Yesterday started off quite promising as the jobs numbers both came in better than expected while the trade numbers were good as well. We were green until we were red, and stocks finished at the session's lows yesterday. One important statistic we saw was that new lows surpassed new highs in yesterday's trading which we found quite interesting and bearish.
We have economic news due out today and it is as follows:
- Export Prices - ex Agriculture - N/A
- Import Prices - ex Oil - N/A
- Michigan Sentiment - 83.0
- Wholesale Inventories - 0.4%
Asian markets finished lower:
- All Ordinaries - down 0.44%
- Shanghai Composite - down 0.12%
- Nikkei 225 - down 0.90%
- NZSE 50 - up 0.07%
- Seoul Composite - down 0.52%
In Europe markets are trading higher this morning:
- CAC 40 - up 0.05%
- DAX - down 0.53%
- FTSE 100 - down 0.17%
- OSE - down 0.06%
The story for the past few quarters in the market has been a trend which developed whereby companies beat on the bottom line by cutting expenses but miss on the top line as growth expectations have either grown slower than expected or simply stalled out. Qualcomm (QCOM) released their quarterly results which beat both estimates handily and sent shares higher by $2.55 (4.39%) to close at $60.67/share. The company also indicated that next quarter would be strong as well as their products are in high demand right now. As smartphones continue to grab market share, especially at the high end, we would expect Qualcomm to outperform.
We have watched as Sirius XM (SIRI) has backed off of highs as it has followed the general market lower during this correction. The stock is off about 10% from its 52-week high set recently and the stock should find support sometime soon as it approaches $2.60/share. If not there, we would look at the $2.50/share area which is a bit more defined. During these types of market corrections is when one want to load up on stocks where the growth story is intact and debt is being paid off. This is a growth story indeed, but it is also very much a deleveraging story as the company's cash flow increases and is used to pay down debt.
Monster Worldwide (MWW) saw shares increase in yesterday's trading by $0.58 (10.16%) as the shares closed at $6.29/share on volume of 9.4 million shares. Investors cheered as the company announced that they would seek to sell off pieces of the company now, probably in response to the fact that there were no takers for the entire entity. Management wants to restructure the company around the better units while selling the less attractive business lines. We think this adds more questions about the company rather than provides any answers but we would point out that the only sure thing here seems to be lower highs and lower lows - keeping in mind we are not far removed from the recently set 52-week low. We are still not fans of this one.
Universal Display (PANL) reported earnings which were a huge disappointment. They missed handily on both the top and the bottom lines and investors sold off the shares in yesterday's trading session. The red tape extended as shares traded down by $5.06 (17.95%) to close at $23.12/share on volume of 7.7 million shares. It seems that the consensus is that long-term the company will be fine and that it is currently facing headwinds only in the short-term, but analysts did cut their price targets considerably and there is now a lot of negative sentiment from the investment community. Negative sentiment is never good, and over the next few quarter the company will have to deliver results to regain Wall Street's faith.
In one of the strangest turn of events we have seen in the biotech and/or pharmaceutical sectors happened yesterday to BioCryst (BCRX). Shares fell $0.99 (40.35%) to close at $1.46/share after the company announced that their drug Peramivir's Phase III Trials were being terminated due to "futility" issues which is mind blowing. First the drug has been sold around the world because it helped fight influenza supposedly and even the US government purchased a stockpile and issued a special order allowing the drug to be used in special situations during the last serious breakout in America. We are left shaking our head that the U.S. government had its citizens depending upon a sugar pill to fight serious strains of influenza , and worse that after spending millions of dollars to stockpile the product that we are only now finding out that it does not work. It is a situation where one simply must shake their head.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.