STTG Market Recap February 7, 2013

Thursday the market looked quite vulnerable as heavy selling began the session and some support levels were broken but once again bears were stymied as buyers came into the market most of the afternoon lifting stocks well off their lows into the close.   The S&P 500 fell 0.18% and the NASDAQ 0.11%.  Apple dominated the headlines today as noted hedge fund manager David Einhorn went activist on the company in an attempt to get it to spend its massive cash hoard.  More on that later.

The S&P 500 once again broke its 10 day moving average and looked set to make a run at week lows, but just as things were the darkest mid morning buyers came in.  The index is now firmly in the middle of this ascending channel so if it continues to digest gains by going sideways bears could be in store for another beating.

As for the NASDAQ the 2012 highs served as support during its selloff.

Apple (AAPL) was the highlight of the regular session while LinkedIn (LNKD) starred in after hours.  Today hedge fund manager David Einhorn said the company needs to use its cash in a more fruitful way, rather than hoarding it.  Many have been surprised the company has not issued a special dividend and/or bought back shares after they have been in free fall for months.

Cash-rich technology giant Apple needs to find a way to distribute its cash to shareholders, instead of sticking to the Depression-like mentality that prompts the company to hoard equity, fund manager David Einhorn told CNBC.  Greenlight Capital’s founder defended his decision to file suit against Apple over a proposal to eliminate preferred stock. Einhorn urged shareholders to vote against the proxy, branding Apple’s tactics as symptomatic of someone who has suffered through a trauma.  Investors and analysts have frequently taken aim at Apple’s refusal to distribute its sizeable pile of cash. The company amassed $23 billion in operating cash in its latest quarter, ending the period with a whopping $137.1 billion in net cash.

The stock initially reacted only mildly but late in the day the company issued a statement in response to Einhorn’s firm, and the stock shot up late.  As you can see below it cleared the lower purple line which has been its range the two weeks, this *should* set the stage for a gap fill up to the top purple line at minimum. We’ll see if it is that easy.

As for LinkedIn, it reported another stellar quarter after the bell, rising ~10% in the after hours session to an all time high.

The company reported a fourth-quarter profit of $11.5 million, or 10 cents a share, compared with a profit of $6.92 million, or 6 cents a share. Revenue was $303.62 million, from $167.74 million. Adjusted profit was 35 cents a share.  Analysts polled by FactSet on average were expecting the professional-social-networking company to report a profit of 19 cents a share, on revenue of $279.93 million.  For the current quarter, LinkedIn said it expects revenue in the range of between $305 million and $310 million. Analysts polled by FactSet on average were expecting revenue of $301 million. LinkedIn said it now has 202 million members, up 39% year-over-year.

Here are two charts from Dan Zanger’s newsletter last nite.

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