Friday Morning, September 28th
Dow Stock News
AT&T CEO Stephenson is setting his sights on acquiring companies abroad and offering telecom services across the globe. - WSJ
IBM - reiterate Buy at UBS with $133 price target
FT also writes that Intel (INTC) says that a large number of jobs will go overseas if healthcare cost in the US keep rising.
The New York Times writes that Disney (DIS) has shut down its cellphone service.
MMM 3M UBS Initiated at Buy $108
Ice Man Stocks
Breakouts the Ice Man may consider trading:
XRAY - 41.80
JOBS - 21
Regular Trades the Ice Man may consider:
SAI - 19
TKLC - 12.10
DECK - 11.20 warning 113.50 breakout
FIG - 22
MPEL - 17
MSTR - 79.75
URRE - 10
MDTL - 12.45, 13
LXK - 40.75
TGIC - 20
TZOO - 20
JSDA - 12.05
Chinese stocks getting cheap:
YGE - 23.50 Gap
SINA
FFHL - 8.30 Gap
Depressed stocks the Ice Man may buy:
JWN - 45.60 Gap
HNSN - 25.75 Gap
Dollar Man Ideas:
KRY - 3.12
SMI - 6.05
GRZ - 4.25
Depressed Dollar:
CDS - 6.80 Gap
VERT - 5 Gap
Media Commentators
Cramer's Comments:
Bullish: UA, HOLX, PEET;
Bearish: SVNT, CHTT, take partial profits in: GOOG, RIMM, AAPL, AMZN;
Ice Cold Commentators
Break Man Video Summary:
Break out buy (or short sell) watch list for short term gains September 28 includes: ACMR, AHS, ABAX, HE, NNN, NWS, TTI, ULTR.
Several candidates for break out or short sell plays for at least short term gains by buying the break out (or selling the break down) on good volume and closing at least some on the first day.
Swing Man Market Recap:
Stocks gapped up Thursday morning on overnight buying but didn't get very far. The SPX hit 1532 early, pulled back to 1526, then rallied to 1532 again in the last hour of trading to close above the 1530 resistance pivot. At the close the SPX/DOW were +0.30%, and the NDX/NAZ were +0.40%. Short term momentum is a bit overbought, but not near the excessive levels normally seen during up trends. Friday the August core PCE will be reported, along with August construction spending, and several consumer reports.
I don't know that I can remember a market behaving this way for basically two straight days. There was just no volatility today (unless you were trading the China Stocks) with the SPX trading a few points below 1530 most of the day only to see it close one point above at the very end of it. This is NOT what I was talking about when I said if we cleared 1530 we'd be off to the races. When you take out massive resistance you need to do it with power and confirming volume. We got neither today. The bulls and bears stood toe to toe and gave each other their best shot. Neither would flinch. The bulls will say the bears don't have what it takes to knock this market down and they'd make a good case on that argument. The bears, however, could say that the bulls had their shot all day but all they could do was make the market churn at that huge breakout level. I have spoken about how the divergences on the 60's aren't great and that's still the case but they're not terrible. They were also overbought but that's not so much the case any more. The daily charts are fine. The way to look at this is to think that today's churn is usually the forerunner of a pullback but since this bull is so strong and the daily charts are fine, I wouldn't be out there shorting in anticipation of a major failure here. Keep in mind that the way to play is to see the move and play the breakout if done so appropriately or to use short term weakness to pick up new plays.
Breadth Thursday was very strong. 17/12 positive on the Nasdaq and 2/1 positive on the NYSE. Volume continued to be about where it's been over the past several weeks but not the type you'll likely see when the SPX ultimately takes out 15390 with gusto. Volume of 1.7+ billion isn't bad but I'd expect a few hundred million more at least when we make the move. At least we saw solid breadth meaning the majority of stocks are doing just fine. New highs are expanding gradually and new lows are contracting slowly but surely. The Vix remains more than high enough for this market to be able to move appreciably higher. All in all the internals remain on a buy signal.
Let's see how the market can deal with 1530 again today. The churn we saw today was as annoying as it gets. Let's do one or the other. Let's pull back and get it over with or just ramp. The bull wants to run but for now the 60's are questionable so it may, I say may need some more time. As you can see in the charts below, several indexes are very close to resistance so please be aware of this fact when trading. At the time of this writing, the futures are down slightly versus fair value so we'll see if the markets can continue their advance into month end.
Good Trading.
CNBC Fast Money Review
1. OIL SURGES 3%
The headline: Tropical Storm Lorenzo Expected To Hit Gulf Coast as Hurricane; Crude Climbs 3.2% to $82.88.
