From Briefing.com: Updated: 31-Jan-03 - General Commentary - Threat of war, anemic economic growth and disappointing earnings guidance add up to one thing - zero buying interest. Just no reason for investors to play hero and try to pick a bottom. Prudent decision is to stand pat and wait to see how events play out.
During a momentum market like the one we had in the late 90s, investors feared being left behind if they were out of stocks. Today, unless you're out of stocks you're having your behind handed to you, so to speak.
Technically, sector/market beginning to look very sick. Most of the major indices and industry groups now trading well below their 50-day moving averages. Most have also taken out their late December lows. Only minor supports now stand in the way of a serious decline.
No question, indices remain oversold short-term. But with little incentive to buy, there's just no reason to think that market is about to launch a strong, sustained recovery try. Rather, Briefing.com expects sellers to use any rebound effort as another selling opportunity.
For all the post-close/pre-open earnings news, see Briefing.com's In Play and/or Economic Calendar pages.
Robert Walberg, Briefing.com
6:36PM Thursday After Hours price changes vs 4pm ET levels: Given the steady decline in the regular session, it is not entirely surprising that the tone of the after hours session is negative. Presently, the S&P futures, at 839, are 5 points below fair value, and the Nasdaq 100 futures, at 982, are 5 points below fair value. Once again, a number of companies reported their Q4 numbers, and for the most part, the news was good rather than bad.
Tonight's heavy hitter, Walt Disney (DIS 16.90 +0.55), delivered a 6% year-over-year rise in revenues to $7.47 bln and topped the Multex consensus estimate of $7.70 bln in its Q4 (Dec) report. Pro forma EPS checked in at $0.17, which excludes a previously announced $0.04 charge, and was ahead of the consensus expectation of $0.15. As for its 2003 outlook, DIS is targeting EPS growth from operations of 25-35%, which assumes a continued gradual improvement in the economic climate.
With more than four weeks remaining in its Q1 (Feb), Adobe Systems (ADBE 26.40 -0.02) reaffirmed its previously provided revenue and EPS target ranges of $275-290 mln and EPS of $0.21-0.23, stating that all of its major geographic markets are on track. Current consensus estimates, which stand at $0.22 and $282.7 mln, respectively, fall roughly at the mid-point of the company's guidance. Peer companies include the likes of AAPL, ADSK, PCLE, and ROXI.
Zoran Corp (00C0 11.42 -2.31), a small-cap semiconductor company, exceeded the Multex consensus estimate by $0.04 at $0.24 and reported net sales of $40 mln (Multex at $40.4 mln) in its Q4 (Dec) report. However, ZRAN is currently expecting its Q1 revenues to be seasonally down from a strong Q4 in the range of 8-10%, which equates to approximately $36-36.8 mln, and EPS to be at $0.01-0.03. The current Multex consensus estimates are pegged at $0.14 and $36.4 mln, respectively. Furthermore, ZRAN expects FY03 revenues to grow 30-34% from 2002 levels, or $193.8-199.8 mln (Multex at $178.7 mln), and EPS to be $0.80-0.85 (Multex at $0.89).
4:23PM GlobeSpan Virata beats by a penny (GSPN) 4.85 +0.08: Reports Q4 (Dec) loss of $0.04 per share, $0.01 better than the Multex consensus of ($0.05); revenues fell 6.9% year/year to $51.1 mln vs the $49.2 mln consensus.
4:16PM Zoran beats by 4 cents, guides below consensus (ZRAN) 13.73 -0.38: Reports Q4 (Dec) earnings of $0.24 per share, $0.04 better than the Multex consensus of $0.20; revenues rose 11.7% year/year to $40.0 mln vs the $40.4 mln consensus. Expects Q1 EPS of $0.01-$0.03 and 2003 EPS of $0.80-$0.85, vs consensus of $0.14 and $0.89.
4:09PM ChipPAC beats by a penny, issues guidance (CHPC) 2.62 -0.38: Reports Q4 (Dec) loss of $0.07 per share, $0.01 better than the Multex consensus of ($0.08); revenues rose 20.7% year/year to $92.7 mln vs the $89.7 mln consensus. Expects Q1 EPS of ($0.10)-($0.13) with sequential rev growth flat to down about 5%, vs consensus of ($0.07) and $88.2 mln; expects to return to profitability in 2H03 with full-year rev growth of 20%.
3:32PM Sector Watch: SOX at lowest level since Oct : -- Technical -- Highlighted the technical deterioration this morning (see 11:31 comment) with the sector index (SOX at 274 -5.4%) pushing to its lowest level since Oct in recent action. Weakest links include: LSI -8.2%, ALTR -7.3%, LSCC -7.7%, AMD -7.3%, NSM -6.7%, MXIM -6.8%, XLNX -6.5% and KLAC -5.5%. Index currently attempting to bounce but a sustained push through 276/276.80 is needed to help improve the very short term pattern. Initial supports, if it fails to accomplish this, are at 271 and 269.
2:16PM Intersil upgraded to Buy from Neutral at UBS (ISIL) 15.00 +0.24:
1:15PM Newport (NEWP) 11.51 -1.07: Adams Harkness downgrades Buy to MKT PERFORM. Following mixed Q402 results.
11:40AM Newport (NEWP) 11.05 -1.53: USB Piper Jaffray downgrades Outperform to MARKET PERFORM. Sees no near-term catalyst that could significantly drive stock price; visibility into end markets remains weak.
