Forget Today, What About Tomorrow?
A day after its top exec forecast a
declining truck market, Navistar International put out a
more upbeat message on Thursday. You can read the press release on the wire but
not on the tape. The stock fell to a 52-week low and appears headed lower.Â
On Wednesday, the chief executive of
Navistar
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PowerRating) told reporters that the domestic truck and bus market could
shrink by 20% in 2001. On Thursday, truck, bus and engine maker issued a statement
reaffirming its sales forecast for the current Oct. 30 fiscal year and
noting analysts estimates reported to First Call/Thomson Financial had
“have anticipated an industry slowdown for some time.”
The market, of course, discounts the
future. Now that next year’s outlook is grabbing headlines, who cares about current year
forecasts? As for idea that the 2001 slowdown is already in the analysts’ estimates, maybe so. But that doesn’t mean those numbers are baked into the stock price!
Navistar shares Thursday lost 1 to 30 7/16 on
higher-than-usual volume, closing at a new 52-week low. Buyers did come in
during the last two hours of trade, pulling the stock off an intraday low of 30
7/17.
Looking at the chart, you can see that Navistar shares have tried to make several stands
around 32 a share, first in late Feburary-early March, next in early May and
then again this month. The stock broke and closed below those support levels on
Thursday. Odds are Navistar heads south from here.
After Thursday’s close, Morgan Stanley
Dean Witter
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PowerRating) posted earnings of $1.26 a share for the May 31 second
quarter vs. 97 cents a year ago and Wall Street expectations of $1.13, according
to First Call/Thomson Financial. Ahead of the news, the stock lost 2 7/16 to 83
3/16 on light volume.
The stock has been trying to complete
the right side of a correction-recovery pattern and has been digesting the sharp
gains of its late May-early June rally.
Volume, though, remains less the
desirable. Notice how the largest volume days since the stock peaked on May 24
were all down days with the stock closing in the bottom half of the session
trading range. (See arrows marking price and volume bars in the chart.)
It does appear that institutions
spread out their buying over several days during the May-June rally, but
I’d like to see a more pronounced cash influx. Let’s see tomorrow
how the stock reacts to the Q2 results.