Najarian says Oil will continue to move higher. The best way to get long oil is to get behind the service sector like BHI, SLB and HAL.
Adami, generally negative on the refiners, calls TSO “compelling’ at $45.
2. WORST SINCE 1970
The headline: Housing Market Looking Bleaker Than Ever as Home Prices Plunge Most Since 1970
Adami says KBH is worth considering for a trade. But he would stop out below $23.50. “All bets are off’ below that level.
Finerman says KBH had “awful’ numbers but the company took a big write-down and it seems like the Street gave it a pass because of that. That piques her interest in considering buying into the homebuilders.
3. BUYOUT BUZZ PICKING UP
The headline: DISH Surges After Oppenheimer Analyst Says T Will Make Bid; Buzz Surrounding WEN, SLM as well.
Make says the AT&T bid is unlikely, but DISH, along with DTV are underowned.
Najarian says the cable names aren´t killing them like they used to be, and the aggressive options trading in the satellite stocks seems to support that.
4. WHO NEEDS BUFFETT
The headline: Financials Lead Market Higher, Even as Skepticism Mounts About NYT Report of Buffett-Bear Buy
Macke says On the trading side, there are a lot of people betting against the financials, but the Fed is keeping them afloat even if their earnings are trainwrecks.
Najarian says the financials are still strong, period, GS and MS especially, and LEH is turning out to be stronger than people expected.
Adami says don´t get suckered into buying BSC as a value play. He thinks the other financials are far better on a valuation basis.
5. EMERGING MARKETS BOOMING
The headline: Shenhua Energy, Largest Chinese Coal Producer, Raises $8.9B in Shanghai Listing; PetroChina, may Raise $5B in Shanghai Share Sale; Chinese Government to Formally Establish Sovereign Wealth Fund
Najarian says China is not over.’ The FXI, is on fire but be careful, he stresses. The index is heavily weighted in financials and telecom – which happen to also be hot – but that is a heavy lack of diversification.
Adami would take some profits in a name like CHL, which is up a staggering 68% just since last month.
6. POPS AND DROPS
PRU popped 3%: Adami says PRU is a great baby boomer play.
PSS popped 6%: Finerman is happy with this pop.
MU popped 6%: Najarian prefers SanDisk.
CBAK popped 20%: Najarian likes this company.
BEAS popped 2%: Macke likes this stock.
YHOO dropped 2%: Macke reveals he´s now bullish on YHOO.
GM dropped 3%: Macke feels the dip is fine for GM.
AMD dropped 3%: Adami doesn´t like AMD.
7. YOUR FIRST MOVE FOR FRIDAY
Macke recommends getting long YHOO and PALM.
Adami likes KBH.
Finerman prefers CKH.
Najarian says NAT is a buy.
News and Events Digest
Breaking News
Department store operator Macy's Inc. said Friday it is launching a program to install solar electric power systems at 28 of its California stores. The systems will be designed and installed by SunPower Corp., which makes solar cells, solar panels and solar systems. - AP
Celera (CRA) announced Friday a $2 million clinical milestone payment from Merck & Co. Inc. (MRK) under a collaboration agreement. The payment results from the development of odanacatib, a potential osteoporosis treatment, into a Phase III clinical trial. Celera, a unit of Applera Corp., added that additional payments are possible if this drug candidate or others move further toward commercial availability. Shares of Celera closed Thursday at $13.55. - MarketWatch
Warren Buffett's Berkshire Hathaway Inc. further cut its stake in the listed shares of PetroChina Co. (PTR) to 7.99% from 8.21%, according to a filing by the U.S. company to the Hong Kong stock exchange Friday. - MarketWatch
OMV´s $20 billion hostile bid for MOL received backing from Mark Mobius, who owns stakes in both energy companies. - WSJ
Banks may benefit from the drop in value of their debt. - WSJ
WYNN - did a spot secondary yesterday for 3.5M shares.
Wesco International Inc.'s (WCC) board approved a stock buyback program of up to $400 million in shares. The Pittsburgh company also said its $400 million stock repurchase program, that was announced on Feb. 1, has been completed. On Thursday, Wesco shares closed down 8 cents, or 0.2%, to $38.98. - MarketWatch
Media Summary:
According to Reuters, Goldman Sachs (GS) offered $1.5 billion for reinsurance broker Benfield
Reuters writes that Alan Greenspan thinks the chance of a US recession is still below 50/50.
