From Briefing.com: 1686 - that is the June trading range top for the Nasdaq, and on Friday, it served as the line in the sand for tech participants as a slight breach of that level early in the session stirred a renewed round of buying interest that didn't face any interruption for the remainder of the day, with the exception of the closing bell.
There was broad-based participation in the move, but for the most part, it was a rally driven by large-cap issues. To say the least, it was a good way to end the week for bullish-minded participants despite the fact that the relatively light volume (1.58 bln shares at Nasdaq) didn't offer any significant proof that there was a whole lot of conviction behind the buying efforts. Be that as it may, the seemingly instant reversal at a notable support level, along with encouraging economic data in the form of the Durable Orders and New Home Sales reports for June, likely spurred some short covering that exacerbated the upside move.
For the week, the Nasdaq added another 1.3% to bring its year-to-date gain to 29.6%. Briefing.com, of course, has maintained that the path of least resistance for the tech sector over the near-term is to the downside, and Friday's stealth rally notwithstanding, we still feel that is the case given the low levels of volatility and bearish sentiment. In fact, the VIX Index, at 19.94, closed at its lowest point since March 2002 and is at a level that, historically, has been associated with at least short-term market tops.-- Patrick J. O'Hare, Briefing.com
4:22PM Weekly Wrap :
What happened this week? Well, quite a bit happened, but you wouldn't know any better by looking at the S&P 500. For the week, it was essentially flat. The inability to get anywhere will be seen by some as a sign that the party is over, and by others, as a sign that the party is simply at a standstill as the punch bowl gets re-filled.
Briefing.com thinks it's time to take a break from the partying, but overall, we would encourage investors not to lose the celebratory spirit. Put another way, it is our contention that a period of consolidation is in order, but that the long-term outlook for stocks still remains favorable. Both views, ironically, tie back to the current earnings reporting period.
Our assessment of the earnings season thus far is that it has been a good one as operating earnings this quarter should be up about 7.0%. Critics, of course, would suggest that isn't very strong, but when taking into account the hurdles of inclement weather and the war with Iraq, it is better than one had reason to expect. Now, with both of those items behind us, the tax cut impact starting to hit home in paychecks, and interest rates remaining low, there is a good foundation for even stronger growth in the economy, and corporate profits, in coming quarters.
Nonetheless, the market didn't get much distance this week out of the reassuring earnings news or from anything else for that matter - and it had plenty around which to rally. Initial claims dipped below the key 400K mark for the first time in 23 weeks, durable orders increased 2.1%, and new home sales hit a new record high. On top of that, there was a psychological gain in the news that U.S. troops killed Saddam Hussein's sons, Uday and Qusay.
The inability to make much headway against a backdrop of favorable news suggests to us, along with sentiment and volatility indicators, that the path of least resistance over the near-term is still to the downside. Be that as it may, recent developments on the economic, geopolitical, and earnings fronts all bode well for the long-term outlook, which is why we believe interim weakness will continue to be viewed as a buying opportunity provided there isn't a material increase in interest rates.
Looking beyond the performance of the major indices, the growing sense of optimism about economic prospects was reflected this week in the outperformance of the cyclical stocks, the jump in copper prices, the Dow Jones Transportation Average breaking out to a new 52-wk high, and the weakness in the bond market.
For a look at next week's happenings, be sure to read Briefing.com's Story Stock that is appropriately titled, Looking Ahead.-- Patrick J. O'Hare, Briefing.com
YTD chart of major stock indexes
Index Started Week Ended Week Change % Change YTD
DJIA 9188.15 9284.57 96.42 1.0 % 11.3 %
Nasdaq 1708.51 1730.70 22.19 1.3 % 29.6 %
S&P 500 993.32 998.68 5.36 0.5 % 13.6 %
Russell 2000 464.76 468.88 4.12 0.9 % 22.4 %
Close Dow +172.06 at 9284.57, S&P +17.08 at 998.68, Nasdaq +29.28 at 1730.70: Today's trading action must've raised a few eyebrows, but there we have it... In the midst of a quiet day in terms of corporate news and research, the market started off in positive territory, declined into negative territory, but advanced and finished the day with gains of 1.7-1.8% for the session and 0.5-1.3% compared to last Friday's levels... But first things first... The leading indicator of manufacturing activity, the Durable Orders report, checked in at 2.1%, above the consensus of 1.2%, and provided the impetus for the slightly positive bias in the early trade...
