TXN, CHRT up estimates. From Briefing.com: TXN Texas Instruments sees Q4 improvements (19.77 -0.24) Company issues guidancefor Q4 (Dec), expecting pro forma EPS at about $0.03 (Multex consensus $0.02); semiconductor revs expected to decline 2% sequentially, instead of the 5% originally noted in 10/21 earnings report; total revenue expected to be down 7%, instead of 10%; cites stronger demand for wireless and high-performance analog products.
CHRT Chartered Semi gives Q4 guidance (6.29 -0.15) issues guidance for Q4 (Dec), expecting a loss of approximately $0.47-$0.49, including one-time charge of about $0.02 associated with workforce re-sizing, unchanged from previous guidance (Multex consensus $0.48 loss); also company indicated that it expects moderate improvement in revenues and higher shipments and utilization in Q4, vs its original Oct. 25 guidance.
4:14PM Numerical Tech: President & CEO Larry Hollatz resigns (NMTC) 5.40 +0.90: Announces the resignation of President & CEO Larry Hollatz; Board member Dr. Naren K. Gupta has agreed to step in as the co's interim President and CEO, effective today, and a search for a President and CEO will begin immediately.
Close Dow -33.52 at 8862.57, S&P -1.78 at 934.53, Nasdaq +6.04 at 1484.80: When today's session began, it seemed as if the Dow was going to have little trouble this week posting its ninth consecutive, weekly gain... That's because it was sporting a triple-digit gain in the first few minutes of trading as investors cheered the positive economic implications embedded in reports that retail sales rose a solid 12% in the three day period following Thanksgiving... Contributing to the optimism surrounding the sales results was an indication from Wal-Mart (WMT 54.38 +0.48) that it achieved a record single-day sales performance of $1.43 bln at domestic stores on Nov. 29...
As one might expect, the retail sector assumed a leadership position when trading began... It had plenty of company, though, as most sectors started the day on an upbeat note, particularly the tech sector... The latter was driven by its hard-charging semiconductor components, which keyed off a Lehman Bros. upgrade of Intel (INTC 21.05 +0.17) and Advanced Micro Devices (AMD 8.93 -0.07) that was attributed, in part, to an expectation that improving corporate profits should drive increased business investment...
At their best levels of the day, which were reached in the first half hour of trading, the Dow, Nasdaq, and S&P were up 147, 43, and 18 points, respectively... At 10:00 ET, however, the market suffered an abrupt reversal of fortune that coincided with the release of the November ISM Index... As it turned out, the national manufacturing report came in weaker than expected at 49.2 with only four of its ten components-- prices, production, deliveries, and imports-- showing a reading above 50.0, which signifies expansion...
The overall report was an improvement from the 48.5 reading in October, but the market was disheartened by the understanding that November represented the third straight month of a sub-50.0 reading, which denotes contraction... Subsequently, the indices endured a broad-based wave of selling pressure that, in all likelihood, was driven by concerns the market had gotten ahead of itself in discounting both the pace of economic activity and the rebound in corporate profits... If nothing else, the ISM Index certainly provided traders with a good enough reason to take some money off the table...
A resilient technology sector, which was underpinned by leadership from the semiconductor, biotech, and wireless service stocks, kept selling efforts in the broader market in check for the most part, but some mid-afternoon weakness in those key areas did prompt a noticeable dip in the indices... To put things in perspective, the Dow, Nasdaq, and S&P were down 109, 4, and 8 points, respectively, at their worst levels of the afternoon... They managed to recoup some lost ground in a modest, but fairly broad-based, late-day push and ended the session mixed... Notable laggards included the paper, managed care, chemical, banking, household products, and utility shares...