11:31AM Newport (NEWP) 11.10 -1.48: RBC Capital Mkts downgrades Sector Perform to UNDERPERFORM . Target $15. Notes that, in Q4 results, NEWP bookings were 15% below firm's estimate and revenues were 5% below estimate; also Q1 revenues guided flat sequentially.
1:05PM Micrel (MCRL) 8.20 -0.92: Adams Harkness downgrades Buy to MKT PERFORM. Based on valuation.
12:13PM Foundry Ntwks (FDRY) 8.85 -0.80: Fulcrum upgrades Sell to NEUTRAL. Based on much stronger-than-anticipated operating leverage which firm believes could be sustainable through 2003.
11:12AM United Micro (UMC) 3.24 +0.03: JP Morgan upgrades Neutral to OVERWEIGHT. Thinks valuation is reasonable; notes that UMC has renewed focus on profitability through careful stance on capital spending and cost control.
10:56AM United Micro (UMC) 3.23 +0.02: Banc of America Sec downgrades Buy to NEUTRAL. Target $5. Based on increasing pressure on margins, tough macro environment, and pressure from competition in leading edge and trailing edge technologies.
10:11AM RMBS gains another 10% after 57% move yesterday :
9:20AM Micrel cut to Mkt Perform at Adams Harkness on valuation; target $10 (MCRL) 9.09:
9:05AM Foundry Ntwks upgraded at Fulcrum (FDRY) 9.65: -- Update -- Fulcrum upgrades to Neutral from Sell based on much stronger-than-anticipated operating leverage, which firm believes could be sustainable through 2003.
9:58AM Technical Levels : Different trading day -- same support point. So yesterday marked the third consecutive session in which the Nasdaq touched an intraday low of 1320. For those that appreciate the details, Monday's intraday low was touched at 1320.3, Tuesday's low was 1321.4 and Wednesday's low came in at 1320.3.
Now earlier this week -- on Tuesday, January 28th -- we touched on the potential significance of this support at 1320. The essence of that story was the 1319 level happens to match up with a trend reversal going back to November 12th. From the point of that November 12th trend reversal, the Nasdaq pushed 200 points higher in a matter of roughly three weeks. So in terms of the psychology, we noted that on two occasions over the preceding three months, long positions in that 1320 area have been successful. The point being, those with a good memory would likely trade that level from the long side until it had been clearly violated.
At any rate, from the standpoint of the intraday activity, the exact same levels were at play on Wednesday as we addressed here in detail regarding Tuesday's price action.
So once again, in the chart above you can see when and where each of these levels was observed. This is an intraday chart of Wednesday's trade activity in which each bar on the chart represents the opening and closing levels for each five-minute time frame. While we were looking for support at 1320, the actual intraday low was touched at 1320.3. To the upside, our resistance points rested initially in the range of 1347 to 1350, followed by additional overhead in the vicinity of 1360 -- the actual close on Wednesday's session came in at 1358.
Now with yesterday's gains under its belt, the Dow Industrials has taken on an interesting posture from a technical perspective. In a sense, the manner in which the Dow responds over the next several sessions, could substantially impact the near to intermediate-term tone on the Nasdaq. So the chart above is a daily chart of the Dow Industrials.
Without making things complicated, there are two obvious take aways here. First, the index appears to have held straight-line support in the vicinity of 8,000 -- if you care to split hairs, that level is technically the closer to 7,990. The second point is the index sold off severely on its most recent sell wave, losing more than 850 points over an eight-session losing streak. Now with the way the Dow has consolidated over the preceding two sessions, the prospects for at least a bounce over the near term look good. Just keep in mind that on a close below that 7,990 level, the near-term bias shifts back in favor of additional downside.
As a random point of interest, note that resistance line drawn on the chart above is the exact same one we drew on our January 15th review. So the price action on January 15th served as the pre-cursor to our slightly more cautious stance of January 16th.
Which of course brings us to the issue of the current picture on the Nasdaq Composite. Now when we reviewed the Nasdaq yesterday, we stated the active trader will want to key off the technical levels at this point, with the notion that the near to intermediate-term bias remains lower until proven otherwise. Well, yesterday's session didn't prove the bias is higher now -- it did not qualify as a definitive signal -- yet it does put us on notice the near to intermediate-term bias may shift positive soon.
On the candlestick chart, the index formed a bullish engulfing pattern yesterday -- this pattern, taken by itself, signals additional upside is likely in the very near-term. In addition, the Nasdaq also has this developing 50/200-day crossover that we were mocking to some extent yesterday. This is a situation in which the index' 50-day simple moving average crosses above its 200-day simple moving average, and also serves as a favorable intermediate-term signal. As a final bullish point, the markets also have this oversold, yet stabilizing price action on the Dow Industrials. So for the time being, we'll shift our near to intermediate-term bias from negative to neutral/cautiously positive.
For those operating on a very near-term basis, a few of the notable technical levels are as follows -- look for that 1360 area, which approximates yesterday's close, to serve as a very near-term pivot point. To the upside, look for initial resistance at congestion in the area of 1367 to 1370 followed by much more important overhead at 1380 -- that 1380 level happens to represent both the index' 20-week exponential moving average and its 20-day exponential moving average. This means the intermediate-term bias improves substantially on a close above that 1380 level. To the downside, continue to watch for that 1347 to 1350 range to serve as notable initial support. That's followed by modest support at 1342 and a more notable floor in the vicinity of 1330. -- Mike Ashbaugh, Briefing.com
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Usually Don leaves a note that he is going to be gone. Hope he is ok.
RtS |
