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PreMarket Prep Recap: Impact Of Cowen's Chip Upgrade, Raymond James Makes A Call In The Housing Sector

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Analysts ratings changes were the focus on today's PreMarket Prep Show.

Cowen Says Chips Will Continue To Rip

Before the open, Cowen upgraded both Micron Technology (NYSE: MU) and Western Digital (NASDAQ: WDC) from Market Perform to Outperform. The timely upgrade has added more momentum to the Western Digital rally and reinvigorated the rally that appearing to stall in Micron.

For those who waited for Western Digital to fall back into Monday's range for a lower-risk long, they were rewarded. After a higher open, it had quick decline but found support just under Monday's high ($64.55) at $64.53 and is approaching $67. No monthly resistance in the issue was identified in the issue until its August 2018 high of $70.43.

For Micron it was a different story. After a much higher open, it only dipped a few pennies before resuming its move higher towards the $57 area. No monthly resistance in this issue can be found until its July 2018 high of $58.15.

Raymond James Makes A Bold Call Ahead Of Homebuilder Earnings

Since homebuilders have a different earnings reporting cycle than most issues, a few of them will report earnings this month. Lennar (NYSE: LEN) will report before the open on Wednesday, KB Homes (NYSE: KBH) will report after the close on Thursday and D.R. Horton (NYSE: DHI) will report before the open on Jan. 27.

The issues in the sector often trade in sync with each other and will be impacted by each others reports. Therefore, with KB Homes on deck, the upgrade from Raymond James to Outperform can construed as a bold call as poor report by the company may exert selling pressure on others in the sector.

As the issue was trading near the $54 area when it was being discussed on the show, the author of this article noted it must clear Monday's high ($54.10) for the rally to continue. After a higher open, it immediately stalled at $54.01 and is drifting toward unchanged ($53.41) on the session.

Ryan Detrick Joins The Show

Midway through the show, Ryan Detrick, CMT-Senior Market Strategist at LPL Financial joined the broadcast. Ryan, being a true historian when it comes to the markets, discussed the long-term impact of major geopolitical events. Also, he shared some insightful data on the market performance following sizable gains and how the market has performed decade to decade going back to the 1950s.

At 8:35 a.m. EST, Michelle Krebs, Executive Analyst at Cox Automotive will join the crew with a forecast for 2020 automotive sector.


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