Action was choppy Wednesday but in the end the markets closed with slight gains. Markets gapped up in the morning as indexes reached new highs (including the NASDAQ this time) but reversed sharply mid morning, and then moved aimlessly most of the rest of the day until a rally in the closing minutes pushed stocks into the green. The S&P 500 gained 0.06% and the NASDAQ 0.33%. In economic news, retail sales for January were released and they came in slightly better than expected which relieved worries about the effect of higher payroll taxes.
Retail sales rose 0.1% versus a 0.5% increase for December. Excluding autos, retail sales were up 0.2% in January versus a 0.3% gain in December. This was above consensus which called for growth of 0.1%.
After the bell networking giant Cisco Systems (CSCO) reported and early indications are light guidance, pushing the stock down 2.5% in after hours. Whole Foods Markets also failed to impress with an update of its quarter as its stock is down 6% in the after hours session.
Let's turn to the longer term charts of the indexes today. The context is the same as we've seen just about every week this year as the markets are working on a remarkable 7 up weeks in a row. The S&P 500 remains the far healthier chart, although extended from major supports at this time. But until this ascending channel breaks things remain status quo.
The NASDAQ finally is making a run for the fall 2012 highs as you can see below. It was temporarily over that level today before selling off to finish just about flat with those levels reached in September. One worry during this rally has been this index has failed to make a new high, and thus had the potential for an bearish "inverse head and shoulders" pattern (the three yellow shaded areas). Breaking to new highs would obviously invalidate that issue.
Here are the charts for Cisco and Whole Foods - the former has fallen down to the mid $20s area which you can see is the 50 day moving average, while the latter is down to the $91s range in after hours which is down near its 200 day moving average.
Whole Foods was hit by same store sales guidance even as it held full year earnings constant:
Same-store sales, a key gauge of performance for retailers, rose 7.2% for the fiscal first quarter that ended Jan. 20. So far this quarter, those sales are up 6.4%, dampened by winter storm Nemo and holiday shifts. As a result, Whole Foods narrowed its 2013 forecast for growth in sales at established stores to a range of 6.6% to 8% from 6.5% to 8.5% previously. It maintained guidance for full-year earnings per share of $2.83 to $2.87
Another major loser today was tech company Rackspace (RAX) which tumbled to the tune of 20% post earnings. But you can see why having charts as part of your arsenal helps as you can see where it finished the day - at its 200 day moving average. That said this is now a very broken chart and it will take a long while for this to be a good intermediate term investment vehicle.
Sales in the fourth quarter rose 25 percent, the slowest pace in more than two years. “The slower rate of growth is likely a function of the law of large numbers and some uncertainty with respect to the growth trajectory of Rackspace’s cloud business,” Todd Weller, an analyst at Stifel Nicolaus, wrote in a research note today. He reduced his rating on Rackspace to hold from buy. Revenue rose to $352.9 million, compared with the $355.4 million average analyst estimate, according to data compiled by Bloomberg. Net income increased 19 percent to $29.9 million, or 21 cents a share, matching analysts’ predictions. Investors are accustomed to Rackspace beating predictions, with the company having topped analysts’ sales estimates in each of the previous 12 quarters.
On the positive side we had onlike real estate company Zillow (Z) which surged 8% during the normal session and then an additional 7%, to the mid $41s, in the after hours on its earnings report.
Zillow earned 2 cents a share on $34.3 million in revenue for the fourth quarter, up 73% year-over-year. Analysts polled by Thomson Reuters were expecting Zillow to break even this quarter on $31.47 million in revenue. Revenue growth was led by Marketplace revenue, which was up 95% year over year to $26.8 million. The company's quarterly traffic rose 47% year over year, thanks in part to the surge in mobile. Zillow saw 34.5 million average monthly unique users, with more than 50% of these visits coming from mobile devices in December.