Trading Blog

The Markets This Week  August 20, 2017 - 9:53am

Markets tried to rally Friday after Thursday's drop but they failed to hold gains and ended generally flat. The SPY could very easily go down and test 240 and if the QQQ breaks 139.68 it could visit 136. With the VIX still pounding against the key level of 16.25 it appears that there is still some fear out there. This week I am looking to see if buyers come in and if they don't we could easily test recent lows. 

Deere & Co. (DE)  August 20, 2017 - 9:46am

Shares of Deere & Co. dropped over 5.0% Friday, after a fiscal third-quarter profit beat was offset by a sales miss. The maker of construction and farming equipment said net income for the quarter to July 30 rose to $641.8 million, or $1.97 a share, from $488.8 million, or $1.55 a share, in the same period a year ago. The FactSet consensus for earnings per share was $1.93. Total revenue rose to $7.81 billion from $6.72 billion, missing the FactSet consensus of $7.90 billion. Agriculture and turf sales rose 13% to $5.34 billion, below the FactSet consensus of $5.42 billion, while the 29% jump in construction and forestry revenue to $1.50 billion matched expectations. Deere expects 2017 agriculture and turf sales to rise about 9% from last year, while construction and forestry sales is projected to increase 15%. "We are seeing higher overall demand for our products with farm machinery sales in South America experiencing strong gains and construction equipment sales rising sharply," said Chief Executive Samuel Allen. This move broke the recent uptrend.

Ross Stores Inc. (ROST)  August 20, 2017 - 9:43am

Shares of Ross Stores Inc. moved up over 10% Friday after the retailer reported second-quarter earnings and sales above Wall Street expectations and forecast sales and earnings growth for the second half of the year and for the full fiscal year. Ross said it earned $317 million, or 82 cents a share, in the quarter, compared to $282 million, or 71 cents a share, in the prior-year quarter. Sales rose 8% to $3.43 billion, from $3.18 billion a year ago. Analysts polled by FactSet had expected earnings of 76 cents a share on sales of $3.37 billion. Comparable-store sales were up 4% on top of 4% growth last year, the company said in a statement. An operating margin of 14.9% outperformed the company's projections, "mainly due to a combination of higher merchandise margin and leverage on our above-plan sales gains," Ross said. Ross forecast same-store sales gains between 1% and 2% in the third quarter, and third-quarter per-share earnings to be between 64 cents and 67 cents, up from 62 cents a share in the third quarter of 2016 and compared with analyst expectations of 67 cents. The company forecast fourth-quarter same-store sales growth of 1% to 2%, with per-share earnings between 88 cents and 92 cents. Based on the results for the first half of the year, the company guided for fiscal 2017 per-share earnings to rise 12% to 14% to between $3.16 and $3.23. The analysts surveyed by FactSet expect full-year EPS of $3.17 for Ross. There needs to be a continuation of this move to break the downtrend in price.

Estee Lauder (EL)  August 20, 2017 - 9:41am

Estee Lauder Cos. shares 7.3% Friday after the beauty company reported fiscal fourth-quarter earnings and revenue that beat estimates. Net income was $229.0 million, or 61 cents per share, up from $94.0 million, or 25 cents per share, for the same period last year. Adjusted EPS was 51 cents, beating the 43 cents per share. Sales totaled $2.89 billion, up from $2.65 billion and ahead of the $2.85 billion FactSet consensus. Skin care sales were $4.52 billion, with La Mer showing double-digit gains. Makeup sales were $5.05 billion, driven primarily by incremental sales of Too Faced and Becca, which were acquired in the second quarter, and double-digit increases in brands including Tom Ford and Smashbox. The company expects fiscal first-quarter sales to increase 9% to 10%. EPS is expected to be between 85 cents and 89 cents, and adjusted EPS is expected to be between 94 cents and 97 cents. The FactSet consensus is 91 cents. EL has room to 111.00 at the 161.8 extension.

The Markets This Week  August 13, 2017 - 10:33am

Markets experienced a soft bounce Friday after selling hard on Thursday. Realistically all the bounce did was stop the bleeding but did not indicate buyers were ready to jump back in pushing the indexes higher right away. In these instances where it is not easy to tell if the move is a technical one or one based on news it is sometimes best to sit and wait to see how things shake out. Markets could just as easily push down through support as easily as they could bounce.

