Mid Day Outlook: November 21, 2017

Scott GreenDaily Market Report

Mid-Morning Look
Tuesday, November 21, 17
Tuesday marked another “risk-on” day for U.S. equities, as major averages continue the bounce from a two-week slide, led by technology and health-care companies, with the tech-heavy Nasdaq Composite and benchmark S&P 500 index posting fresh record highs. All 11 industry groups advanced in the S&P early, along with record highs for the S&P SmallCap 600 and S&P Midcap 400 indexes. NASDAQ outperformance led by semiconductors (again) as the Philly Semi index (SOX) overtook its 2000 peak to trade at a fresh record today. The Dow Industrials opens with triple digits gains as investors focused on upbeat corporate earnings and still have high hopes for tax reform to further boost markets. Just an all-out jump into stocks again today as the recent “mini” pullback in broader markets over the last 2-weeks is forgotten with two days of gains to start this holiday abbreviated trading week. Outside of bonds, most asset class moving higher, including strong rallies in commodity prices (oil and gold), as the dollar pares recent gains. Lone piece of economic data today a positive with a rise in existing home sales.
Treasuries, Currencies and Commodities
·      In currency markets, the dollar index pares recent gains (up 2-consecutive days), which is helping propel commodity linked assets with both gold and oil prices moving decisively higher; OPEC Nov 30th meeting the next major catalyst for energy prices, while the FOMC rate decision (hike expected) in December could move the needle for gold. Treasury market’s fall as the yield curve continues to collapse as the 2-year yield extends its run higher, while the longer-dated bond yield move lower (2-yr yield 1.759% while 10-yr slides to 2.34%)
Economic Data
·      Existing-home sales for October rises 2% at 5.48M, topping the 5.4M estimate, while Sept. was downwardly revised to 5.37M from 5.39M; there were 3.9 months’ supply in Oct. vs. 4.2 in Sept., while inventory fell 3.2% to 1.8M homes; said 1st-time buyers 32% of total sales; all cash 20%; investors 13%; median home price rose 5.5% from last year to $247,000
·      U.S. banks and thrifts had $47.9 billion in third-quarter profits, as widening margins boosted net interest income, the Federal Deposit Insurance Corp. says in report released Tuesday. Bank revenue reached record $191.7 billion in the three-month period that ended Sept. 30, a 4.5% increase from a year earlier, pushed by higher interest income even as trading income fell slightly
Sector Movers Today
·      Semiconductors; another strong rally for semiconductors early as the Philly Semi index (SOX) earlier overtook its 2000 peak to trade at a fresh record today in a group that has been buoyed by better earnings, M&A consolidation and benefits from iPhone; ASYS delivered a FQ4 beat and provided higher-than-expected FQ1 revenue and operating margin guidance; 52-week highs for CAVM, TSM, MPWR, ON, MRVL, TXN, MU, CY and LRCX in the semi index alone today; MLNX rises as Starboard takes 9.8% stake calling shares undervalued
·      Housing & Building Products; in home improvement retail, LOW shares weak initially as 3Q results topped estimates but company failed to boost its year forecast, unlike rival HD’s beat and raise quarter last week; in homebuilders, DHI was added to US 1 and named top pick in homebuilding/products; BECNposts 52-week high after mixed Q4 (EPS miss/sales beat); SSTI slips early after Mox Reports said the shares could have 80% downside to $2-$4/share as IPO lockup expires in early December
·      Watch and jewelry names active: SIG plunges on Q3 miss and lower forecast, sending shares down as much as 19% citing its “challenging Q3” on unfavorable weather-related incidents and worse-than-expected disruptions during transition of credit services, along with anticipated sequential slowdown in comp sales; MOV reported better-than-expected 3Q sales and adj. EPS and raised its FY18 outlook above the highest estimates; overnight, was reported that Swiss watch exports in October rose at the fastest monthly pace in more than four years
·      Metals & Mining; AKS upgraded to outperform at Credit Suisse and raised tgt to $7 as its 21% FCF yield for 2018 and near-term catalysts are too compelling; for the steel sector, CSFB said despite seasonal softness, steel prices are sharply recovering from October weakness and are poised to test $650-675/ton in 1Q-18; KeyBanc with comments on carbon steel, as they maintain selective view them as U.S. sheet supply/demand momentum appears more balanced into 2018, supporting 1Q18 pricing and demand improvement, consistent with our existing view (the firm downgraded RYI to Sector Weight from Overweight, though raised RS estimates a bit following solid 3Q execution and maintain our Overweight rating/prefer STLD on the mill side
·      AKS +6%; upgraded to outperform at Credit Suisse as firm bullish on steel sector
·      CMCM +15%; rises after Q3 results, upside guidance and offers slightly higher guidance
·      CUB +16%; earnings related beat
·      JEC +9%; on top and bottom line beat for Q4 and guidance tops mid-point of estimates
·      MDT +5%; beats Q2 profit and sales estimates even though sales declined
·      MLNX +10%; as Starboard takes 9.8% stake calling shares undervalued
·      PANW +6%; raised total revenue, product revenue and billings guidance for year after beat
·      URBN +5%; reported above-consensus EPS on better-than-expected comps
·      A -2%; Q4 results topped views, but Q1 and year EPS guidance fell short of expectations
·      CPB -7%; Q1 EPS missed by 5c on weaker sales ($2.16B) and guided year outlook below views
·      CYTK -33%; as it suspends development of ALS drug tirasemtiv after Phase III trial failed
·      LOW -1%; 3Q results topped estimates but company failed to boost its year forecast like HD
·      QD -13%; as Chinese online lenders fall after NTES said the country has decided to immediately suspend approvals for new online micro-lenders – also reports that Qudian suffered a data breach that exposed information related to millions of student users.
·      SIG -25%; plunges on Q3 miss and lower forecast
·      Black Knight (BKI) 7M share Spot Secondary priced at $45.50
·      Paylocity (PCTY) 1.3M share Block Trade priced at $47.25
·      Performance Food Group (PFGC) 5M share Spot Secondary priced at $28.25
·      Zayo Group (ZAYO) 4.7M share Block Trade priced at $36.00



Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

Live Trading

Open an Account

Paper Trading