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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

10/31/12

Equities began the session on a strong note. However, the bullish sentiment failed to hold as major averages began sliding off their highs shortly after the open. The key indices then marked their respective lows in the early afternoon before rallying in the final hour to finish mixed. The S&P 500 finished flat, while Nasdaq lost 0.4%.

Looking at tech companies, the SPDR Technology Select Sector ETF (XLK 28.87, -0.11) slid 0.4%. The biggest sector component, Apple (AAPL 595.32, -8.68), lost 1.4% after announcing the departure of Scott Forstall, who was the company's head of mobile software products.

Seagate Technology (STX 27.33, -0.58) shed 2.1% after reporting disappointing earnings. During the first quarter, the hard drive manufacturer earned $1.45, which was $0.25 worse than the Capital IQ consensus estimate. In addition, the company's revenue of $3.73 billion also fell short of analyst expectations.

Western Union (WU 12.72, -5.20) plunged 29.0% after reporting in-line earnings. However, the company's revenue of $1.42 billion fell short of the $1.47 billion expected by the Capital IQ consensus. In addition, the company announced a 25.0% increase in quarterly dividend to $0.125. Following the earnings release, Western Union received six analyst downgrades.

Facebook (FB 21.11, -0.83) lost 3.5% after another lockup expiry took place.

A handful of names within the software industry made notable moves. Commvault Systems (CVLT 62.37, +8.90) soared 16.6% after beating on the top and the bottom line. During the second quarter, the software company earned $0.38 on $118.2 million in revenue. Both figures were ahead of the Capital IQ consensus estimates. In addition, the Board of Directors authorized a $50 million increase to the existing stock repurchase program.

Elsewhere, JDA Software (JDAS 38.15, +4.23) spiked 12.5% after reports from Reuters indicated JDA is exploring a sale, and has hired JPMorgan as an advisor.

OPNET Technologies (OPNT 42.05, +9.95) surged 31.0% after entering into a definitive agreement to be acquired by Riverbed Technology (RVBD 18.47, -4.15). Per the agreement, Riverbed will pay $43 per share, representing a 34.0% premium to OPNET's Friday closing price.

In other M&A news, Warnaco Group (WRC 70.58, +19.70) will be acquired by PVH (PVH 109.96, +18.46) in a transaction valued at $2.9 billion. Warnaco stockholders will receive $68.43 per share, which represents a 34.0% premium to Warnaco's last closing price. Following the acquisition, PVH issued upside guidance as the company now expects third quarter and full-year earnings near the top range of its prior guidance of $2.28-2.30. Meanwhile, the Capital IQ consensus expects the company to earn $2.29 per share.

The Dow Jones Transportation Average settled higher by 0.7% with trucking stocks leading the complex. Landstar System (LSTR 50.60, +2.47) was the top performer, and settled higher by 5.1% after Goldman initiated coverage of the stock with a 'neutral' rating. Con-way (CNW 29.11, +1.12) rose by 4.0% after Goldman resumed coverage with a 'buy' rating. Meanwhile, other freight carriers also saw strength. JB Hunt Transport (JBHT 58.70, +1.54) and CH Robinson (CHRW 60.31, +0.90) advanced 2.7% and 1.5%, respectively.

On the downside, railroads saw general weakness. Norfolk Southern (NSC 61.35, -0.92) and Union Pacific (UNP 123.03, -0.58) shed 1.5% and 0.5%, respectively.

Two automakers moved higher after reporting strong earnings. General Motors (GM 25.50, +2.22) surged 9.5% after reporting earnings of $0.90, which was $0.30 ahead of the Capital IQ consensus estimate. The automaker's revenue of $37.6 billion represented a 4.6% year-over-year decrease, but the figure was ahead of analyst estimates.

Meanwhile, Ford Motor (F 11.16, +0.85) jumped 8.2% after reporting mixed earnings. During the third quarter, the company earned $0.40, which was $0.10 better than the Capital IQ consensus estimate. However, the company's revenue of $30.20 billion fell short of analyst expectations. Regarding the fourth quarter outlook, management said it expects production volume to increase in all regions except Europe. Today's buying has lifted the shares to levels not seen since early May.

The weekly MBA Mortgage Index registered a 4.8% decrease in new mortgage applications over the past week. This follows last week's 12.0% decrease.

Third quarter Employment Cost Index increased by 0.4%, which was slightly worse than the 0.5% increase that was widely forecast. Today's reading follows prior quarter's increase of 0.5%.

October Chicago PMI of 49.9 surprised to the downside as economists surveyed by Briefing.com had generally expected a reading of 50.9 to follow the prior month's 49.7.

Looking at tomorrow's economic data, automakers will be reporting their sales throughout the day and October Challenger Job Cuts will be announced at 7:30 ET. October ADP Employment Change Survey will be released at 8:15 ET. In addition, weekly initial and continuing claims, third quarter unit labor costs and preliminary productivity will all be released at 8:30 ET. Lastly, the ISM Index, construction spending, and consumer confidence will all hit the wires at 10:00 ET

All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.