Stocks staged a sharp rally Thursday and we are at a very interesting spot technically, especially for the NASDAQ as we head into a key jobs report Friday. The S&P 500 gained 1.24% and the NASDAQ 1.14%. Recall last month we saw a measly 74,000 as the weather was blamed so a large upside revision would probably have people thinking that number was an anomaly. Overseas, the European Central Bank kept its rates unchanged at a record low, as expected, and Mario Draghi told a news conference that risks to the euro zone were still on the downside, but that turmoil in emerging markets could hinder economic recovery.
As we noted yesterday throughout 2013 when the NASDAQ broke this key trendline it was only for a few days and immediately after we had a “V shaped” bounce. We said if that pattern was going to repeat it would have to happen soon and lo and behold we had a strong day today. Now this sets up a very interesting day tomorrow because if we have a strong rally on the jobs data we have a “here we go again” moment as that pattern we saw throughout 2013 will look to be repeating. If however, we roll over, that will be a distinct change in pattern – so get the popcorn out.
We’ll post the long term charts for the indexes a second day in a row because it is important to see how familiar of a spot we are on the NASDAQ. We have highlighted in yellow shade similar situations over the past year and you can see what happened each time shortly after – a very strong rally. So we’ll know soon if 2014 is the same or different than 2013.
Today’s move helped get the NYSE McClellan Oscillator well out of the oversold area it bounced out of multiple times the past two weeks, but a reading back above zero would be more comforting for bulls.
After the close today LinkedIn (LNKD) reported a quarter that investors were fine with but guidance not so much, and the stock is down some 7% in after hours. So net of the regular session when shares were up 4% that is only a loss of 3%.
LinkedIn Corp posted a better than expected 47 percent jump in fourth-quarter revenue but projected 2014 revenue that was below Wall Street targets. The company projected that full year revenue for 2014 will range between $2.02 billion and $2.05 billion. Analysts polled by Thomson Reuters I/B/E/S were looking for 2014 revenue of $2.16 billion.
On the brighter side, Disney (DIS) had a report people liked (it reported after the close Wednesday).
Media company Walt Disney Co reported higher profit for the quarter that ended in December, beating Wall Street expectations due to growth at sports network ESPN and the blockbuster performance of its animated hit film “Frozen.” The company posted adjusted earnings per share of $1.04, according to a statement it released, exceeding the 92 cents average estimate of analysts. Net income for the quarter rose to $1.8 billion, a 33 percent gain from a year earlier.
The company’s five major business units all reported higher profit, with the biggest gain at Disney’s movie studio. The unit reported a 75 percent increase in operating income to $409 million. The studio benefited from big box office grosses for “Frozen,” the story of royal sisters in an icy kingdom, and Marvel superhero sequel “Thor: The Dark World.” The two films have sold more than $1.5 billion worth of tickets combined worldwide.
Yelp (YELP) bucked the trend in social media/internet stocks as it reported.
Shares of the Yelp Inc. jumped to an all-time high Thursday, a day after the online review site reported fourth-quarter revenue and a 2014 revenue guidance that beat Wall Street expectations. The San Francisco-based company also said it had a monthly average of 120 million visitors during the fourth quarter, up 39 percent from the same period a year before. Yelp said users wrote about 53 million reviews in the quarter, up 47 percent from the same period a year before. Yelp makes money from advertisements on its website and app. Many of the ads are from the local businesses that users are reviewing, including restaurants, bars, bakeries, hospitals and hair salons. Over the past year, the company has launched new products and tools for businesses, including a free revenue estimator and a food ordering service that lets customers order meals from the site.
We mentioned the homebuilder ETF (ITB) as one of the few areas really holding up well during the selloff; if you are a cynic on Wall Street today’s report that Goldman Sachs is bullish on the sector would raise some eyebrows. Of course the company is not “technically” allowed to let anyone know about such good news before it is publicly known….ahem.