Conversely, the oil drilling, footwear, apparel, biotech, wireless service, and semiconductor issues were among today's best-performing issues... The Treasury market had a roller coaster session of its own... To wit, the 10-yr note, which was down more than a point in the early-going, was trading off just 2 ticks at 4.215% when the closing bell rang on Wall Street...DJUA -1.3%, SOX +0.5%, NYSE Adv/Dec 1978/1432, Nasdaq Adv/Dec 1723/1671
2:05PM Chart Watch -- INTC : Solid performance for Intel (INTC 21.23) today with the early upgrade by Lehman helping to propel the issue higher. The firm based the move on the belief that improving profits will drive business investment, the aging installed base and Win95 enters end of life at the end of this year with Windows 98 and NT4.x entering the non-support phase in June.
While still clinging to a firmly positive bias, the issue has pulled back significantly following the early sprint. As we highlighted in a Story Stock from Nov 26, during a consolidation phase for INTC (and a number of other well know stocks), we were looking for an upside extension with potential for a more sizeable correction following such a move. While all of the stocks mentioned have not matched up as well as INTC with the resistance levels listed, they all have come within a dollar as of today's high.
Why the short term concern at this point for INTC? There are several technical factors including the extent of the run off the Nov (+28%) and Oct (+70%) lows, the chart patterns and the fact that INTC has run into important resistance near 22. This marks the 200 day sma, two retracement targets (Jan/Oct and May/Oct slides), top of the June 19 gap (green line), a Fibonacci swing target and the fact that it spiked significantly above its 10 day Bollinger Band today.
On a short term basis support is at 20.80/20.75 with a solid secondary barrier between 20.50 and 20. A sustained reversal back through the 21.60 area argues that the correction will be short lived. Failure coupled with the technical factors highlighted above leaves the door open to further near term downticks. It will take a slide back through the 19.20 area to inflict any damage of note to the current bull trend. -- Jim Schroeder, Briefing.com
1:26PM Looking Ahead: The key events scheduled for this week are an Intel (INTC 21.54) mid-quarter business update on Thursday, and the employment data on Friday. There is also an important European Central Bank meeting on Thursday in which rates could be cut. An interesting IPO is expected, the Chicago Mercantile Exchange. There are very few earnings releases, and none that are noteworthy.
The Intel mid-quarter business update is scheduled for Thursday at 17:30 ET. Whatever Intel says can have a big effect on the Nasdaq overall. Intel stock has rallied about 50% since early October on expectations of improving demand for semiconductors. Briefing.com suspects that Intel will make some upbeat statements, but whether or not the fundamentals are improving enough to justify further stock gains is questionable. Intel is still only making $0.11 a quarter. The stock is already priced for profit growth. How much Intel can deliver is the question.
1:08PM Intersil -- Daily Breakout (ISIL) 19.51 +2.23: -- Update -- Shares of Nasdaq-traded Intersil are posting a 13.0% gain today. The company makes high-speed wireless local area network (WLAN) chipsets and other integrated circuits, primarily for the communications and computing markets. For the latest quarter, company reported that revenues rose 42.7% to $191.3 million, versus the $134.1 million reported in the year ago period. Net income excluding items totaled $26.6 million or $0.19 per diluted share, exceeding the analyst consensus estimate by a penny. Going forward, ISIL is projected to earn $0.66 this yr (p/e 29.1); EPS projected to grow 32% next yr to $0.90 (p/e 21.3). Shares are running today on a Bear Stearns upgrade to Outperform from Peer Perform (see 8:30 ET comment). Volume today is 5.3 mln shares, or 1.5x avg daily turnover.
12:12PM Silicon Labs (SLAB) 28.27 -1.02: Legg Mason downgrades to SELL from Hold. Cites SLAB trading with a CY03 price to sales multiple of 6.2, vs peer average of 3.4; belief there is heightened risk that holiday handset sales will not be enough to absorb the strong shipments of components during Q3 and Q4; firm's checks indicate that Skyworks may have won Wavecom's (currently SLAB's largest customer) new quad-band WISMO 5100 for GPRS.
12:06PM Cisco Systems (CSCO) 15.06 +0.14: RBC Capital Mkts downgrades to SECTOR PERFORM from Outperform with price target of $15. Cites caution over current valuation and top-line outlook ahead of tomorrow's analyst day.
