After a moderate gap down to open the day indexes traded in a narrow range as most seem to be waiting for Yellen testimony; bulls yearning for her to ride in on a white horse and bears remembering how central bankers have chopped their heads off constantly for 6 years. We’ll see if any such drama hits tomorrow. The S&P 500 fell 0.07% while the NASDAQ dropped 0.35%.
“There’s a real likelihood that she comes out and acknowledges the weakness in the economy here and overseas,” said Robert Pavlik, chief market strategist at Boston Private Wealth. “I think that will be taken by the market as a positive.” “There could be some growing optimism ahead of Janet Yellen’s testimony. She has in the past had the ability to push markets higher, although that’s diminished in recent years,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. Randy Warren, chief investment officer at Warren Financial Service, said “there is a good chance that Yellen says ‘we’re not remotely close to our 2 percent inflation target.” “People don’t want to get caught short.”
Even if the longer term direction is down, these downside gaps as you see in the NASDAQ chart (when the market gaps overnight leaving a space in the chart) work just like upside gaps – they eventually get filled. And the ones created to the downside usually get filled much quicker than ones to the upside (unless its a 2000 or 2008 situation). Therefore a move up to 4350 in the NASDAQ sooner rather than later would seem appropriate but again it means nothing longer term.
For such a modest down day in the indexes you see a quite dramatic drop in the NYSE McClellan Oscillator.
Stop me if you’ve heard this one before… oil fell sharply.
A lot of weakness overseas as well – yesterday we pointed out the German DAX; today the Japanese Nikkei. Yields on 10 year bonds in Japan turned negative for the first time ever.
LinkedIn (LNKD) is amazingly back to the century mark! This was a stock near $260 three months ago. Wow.
Here are some individual charts per MarketSmith:
It’s difficult to see on the chart since the stock price is so low but Chesapeake Energy (CHK) fell some 30%+ yesterday on a cut of their debt rating. This is the 2nd largest producer of natural gas in the U.S.
Salesforce.com (CRM) is one of these tech stocks completely crushed in this selloff but today was a nice rare day as the stock was upgraded by Jeffries. For those of you who used more advanced technical analysis it had also crashed through its lower Bollinger Band lately which the MarketSmith charts show.
All these other names have earnings in after hours.
Shares of Disney (DIS) fell 3% despite reporting better-than-expected first-quarter earnings and revenues. The entertainment pioneer behind the latest “Star Wars” film reported earnings of $1.63 per share on revenue of $15.24 billion, excluding items. That was higher than the $1.45 per share on $14.75 billion forecast by analysts. Though CEO Bob Iger told CNBC there’s been an uptick in ESPN subscribers and an expansion to digital streaming within the company, a year-over-year decline in operating income across Disney’s cable networks fueled investor worries.
We’ve seen a lot of enormous blowups this earnings season and you can add SolarCity (SCTY) to the list – down over 30% in after hours. The company reported a loss of $2.37 per share, excluding items, on revenue of $115 million, in the latest quarter. Earnings were higher than the $2.59 loss on $106 million expected by analysts, but the company said it would revamp its guidance process after falling short of installation goals.
Panera Bread (PNRA) is up 2.5% in after hours. The quick-service chain reported better-than-expected earnings of $1.88 per share, beating estimates by 10 cents, excluding items. But revenue fell slightly short of estimates, hitting $692 million in the latest quarter, versus the $695 million expected.