From Briefing.com: The market put together a solid performance with the tech dominated Nasdaq Composite again pacing the way as it established another new 52-wk closing high. This marks the first time the index has closed above the 1800 barrier since April 2002. It was not a day of data driven gains as the market reaction to the early stronger GDP report was met with only minor buying interest and then a pullback while market calls from the Street were limited (although the GM upgrade did boost the Dow).
If it wasn't data/new driven and there weren't any major market calls, what continues to underpin the indices? From this vantage point it appears to boil down to three things: 1) resiliency-- despite bearish concerns (rising rate, weak seasonals, excessively bullish sentiment etc.) the market continues to trade well and in a typically bullish fashion as shorter term moving averages and chart points hold during pullbacks; 2) momentum -- other than the two day knee jerk reversal off last Friday's early high, once the bulls get the ball rolling on an intraday basis no selling interest has surfaced; 3) thin trading conditions -- clearly there was pent up buying interest as the averages pulled back in an orderly manner into the August low with volume rising as recent trading tops were approached and breach (Dow and Nasdaq). But, during this holiday week the thinner conditions have contributed to both the more volatile trade and the relative ease with which the market has been able to push higher off of Tuesday's low.
From a sector perspective we saw a strong performance in the networking, software and computer-hardware which each established new 52-wk highs along with disk drive which is within roughly one point of doing the same. Outside of tech solid gains were also posted in retail, cyclical, biotech, housing, airline and energy.
As for the levels of interest for the Nasdaq Composite, we are of course headed into the Friday before a holiday with even fewer traders expected to participate in the action. However, we thought we would take a quick look at some longer term potential targets under the assumption the short term supports at 1780 and 1772 along with the more important 1739/1737 (Aug 26 low, 20 day exp mov avg) area are not taken out during a near term pullback. The resistance levels are at 1812 (Aug high), 1825/1830 (straight line congest/weekly closes, Fib extension target at 1823), 1845/1850 (also straight line congest/weekly closes) and 1862 (62% retrace of the May 2001 to Oct 2002 decline.
6:00PM Thursday After Hours price changes vs 4pm ET levels: A winning session in the equities market is being followed by lackluster trade in the after-hours. Presently, the S&P 500 futures are trading 1.3 points below the fair value of 1002, while the Nasdaq futures are 3.5 points below the fair value of 1333.
The highlight of the after-hours session was the Q3 mid-quarter update from the semiconductor giant, Novellus Systems (NVLS 39.85 -1.00). On the conference call, the company updated its Q3 guidance, saying it continues to expect Q3 earnings to be breakeven (consensus breakeven) and revenues in the range of $215-220 mln (consensus of $220 mln). NVLS also indicated that booking are expected to be $220 mln, above the $210 forecasted on the Q2 (June) conference call. While management said that it remains cautious and is not looking for a hockey-stick shaped recovery, NVLS did say it believes it is in the midst of a pick-up, with Japan being strong, Europe showing some strength, and the rest being flat. Related stocks include the likes of KLAC, KLIC, LRCX and INTC.
Another semi player under pressure is Integrated Device Technology (IDTI 13.10 -0.55) despite it having reaffirmed previous guidance. Specifically, the company said it continues to expect Q2 (Sep) revenues to be flat to down 4% from last quarter's $83 mln, implying a range of $79.7-83.0 mln. The current Reuters Research consensus calls for revenues of $82.3 mln.
And more semiconductor news... Applied Micro Circuits Corporation (00C0 5.88 -0.05) announced that it has signed a definitive agreement to acquire JNI (JNIC 6.86 +1.07). Under the terms of the agreement, AMCC will pay $7.00 per share in cash for each outstanding share of JNIC common stock for a total of approximately $190 mln, and will assume all outstanding employee stock options. The acquisition is expected to close in the fourth quarter of calendar 2003.
