AAPL, INTC, A, HPQ, SNDK, ALK, DAL, CSX, NSC, KKD, BOBE, MAS, RYL, MAS, PHM

US stocks started the day on a down note after Moody’s cut France’s sovereign rating to ‘Aa1′ from ‘Aaa.’ In addition, disappointing earnings from Hewlett-Packard NYSE:HPQ 11.71, -1.59 contributed to the cautious sentiment.

The major averages broke into positive territory midday, but saw new lows as US Federal Reserve Chairman Ben Bernanke spoke in front of the Economic Club of New York.

Mr. Bernanke commented on the F-Cliff by saying that if a resolution is not reached, the US economy would fall to recession, and the Federal Reserve would be powerless as the Chairman does not believe the Fed has the tools necessary to deal with it.

The S&P 500 followed the early afternoon slide with a rise towards the unchanged level before ending with a gainer of 0.1%.

DJIA 12788.51-7.45 (-0.06%) NAS 2916.68+0.61 (0.02%) S&P 5001387.82+0.93 (0.07%)

!0-yr T-Note-16/32 1.672
NYSE Adv 1682 Dec 1347 Vol 644.5-M

NAS Adv 1159 Dec 128 2Vol 1.53-B

Industry Watch

Strong: Consumer Discretionary, Health Care

Weak: Technology, Energy, Telecoms

The technology sector lost 0.6% and was the weakest performer of the day.

Among tech bellwethers, Apple NASDAQ:AAPL 561.15, -4.58 shed 0.8% after Monday’s rally resulted in a 7.2% gainer. Intel (INTC 19.52, -0.73) fell 3.6%.

Looking at tech earnings: Hewlett-Packard fell 12.0% after reporting mixed results. During Q-4, the computer assembler earned 1.16, which was 0.01 ahead of the consensus estimate. The company’s revenue missed expectations declining 6.7% Y-Y, to $29.96-B. In addition to the results, investors were drawn to another point of interest in the Quarterly report. The report included an $8.8-B charge related to serious accounting improprieties and misrepresentations by Autonomy Corporation before it came under Hewlett-Packard’s control. Following the earnings release, ISI Group downgraded HPQ to ‘neutral’ from ‘buy.’

Agilent Technologies NYSE:A 36.28, -1.23 beat on earnings and reported in-line revenue. The stock settled lower by 3.3% after the company issued cautious guidance as it sees Q-1 earnings and revenue below analyst expectations.

Also of note, SanDisk NASDAQ:SNDK 36.84, -0.46 fell1.2% after reports suggested the company may face antitrust claims over some of its NAND drives.

The Dow Jones Transportation Average saw a marginal loss as airlines outperformed.

Delta Air Lines NYSE:DAL 9.68, +0.13) and Alaska Air NYSE:ALK 41.82, +0.29) were the top performing carriers, seeing respective gains of 1.4% and 0.7%. The relative strength in airlines was a by-product of today’s action in Crude Oil.

On the downside, 4 railroads within the transportation average under performed. CSX NYSE:CSX 19.52, -0.16 lost 0.8% after Avondale downgraded the stock to market perform from outperform,  Norfolk Southern NYSE:NSC 56.91, -1.12 was the worst performing rail operator, off 1.9%.Quick service restaurants were in focus after reporting their quarterly results. Krispy Kreme Doughnuts NYSE: KKD 9.31, +1.77 rose 23.5% after beating on earnings and revenue. During Q-3, the company earned 0.12, which was 0.04 ahead of the consensus estimate. In addition, the revenue of $107.1-M also beat expectations. The earnings report also contained upbeat guidance as the company sees its Y 2013 and Y 2014 earnings ahead of analyst expectations. As a result of the strong report, shares of Krispy Kreme were bid to levels not seen since September 2011.

Meanwhile, Bob Evans NASDAQ:BOBE 35.06, -1.28 lost 3.5% after missing on both the top and bottom lines. In the earnings release, the company also indicated it is exploring strategic alternatives for its Mimi’s Cafe business segment.

Tuesday’s economic data spotlighted housing. October US building permits were reported at 866,000. The reading was below the prior month’s rate of 890,000, and fell short of the 870,000 expected by the consensus.

US housing starts hit an annualized rate of 894,000 units. This number was well ahead of the 840,000 expected by the consensus, and it represented an increase from prior month’s reading of 863,000.

Homebuilders and providers of building materials outperformed due to upbeat housing starts data. PulteGroup NYSE:PHM 16.75, +0.85 jumped 5.4% and Ryland Homes NYSE:RYL 34.28, +1.92 rose 5.9%. Among building material suppliers, Masco NYSE:MAS 16.31, +0.87 rose by 5.6% and NCI Building Systems NYSE:NCS 11.85, +0.64 rallied 5.7%.

                                      US Major Market Indexes Technical Analysis

 
DateSymbolPriceTechnical AnalysisSupportResistance
20 Nov 2012QQQ63.6Bearish (-0.33) 63.1164.38
20 Nov 2012DIA127.5Bearish (-0.34) 127.14128.13
20 Nov 2012SPY138.78Bearish (-0.33) 137.61139.54

Wednesday’s economic data: the weekly MBA Mortgage Index will be announced at 7:00 a EST. In addition, weekly initial and continuing claims will be reported at 8:30 a EST. Lastly, the final November Michigan Sentiment and October leading indicators will be reported at 9:55 a EST and 10:00 a EST, respectively.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.

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