Schaeffer's Trading Floor Blog

DELLicious Drop?

by 4/28/2005 9:00 AM
Stocks quoted in this article:

Earlier this month we discussed the downtrend in Dell and noted that analysts were still overwhelmingly enthusiastic both in their ratings and comments. I wanted to touch back on this because I just saw a note out from Prudential that says a compelling buying opportunity has been created by the continued decline.

Below is an updated version of the weekly chart we have been watching. Note how the shares failed to hold at what should have been support from the prior highs. Given the optimism, this is not a surprise. It is also not a shock to see the Street defend the shares here...


Created with SuperCharts by Omega Research

A check of Zacks show that 18 of the 24 analysts (75 percent) now rank DELL with a "buy" rating...

<

permanent link
Stocks quoted in this article:

Before I dig into the details of today and get swept away by the action, I wanted to throw out this thought out to ponder...

Earlier this week I touched on the black swan topic. Early this morning I was contemplating this concept in regard to bullish article on Microsoft that I noted last night.

As I reflected on the article, I realized that not too many of the analysts quoted were looking for the earnings report to have a big impact on the share price. Most appeared to be looking ahead to the next software release as the catalyst for the much awaited share boost.

The issue then becomes, is this indicative of the consensus opinion? And if so, does this open up the possibility of an earning's surprise? In other words, if few expect earnings to move the stock, then the report has the potential to catch the Street off-guard. However, with analyst enthusiasm over the long-term prospects already running at full-throttle it seems that the potential for a sustained upside move is mitigated and opens up the potential for downside risk.

That is where the "black swan" comes in as Microsoft seems to be gaining nearly universal acceptance as one of the "premier safe haven tech stocks." (Apparently some believe a stock that hasn't gained ground in nearly four years is safe.) A move lower would most likely get the after the fact label as "unforeseeable". Is this the most likely outcome to today's earnings? Definitely not. That is the nature of the "black swan". However, with expectations running high that something (anything!) in the future will boost the shares, the odds of a disappointment (a.k.a. the swan) seem to grow...

<

permanent link

News Overload?

by 4/28/2005 8:08 AM
Stocks quoted in this article:

It looks like we have a busy day in terms of things to keep an eye on. The first-quarter GDP report and jobless claims are out at 8:30 and one of the earnings calendars I just checked showed more that 200 companies are slated to report today. Fasten your seatbelts...


permanent link

Good Morning

by 4/28/2005 7:59 AM
Stocks quoted in this article:

As was the case yesterday, we come into the session with stock futures pointing to a slightly lower open. With a little more than an hour and a half until the open, S&P futures sit roughly three points below fair value. Oil is down 36 cents to 51.25 and gold is down 50 cents to 433.60.


permanent link

Final Figures

by 4/27/2005 5:20 PM
Stocks quoted in this article:

After a rough start to the day...

Index Index Value Point Change Percent Change
S&P 500 (SPX) 1156.4 4.6 points 0.40 percent
Dow Jones Industrial Average (DJIA) 10198.8 48 points 0.5 percent
Nasdaq Composite (COMP) 1930.4 3.0 points 0.16 percent
Russell 2000 (RUT) 587.1 -0.5 points -0.09 percent
CBOE Market Volatility Index (VXO) 13.90 -0.36 points -2.5 percent

The major indices finished the session flat or slightly better. The SPX and DJIA (a.k.a. the large cap indices) fared a little better than the COMP and RUT. Yesterday we briefly explored that the market doesn't seem to have the support of tech and small cap names and today was a small (very small) example of that.

Overall we see that the Amazon induced weakness weighed on the INX all day while housing and broker/dealers tried to bounce. The major weakness can be seen in bottom portion of the graph that lists the oil/gas/gold related groups.

I suspect the chatter on Microsoft will get some attention tomorrow and that is where I will pick up in the morning...


permanent link
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.