Weekly Roundup February 16-20

Mar 4, 2015   //   by Profitly   //   Profitly, Profitly Weekly  //  Comments Off on Weekly Roundup February 16-20

The shortened trading week was a rather subdued one in the markets. The Dow ended +0.67%, S&P +0.63%, Nasdaq +1.27%, Russell 2000 +0.71%. There weren’t many big moves along the way like we’ve seen in previous weeks either. Here is a quick overview via FactSet:

Sector Performance (vs S&P 500):

Outperformers: Healthcare +1.93%, Industrials +1.59%, Utilities +1.19%, Tech +1.18%, Materials +0.98%, Consumer Disc. +0.77%

Underperformers: Energy (2.38%), Telecom (1.36%), Financials +0.10%, Consumer Spls. +0.11%

The S&P 500 posted its third straight weekly gain, ending 6.5% above its recent low on 2-Feb. Most of the higher-profile stories had relatively little influence on the broader market. The drama surrounding Greece continued to dominate the headlines despite the limited directional takeaways for risk assets. However, a deal between Athens and the Eurozone did boost US stocks on Friday. The minutes from the January FOMC meeting had a slightly dovish tilt that underpinned Treasuries on Wednesday, though there did not seem to be any meaningful shift in policy normalization sentiment. While Wal-Mart’s decision to boost pay for a third of its workforce received a lot of attention, there was some debate about its potential to trigger broader wage increases.

Greece, Eurozone reach a deal:

Stocks got a lift on Friday after Athens secured a four-month extension of its loan agreement with the Eurogroup. This was less than the six months it had sought. In addition, Greece had to commit to a successful completion of the current bailout review and pledge not to roll back any reform measures that could have a negative impact on its finances or economic recovery. It also pledged to fully honor its existing debt obligations. Athens will have to continue to run a primary budget surplus, though the statement seemed to imply that targets could be lowered. While €10.9B of Eurozone funds for the recapitalization of Greek banks will still be available, the money will be held by the Eurozone bailout fund (rather than the Hellenic Financial Stability Fund as is now the case) and dispersed only at the request of the ECB. In terms of the next steps, there is still a bit of uncertainty as Greece has to submit a list of reforms on Monday that it plans to implement over the remainder of the rescue period. Provided that Greece’s creditors are satisfied with the measures, the extension will be ratified at another Eurogroup meeting on Tuesday. After that, where necessary, national parliaments will begin their approval process.

Slightly dovish tilt to January FOMC minutes:

There was a slightly dovish tilt to the January FOMC minutes with two particular areas of focus. One was that “many participants” believed the balance of risks associated with the timing of the beginning of policy normalization implied that the fed funds rate should be kept at its effective lower bound “for a longer time”. The other was that “many participants” also highlighted concerns that dropping the “patient” forward guidance language in the statement could risk shifting market expectations for initial policy firming to too narrow a range of dates.

Earnings calendar drives notable movers:

The earnings calendar was not a directional driver for the broader market as aggregate takeaways have already been hashed out, though it did trigger some of the more notable single-stock price action. Despite the better comp/traffic trends and tailwind from lower gas prices, WMT (1.8%) underperformed with the drag on guidance from its new compensation structure and e-commerce investments. JWN +2.9% fared better as favorable top-line trends offset concerns about its investment cycle. PCLN +10.2% was one of the big gainers on solid bookings growth, with the International segment a particular bright spot given concerns about a potential deceleration. RevPAR and unit growth guidance upside helped MAR +4.5%. Better comps at Qdoba and Jack in the Box (JITB) and above-consensus guidance boosted JACK +12.5%. INTU +7.2% was underpinned by a better-than-feared start to the tax season and momentum in the Small Business segment (QBO). FOSL (13.5%) sold off sharply on concerns about negative NA trends and the upcoming launch of the Apple Watch. EOG (6.3%) was hit by lower-than-expected Q4 production and 2015 production guidance that was down at the midpoint compared to sell-side expectations for a LSD gain. The soft performance in the Mobile/Wireless segment weighed on MRVL (1.8%).

Moving on to our Profit.ly gurus,

Tim and Superman had some great trades this week. First we’ll start with Sykes.







Then we have Superman! He didn’t have as many trades this week, but sometimes it’s best not to trade than to force something. (Forcing trades is one of our gurus big “no-go’s” since that often leads to losses).