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Thursday, August 22, 2013

THURSDAY'S MARKET: You Got the Green Light!

green street light
Markets across the globe are higher today and for good reason. The data, yes the real data, is indicating the global economy is improving. Manufacturing measures across a span of critical regions are all improved, as was reported today (find the details herein). One voice could sour the mood though, with the potential replacement for Fed Chief Bernanke speaking in Jackson Hole. One thing’s certain to me though, the devil I know (Yellen) is preferred over the one the President wants us to buy into (Summers). I expect the market will get behind that argument as well, and so when Yellen speaks, stocks should rise. For more in-depth analysis and research visit our stock market blog.

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Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Green Light Flashes


Market ETF
August 22, 2013
Year-to-Date
SPDR S&P 500 (NYSE: SPY)
+0.7%
+16.4%
SPDR Dow Jones (NYSE: DIA)
+0.4%
+14.3%
PowerShares (Nasdaq: QQQ)
+0.9%
+16.9%

After a tough time of late, stocks are seeing green today on a slew of good economic news from both the U.S. and abroad. Economic activity really does seem to be picking up into Q3, as evidenced by the first Leading Economic Indicators Index for the period and a series of PMI data points spanning the U.S., Europe and China. Who are we to stand in the way; stocks have real reason for this move.

Economic Events

ECONOMIC REPORT SCHEDULE

Economic Data Point
Prior Period
Expected
Actual
THURSDAY



53.2
53.5
53.9
+0.7%
+0.6%
+0.7%
-26.6

-28.8
323K (R)
329K
336K
+65 Bcf

+57 Bcf
0.0%
+0.5%
+0.6%
6
5
8







No matter what data comes to wire, this day and the next hinge on what is said in Jackson Hole at the Kansas City Fed’s annual symposium. Investors will be anxiously awaiting the words of one candidate to replace Fed Chief Bernanke, when Vice Chair Janet Yellen gives the keynote. It’s my view that the market favors Yellen to replace Bernanke, versus the apparent presidential favorite (in my estimation), Summers. Summers is outspoken and confident, and could disrupt the current Fed flow and understanding of things. There’s wisdom garnered from being on top of things that Summers just cannot have from the outside looking in. The market is justified to worry about what Summers may seek with regard to expediting Fed braking of the economic aid.

The day’s economic data offered good news this morning, with three premarket releases showing economic improvement and the rest of the flow favoring stocks. The weekly jobless count had a high bar set after last week’s low reading for new jobless claims. The weekly count of new unemployment benefits filers just edged up slightly to 336K. The flow simply continues to reflect the ongoing improvement of the global economy and also seasonal factors here in the late summer holiday season. In other words, while there’s no fire alarm to worry about, neither should we read too much into the slow flow of claims.

Markit Economic reported its PMI (Flash) Manufacturing Index, which is the first reading of the latest period; it gets revised later on. This latest reading was not only better than the last measurement, but it also exceeded economists’ expectations. Also, at 53.9, it sits more comfortably above break-even (50.0) now and offers some support to manufacturers’ shares.

The Leading Economic Indicators Index (LEI) for the first month of the third quarter (July) came in better than expected at 0.7% growth. It also offered support to the Fed and economists’ arguments that second half GDP growth will be better than the first half slowdown. To help you understand how comforting this data point was, June’s reading marked no change.

The FHFA says home prices continued to rise, this time by 0.7% for June. However, it’s July and August we are most worried about given the increase in mortgage rates since the start of May and the seasonal shift out of the buying season. So while homebuilders are rising again, we would not put money to work there beyond day-trading play dough (if that). The SPDR Homebuilders (NYSE: XHB) is up 1.3% intraday Thursday.

The consumer mood is fading a bit here, as evidenced today by the Bloomberg Consumer Comfort measure for the latest week. It fell to -28.8 from -26.6 the week before. My feeling here is that when people don’t spend money, they may say it’s because sentiment is lower. However, I believe this is just the lull before the back-to-school storm that is just gaining steam now. When they are spending again and finding deals of all sorts, they’ll (the surveyed) say they’re feeling better about the state of affairs.

Overseas Markets

EUROPE
9:16 AM
ASIA/PACIFIC
CLOSE
EURO STOXX 50
+1.4%
NIKKEI 225
-0.4%
German DAX
+1.3%
Hang Seng
+0.4%
CAC 40
+1.1%
S&P/ASX 200
-0.5%
FTSE 100
+0.9%
Korean KOSPI
-1.0%
Bloomberg GCC 200 Mideast
+0.2%
BSE India SENSEX
+2.3%

It’s a day of recovery for international markets, especially India, which is bouncing today. Still, when capital really does start flowing out of emerging markets and into developed ones, this latest blip will carry heavier weight. Over the long-term, global economic health is certainly a positive for the suppliers of labor and resources, and that means the BRICS. In other words, sell the BRICS short-term and buy them back later for the long-term. The SPDR S&P BRIC 40 ETF (NYSE: BIK) is up 1.9% so far today.

