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Market Commentary
By Fred Dickson, Chief Investment Strategist
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Written by Fred Dickson | Chief Investment Strategist
D.A. Davidson & Co. Lake Oswego, OR. Email: fdickson@dadco.com |
| Market Summary | End of Market May 20, 2013 DAD99: 12/31/2003=100.00 |
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|---|---|---|---|---|
| Index | Current | Chg | YTD Chg | YTD % |
| DOW | 15335.28 | -19.12 | +2231.14 | + 17.03% |
| NASDAQ | 3496.43 | -2.54 | + 476.92 | + 15.79% |
| S&P 500 | 1666.29 | -1.18 | + 240.10 | + 16.84% |
| Davidson 99 Regional Index ® (DAD 99) | 210.63 | + 0.27 | + 28.81 | + 15.84% |
Morning Market Comment - May 20, 7:31:47 AM MDT
Overview: Stock prices rallied on Friday, extending the major equity market indices to another round of new highs. Investors appeared to react to some good economic news including a surprising 0.6 percent increase in the Index of Leading Indicators and a nice jump in the mid-month University of Michigan Consumer Sentiment Index to a new 6-year high. The Obama Administration approved a $10 billion natural gas terminal facility in Texas designed for the export of natural gas. Gold fell for a seventh straight trading session on the Comex closing at a 26-month low of $1364/ounce. Market Recap: Stock prices opened higher on Friday, rallying throughout the day and closing at session highs. Composite trading volume totaled 2.6 billion shares on the NYSE and NASDAQ. Market breadth on the NYSE was positive with advancing issues outnumbering declining issues 2,168 versus 797. The bond market sold off, sending the yield on the 10-year Treasury note up to 1.951%. The euro rose versus the dollar, closing at $1.2839. The trade-weighted U.S. dollar rose, closing at $84.21. The near-term West Texas Intermediate crude oil futures contract rose, closing at $95.16/barrel. Gold closed lower at $1,364/ounce. Sector Recap: All ten equity S&P 500 sectors rose on Friday, led by Energy (+1.58%) and Industrials (+1.45%). Each of the four investment styles rallied in a very tight range, as shown below:| Investment Style | % Change |
| Small Cap Growth | +1.09% |
| Small Cap Value | +1.08% |
| Large Cap Value | +1.04% |
| Large Cap Growth | +0.97% |
| Source: Morningstar |
|
Friday's Lagging Industry Groups: Oil & Gas Exploration & Production (-10.72%), Health Care Facilities (-2.63%), Gold (-2.54%), Computer Hardware (-0.30%), Hypermarkets & Super Centers (-0.21%) Last Week’s Leading Industry Groups: Tires & Rubber (+14.71%), Education Services (+13.55%), Communications Equipment (+8.04%), Oil & Gas Refining & Marketing (+7.22%), Automobile Manufacturers (+6.87%)
Last Week’s Lagging Industry Groups: Oil & Gas Exploration & Production (-10.40%), Gold (-7.52%), Health Care Facilities (-5.84%), Computer Hardware (-3.93%), Coal & Consumable Fuels (-3.06%) Companies in the News this morning: Generic drug maker Actavis (ACT) is acquiring privately held specialty drug maker Warner Chilcott plc in a deal valued at approximately $8.5 billion. Microsoft (MSFT) appears set to launch the latest version of its Xbox gaming console. Yahoo (YHOO) is acquiring social networking site Tumblr for $1.1 billion in cash. Companies reporting earnings above forecast: CPB, JASO, QIHU
Companies reporting earnings in line with forecast: BABY
Companies reporting earnings lower than forecast: None reported Companies raising earnings or revenue guidance: CPB, BABY, QIHU
Companies maintaining earnings or revenue guidance: None reported
Companies lowering earnings or revenue guidance: None reported Analyst Upgrades (from Thomson, Briefing.com, Marketwatch.com): NOC, MTOR, IBKC, VVC, NOC, RLGY, ACN, ABT, PCLN, TMUS
Analyst Downgrades (from Thomson, Briefing.com, Marketwatch.com): KMX, EAT, SNDK, GAS, RHT, AQ, WEC, PLCE, SPNC, REXX, RRC, KSU, CPLA, EAT, CAMM, MSTR, RHT, DNKN, NTAP, CAVM, SNV, NSR, EFX, THOR, BBBY, LOW, IRE, LEAP, RT, APAM, BAC, BLK, SCHW, AMTD
Returns — Investment Style Indices | |||||
Last Week | 2013 YTD |
| Last Week | 2013 YTD | |
| Large Cap Growth (TR) | +1.39% | +13.78% | DJIA (PR) | ||
| Large Cap Core (TR) | +2.26% | +21.71% | S&P 500 (PR) | ||
| Large Cap Value (TR) | +2.63% | +17.60% | NASDAQ Composite (PR) | ||
| Mid Cap Growth (TR) | +1.83% | +17.52% | Russell 2000 (PR) | ||
| Mid Cap Core (TR) | +1.93% | +19.47% | MSCI EAFE (PR) | ||
| Mid Cap Value (TR) | +2.42% | +23.38% | DAD99 Regional Index (PR) | ||