The uptick, however, was short-lived as the small dip in Existing Home Sales report to 5.83 mln versus the consensus of 6.0 mln was used as an excuse to book profits, forcing all of the major averages into negative territory... As an aside, the simultaneously reported New Home Sales report checked in at 1.16 mln versus the consensus of 1.11 mln... The selling pressure abated after the Nasdaq and the S&P 500 retested and held at their technically significant levels of 1686 (June range top) and 978.75 (50-day moving average)...
From that point on, there was no looking back for the market as all of the major indices were on a one-way street heading north... As a result, winning sectors were abound and the only laggards of note was the steel sector... Interestingly, despite the large point move, breadth figures were only slightly favorable and volume on the light side of things... Additionally, the majority of the move could be attributed to large-cap issues as the S&P 400 and the Russel 2000 underperformed the S&P 500 on a relative basis with gains of 0.78%... Elsewhere, the 10-year note closed the day near its worst levels of the session at -4/32, with its yield at 4.18%...NYSE Adv/Dec 2132/1123, Nasdaq Adv/Dec 1828/1298
4:00PM Qualcomm sues Texas Instruments for breach of patent agreement :
3:47PM Weekly Losers List : Stocks over $5 posting the largest percentage loss this week include: NTIQ -29%, GSPN -25%, IDCC -24%, UCI -22%, CPSI -21%, SKX -21%, HCM -20%, MED -20%, QSFT -20%, MOBI -19%, ASIA -19%, DSTM -18%, CPKI -18%, VIRL -18%, FCN -17%, CBM -17%, SIMG -17%, AAII -17%, ULTE -17%, PTEC -16%, HTCH -16%, BSTE -16%, LAB -16%, HITK -15%, AFCO -14%, MACR -14%, EME -14%.
3:46PM Earnings Calendar : Monday morning, watch for earnings reports from ABRX, BMC, MCH, NOC, RDWR, RCL, XRX, and ZBRA. During the session, AXP will report results.
3:39PM Top Weekly Performers : Stocks over $5 that have topped the weekly percentage gainers list includes: CVNS +61%, SMMX +50%, MAXF +49%, EQIX +47%, TTN +43%, UHAL +42%, AV +38%, PFI +37%, RFMI +32%, THER +31%, QLTI +31%, PCLN +30%, KYPH +30%, ARDI +29%, TASRW +29%, IFLO +29%, SSRI +29%, TLCV +28%, LCAV +26%, ASKJ +26%, MNST +24%, CELL +23%, BOBJ +23%, SIE +23%, CLRS +22%, FLML +21%, GOLD +20%.
10:38AM Celestica upgraded at RBC (CLS) 14.78 -0.17: RBC Capital upgrades to Outperform from Sector Perform based on valuation; stock is trading nearly 40% below its historical 14.2x EV/EBITDA multiple, and firm believes that the co's new share buyback provides downside support. Target is $18.
8:58AM Benchmark Elec target raised to $52 from $45 at Needham (BHE) 37.78: The increased target is based on higher EPS estimates for 2004 and the possibility of further upside EPS leverage.
9:52AM Integrated Silicon (ISSI) 7.32 +0.42: Soundview Technology initiates OUTPERFORM. Target $12. Firm cites consistent execution, new products, a healthy balance sheet, and improving gross margins.
9:51AM Kulicke & Soffa (KLIC) 9.00 +0.56: Soundview Technology upgrades Neutral to OUTPERFORM. Target $5 to $12. Cites co's stronger than expected Q3 operating margin as well as data points that suggest industry is in early phase of broad-based recovery.
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