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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

9/19/13

Equity futures point to modest gains at the open as the bulls look for follow through buying after yesterday's foray into record territory. However, current levels may prove problematic, at least for the near-term, as trade tests trendline resistance that dates back to November 2008. Data out this morning was better than expected as tnitial claims climbed to 309K (340K expected, 294K previous) while the current account deficit narrowed to $98.9 bln ($100.0 bln expected, $104.9 bln previous).

It was a sea of green across Asia as all of the major bourses saw gains on the heels of the Fed's decision to delay the tapering of its asset purchase program. India's Sensex (+3.4%) surged to his highest level in almost three years as traders gobbled up shares ahead of tomorrow's Reserve Bank of India rate decision where expectations are for no change to the current 7.25%. Emerging markets led the region higher as Indonesia's Jakarta Composite (+4.7%) and Thailand's SET (+3.5%) led the way. Elsewhere, Japan's Nikkei (+1.8%) was buoyed by comments from Bank of Japan Governor Haruhiko Kuroda, suggesting policy is having an effect on the real economy. China's Shanghai Composite and Taiwan's Taiex were closed for Mid-Autumn Festival.

In Europe, all of the major bourses are higher as Britain's FTSE and Italy's MIB lead the way with gains of 1.4%. The strength in Italy comes following a Senate committee vote which favored the expulsion of Silvio Berlusconi from politics. A full Senate vote will now take place in October. Traders should take note of the sharp drop in yields across the region with the 10-yr Gilt off 15 bps at a two-week low of 2.685%.

Treasuries hold little changed amid a quiet trade. The flat session has the 10-yr yield hovering near 2.700%. Meanwhile, the Dollar Index has managed to erased its early losses with action now unchanged at 80.25. Notable is the greenback's strength against the Japanese yen (USDJPY +105 pips @ 99.20). CAG, ORCL, RAD, SCS are in focus following the release of their quarterly results...The following are the most important factors influencing the market this morning:

Asian Markets Close: Nikkei +1.8%, Hang Seng +1.7%, Shanghai CLOSED

In regional economic data:

Japan's trade deficit narrowed to JPY960 billion from JPY1.02 trillion (deficit of JPY1.10 trillion expected) as exports increased 14.7% year-over-year (14.5% expected, 12.2% prior) and imports climbed 16.0% (18.5% consensus, 19.6% previous). In addition, the adjusted trade deficit came in at JPY0.79 trillion (-JPY0.81 trillion expected, JPY0.91 trillion prior). Separately, the All Industries Activity Index rose 0.5% month-over-month (0.3% expected, -0.7% prior).

New Zealand's GDP increased 0.2% quarter-over-quarter (0.1% expected, 0.4% prior).

Looking at news:

Bank of Japan member Takahide Kiuchi said he sees more downside than upside risks to the Japanese economy. He also said the BoJ may be forced to step up its easing efforts due to the Fed's policy course.

Emerging markets rallied following the Fed's decision to maintain its policy stance rather than reduce the size of its asset purchases, as many had expected. Indonesia's Jakarta Composite surged 4.7% and India's Sensex jumped 3.4%.

Europe: FTSE +1.4%, CAC +0.9%, DAX +1.1%, MIB +1.4%, IBEX +1.0%

Participants received a handful of economic data:

Great Britain's retail sales fell 0.9% month-over-month (0.4% expected, 1.1% prior) while the year-over-year reading rose 2.1% (3.3% forecast, 3.0% previous). In addition, core retail sales fell 1.0% month-over-month (0.3% expected, 1.2% prior while the year-over-year reading increased 2.3% (3.1% consensus, 3.2% last). Also of note, CBI Industrial Trends Orders improved to 9 from 0 (2 expected).

The Swiss National Bank left its key interest rate unchanged at 0.00%, as expected. Separately, the country reported a trade surplus of EUR1.85 billion (EUR2.74 billion expected, EUR2.49 billion prior).

In news:

Germany's anti-euro party has filed a court complaint, accusing the EFSF of fraud. With the national election coming up this weekend, the latest polls indicate the party could win 5% of the vote, which would allow the party to enter parliament.

DYN responds to Foresight Energy proposal: 'Completely lacks merit and is absolutely not a viable alternative'

MCBI and EWBC enter into definitive agreement for merger

PRE provided initial estimate of German hailstorm losses of $50-60 mln pre-tax and net of retrocession and reinstatement premiums

ACC provided fall 2013 leasing update; 2013 Q4 same store properties are 96.7% leased

ATVI announced that a court ruled to halt the closing of a transaction with Vivendi

GTIV announced that they have entered into a definitive merger agreement whereby Gentiva will acquire Harden; The purchase price to be paid by Gentiva is ~$408.8 mln; Company expects the acquisition to be accretive within the first 12 months following closing

HTS lowered quarterly dividend 21% to $0.55 per share

Earnings/guidance of interest:

ORCL is down 2% this morning, giving up gains following weak Q2 guidance; the stock popped 2% to a 4 moth high in the after hours after the co reported Q1 adj. EPS of $0.59 vs. the Consensus of $0.56; non-GAAP rev rose 2.1% YoY to $8.38 bln vs the $8.48 bln consensus, but Q2 EPS guidance of $0.64-0.69 vs. the $0.69 consensus and non-GAAP rev -1% to +2% ~$9.02-9.30 bln vs. the $9.42 bln consensus caused a sell off during the conf. call.

CAG is ~flat after reporting Q2 EPS in-line with last week's downside preannouncement on lower than expected rev; co reaffirmed FY14 EPS guidance that was lowered last week; Ralcorp performance is on track

RAD is +14% after reporting upside Q2 EPS, including items, on in-line rev; co raised FY14 EPS guidance and guided FY14 rev to the high end of the prior range

SCS is -5% after missing Q2 estimates; co guided Q3 in-line

Select analyst actions of interest:

Upgrades: GTAT upgraded to Buy from Neutral at UBS, GRPN upgraded to Buy at Stifel, TSLA tgt raised to $200 from $160 at Deutsche Bank, HERO reinstated with a Buy at Deutsche Bank, DEO upgraded to Outperform from Mkt Perform at Bernstein, DEG upgraded to Buy from Neutral at Nomura, TWX upgraded to Overweight from Equal-Weight at Morgan Stanley, AG upgraded to Strong Buy from Outperform at Raymond James

Downgrades: DIS downgraded to Equal-Weight from Overweight at Morgan Stanley, CSCO initiated with an Underperform at Credit Suisse

Technical factors: The surprise move by the Fed led to a substantial breakout above its previous all time high from Aug (1709) bringing the dramatic Sep gain to 5.8% from intraday low to high. The surge brought into play a technical target zone (1729/1730) which lined up with the upper boundary of the steep Sep channel. While also extended on daily/intraday time frames, momentum is impressive. Resistance above is in the 1735/1737 area. Short term will be watching the 1720/1718 zone for a read if some corrective action develops.

Looking ahead: Existing home sales, the Philly Fed, and leading indicators are due out at 10 am ET. CTAS, TIBX will release their quarterly results following today's close while DRI is set to report ahead of tomorrow's open.
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.