12:03PM EMC Corp (EMC) 7.12 -0.21: RBC Capital Mkts downgrades to SECTOR PERFORM from Outperform with price target of $7. Cites valuation, belief that November has slowed, recent layoffs may be affecting business activities, and new Symmetrix product looks strong but transition risk remains.
11:08AM Advanced Micro falters (AMD) 9.04 +0.04: -- Technical -- Gapped higher to resistance at its 200 day sma (9.62 highlighted in Morning Movers Story) after upgrade but has subsequently dropped roughly 6%. Next support is at 8.97 followed by a stronger floor at 8.82. While still positive on the day, takes a push back through 9.20/9.24 to help neutralize the current weaker posture.
11:02AM Advanced Micro (AMD) 9.02 +0.02: Lehman Brothers upgrades to EQUAL-WEIGHT from Underweight. Cites improving corporate profits driving increased business investment; installed base continues to age; and Win95 enters end of life at end of this year and Windows 98 and NT4.x enter the non-support phase for MSFT on June 30.
11:02AM Intel (INTC) 21.47 +0.59: Lehman Brothers upgrades to OVERWEIGHT from Equal-weight. Cites improving corporate profits driving increased business investment; installed base continues to age; and Win95 enters end of life at end of this year and Windows 98 and NT4.x enter the non-support phase for MSFT on June 30.
10:40AM Intersil (ISIL) 19.90 +2.62: Bear Stearns upgrades to OUTPERFORM from Peer Perform. Cites potentially strong ramp of 802.11g WLAN products in 2003, as ISIL will likely distance itself from much of its competition.
10:13AM Market slips after ISM report : The construction spending data trigger little reaction but the weaker than expected ISM index has elicited an 82 point drop in the Dow as this was the third month below 50. The New Order component fell to 49.9 vs 50.9 in Oct, employment slipped to 43.8 vs 45, inventories rose to 42.1 vs 40.2 while the prices paid came in at 55.7 vs 58.3.
9:52AM Intel tests solid resistance area (INTC) 21.90 +1.02: -- Update -- -- Technical -- Sprints higher in the wake of the early upgrade (see 07:13 comment) and tests a solid resistance area between 22.01 and 22.17 (top of June gap and 200 day sma). Intraday supports are at 21.80 and 21.60/21.50. Takes a slide through 21 to inflict any short term damage. Initial resistances if a breakout is seen are at 22.30 and 22.55.
9:45AM Bernstein cautious on semis; pre-open : In a pre-open note, Bernstein says that the typical Dec strength in semi stocks is unlikely to be as large this year as in prior years given the nearly unprecedented run-up in these stocks during Oct and Nov; firm would look to lighten exposure going into the end of the year, and would view any positive catalysts as good exit points, particularly for NSM and TXN.
10:19AM The Big Picture - Valuation Stabilizes: This morning's Stock Brief reviews third quarter earnings and the associated valuation measures. Valuation remains a bit high by historical standards, but that is supported by historically low interest rates. Most importantly, valuation measures probably won't drop sharply from here. That means the market can rise in line with earnings growth.
Operating earnings in the third quarter were flat (+0.08%) compared to the second quarter. The lack of any decline is good news. As-reported earnings, which include all charges and one-time gains, were actually up, because there were fewer large charges.
The price/earnings multiple (P/E) on operating earnings is now about 20, using either the trailing twelve month data or annualizing the current quarterly data. The trailing twelve month P/E on as-reported earnings is a very high 35, because there have been huge one-time charges over the past year (which reduce earnings and thus raise the ratio). The operating earning P/E now reflects a reasonable level given low interest rates and the prospect for earnings growth. Most significantly, it has stabilized relative to second and third quarter earnings.
As the Stock Brief points out, what this means is that the outlook for stock prices may no longer be driven by the need for a multiple contraction (declining P/E ratio) based on concerns of declining profits. At the height of the market frenzy, valuations were so high that stock prices had to come down just to get multiples to a reasonable level. Falling profits were a problem, but multiple contraction (compression) was a bigger problem. Now, significant multiple contraction is no longer necessary.
