Intraday Market Update
The equity markets are mixed in trading today as a favorable durable goods report and a jump in new home sales are being offset by evolving uncertainty in Greece and negative reactions to earnings reports. Greece formally requested activation of its emergency loan package this morning which narrowed the premium between the 10-year Greek/German bonds to 490 bps, down from record highs around 590 earlier this week. All of the indices are teetering between positive and negative territory as the bulls and bears continue their fight.
There may be a bearish megaphone pattern forming (or reverse symmetrical triangle) on the intraday S&P 500 chart since Tuesday (see SPX chart below). A megaphone top is formed because the stock makes a series of higher highs and lower lows. The megaphone top usually consists of three ascending peaks and two descending troughs. The signal that the pattern is complete occurs when prices fall below the lower low. It doesn't appear that the third ascending peak or the second descending trough have formed yet, which probably signals more whipsaws ahead in the coming days. This is a shorter term signal which could provide direction of price action next week
In economic news, new orders for durable goods in March dipped -1.3% after gaining a revised +1.1% in February. The headline number came in well below market forecasts for a +0.4% rise, however, aircraft orders pulled down the number. Stripping out transportation new durables spiked +2.8% so the report looks strong.
The pending expiration of government stimulus for homebuyer tax credits lifted new home sales in March. New home sales surged +26.9% to an annual rate of 411,000. Supply on the market eased to 6.7 months from 8.6 in February. However, prices curiously declined with the median dropping to $214,000 from $221,600 in February, while the average price dropped to $258,600 from $290,900. Although inventories were worked off, mainly from the government tax credits, it begs the question whether or not the incentives are simply pulling purchases by the consumer forward which will likely depress future new home sales.
In earnings news Microsoft, Amazon, and Honeywell International all topped the Streetâ€™s profit projections, but shares are under pressure, while Travelers Companies missed and issued a disappointing outlook. Microsoft offered the usual inline quarterly report noting that revenue has been driven by strong demand for Windows 7. Shares of MSFT are down by almost -2%. On its conference call MSFT's CFO said a new cycle of business IT spending is expected to start this year and should extend for several years. Amazon offered solid quarterly results free of any surprises and the company insists that sales of its Kindle eReader remain strong despite competition from the iPad. AMZN is down -4%. Hard disk manufacturer Western Digital was comfortably ahead of the Street in its Q3. WDC is up 8%.
New is not all bad on the earnings front, Capital One and Dow member American Express topped analystsâ€™ forecasts. Shares of both companies are headed higher after their quarterly reports showed the credit card issuers are turning the corner on credit losses. Similar to other financial institutions reporting over the last two weeks, credit metrics from both firms are showing distinct improvement. AMEX's loan loss provisions are declining, down nearly -50% compared to last year's levels, while COF's net charge-offs are trending downward. Visa and Mastercard are both up on the news.
Among manufacturing names, Johnson Controls met expectations in its Q2 and raised its 2010 guidance. JCI's CEO said the firm is seeing strong signs of recovery, with orders rising across all geographic regions. Ingersoll-Rand missed expectations and offered a wide range for its 2010 earnings. Rockwell Collins exceeded earnings targets. JCI is near break-even, while ROC is down -3% and IR is down -7%.
Reports have surfaced that the Senate hearings with the ratings agencies has found that they were overly influenced by Wall Street firms and they used outdated models for rating complex securities.
Commodities are higher across the board led by Natural gas (+2.35%). Front month crude is higher by +1% to $84.50 per barrel. Gold is +$10 higher to $1,153 per ounce (+.94%). Silver is higher by +1.05% and Copper has regained some its losses from yesterday, gaining +0.83%.
Stocks around the world were mixed on Friday. All major Asia-Pacific markets were lower led by declines in Honk Kong (-0.98%), China (-0.53%), and Japan (-0.32%). On the flip side all major European markets were higher led by gains in Germany (+1.57%), London (+1.03%), Spain (+0.89%), and France (+0.68%).
Core Sector List:
Overall reading: 11 sectors advancing, 5 sectors declining.
Strongest Sectors: Home Construction, Oil Services, Gold Miners
Weakest Sectors: Software, Internet, Semiconductors
S&P 500 - Daily and 30-minute Intraday Charts:
Dow Jones - Daily and 30-minute Intraday Charts:
NASDAQ - Daily and 30-minute Intraday Charts:
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