J.C. Penney Co. (JCP)  August 13, 2017 - 10:29am

J.C. Penney Co. Inc. dropped more than 16% in Friday trading after the retailer reported second-quarter losses that exceeded expectations. J.C. Penney reported a net loss of $62.0 million, or 20 cents per share, after a loss of $56.0 million, or 18 cents per share, for the same period last year. Adjusted losses were 9 cents per share, wider than the FactSet consensus for a 4-cent loss. Sales were $2.96 billion, up slightly from $2.92 billion, and ahead of the FactSet consensus of $2.84 billion. Same-store sales fell 1.3% for the quarter. Nearly all categories had improved sales results, according to Chief Executive Marvin Ellison, and the company liquidated inventory in 127 of its closing stores, which had an impact on earnings and margins. Inventory was $2.8 billion at the end of the second quarter, a 6.8% decline year-over-year. J.C. Penney reaffirmed its full-year 2017 outlook, expecting adjusted EPS of 40 cents to 65 cents and same-store sales between a 1% decline and 1% increase. The FactSet consensus is for EPS of 49 cents. Shares had started a comeback after the previous earnings report but now sit at a three year low.

Snap Inc. (SNAP)  August 13, 2017 - 10:26am

Snap Inc. Chief Executive Evan Spiegel made an important promise to investors Thursday, but that wasn’t enough to overcome disappointing quarterly earnings and declining ad rates that pushed the young public company’s shares toward new lows. Spiegel told investors on Thursday’s earnings conference call that he and co-founder Bobby Murphy would not sell any Snap shares this year, as expiring lockups allow early investors and employees to cash in after the company’s initial public offering. The two executives hold more than a quarter of the company’s stock — roughly 188 million shares, according to FactSet — so the promise to hold the stock could ease fears of a flood of fresh shares hitting the market, as it did for rival Facebook Inc. when CEO Mark Zuckerberg made a similar oath amid early struggles. Any relief from Spiegel’s promise did not last long, however. It was sandwiched between the announcement of quarterly earnings that missed expectations across the board and a disclosure in the conference call just minutes later that Snap’s average ad prices declined in the second quarter as a result of a new approach to selling ads for the Snapchat app. SNAP has been in a downtrend since the IPO date.

Nvidia Corp. (NVDA)  August 13, 2017 - 10:22am

On the anniversary of the earnings report that jump-started Nvidia Corp.’s AI-fueled boom, the chip maker is feeling the weight brought on by higher expectations. Nvidia’s second-quarter results beat overall expectations Thursday, thanks to a boost in sales of its chips to digital currency miners. But Nvidia stock did not respond positively after the report, falling more than 5% in Friday's trading. The culprit appeared to be the business that has shown the most progress in the past year, graphics chips designed for data centers. While that segment soared 175% from the same quarter a year ago, it grew only 2% on a sequential basis to $416 million. While that beat average analyst estimates of $401 million for the server business, it didn’t reach the whispered expectations on Wall Street. Bernstein Research analyst Stacy Rasgon said he believed some investors and buy-side analysts were looking for sales in the data-center business of about $430 million. “I am sure the buy-siders were hoping for more,” Rasgon said in an email. NVDA could find support at 152.00.

The Markets This Week  August 6, 2017 - 8:34am

The SPY has closed below its open eight of the last nine trading days and the QQQ has done the same the last five of seven days. Both of these indexes have been consolidating while the IWM has traded down and just tested recent lows at 139. The markets are bullish with their trend but it doesn't appear anyone is interested in buying the markets here. As I said last week I would not be surprised if we get a pull back in the SPY to the 243 area. For this week look to see if we can get some buyers off an open and if not 246 is our next key support level on SPY.