In non-tech developments, coffee king Starbucks (SBUX 27.65 +0.01) reported a 9% increase in comparable store sales for the month of August. August consolidated net revenues of $335 mln shaped up for a 26% increase compared to last year's revenues of $265 mln for the same time period.
There are no earnings reports of note tonight or tomorrow. However, tomorrow's Economic Calendar includes announcements such as the Personal Income and Spending report for July at 8:30 ET, the revised reading for the August Michigan Sentiment report at 9:45 ET, and the Chicago PMI for August at 10 ET. The economic reports are bound to be the driving forces behind the trading action in tomorrow's session, which can be expected to be relatively unexciting ahead of the long Labor Day weekend.
For more detail on these, and other developments, be sure to visit Briefing.com's In Play and Guidance pages.-- Victoria Glikin, Briefing.com
5:17PM Novellus expects Q3 shipments of $210 mln, in line with prior outlook (NVLS) 40.85 +0.15: -- Update --
5:12PM Novellus says it sees a "steady increase" in bookings going forward (NVLS) 40.85 +0.16: -- Update -- On call, NVLS says the bulk of that increase will lie in 300 mm... NVLS is down 1.08 to 39.77 in the after hours
4:53PM Novellus comments on industry/geographical conditions (NVLS) 40.85 +0.15: -- Update -- On call, NVLS says it is "remains cautious" and not looking for a "hockey-stick shaped" recovery, but rather a "sustained" recovery... NVLS believes it is in the midst of a pick-up... Management says Japan is strong, Europe is showing some strength, and the "rest is flat."
4:39PM Novellus guides in line for Q3 (NVLS) 40.85 +0.15: -- Update -- On its call, NVLS says it sees revenues of $215-220 mln (consensus of $220 mln), bookings of $220 mln, and breakeven in Q3 (consensus of breakeven)... During its Q2 (June) call, management said it saw revs of $220 mln, bookings of $220 mln, and breakeven.
4:35PM Integrated Device reaffirms (IDTI) 13.65 0.50: Company issues in line preannouncement for Q2 (Sep), reaffirms revenues will be flat to down 4% from last quarter's $83 mln, this equates to $79.7-83 mln, Reuters Research consensus is $82.3 mln.
4:04PM JNI Corp being bought by AMCC for $7 cash (JNIC) 5.79 +0.02: Applied Micro Circuits (AMCC 5.93 -0.05) has signed a definitive agreement to acquire JNIC, which provides Fibre Channel hardware and software products that form critical elements of Storage Area Networks (SANs). AMCC will pay $7.00 per share in cash for each share of JNI for a total of approximately $190 million.
12:40PM Symantec tgt raised to $64 at Prudential (SYMC) 56.37 +0.07: Prudential raises their target to $64 from $54, as firm believes SYMC should be able to sustain its 28x multiple (or higher) based on likely near-term positive revisions to Q2 and FY04 est; in addition, firm expects SYMC to benefit disproportionately from reactive spending increases resulting from the late summer rash of virus attacks due to its share leadership in the sector and its high exposure to the consumer segment, where security penetration is the lowest.
11:47AM CCMP turns lower amid unsubstantiated market chatter 64.49 -0.11: CCMP has come under pressure intraday breaking down to new session lows just as the market has started to lift. Apparently some investors are hearing that Marketech is starting to represent Ashland and that this may have an impact on Cabot. However, we are hearing from a sell side desk that Marketech is a distributor (just like Metron used to be until recently) and should not have issues representing both the companies. If the relationship is terminated, it could be more due to Cabot's preferences... CCMP shares have fallen a point over the past 20 minutes.
9:42AM WDC gaps higher on news Read-Rite will be accretive ahead of plan 11.25 +1.75: Although most analysts surprised by this news, seems that the majority continue to maintain a cautious view based on valuation. However, hearing that Craig-Hallum is out with an upgrade to Buy from Neutral with a $17 tgt. |