Europe is hyped today on strong PMI data from Markit Economics. Euro-zone PMI improved to its highest level since June 2011, and that is definitely great news. This is the sole reason for the regions’ broad share gains today. More good news came in the data covering China, as the relative PMI rose above 50 there, showing stabilization in yet another critical communal cog.

Commodity Markets (9:04 AM ET)

WTI Crude
+0.1%
Brent Crude
-0.1%
NYMEX Natural Gas
+1.5%
RBOB Gasoline
+0.3%
Gold Spot
+0.5%
Silver Spot
+1.5%
COMEX Copper
+1.4%
CBOT Corn
-1.0%
CBOT Wheat
-0.5%
CBOT Soybeans
-1.0%
ICE Cocoa
+1.0%
ICE Sugar
-0.1%
ICE Orange Juice Conc.
+0.8%
CME Lumber
-0.4%
CME Live Cattle
-0.0%

The precious metal play is gaining steam, with money moving back in heavier and faster, and even reaching as far down the channel as the miners at this point. I like the sector short-term, but global economic data flow indicates gold has a ceiling, and stocks will get further support before long. Then comes Iran when all bets are off.

Corporate Events

GameStop (NYSE: GME), a name I once covered and also recently recommended, is soaring today (+12%) on its results. During every gaming cycle lull, investors question if this will be the one in which the retailer finally sees market share loss from digital downloading. Every cycle, GameStop shuts those doubters up. And guess what, when the digital download really does gain steam, GameStop will be there, as indicated by its expansion into the business recently.

Sears (Nasdaq: SHLD) is languishing today (-8%) on a poor report, but the company is in the process of change, becoming a membership mainly retailer ala Sam’s Club and Costco (Nasdaq: COST). As we know, that model actually works for some, so we are going to take a look at SHLD on this weakness and get back to you.

REPORTING EARNINGS
Company
Ticker
THURSDAY

Aeropostale
NYSE: ARO
Abercrombie & Fitch
NYSE: ANF
Aruba Networks
Nasdaq: ARUN
Dollar Tree
Nasdaq: DLTR
GameStop
NYSE: GME
The Gap
NYSE: GPS
Hormel Foods
NYSE: HRL
Marvell Technology
Nasdaq: MRVL
Nordson
Nasdaq: NDSN
Pandora Media
NYSE: P
Akers Biosciences
Nasdaq: AKBS
Stage Stores
NYSE: SSI
Stein Mart
Nasdaq: SMRT
Trans World Entertainment
Nasdaq: TWMC
Kirkland’s
Nasdaq: KIRK
Patterson Companies
Nasdaq: PDCO
Children’s Place
Nasdaq: PLCE
Lancaster Colony
Nasdaq: LANC
Sears
Nasdaq: SHLD
Perry Ellis
Nasdaq: PERY
Cyberonics
Nasdaq: CYBX
ScanSource
Nasdaq: SCSC
Buckle
NYSE: BKE
MICROS Systems
Nasdaq: MCRS
John B Sanfilippo
Nasdaq: JBSS
DFC Global
Nasdaq: DLLR
Immunomedics
Nasdaq: IMMU
Harris Interactive
Nasdaq: HPOL
Solera
NYSE: SLH
Mentor Graphics
Nasdaq: MENT
New York & Company
NYSE: NWY
Autodesk
Nasdaq: ADSK
Sprouts Farmers Market
NYSE: SFM
Ross Stores
Nasdaq: ROST

MOST ACTIVE STOCKS
BIGGEST GAINERS
% Gain
Genetic Technologies (Nasdaq: GENE)
+23%
SunEdison (Nasdaq: SUNE)
+19%
Globus Maritime (Nasdaq: GLBS)
+14%
XOMA Corp. (Nasdaq: XOMA)
+7%
China Commercial Credit (Nasdaq: CCCR)
+11%
GameStop (NYSE: GME)
+14%
Banco Bradesco (Nasdaq: BBDO)
+12%
Genco Shipping & Trading (NYSE: GNK)
+11%
Intelligent Systems (NYSE: INS)
+11%
Direxion Daily India Bull 3X (Nasdaq: INDL)
+11%
BIGGEST LOSERS
% Drop
Crumbs Bake Shop (Nasdaq: CRMBU)
-20%
ValueVision Media (Nasdaq: VVTV)
-19%
Abercrombie & Fitch (NYSE: ANF)
-18%
Hewlett-Packard (NYSE: HPQ)
-13%
Noah Holdings (Nasdaq: NOAH)
-9%
Bon-Ton (Nasdaq: BONT)
-9%
Taomee Holdings (Nasdaq: TAOM)
-4%
eFuture Information Technology (Nasdaq: EFUT)
-5%
Valley Financial (Nasdaq: VYFC)
-8%
Direxion Daily Gold Miners Bear (Nasdaq: DUST)
-7%

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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