NEW YORK ( TheStreet) -- Well, that's out of the way. The Dow Jones Industrial Average moved past the 13,000 mark in intraday trading on Tuesday, but the blue-chip index, up 6.1% so far in 2012, couldn't hold it through the close. Not to worry though, the trend is still pretty friendly with the Dow up three days in a row, and in five of the past six sessions. Big, round numbers always get a bit of extra attention, and given how much of the market is driven by psychology, that makes some sense. As has been mentioned ad nauseam, this was the Dow's first trip into the rarified air above 13,000 since May 20, 2008, before Lehman Bros. failed and the financial crisis really and truly kicked in. The folks at Dow Jones Indexes were ready with all the pertinent facts -- it took 127 trading days to revisit 13,000 from the prior first close above 12,000 -- and it's worth noting that the run to 14,000 from the Dow's first close above 13,000 last time around was a speedy 59 trading days, the second fastest 1,000 point advance in the index's history. Whether this market has that kind of momentum remains to be seen. The skepticism is definitely building, but that's been the case for a few weeks now, and the indexes keep churning higher. Maybe 13,000 will be a lucky number, bringing enough money off the sidelines to carry stocks another leg higher. Meanwhile, Citigroup provided a few reasons for investors to not chase the tape on Tuesday, prior to the Dow's flirtation with 13,000. Fourth-quarter reporting season is waning and the firm thinks the disconnect between falling profit outlooks and rising stock prices is cause for concern. "While equities have surprised many with an impressive start to 2012, the revision momentum for earnings have proven to be disappointing, with mixed forward profit guidance amidst uncertainty surrounding European economic activity, corporate margins, and the impact of rising oil prices," Citigroup said. "Typically there is a tighter relationship between earnings and the S&P 500 and the divergence is worrying in the short term."
That said, the firm is sticking with its year-end target of 1425 for the S&P 500, which would represent 4.6% upside from Tuesday's close at 1,362. That's on top of the 8.2% surge already seen in 2012. "Valuation is still compelling as are indications from implied long-term earnings expectations and the corporate credit cost backdrop," Citigroup said. "Thus, one should not confuse the near-term concerns with ongoing bullishness for 2012 and buying on weakness makes sense rather than chasing the tape." One stock that looks bound to see a lot less tape-chasing is Netflix ( NFLX - Get Report), which fell 3% to close at $117.40 following news that Comcast ( CMCSA) is launching its own streaming content service. The move spurred talk that DirecTV ( DTV) could be next and put the squeeze on Netflix shares, which have been one of the best performers in the S&P 500 this year, rising an incredible 75% based on Tuesday's close at $117.40. Jefferies offered up some commentary on Netflix early Tuesday, ahead of the Comcast news. The firm hosted an investor meeting with the company's management last week and while it "walked away incrementally more positive," Jefferies kept its hold rating on the stock with a $115 price target. The way forward for Netflix as competition increases appears to be getting hold of enough exclusive, proprietary content to stand out. That's why Reed Hastings has repeatedly said he sees HBO as a threat because of the quality of the content it controls. Jefferies thinks the company's efforts in this area are improving but, as evidenced by the Comcast move, the race is going to be tight. "As Netflix grows larger, it is increasingly focusing on differentiating its offering through a mix of exclusive deals and original content, which should allow it to stay ahead of competition and position it for longer-term growth in subscribers," the firm said. "In pursuing this strategy, management is looking to emulate HBO's playbook, which has garnered 30M domestic subs." It wouldn't be a shocker to see further profit-taking in the stock since it's come so far, so fast, and there's a lot riding on whether the company can keep up the strong growth in streaming subscribers in its most recent quarter. Remember, Netflix is still expected to post losses for the next three quarters as it invests in international operations, and sell-side sentiment remains very negative with 29 of the 35 analysts covering the stock in the bear camp at hold (20), underperform (6) or sell (3). Check out TheStreet's quote page for Netflix for year-to-date share performance, analyst ratings, earnings estimates and much more.
Moving on to Wednesday's scheduled news, Hewlett-Packard ( HPQ - Get Report) is reporting its fiscal first-quarter results after the closing bell, and the average estimate of analysts polled by Thomson Reuters is for earnings of 87 cents a share in the January-ended period on revenue of $30.71 billion. The company itself has guided for a profit of 83 to 86 cents a share in the quarter. Plagued by management missteps, HP shares were one of the worst performers within the Dow in 2011, losing 39%, with only Alcoa ( AA), down 44%, and Bank of America ( BAC), dropping 58%, being more of a drag on the blue-chip index. Since the calendar turned though, the stock has seen a bounce, rising nearly 15% year-to-date. Based on Tuesday's close at $29.35, the shares have jumped 36.5% since hitting a 52-week low of $21.50 on Sept. 23. Most of Wall Street is still on the fence with 23 of the 35 analysts covering the shares at either hold (18) or underperform (5), and the 12-month median price target sitting at $30.50. Sterne Agee is one of the bulls, rating the stock a buy with a $34 price target, and based on its supply chain channel checks, the firm expects HP to likely meet or exceed the consensus view for the quarter. "What we are picking up are mixed trends where the company is regaining credibility with customers and fixing inventory issues in its PC (31% of revenue) and printer (20%) businesses," Sterne Agee wrote. "In terms of end markets, we are picking up relative strength in enterprise and SMB markets (65%-70% of revenue) offsetting weakness in consumer (~25%). The reason why we think HPQ will meet or exceed consensus is because we believe the company has set the bar low enough where consensus is looking for a modest 5% Y/Y decline in revenue." As for guidance, the firm expect HP will likely forecast a profit in line with the current analysts' view for a profit of 95 cents a share, and reiterate an outlook for earnings of at least $4 per share in fiscal 2012.
