Ticker Sense

Analysts Wrong on Juniper Networks

JNPR reported EPS yesterday after the close of $0.31 vs a $0.33 estimate.  Revenue came in at $1.12B, lower than the $1.15B estimate.  Their guidance going into the second half of the year was cautious and lower than what the analysts were expecting.  The stock is down 19% in pre-market trading.

So far this morning, four Wall Street firms downgraded their rating on JNPR from the highest rating they give ("overweight" or "outperform").   Goldman Sachs removed the stock from their "Conviction Buy List." 

The consensus 12-month price target has been lowered 20% to $34.56.

 

 

Tech and Energy Recover from Corrections, Financials Remain in Decline

The technology and energy sectors both entered 10% rallies last week.   Energy rebounded from its 11.9% correction that began on 4/29 and bottomed on 6/24.  The sector is up 12.0% from the bottom and on average continues 18.5% higher for a duration of 163 days.  Tech bounced back from its 11.2% correction that began 2/17 and bottomed 6/17.  Tech is up 10.8% from the bottom; the average 10% rally in the tech sector continues 20.6% higher from current and lasts an additional 96 days. 

Below is the 10% filter for the market and all the sectors.  Financials are the only sector that remains in a 10% decline.   The sector is down 14.7% from its peak on 2/18.

 

 

July 25th Blogger Sentiment Poll

 
 

Blogger Sentiment Poll Participants:

24/7 Wall St (-) The Aleph Blog (+) Biiwii  Bruce Krasting  BullBear Trading (+) Carl Futia (+) Dash of Insight (+) Dividend Growth Investor  Elliot Wave Lives On (+) Expected Returns (-) Fallond Stock Picks (+) Global Economic Intersection (N) Global Economic Intersection – Investing Blog (-) Humble Student of the Markets (+) In the Money  Learning Curve (-) MaoXian  The Mess That Greenspan Made  Oil Trader’s Blog (-) Peridot Capitalist  Prometheus Market Insight (N) Quant Investor (-) Short Takes  Smart Money Tracker (+) StockAdvisors.com  Traders-Talk  VIX and More (N) The Wall Street Examiner (N) Wall Street Folly  Wishing Wealth  Zentrader (-)

CAT's Earnings Report Disappoints

Caterpillar reported EPS of $1.72 this mornings which was lower than the $1.75 estimate.  Revenues were higher than expected at $14.23B vs a $13.24B estimate.  The stock is currently down seven points or 6.3%.

80% of the time after an EPS miss CAT trades lower from the open to the close for an average loss of 1.01%.

 

50% Chance of a Debt Rating Cut?

The market shrugged off this morning's Standard and Poors' announcement that there is a 50% chance they will cut the debt rating within in the next three months.   An interesting note to this is that the US debt rating has already been cut by some small nationally recognized rating agencies.  On 7/15 Weiss Ratings downgraded US debt to C- from C.  They say their C- rating is the equivalent of BBB- on the scale of other rating agencies (one notch above junk). On 7/16 Egan-Jones Ratings Co downgraded US debt to AA+ from AAA.  Despite all this S&P 500 is up 2.2% so far this week.

Apple's Blow-Out 3rd Quarter

Apple reported an outstanding 3rd quarter last night, easily surpassing analyst expectations.  It was no surprise AAPL beat EPS expectations considering it reported higher than estimated earnings per share every quarter since 2004, but Apple's actual EPS of $7.79 was 33% higher than analyst's expectations and equates to 122% growth from the same quarter one year ago.  Revenue came in $3.5B higher than expected. Sales of iPhones and iPads were also higher than expected.  As per usual management issued conservative guidance which was below the Street's consensus.

We sent out a note to our Mini-Institutional clients yesterday morning detailing AAPL's trading pattern and opportunities surrounding the report.  We discussed that Apple has reported higher EPS every quarter since 2004 and there was a 71% probability of trading higher from the close prior to the report to the open the next morning.  The report was entitled: "Will Apple's Winning Streak Continue?," and it clearly has.  AAPL is currently up over 21 points or 5.7% in the premarket and at one point yesterday evening it traded over $400 for the first time. 

Another significant opportunity with AAPL's report is when it opens higher after earnings it trades down from the open to the close 68% of the time for an average loss of 67 bps.

 

5 Stock Picks From the Birinyi Basket

Check out the article from Yahoo! Finance's blog and webcast Breakout with Jeff Macke and Matt Nesto.

Laszlo's Interview With Jeff Macke and Matt Nesto

 

Energy Sector Fighting the Trend

The S&P 500 remains neutral within its trading envelope.  Financials, health care, and telecom are oversold.  Health care and telecom are within 2% of their most oversold levels in the past twelve months.  Despite remaining neutral, staples are nearing the bottom of their range and are within 2% of their extreme oversold level. 

 
The energy sector is overbought (0.7% above its top TE).  The sector is being buoyed by stocks such as BHI, CNX and EQT that are outperformed yesterday despite the market pullback. 

 
 
 

Below is the Birinyi Sector Timing Model for the energy sector along with the rest the sectors and the market.
 
 
Click here for an explaination of the Sector Timing Model.

July 18th Blogger Sentiment Poll

 
 
 

Blogger Sentiment Poll Participants:

24/7 Wall St  BullBear Trading (+) Carl Futia (+) Crossing Wall Street  Dash of Insight (+) Elliot Wave Lives On (+) Fallond Stock Picks (-) In the Money  Learning Curve  MaoXian  Peridot Capitalist (N) Quant Investor  StockAdvisors.com  Smart Money Tracker (-) Traders-Talk (-) Wall Street Folly  Wishing Wealth (+)