STTG Market Recap Feb 20, 2013

Wednesday was a potentially quite important session for the market as a striking reversal hit, and for one of the few days in 2013 bears had the upper hand.   Stocks began selling off in the opening minutes of the day and it only accelerated after the 2 PM release of the Federal Reserve’s minutes.  In those minutes even the faintest hints that some members wanted to remove some of the easing policies earlier than the market is anticipating caused some unrest among market participants.  In the end the S&P 500 fell 1.24% and the NASDAQ 1.53%.  Small caps got hit especially hard as the Russell 2000 was crunched to the tune of 1.99%.

In terms of the S&P 500 we see how quickly things can reverse – today’s selloff enveloped the range of the the previous 7 sessions.  It was also the first rejection of a push through up into a new bull flag in months.  And we can see how just like that the index is near the bottom of the ascending channel range.

The NASDAQ was rejected smartly at fall 2012 highs; was it exactly at the old highs?  No but close enough for government work.  If this proves to be a top in the coming weeks you have the makings of a “double top” in this index.

Precious metals continue to get obliterated – see both gold and silver.

Oil broke below the range it had been trading in the past month.

There was damage across many sectors but one to point out was the housing stocks.  Toll Brothers (TOLL) reported and missed expectations.

Toll Brothers Inc. (TOL), the largest U.S. luxury-home builder, tumbled the most in four years after reporting fiscal first-quarter earnings that trailed analyst estimates and projecting narrower margins.  Net income for the quarter ended Jan. 31 was $4.4 million, or 3 cents a share, compared with a loss of $2.8 million, or 2 cents, a year earlier. The average of 16 analyst estimates was for earnings of 10 cents a share.  Toll’s biggest market is from Boston to Washington, wherenew-home sales have lagged behind growth nationwide amid rising foreclosures in the area and threats of federal budget cuts. The company delivered 746 homes in the quarter, about 100 fewer than analysts projected.

Economic data also hit the sector:

Builders broke ground on new homes in January at an annual rate of 890,000, the Commerce Department reported. That was less than the 920,000 average economist estimate and down from a revised pace of 973,000 in December.


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