Technology sectors along with financials lead sector declines after an earnings warning from Motorola (NYSE:MOT) $8.43 -5.28% brings in further profit taking in today's session, while news out of mortgage lender Freddie Mac (NYSE:FRE) $52.42 -12.4% that its Board of Directors terminated its former President/COO David Glenn, and accepted the resignation of it President/CFO Vaughn Clarke.
Freddie Mac's (FRE) Board said that Mr. Glenn was terminated because the Board viewed Mr. Glenn's timeliness and completeness of his cooperation, or lack thereof, with the Board's Audit Committee as troubling. In January of this year, FRE's Board began reviewing the facts and circumstances surrounding the principal accounting error identified dure a restatement of financials process. Freddia Mac said today that it has informed its regulator OFHEO, the SEC and the NYSE about matters described in the release.
The shakeup in Freddie Mac's top management has brought selling into the financial sectors with the S&P Banks Index (BIX.X) 304.30 -2.29% seeing selling on thought that trouble for Freddie Mac, which purchases single-family and multi-family residential mortgages from banks that have originated many of the mortgages, could hamper liquidity for many of the regional banks. Also weak are the larger banks found in the KBW Bank Index (BKX.X) 857.85 -1.53%.
With weakness in financials and the S&P Banks Index (BIX.X) we were looking for a short/put in the broader S&P 500 Index (SPX.X) this morning on a break below the 982.00 level with a near-term downside target of WEEKLY S1 of 965. With market internals still having shown strength, I'm still assessing upside risk to a minimum of 997 from our WEEKLY pivot analysis retracement.
Technology sectors are showing weakness today after Friday's reversal of fortune with the Biotechnology Index (BTX.X) 467.21 -3.23% leading sector declines. Protein Design Labs (NASDAQ:PDLI) $17.38 -7.8% leads the index component loser list. Shares of past bullish profiled and SPECULATIVE biotech Geron (NASDAQ:GERN) $6.60 +12.4% buck the sector trend after Rodman & Renshaw initiated coverage with a "market outperform" rating after Phase I and II clinical trials for its cancer vaccine targeting telomerase, a protein highly expressed and specific for cancer cells, has shown strong preliminary safety and efficacy results in hormone refractory metastatic prostate cancer patients. Rodman & Renshaw thinks GERN could exceed its $9 price target due to near-term news flows as well as potential for a partnering agreement with big Pharmaceutical/biotechnology companies.
On Thursday, I profiled shares of Human Genome Sciences (NASDAQ:HGSI) $15.30 -4.25% as bullish on a trade at $16.00 and the stock exhibits weakness today with the Biotechnology Index (BTK.X). I remain bullish the stock on a technical basis with originally profiled stop of $14.00.
Sector strength in this morning's trade is limited with only the Health Providers Index (RXH.X) 280.47 +0.36% and Gold/Silver Index (XAU.X) 77.35 +0.35% showing gains.
Economic data release at 10:00 AM EST had April wholesale inventories falling 0.1%, which was below economists' forecast for a 0.2% gain.
Current levels of trade finds the Dow Industrials (INDU) 9,007 -0.6%, S&P 500 Index (SPX.X) 978.10 -0.97%, S&P 100 Index (OEX.X) 492.15 -0.71%, NASDAQ-100 Index (NDX.X) 1,195.91 -1.38% and its Tracking Stock (AMEX:QQQ) $29.74 -1.26% lower by $0.39.