| Small Cap Growth (TR) | +2.12% | +16.84% | US Agg Bond Index (TR) | -0.21% | +0.01% |
| Small Cap Core (TR) | +2.24% | +19.28% |
| ||
| Small Cap Value (TR) | +1.54% | +18.77% |
| ||
| PR=Price Return, TR=Total Return Sources: FactSet, Morningstar | |||||
Fundamental (Growth) Outlook: Slightly positive, projected 2Q 2013 EPS growth at 4.5% Y/Y for the S&P 500
Valuation (P/E relative to interest rates): Equities in the “fair value” zone at 15x estimated 2013 S&P 500 EPS
Cyclical Economic/Market Position: Late-middle stage of a multi-year expansion
Near-Term Technical Market Trend: Extended but slowly moving higher on light to moderate trading volume
Long-Term Technical Market Trend: Up
Investor Sentiment: Mixed; P/E expansion (positive); VIX volatility (ultra-low) – indicating too much complacency
Next Major Market Problems/Risk: Syria, 2Q 2013 earnings/revenues estimate revisions Today’s Earnings Releases:
9 companies reporting, including Campbell Soup (CPB) and Urban Outfitters (URBN) Economic Releases/Events:
None expected Corporate Analyst Meetings, Conference Calls, and Investor Meetings:
SAVE Analyst Day This Week’s Institutional Investor Conferences:
B. Riley & Co. Investor Conference, Barclays Global Technology, Media & Telecommunications Conference, Barclays High Yield & Syndicated Loan Conference, Bloom Burton & Co. Healthcare Investor Conference, BofA Merrill Lynch Services Conference, Brean Capital Global Resources & Infrastructure Conference, CIBC World Markets Small Cap Retail Conference, Goldman Sachs Basic Materials Conference, J.P. Morgan Homebuilding & Building Products Conference, Johnson Rice Energy Infrastructure Conference, Longbow Research Consumer Investor Conference, NAPTP MLP Investor Conference, Stifel Nicolaus Internet, Media & Technology Conference, SunTrust Robinson Financial Services Unconference, UBS Global Healthcare Conference, UBS Global Oil & Gas Conference, Wells Fargo Gaming & Hospitality Conference, Wolfe Trahan Global Transportation Conference, Wunderlich Investor Summit
| Technical Overview (updated 5/17/2013) | |||
Short-Term Trend | Intermediate Trend | Long-Term Trend | |
| DJ Industrial Average | Up | Up | Extended-Up |
| NASDAQ Composite | Up | Extended-Up | Extended-Up |
| MSCI EAFE (EFA) | Up | Extended-Up | Extended-Up |
| Gold (GC/Z3) | Down | Down | Extended-Down |
| Euro (FXE) | Extended-Down | In Transition-Up | In Transition-Up |
| Trade-Weighted USD | Up | Up | Up |
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Near-Term Support | Near-Term Resistance | Current Price | |
| DJ Industrial Average | 14,400 | 15,250 | |
| S&P 500 | 1,540 | 1,660 | |
| NASDAQ Composite | 3,150 | 3,500 | |
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50-day Moving Avg. | 200-day Moving Avg. | Current Price | |
| DJ Industrial Average | 14,707 (up) | 13,721 (up) | |
| S&P 500 | 1,579 (up) | 1,479 (up) | |
| NASDAQ Composite | 3,287 (up) | 3,126(up) | |
| Upcoming Office Visits and Client Event Appearances/Speeches: | |
| May 20: | Return to Lake Oswego |
| May 22: | Seattle, WA – Davidson Companies Investment Summit Meeting |
| May 23: | Seattle, WA – Foster Pepper Banking Conference- Speech (PM) |
| May 28-29: | Los Angeles, CA – Davidson-CW Meeting Luncheon Presentation |
| May 30: | Newport Beach, CA- Davidson-CW Meeting Luncheon Presentation |
| May 30-June 2: | Laguna Beach, CA – Davidson’s President’s Club Meetings |
| June 11-13: | Great Falls, MT – Corporate Meetings- FC/Intern Presentation (June 12) |
| June 18-19: | Port Angeles, WA – Office Visit/Client Meetings |
| June 20: | Aberdeen, WA – Office Visit/Client Meeting |
| July 1-3: | Cannon Beach, OR – Working Vacation |
| July 25-Aug. 7: | Bethany, DE/Cooperstown, NY – Working Vacation |
| Aug. 27-29: | Denver, CO – Fixed Income Lunch Speech at Coors Field (Aug 29) |
| Sept. 13: | Travel to New York City |
| Sept. 16-17: | Philadelphia, PA – Wharton-SIFMA Securities Institute Trustee Meeting |
| Sept. 18: | Return to Lake Oswego |
| Sept. 30-Oct. 1: | Great Falls, MT – Corporate Meetings |
| Oct. 2-3: | Bozeman, MT – Client Events |
| Oct. 4: | Return to Lake Oswego |
| Oct. 8-11: | Lewiston/Sandpoint/Coeur d’Alene, ID – Client Events |
| Nov. 6: | Eugene, OR – Office Visit/Client Meetings (?) |
| Nov 7: | Roseburg, OR – Chamber of Commerce Economic Outlook Forum Speech; Client Event |
| Nov 20: | Cascade Country, Estate Planning Council Presentation –Great Falls |
Senior Vice President, Chief Investment Strategist
Davidson Companies
503.603.3059
fdickson@dadco.com