MLR - Premarket Pulse August 15, 2012
Investors are paring back their expectations of a new round of QE from the Fed following a string of economic data releases that have exceeded expectations, and this has sent the market indexes into consolidation mode. While volume did pick up yesterday as the indexes backed off from their intra-day highs, only further evidence will reveal whether the market's current test of upside resistance as the S&P 500 comes within 19 points of its 2012 high of 1422 will succeed or fail. For the most part, the market indexes remain within a relatively narrow "channel" as they swing back and forth in a choppy rally that began off the early June lows. Today's Empire State Manufacturing Index comes out a half hour after the opening bell and will likely shed more light on the state of the economy and the likelihood of "necessary" Fed QE responses.
The action among individual stocks remains uneven, and while tech belwether Apple (AAPL) was able to push higher yesterday, volume picked up as the stock reversed off of its intra-day peak of 638.61 before closing at 631.69. AAPL has been moving higher over the past 2-3 weeks, albeit on light volume, a characteristic that at best merely appears to be in sync with the uneven uncertainty that overlays this market.
Michael Kors (KORS), a maker of luxury apparel, accessories, and footwear, had a buyable gap up which we sent yesterday to members after a strong earnings report that showed the company has not been negatively impacted by the European economic slowdown, and remains on track to open 40-50 new stores in North American during the current fiscal year. It also sees Q2 gross margins expanding while earnings and sales growth continue at a torrid pace.
Mortgage servicer Nationstar's (NSM) also shot higher after better-than-expected 2Q results which showed that it has been able to post strong growth. NSM says mortgage-origination revenue surge 53% from 1Q amid surging refinancings as interest rates hit fresh record lows last quarter. NSM shares have nearly doubled since early May amid the potential ResCap deal which would more than double the company's portfolio if NSM is able to buy the bankrupt ResCap's servicing assets in an upcoming auction.
Pre-open Abercrombie & Fitch (ANF) is moving higher after a positive earnings report, while Deere (DE) is bid five points lower after a disappointing earnings report, highlighting the uneven action among stocks during "earnings roulette" season.
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