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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

11/5/12

Today's session began on a mixed note. The S&P 500 spent the majority of the day in negative territory as cautious trade took place ahead of tomorrow's Presidential election. However, late afternoon buying drove the benchmark average to a higher finish by 0.2%.

The technology sector outperformed the broader market. The biggest tech component, Apple (AAPL 584.62, +7.82), gained 1.4% after reporting that sales of its iPad 4 and iPad mini have reached three million units during the first three days of sales. Also of note, shortly before the close reports indicated that the company may be considering a switch from Intel (INTC 21.84, +0.01) processors. Following the news, Intel shares surrendered their gains, while AMD (AMD 2.10, 0.00) and ARM Holdings (ARMH 34.08, +0.88) spiked higher.

Netflix (NFLX 78.24, +1.34) added 1.7% after announcing it will issue one right for each current share of outstanding common stock at the close of business on November 2, 2012. The rights will not be exercisable immediately. However, if they do become exercisable, each right will entitle shareholders to buy one one-thousandth of a share of a new series of participating preferred stock at an exercise price of $350 per right. The plan is intended to protect Netflix and its stockholders from efforts to obtain control of company.

In technology earnings, Rogers Corporation (ROG 41.90, +2.67) spiked 6.8% after reporting mixed results. The supplier of communications equipment reported earnings of $0.69, which was $0.05 ahead of the Capital IQ consensus estimate. Meanwhile, the company's revenue of $130.20 million was slightly lower than estimated. However, the strength in the stock is likely related to upbeat guidance as the company expects fourth quarter earnings above analyst estimates while revenue is expected to be in-line with expectations.

On the downside, Ebix (EBIX 19.26, -3.15) fell 14.1% after Bloomberg reports indicated the software company is facing a Securities and Exchange Commission probe focused on its accounting practices. Since the initial report, company officials have issued the following statement: "The Ebix senior management team has not been advised of nor is it aware of any SEC investigation regarding the Company's previous filings. We stand behind the accuracy of our public filings. The Bloomberg article is inaccurate and misleading in many respects and we intend to evaluate all avenues of recourse."

Looking at the financial sector, The SPDR Financial Select Sector ETF (XLF 15.97, -0.03) underperformed the broader market as it settled lower by 0.2%.

Among the majors, Goldman Sachs (GS 124.08, +0.83) and Wells Fargo (WFC 34.02, +0.28) outperformed as the two stocks settled higher by 0.7% and 0.8%, respectively. Meanwhile, Bank of America (BAC 9.75, -0.10) and Citigroup (37.32, -0.28) were the notable laggards as the pair saw respective losses of 1.0% and 0.7%.

Elsewhere, KBW (KBW 17.47, +1.17) announced a merger with Stifel Financial (SF 32.58, +0.67). Per the agreement, KBW shareholders will receive $17.50 per share, which represents a 7.4% premium to KBW's Friday closing price. In addition, Stifel Financial reported its earnings this morning. During the third quarter, the investment brokerage earned $0.60 on $420.08 million in revenue. Both figures were ahead of the Capital IQ consensus estimates.

Also of note, MetLife (MET 34.69, -0.01) has agreed to sell its $70 billion mortgage servicing portfolio to JPMorgan Chase (JPM 42.27, -0.15). The move is aimed at expanding JPMorgan's footprint in the mortgage servicing business, while banks were expected to reduce their exposure in this area. As a result, companies which concentrate on mortgage investment were pressured. Nationstar Mortgage Holdings (NSM 30.20, -2.91) fell 8.8% and Ocwen Financial (OCN 32.95, -2.06) slid 5.9%.

The Dow Jones Transportation Average outperformed the broader market and settled higher by 0.3%. Alaska Air (ALK 40.13, +1.09) was the top performer within the complex after the carrier reported an 8.5% increase in traffic on the back of a 5.1% increase in capacity as compared to October 2011. In addition, Hurricane Sandy did not have a material impact on the company's capacity as 38 flights to and from the East Coast were cancelled. The stock rose by 2.8% following the positive report, and traded at its all-time high. Rival United Continental (UAL 20.25, +0.52) advanced 2.6% after the company's first Dreamliner 787 supplied by Boeing (BA 70.41, +0.36) took flight over the weekend.

Two automakers reported their quarterly results before today's open. Tesla Motors (TSLA 31.50, +2.58) surged 8.9% after reporting mixed earnings. During the third quarter, the automaker registered a loss of $0.92, which was $0.01 below the Capital IQ consensus estimates. Meanwhile, the company's revenue of $50.1 million represents a 13.2% year-over-year decline, but the figure came in ahead of analyst expectations. Lastly, Tesla reaffirmed its full-year 2012 guidance as well as its full-year 2013 gross margin projections and delivery targets. Note that today's buying has lifted the stock to levels not seen since late September.

Elsewhere, Toyota Motor (TM 81.35, +3.55) finished higher by 4.6% after its bottom line exceeded the Capital IQ consensus estimates. The Japanese carmaker reported earnings of JPY81.44, which was JPY8.47 ahead of expectations. Meanwhile, the company's revenue was in-line with analyst estimates. Regarding future outlook, the company raised its full-year 2013 net income guidance and lowered the full-year 2013 revenue expectations.

The October ISM Services index was reported at 54.2, which is below the 55.0 Briefing.com consensus, and down from September's reading of 55.1.

There is no economic data scheduled for tomorrow. However, the U.S. Treasury will auction off $32 billion in 3-yr notes.

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.