12:35pm (EST)
The market is trying to rebound from a two-day slide and has held up well after hearing Federal Reserve Chairman Ben Bernanke tell Congress that low interest rates are still needed to support the economy. He also added that interest rates will probably remain low for an extended period to allow more time for an economic recovery.
The Commerce Department said sales of new homes fell to a record low in January as Wall Street had been expecting an increase. New home sales fell a whopping 11.2% last month to a seasonally adjusted annual sales rate of 309,000 units versus a forecast of 360,000. This was the lowest level on a record in nearly 50 years.
The Department of Energy released its inventory report which showed a larger than expected build up of crude oil, but a larger than expected draw down of gasoline.
As a result, the Dow is currently up 85 points to 10,367. The Nasdaq is higher by 22 points and is at 2,236 while the S&P is up 9 points to 1,103..
In earnings news, Garmin (GRMN, $31.99, down $2.46) is getting a haircut despite beating Wall Street’s estimates.
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The company earned $278 million, or $1.38 a share versus $158 million, or $0.78 a share, during the year ago period. More importantly, Garmin also said it sees its NuviFone operating margins to be slightly negative in 2010.
We have mentioned Garmin often in this space over the last few months and yesterday we profiled an earnings trade to take advantage on a possible move lower. We knew the company would beat estimates but like we told our readers yesterday, Garmin is the next Blockbuster (BBI/B, $0.26, down $0.03).
Garmin has made a niche for itself in the navigation field but there is just too much better and cheaper competition that continues to eat away at the company’s margins. Here is what we said yesterday in our Members Area:
“Garmin reports earnings on Wednesday and we have talked about Garmin in the past. A recent stroll in our neighborhood showed the latest Garmin devices selling at 50% discounted prices and there were a TON of them. It looked liked the same display that has been up at Christmas…
The company is in a dying business as simple, easier ways of navigation are now available. Google and Nokia said they will offer free turn-by-turn navigation on mobile phones and we are sure other applications will continue to be far cheaper than Garmin’s products.”
Current subscribers who acted on those comments are up 75%-100% today on a put option trade. Yes, earnings trades are risky but if you can read the hidden message before a company reports then you have a chance at a pretty good payday.
We have updated all of our trades, including Garmin, so please check the Members Area NOW…
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