Technology and commodities have moved this market lately and we think that it is important to watch over the generals in the sectors to get an idea of where the general market is headed. Apple (AAPL) has been one of the leaders and continues to be so. Investors should pay careful attention to which way this one is moving as it should foreshadow moves that the general market will make. It led the way up earlier this year, then down and once again finds itself leading the charge higher.
We have economic news out today, and it is as follows (data set - consensus):
MBA Mortgage Index- N/A
GDP - Second Estimate - 1.6%
GDP Deflator - Second Estimate - 1.6%
Pending Home Sales - 0.0%
Crude Inventories - N/A
Fed's Beige Book - N/A
Looking at Asian markets we see markets are mixed:
All Ordinaries - down 0.13%
Shanghai Composite - down 0.96%
Nikkei 225 - up 0.40%
NZSE 50 - down 0.02%
Seoul Composite - up 0.64%
In Europe markets are lower:
CAC 40 - down 0.54%
DAX - down 0.61%
FTSE 100 - down 0.52%
OSE - down 0.02%
Lexmark (LXK) announced yesterday that they were going to sell some 1,000 patents which deal with their inkjet segment and lay off about 13% of their workforce. The company wants to focus on their imaging and software business since printer sales have fallen along with ink cartridge sales as both the commercial and consumer segments are cutting back on printing as new technology changes old patterns. We have been bearish here, and apparently the company itself is now too, so there is no need to wait around and see if they can pull this transition off, especially after shares finished up $2.61 (13.73%) to close at $21.62/share yesterday - seems a bit rich to us.
The fact that Lexmark is getting out of the business is just another reason to dislike Hewlett Packard (HPQ), not a reason to like to it. We are on record as not liking HP as they are under pressure on many fronts (think PCs, laptops and printers/cartridges) and will need to remake the company. This is an old tech company and it will take some time and a lot of money to truly morph into a new tech company. The company is going to try and move into the higher margin customer service areas like IBM has done over the years, but one of the problems is that others such as IBM have already made the transition which makes HP's transition just that more difficult.
For those who do not read our commodity article we put out each day we will highlight two areas we like these days. Simply put we like oil and gold. Getting into a bit more detail we like the Utica shale play in Ohio and physical holdings of gold.
Gulfport Energy (GPOR) is a mid-sized E&P company with assets in Louisiana which provide cash flow for their exploration in shale plays and the Canadian oil sands. The company's Utica acreage can only be described as prime and is probably among the best in the wet gas window. Next quarter will deliver the knockout news - numerous new monster wells - and for those who read the conference call transcripts this can be verified already. The stock has been performing quite well lately and yesterday finished near the highs of the day.
Most investors will purchase SPDR Gold Shares (GLD) to gain exposure to gold, which we are bullish of as central banks will need to act to keep current growth rates intact and keep markets as far away from the fiscal cliffs as possible. We ourselves prefer physical holdings when it comes to precious metals, but for those seeking liquidity the 'paper' holdings work just fine - but always remember the tax implications of investing in this segment of the market as the same tax rates do not apply and there are fees you will incur.
Disclosure: I am long GPOR.