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12:50pm (EST)
The bulls have kept the market in positive territory for the majority of the session although the bears sniffed red shortly after the open. The Dow and S&P 500 briefly slipped into negative ground but quickly bounded off their lows and are challenging key resistance levels once again.
The Dow is currently up 35 points to 10,688 and has traded as high as 10,696. The S&P is up 4 points and is trading at 1,125 while the Nasdaq is higher by 10 points to 2,298.
The Dow could challenge 10,800 if it can get above 10,700. If the S&P can clear 1,125-1,130 then there is an air pocket up to 1,150 which is the upper end of our current target for the index. The Nasdaq is trying to clear 2,300 and make a run at 2,350 but continues to struggle with this level.
We still believe any sustained rally will depend on how the financial stocks trade and the trend is still lower for the sector. Bank of America (BAC, $13.84, down $0.12) is near its 52-week low of $13.30; Morgan Stanley (MS, $27.42, down $0.23) and JPMorgan Chase (JPM, $40.04, down $0.40) both continue to trade lower…
McDonald’s (MCD, $73.03, up $1.29) is up nearly 2% after reporting great same-store sales numbers and posting its biggest monthly increase in U.S. sales in more than a year.
The company said sales jumped 5.7% in the U.S. and Europe sales were strong as they rose 5.3%. Overall, global sales climbed 7%. Mickey D’s is benefitting from its new fruit smoothies and frappes which seem to be going over well with customers during these hot summer months.
The Fed will talk on Tuesday so look for the indexes to continue to test resistance or trend lower for the rest of the session. Subscribers, check the Members Area for the latest updates.
McDonald’s (MCD) Slips, Bulls Keep Pushing
Thursday, September 9th, 2010
12:30pm (EST)
The bulls are in the green after a better-than-expected jobless claims report and news that the trade deficit narrowed significantly in July as exports climbed to the highest level in nearly two years. The U.S. international trade balance level for July came in at $42.8 billion versus estimates of $46.8 billion.
As a result, the Dow is showing a gain of 67 points and is at 10,454 while the S&P 500 is higher by 10 points to 1,108. The Nasdaq is advancing by 16 points to 2,245.
The S&P has traded to a high of 1,110 and its 200-day moving average is at 1,115. We have pegged a top of 2,250 for the Nasdaq and the index has traded to a high of 2,251.
McDonald’s (MCD, $73.73, down $2.35) is down 3% despite reporting higher August same-store sales. The company said same-store sales increased 4.9% for the month, up from a 2.2% pop from a year ago. Specifically, here in the States, Mickey D’s experienced a 4.6% rise in same-store sales, up from a 1.7% increase in August 2009.
Same-restaurant sales rose 7.8% in the company’s Asia Pacific, Middle East and Africa regions. Great numbers, but for some reason analysts were disappointed with same-store sales for France, which increased 2.2% but dropped from a 3.5% increase a year ago. Go figure.
At any rate, McDonald’s just went on sale with today’s drop. Shares were approaching their 52-week high of $76.26 before the news which was set last week and should rebound if the bulls can push past resistance levels. We will certainly be adding this one to our Watch List for a future trade.
In earnings news, Men’s Warehouse (MW, $22.04, up $1.04) is trading higher after topping Wall Street’s expectations. The company reported a profit of $43 million, or $0.80 a share, versus $40 million, or $0.75 a share, in the year earlier period. Men’s would have earned $0.83 a share but they wrote-off nearly $3 million in charges as revenue jumped 2% to $537 million. Analysts were expecting earnings of $0.77 a share on revenue of $536 million.
We have a special update in our Members Area on what the current action means and we have added a couple of more trades to our Watch List as we get ready for the market’s next move.
Tags: MCD, McDonald's, option picks, same-store sales, stock options trading
Posted in Company Commentary, Hot Stocks, Market Analysis | Comments Off