STTG Market Recap Apr 30, 2015

April 30, 2015

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Quick Note from Blain: Made some short and “to the point” market analysis videos over at Ticker.tv. These are 100% mobile friendly, please check them out and let me know what you think. If you like them I will try and make some every couple days. Thanks!

Indexes continue to show weakness as the S&P 500 fell 1.01% and the NASDAQ 1.64%. Data today showed that consumer spending in March posted the the biggest increase since November, while February’s gain was larger than previously estimated. Incomes were little changed reflecting a drop in dividend payments.

At this point that bearish outside reversal day we mentioned Monday as a potential short term top in the NASDAQ has actually led to follow through. Sometimes you get surprised when old fashioned bearish indicators still work in these markets. That index has now quickly fallen below its 50 day moving average after being in a parabolic state early Monday nowhere near even the 20 day moving average – things can change fast. The S&P 500 never closed over our upper trend line which has not been the case during the past 9 months during rallies. So it was a notable underachiever and is now well below that level.

The Russell 2000 – which had been an outperformer this year – really took it on the chin today. It sliced through the 50 day moving average and now is approaching the 100 day – what a quick move. It is now near an old support level. Remember the Russell 2000 companies were benefiting from the strong dollar as investors rotated into these names which don’t have much dollar exposure (i.e. exports). But as we showed yesterday the dollar rally has ended and now we are seeing an almost perfect correlation out of the Russell 2000 – interesting.

The NYSE McClellan Oscillator is already fast approaching the initial stage of oversold – it has been a while since we saw these type of readings.

Apple (AAPL) was a big drag as the Wall Street Journal reported that supplies of the company’s Apple Watch were limited at the product’s rollout after a key component was found to be defective.

LinkedIn (LNKD) is being decimated in after hours to the tune of 20%+ at just under $200. The action is very volatile so who knows where it opens tomorrow but much like Twitter a few days ago, guidance killed the stock. Still a great franchise long term but momentum traders and short timers will be avoiding it near term. The company forecast revenue that missed analysts’ estimates, citing the strong dollar and slower-than-expected growth.

For the just-completed first quarter, LinkedIn’s results exceeded analyst estimates. Adjusted earnings of 57 cents a share were a penny better than the average analyst estimate and sales of $638 million were also just above the average forecast of $636 million. For this quarter, LinkedIn expects adjusted earnings of 28 cents per share on revenue of $670 million to $675 million. Analysts are forecasting much higher adjusted earnings of 74 cents per share on revenue of $719.3 million

The professional networking company, which has more than 350 million members, reported that revenue from marketing solutions products increased 38 percent from the first quarter of 2014, to $119 million. Premium subscriptions increased 28 percent from the year-earlier period to $122 million. Those subscriptions represented 19 percent of total revenue in the first quarter of 2015. Revenue from the U.S. came in at $389 million, representing 61 percent of total revenue in the first quarter. Revenue from international markets was $248 million, about 39 percent of total revenue.

The company announced the pending acquisition of teaching website lynda.com earlier this month. The deal was valued at $1.5 billion in cash and stock. Colin Gillis, of BGC Financial, attributed the weak guidance to the costs associated with the lynda.com acquisition. “They’re acquiring a company that has a very different margin profile than their core business.”

Biotech is having a very rough week – often as goes this sector, so goes the market the past 3-4 years.

Celgene (CELG) is a major component in all the biotech ETFs and while profits beat estimates, revenue missed.

U.S. biotechnology company Celgene Corp posted a lower-than-expected quarterly revenue, hit by a stronger dollar, but said the dollar would not hurt full-year sales and profit more that it had already forecast. The company gets nearly 41 percent of its revenue from outside the United States. Celgene’s total revenue rose 20 percent to $2.08 billion in the first quarter ended March 31, but fell short of analysts’ average estimate of $2.11 billion. Sales of the company’s flagship multiple myeloma drug, Revlimid, rose 17.4 percent to $1.34 billion, roughly in line with the consensus estimate of $1.33 billion. Celgene’s net profit soared to $718.9 million, or 86 cents per share, from $279.7 million, or 33 cents per share. Excluding one-time items, its profit of $1.07 per share beat the average analyst estimate by one cent.

If you don’t have biotech and Apple helping you, it is difficult to get a real rally nowadays in the NASDAQ….

It was a rough day all over the internet sector as Yelp (YELP) was crushed by nearly 25%, its biggest drop since going public three years ago, after reporting first-quarter sales and profit that missed analysts’ estimates. Its second-quarter sales outlook was also below estimates.