General Commentary: The markets started the week strong, posting impressive single-day gains and closing towards their best levels of the session. The Nasdaq turned an unusually strong 1.9 billion total shares, challenging its best reading for calendar 2003. Also note the market internals were particularly strong, with advancing volume outpaced declining volume by an extreme reading of nearly 9 to 1.
So what triggered this notable buy interest? The short answer is well received economic data. Namely, May Consumer Confidence rose 2.8 points to 83.8 which essentially matched consensus expectations for a reading of 84.0. At the same time, April New Home Sales rose 1.7%, and Existing Home Sales spiked 5.6% -- both numbers were ahead of consensus estimates.
From a technical perspective, the current outlook remains consistent with our assessment this morning. Recall we had set our final resistance point at 1553, and the Nasdaq edged out that level with Monday's close at 1556. In light of the unusually strong volume -- as well as the broad market participation -- the immediate outlook continues to favor a bullish bias. Note a more detailed account of potential 'watch outs' was addressed in our technical review this morning.
Looking towards Wednesday, be aware that April Durable Orders data are set for release at 8:30 ET. The report serves as a leading indicator of manufacturing activity, and the market can move on it despite its well recognized volatility. The total number is frequently slanted by sizeable changes in aircraft and defense orders. An increase or decrease based solely on one sector tends to be ignored, while the market is more likely to acknowledge broadbased changes to the number. The consensus estimate is for a 1.0% decline in Durable Orders versus a 2.0% increase in the prior month.
Aside from the Durable Orders data, the corporate earnings calendar is notably limited, with no real market moving reports slated for release. For a more detailed look at the remainder of this week, please visit Briefing.com's Earnings Calendar and Economic Calendar. -- Mike Ashbaugh -- Briefing.com
4:52PM SMTC falls 5.3% in after hours; CYBX plunges 16.5%
4:44PM Semtech reports in line, guides down (SMTC) 16.90 +0.64: Reports Q1 (Apr) earnings of $0.11 per share, in line with the Reuters Research consensus of $0.11; revenues fell 10.6% year/year to $44.0 mln vs the $45.1 mln consensus. Company sees Q2 EPS of $0.09-0.10 vs R.R. consensus of $0.12, sales flat to up 2% from Q1, or $44-44.9 mln vs R.R. consensus of $47 mln.
3:40PM Semtech Earnings Preview (SMTC) 16.99 +0.73: Semtech reports its Q1 after the close today with Reuters Research earnings estimates of $0.11 and revenues of $45.1 mln. First Albany's analyst expects the co to perform in-line but expresses concern about ability of co to meet analysts' projections for the 2nd-half. Firm notes pricing pressure in a number of the co's markets Analyst sees stock fully valued on Street consensus estimates that may prove to be optimistic.
4:07PM Cyberonics beats by a penny, guides below consensus (CYBX) 24.00 +0.69: Reports Q4 (Apr) earnings of $0.17 per share, $0.01 better than the Reuters Research consensus of $0.16; revenues rose 37.6% year/year to $27.8 mln vs the $29.1 mln consensus. Expects Q1 EPS to be at least $0.08 on sales of $26.5 mln (consensus $0.10 and $29.3 mln), expects FY04 EPS of $0.45 on sales of over $128 mln (consensus $0.50 and $129.7 mln), and expects to see quarterly annual sales growth increase from 12% to 15% in the first two quarters to 22% in Q3 and 40% in Q4.
12:37PM Volume Alert -- NVIDIA pops to fresh session high amid a surge in volume (NVDA) 22.11 +1.24: Intraday pop appears to have been triggered by a technical breakout, as buying accelerated once issue crossed resistance in the $21.95 area.
12:21PM Novellus vacillating just below resistance (NVLS) 30.06 +1.49: -- Update -- -- Technical -- Issue pressured in early trade but has advanced as much as 6.5% off the low despite negative commentary (see 08:28 comment). Was unable to take out the recent highs (30/30.07) on initial attempts but is back for another try. Next resistances, if able to sustain a breach, are at 30.18 April and 30.29 (200 day ema).
11:06AM STMicroelectronics reaffirms Q2 guidance (STM) 21.50 +0.69: Based on currently available data, co reaffirmed the guidance for Q2 revenues and gross margin that it provided in its news release dated April 23. At that time the Company stated that it expected revenues to be within the range of $1.68 billion to $1.72 billion, and that its gross margin would be approximately 36%.
9:47AM Fulcrum defends Cymer (CYMI) 27.21 +0.12: Fulcrum reiterates their Buy rating and $45 target on CYMI, saying Friday's INTC-induced selloff was wrong; firm believes that INTC's decision to skip the intro of next-gen 157-nm lithography tools is in fact very positive for CYMI, as it dominates the 248-nm and 193-nm laser mkts, and especially bad for competitor Lambda Physik.
9:43AM Photon Dynamics reit Outperform at SoundView; target $35 (PHTN) 23.08 +0.23: Soundview out with a note believing Photon Dynamics remains on track to meet or beat consensus estimates for the June quarter. Analysts note that only about 10%-15% of all desktops have flat panel screens - thus there is a huge replacement opportunity. If the corporate PC replacement cycle begins to occur, least 50%-60% of these machines will ship with flat panel displays. Photon Dynamics is the leading supplier of test and repair equipment for flat panel production.
9:38AM SanDisk extends Friday's move; heavily shorted stock hits new 52-wk high (SNDK) 34.29 +1.25: -- Update -- Briefing.com noted late Friday that stock was being accumulated into the close of trading. Strength comes amid positive chatter on co as SNDK is on the road this week.
9:00AM Centillium announces longer reaching ADSL-related CO chipset (CTLM) 8.60: The co announced the unveiling of its highest performance ADSL technology with its Maximus 12-channel central office or CO chipset. The chipset utilizes its eXtremeDSLMAX technology, which provides up to 50Mbps downstream and can reach customers up to 22,000 feet from the CO with backwards compatibility to over 30 mln ADSL modems.
8:28AM Novellus reit Sell at Fahnestock; near-term risk to $17 (NVLS) 28.56: While Fahnestock believes that co's exposure to the copper equipment mkt gives Novellus above-average growth potential, firm is concerned that its acquisitions will meaningfully reduce margin potential. In addition, cautions that industry visibility remains low and firm does not expect a significant order upturn to begin until Q4. Fahnestock sees near-term risk in the shares to the $17 level; firm's 12-month target is $22.
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