"We maintain our Buy rating on HPQ shares as we find the risk-reward favorable at 6.5x CY12 EPS," Sterne Agee said. "We believe the company is an underappreciated turnaround story where its trading multiple could expand as investors get more comfortable with the company's improved focus and execution." Credit Suisse is less optimistic. The firm is at neutral on the stock but it did lift its price target to $30 from $26.50 on Tuesday, citing "modest multiple normalization." "Although we believe focus on profitability will help drive margin improvement (at the expense of revenue), we believe HP will double R&D focus across business units to drive organic growth, which we think will limit material margin expansion. We continue to view 2012 as a transition year." Check out TheStreet's quote page for Hewlett-Packard for year-to-date share performance, analyst ratings, earnings estimates and much more. Notable reports before the opening bell include Anadigics ( ANAD), Chico's FAS ( CHS), Clean Harbors ( CLH), Dollar Tree Stores ( DLTR), Eaton Vance ( EV), El Paso Electric ( EE), Garmin Ltd. ( GRMN), Great Wolf Resorts ( WOLF), Lithia Motors ( LAD), Medicines Co. ( MDCO), Nicor ( GAS), R.R. Donnelly ( RRD), TJX Cos. ( TJX), Toll Brothers ( TOL), and Zale Corp. ( ZLC). The late roster features Analog Devices ( ADI), Angie's List ( ANGI), Avago Technologies ( AVGO), Boston Beer ( SAM), Caribou Coffee ( CBOU), Dillard's ( DDS), DryShips ( DRYS), Express Scripts ( ESRX), Flowserve ( FLS), Fluor ( FLR), Goodrich Petroleum ( GDP), Hertz Global Holdings ( HTZ), Jack in the Box ( JACK), Limited Brands ( LTD), Maiden Holdings ( MHLD), Skullcandy ( SKUL), Stone Energy ( SGY), and Williams Cos. ( WMB). Apple ( AAPL - Get Report) will also be in focus on Wednesday as investors position themselves ahead of the company's annual shareholder meeting on Thursday. Expect the dividend chatter to pick once again as Tim Cook & Co. meet the faithful. Sterne Agee thinks instituting a regular payout "makes the most sense" for Apple, which finished Tuesday at $514.85, up 2.5% on the day. "We believe a yield in the 2%-3% range would be very attractive for shareholders, including employees," the firm said on Feb. 10. "The reason is that the company's strong cash flow should be able to fund this (which we estimate could be $75-$80 billion in the next four quarters vs. the $45.3 billion we estimate the company generated in the last four quarters). The company's net cash position currently stands at $97.6 billion and is growing quarterly." Sterne Agee also thinks a dividend would actually broaden the appeal of what often seems like the world's most beloved stock. "The other positive outcome from paying a dividend is that it would bring in a new class of investors where funds that only invest in dividend paying stocks could now ownAAPL shares," the firm said. "We believe this should help further stabilize its shareholder base." Wednesday's economic calendar features the Mortgage Bankers Association's weekly application index at 7 a.m. ET, Redbook weekly chain-store sales at 9 a.m. ET; and existing home sales for January at 10 a.m. ET. The housing market has been showing signs of life of late and the consensus view is for existing home sales to come in at 4.63 million for last month, a performance that would be up slightly from 4.61 million in December, and mark a fourth straight monthly increase. Ian Shepherdson, chief U.S. economist at High Frequency Economics, sees an upside surprise, predicting sales at 4.7 million. "The pending sales index is the only advance indicator of actual sales, and while it does a decent job, it's far from perfect," he said. "It tends to over-predict sales when activity is spiking higher, so we are reluctant to forecast a headline number as the 4.8M the pending sales index suggests." And finally, Dell ( DELL) was a loser in the after-hours session as the PC maker came in a penny short, failing to validate the strong run the stock's been on since the start of the year. Brocade Communications ( BRCD) went in the opposite direction, surging 6% to $5.83 after its much better than anticipated earnings report. The networking equipment maker posted non-GAAP earnings of 20 cents a share, nearly 50% better than Wall Street's consensus view for a profit of 13 cents a share. -- Written by Michael Baron in New York. >To contact the writer of this article, click here: Michael Baron.