Stock prices may therefore be driven by profit growth rather than changes in multiples. If profits rise 5% in 2003 and the operating P/E stays at 20, then stock prices will go up 5%. Or, the multiple may go up a bit if profit growth forecasts increase. The multiple may go down if interest rates start to rise. As the Stock Brief explains, that leaves the market outlook mildly positive. Back to the way things used to be before the market bubble, and crash.
-- Dick Green, Briefing.com
Intel (00C0 +4.7%) was upgraded by Lehman and is in position for a test of a solid resistance barrier in the 22/22.16 area. This marks the top of the June gap and the 200 day sma. Next resistance if taken out is at 22.45/22.55. Advanced Micro Devices (AMD +5.2%) was upgraded in the same note is also approaching a solid resistance barrier between 9.55 and 9.75. This represents its 200 day sma, 38% of the Jan/Oct slide and a swing target (equal to the initial leg higher).
Other stocks of interest include: Qlogic (QLGC +2.6%) which is in position to test a minor resistance at 44.70 in front of the recovery high at 44.90; Xilinx (XLNX +3.2%) is approaching its recovery high of 25.56. -- Jim Schroeder, Briefing.com
9:48AM Technical Levels : So when we reviewed the Nasdaq this past Friday, November 29th, we noted the index was facing an important test of its 200-day simple moving average. This average started Friday's session at 1,497 and conventional wisdom suggests its 200-day simple moving average was -- and will continue to be -- a genuinely important test for the Nasdaq. At any rate, we had our doubts as to whether the index could manage a break of this level on a less liquid, holiday-shortened session.
Yet note that as it turns out, the index did observe its 200-day simple moving average. In fact, the Nasdaq topped out intraday precisely on the 1,497 mark before turning modestly lower for a consolidation day. Now keep in mind that Friday's move came within three points of our intermediate-term target in the range of 1,500 to 1,520 identified on November 18th.
Nonetheless, our near-term technical assessment remains essentially the same following Friday's thinly traded session. In the broader context, the Nasdaq continues to carve out 'higher highs' as it did with Friday's intraday high at 1,497 -- a bullish near-term signal. Also keep in mind that the markets remain comfortably within a favorable period seasonally -- a dynamic we addressed back on October 28th.
Now this morning, the Nasdaq has already gapped above its 200-day simple moving average -- that average currently rests at 1,495. So this is another big break for the markets. Now keep in mind we've been bullish through the index' break of several key levels over the past two months: 1) its 50-day simple moving average, 2) its 20-month downtrend line, 2) its 100-day simple moving average, 3) its 20-week exponential moving average, 4) the massive straight-line resistance at 1,423 and now again for 5) this most recent break of its 200-day simple moving average.
Each of those breaks improved the near to longer-term tone and this one is no exception. Put another way, while the broader bias in this column has been bullish since October 10th, many professionals will be taking today's break as the longer-term trigger to an entry point.
So the best candidate for very near-term overhead appears to be the 1,520 level which matches up with a 50% retracement of the index' March to October sell wave. Looking out much more broadly, we'll reiterate that resistance in the range of 1,613 and 1,620 will be an important level worth watching on a longer-term basis. It represents obvious straight-line resistance and also matches up with a 62% retracement of the Nasdaq's March to October sell wave. This is an area we've been looking towards since our November 14th review. -- Mike Ashbaugh, Briefing.com
finance.yahoo.com^SOXX+ALTR+AMAT+AMD+BRCM+CHRT+CSCO+EMC+INTC+ISIL+KLAC+LLTC+LSCC+LSI+MOT+MU+MXIM+NMTC+NSM+NVLS+QLGC+SLAB+TER+TXN+XLNX+^VIX+^VXN+^IXIC+^NDX+^SPX+SMH&d=t
I'm seeing a doji on the SOX here. Even on the monthly chart. Could be tough sledding from here although its still too early to know for sure. Certainly the news from CHRT and TXN is helping the after hours prices.
RtS |
