Stocks continue their oversold bounce thanks to positive pending home sales numbers and a better than expected earnings report from D.R.Horton. Car-maker Ford (F) was making headlines with a 43% jump in car sales. The dollar's retreat is giving commodities another boost for the second day in a row. In other news Punxsatawney Phil, the most famous groundhog in the world, saw his shadow this morning forecasting six more weeks of winter.
Foreign markets were mixed on Tuesday. In Asia the Japanese market led the bounce with a 1.6% rally in the NIKKEI thanks to a rebound in shares of Toyota Motors. Unfortunately for U.S. investors the bounce in Toyota didn't carry over into domestic trading. The Chinese Shanghai lost 0.2% erasing earlier gains. The Hong Kong Hang Seng gained 0.14% but on low volume. Volume will continue to slip as we get closer to the week-long Lunar New Year holiday this month.
European stocks continued their rebound for the third day in a row. Mining stocks were some of the best performers after Citigroup upgraded the sector. News that Australia had unexpectedly left rates unchanged also gave the metals a boost. The French CAC-40 led the rally with a 1.3% gain. The German DAX Gained 0.98%. The English FTSE rose 0.68%.
The National Association of Realtors (NAR) said their pending home sales report for December rose 1%. The trend has been improving for several months. Last year the November deadline for the new homebuyer tax credit created a rush of demand. Currently the new deadline is April, just before the normal residential selling season begins. In other real estate news D.R.Horton (DHI) reported its fourth-quarter earnings that crushed Wall Street's estimates. Analysts were expecting a loss of 13 cents. DHI delivered a profit of 56 cents or $192 million. Yet nearly 75% of this "profit" was due to a tax benefit. Revenues improved, closed homes jumped 36%, and new orders for last quarter surged 45%. Shares of DHI, which had about 14% short interest, are up 10.4% on the news today.
A couple of the major earnings reports today were Ford (F) and Lexmark (LXK). Ford made headlines as sales surged 25% in January. Toyota's recall due to a sticky gas pedal certainly didn't hurt. Ford announced that its SUV sales rose 15% while car sales came at +43%. Year over year comparisons for Ford will probably never be easier since January 2009 was a 26-year low for the industry. Shares of Ford are up 3.4% near $11.50 a share.
Lexmark (LXK) blew away analysts' estimates with a profit of $1.16 a share. Wall Street was expecting 62 cents. The company issued upside guidance for Q1 2010 and the stock is reacting with an 11% gain and a move toward $30 a share. Ann Taylor (ANN) also raised their guidance this morning. The company doesn't report until early March but the news was good enough to lift ANN up 18% toward resistance near $16.
In non-market news, today is "groundhog day". According to the 124-year old tradition, if a groundhog sees his shadow on this day it means there is six more weeks of winter. One of the high-profile characters of the rodent world is Punxsatawney Phil, who makes his forecast from his Pennsylvania home on Gobbler's Knob. Nearly 12,000 people braved the 18 degree weather to stand outside and await Phil's prediction this year, which is six more weeks of winter.
Currently the market is slowly making progress. The S&P 500 has been struggling with the 1100 level most of the morning. The NASDAQ is back above its 100-dma but approaching possible resistance at 2200. The Dow Industrials are up 1% and nearing the 10,300 level. The SOX semiconductor index is nearing short-term resistance at its 100-dma and the 330 level. The Dow transportation index is up 0.7% and nearing old support and new resistance near 4,000 and its 100-dma.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
The market's widespread bounce is having a similar affect on our play list. A few notable moves are FDX, which is up 1.6%. GYMB is up 2.8% and nearing its 200-dma. JPM is up 2.3% and breaking out over $40 and its 200-dma.