 mln.
2:30PM Intel: cautious comments by Lehman (INTC) 17.72 +0.91: -- Update -- Lehman's Dan Niles is reiterating his cautious stance on INTC, saying that although Q2 estimates look reasonable, future consensus expectations may need to come down due to pressure on gross margins and falling avg selling prices; also, while he does not believe that INTC will change capex guidance of $5.5 bln this early in the year, he thinks it will probably be cut at some point. (Earlier we had posted a rumor that a prominent analyst would upgrade INTC (13:26), so it looks as though we can now rule out Niles.)
2:24PM Sun Microsystems rises on upgrade rumor (SUNW) 5.23 +0.18: Trading floors are buzzing with talk that a tier one broker is about to upgrade SUNW today; while we can't confirm this, we're hearing that the analyst believes the stock is cheap and that recent results have been strong.
2:18PM S&P 500 back to resistance : -- Technical -- Index attempting to work back through the Oct 1998 low of 923.32 which limited the upside during the morning rally. Ability to hold above 917/915 during a short term dip keeps the bias favorable. Next resistances are at 927 and 930.
1:54PM Nasdaq Composite eyeing 1360 again : -- Technical -- Index extends recovery but is still below solid short term resistance at 1360/63. If taken out, the next resistances of interest are at 1367, 1380 and 1390/1395. Failure and a breach of support at 1336 suggests further short term vulnerability.
1:36PM Nasdaq edges back into positive territory led by SOX +3.4%, Biotech +1.3% :
1:26PM Rumor Mill: Intel and the semi's : Hearing trading floor chatter about today's strength in INTC and the SOX; one rumor is that INTC is going to issue a positive preannouncement after the close, which seems dubious given that INTC guided down at its mid-qtr update and AMD has warned twice this qtr; another rumor is that a prominent analyst who has been bearish on INTC is going to upgrade the stock after the close, yet we're also hearing skepticism about that rumor as well.
12:55PM Sector Watch: Semiconductor : Another intraday rally attempt for the semi sector (SOX at 354, +1.6%) with XLNX +6%, LLTC +4.5%, BRCM +3.9%, AMAT +3%, KLAC +2.8% and NVLS +2.4% pacing the way. From a positive standpoint, the index has held again at 343 which matches both the early July low and the Sep 2001 low.
12:01PM Micrel (MCRL) 12.13 +0.01: Before open, USB Piper Jaffray initiated with Outperform rating and price target of $20, believing current discount multiple between MCRL and peers remains exaggerated, especially given co.'s sound track record of outperforming industry during semiconductor upturns. Firm citing attractive and diversified business model composed of stable and profitable analog business coupled with faster growing communications IC segment; during times of uncertainty in relation to accounting practices, believes Micrel maintains transparent accounting practices... Firm also initiated on Linear Tech (00C0 27.93 +0.41), Power Integrations (POWI 15.81 -0.19), and Texas Instruments (TXN 21.55 -0.63) with Market Perform ratings.
8:20AM Linear Tech, Maxim upgraded at Prudential : Prudential upgrades LLTC and MXIM to BUY from Hold based on expectations for growth in the Sept qtr; believes both co's closed the books several days early in the June quarter, indicating that the June qtr was fine and helping the Sept qtr; also, checks indicate that bookings held in the June month versus April-May rather than falling off a cliff, and demand for high-end analogs remains steady. Maintains $52 price target for MXIM and lowers LLTC's price target to $41 from $45.
8:10AM Intel may cut 2002 capex, ests cut for select semi equipment co's-- Pru (INTC) 16.81: Prudential believes that INTC could reduce capex in 2002 to $4.8-$5.0 bln from $5.5 bln; field checks suggest co could be pushing out tool delivery to Q1 from Q4 for its 300mm Fab 11x in New Mexico; overall tool spending in 2002 could be down 24%-25% YoY vs prior est of down 18%-20% YoY; consequently, firm cuts 2002-03 EPS ests and price targets for AMAT, KLAC, NVLS, and LRCX.
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