Fitbit Inc. (FIT)  August 6, 2017 - 8:23am

Fitbit Inc. shares rallied about 15% Thursday, as analysts weighed in on the fitness-tracking device maker’s better-than-expected second-quarter earnings and news that its smartwatch will hit stores in time for a crucial selling period. “With channel inventory now at manageable levels (8-12 weeks), we believe FIT is positioned to participate with industry growth (18% according to IDC in 1Q17),” Benchmark analyst Scott Searle wrote in a note. “Importantly, the company provided the initial timeline for its smartwatch introduction which is expected in time for the holiday selling season.” Fitbit’s fortunes have waxed and waned since it went public in June of 2015, as demand for its devices has fluctuated. Experts say that’s because trackers have failed to cement a position in the eyes of the public as a must-have item, instead of an accessory that drifts in and out of fashion. The stock is trading at just below $6, well below its IPO price of $20. The company posted its first quarterly loss in the fourth quarter after sluggish holiday sales, and has not returned to profitability since then. The next upside level to watch here is around 6.40.

Tesla (TSLA)  August 6, 2017 - 8:18am

Wall Street is celebrating Tesla Inc.’s better-than-expected quarterly results, but the company’s spending needs still are a top worry, leading to fresh chatter among analysts that the electric-car maker is likely to tap capital markets again. Shares on Thursday rose nearly 7% higher to around $347 after Tesla TSLA, +2.83%  late Wednesday posted a smaller-than-anticipated loss and higher-than-expected revenue. Yet concerns about another potential capital raise aren’t going away. Positives in the latest updates include the mass-market Model 3 sedan’s production starting as planned, and Model S pre-orders coming in at about 500,000 — up from a prior level of 373,000, said Efraim Levy, senior equity analyst at CFRA Research, in a note. “However, while cash increased to $3 billion at quarter-end, we think that is timing related and that second half spending will be an above-consensus $2 billion, and could likely necessitate a capital raise in 2018,” wrote Levy, who has a sell rating on the stock. The CFRA analyst lowered his rating to sell from hold in February, citing execution risks and other issues. With the push through 356 TSLA could be headed back to 387.

Apple Inc. (AAPL)  August 6, 2017 - 8:13am

Apple Inc. dampened fears about slow iPhone sales and potential delays of its next smartphone with its quarterly earnings report Tuesday, sending shares soaring to levels that would be record highs. Investors and analysts were concerned that consumers were avoiding purchases of iPhones, after Chief Executive Tim Cook admitted in a May conference call that there was a “pause” in iPhone sales amid heavy publicity for the 10th-anniversary iPhone. There have also been reports that a high-end iPhone rumored for release this year has hit production problems that would keep it from reaching prospective buyers before Apple’s fiscal year ends at the end of September. AAPL ended the week dancing around gap support at 156.16.

The Markets This Week  July 30, 2017 - 10:51am

As I said at the beginning of last week the stocks are currently moving the markets as opposed to the markets moving stocks. This is what will happen when we get into the meat of earnings season. This week we need to see if the markets continue this mini slide and maybe give us better buying opportunities.

Expedia Inc. (EXPE)  July 30, 2017 - 10:40am

Shares of Expedia Inc. were up 3.4% Friday after the company beat second-quarter revenue expectations on Thursday. It reported net income of $56.7 million, or 36 cents per share, up from $31.6 milion, or 21 cents per share, in the year-earlier period. It reported adjusted earnings per share of 89 cents, below the FactSet consensus of 94 cents. Revenue was $2.59 billion, up from $2.2 billion in the year-earlier period and above the FactSet consensus of $2.55 billion. Alongside the earnings, Expedia announced a $350 million minority investment in Traveloka Holding Limited, a Southeast Asian online travel company. EXPE has room to 165.56 at the 161.8 extension.

Starbucks (SBUX)  July 30, 2017 - 10:32am

Starbucks Corp. shares dropped more than 9% Friday heading to a four-month low after the coffee company reported third-quarter revenue that missed expectations. Sales for the quarter totaled $5.66 billion, below the $5.76 billion. Starbucks shares were downgraded to hold at Stifel, according to FactSet. Wells Fargo maintained its overweight rating, on the other hand, based on factors like its loyalty program and strong execution on initiatives including food and tea, which positions the company to reaccelerate growth. "While Starbucks has been (and to a large extent continues to be) immune to the broader retail challenges in the U.S., clearly the breadth and reach of the retail headwinds are increasingly impacting Starbucks," analysts led by Bonnie Herzog said. The stock could find some support here near the 161.8 extension at 52.78.