Reuters reports that the head of Freddie Mac says the chance of a US recession is close to 40% to 45%.
The Wall Street Journal writes that Google (GOOG) is facing a battle in the US Senate over is purchase of DoubeClick.
WSJ writes that CBS (CBS) has created CBS EyeLab, a site of short clips from its shows to attract web views who only want to spend a few minutes watching video.
WSJ said comments by the head of the FCC cast some doubt on the Sirius (SIRI) merger with XM.
WSJ writes that Dell (DELL) will sell computers in Wal-Mart stores in Brazil and Mexico.
FT writes that the global M&A market fell 42% in the third quarter.
Barron's writes that Big Band (BBND) cuts its forecasts driving the stock down more than 20%.
Bloomberg reports that oil moved up sharply to $83 a barrel.
CNN Money writes that the EPA found the Japanese cars are still more fuel efficient than those made by US companies.
M&A Activity:
3Com Corp. (COMS) will announce that it will sell itself to Bain Capital and Huawei Technologies Co. for more than $2 billion, according to a report Friday morning in The Wall Street Journal. The cash deal values the Marlborough, Mass.-based networking company at more than $5 a share and gives Chinese networking company Huawei Technologies a minority stake in 3Com, the article said. Shares of 3Com closed Thursday at $3.68. - MarketWatch
IPO Central:
IPOs on schedule for the week of 9/28/2007:
BioHeart (BHRT). The company is a biotechnology company focused on using cells derived from a patient's body for treatment of heart damage. The company is selling 3.6M shares at the initial range between $14-$16. The company announced Revenues for the last 12 months of $0M and Net Income of $(-13)M. The Lead Manager is Merriman and Dawson James is co-manager. BioHeart (BHRT) is headquartered in Sunrise, FL and their website is www.bioheartinc.com.
China Digital TV Holding (STV). The company provides conditional access systems to China's digital television market. The company is selling 12M shares at the initial range between $11-$13. The company announced Revenues for the last 12 months of $41M and Net Income of $22M. The Lead Managers are Morgan Stanley and Credit Suisse. China Digital TV Holding (STV) is headquartered in Beijing, China and their website is www.superdtv.com.cn.
Constant Contact (CTCT). The company provides on-demand email marketing for small businesses and non-profits. The company is selling 6.7M shares at the initial range between $12-$14. The company announced Revenues for the last 12 months of $32M and Net Income of $(-10)M. The Lead Managers are CIBC and Thomas Weisel. Constant Contact (CTCT) is headquartered in Waltham, MA and their website is www.constantcontact.com.
Economic Data:
8:30 Personal Income
8:30 Core PCE Inflation
9:45 Chicago PMI
10:00 Construction Spending
10:00 Michigan Sentiment
Upgrades and Downgrades by Sector:
Advertising
FMCN FMCN - price target raised to $70 at HAMR Price Target Raised
FMCN Focus Media CIBC Wrld Mkts Price Target Raised Sector Outperform $55 to $70
Audio-Video Equipmnt
HAR Harman Bear Stearns Upgraded from Peer Perform to Outperform
Beverages
SAMB Sun American Banc Keefe Bruyette Downgraded from Outperform to Mkt Perform
Biotech
XNPT Xenoport Friedman Billings Price Target Raised Outperform $52 to $62
BMRN Biomarin Pharm Citigroup Initiated at Buy $30
Business Services
CRAI CRA Intl William Blair Upgraded from Mkt Perform to Outperform
Chemicals
ROG Rogers Corp Broadpoint Capital Initiated at Buy $50
Communications
Tch BBND Bigband Networks Jefferies & Co Downgraded from Buy to Hold $16.50 to $7
BBND Bigband Networks Morgan Keegan Downgraded from Outperform to Mkt Perform
Computer Hardware
JBL Jabil Circuit Needham & Co Price Target Raised Buy $26 to $27
Computer Software
COGN Cognos Wedbush Morgan Price Target Raised Buy $45 to $49
LNUX SourceForge Merriman Curhan Ford Initiated at Buy
COGN Cognos Soleil Downgraded from Buy to Hold
COGN COGN - downgraded to Hold at SOLE Downgraded
Defense
SXE Stanley Inc. Stifel Nicolaus Price Target Raised Buy $24 to $34
Environmental Prod
FTEK Fuel-Tech JMP Securities Initiated at Mkt Outperform $30
CCC CCC - initiated with an Outperform at JMPS Initiated
Healthcare
WPI Watson Pharm Roth Capital Upgraded from Hold to Buy $34.50 to $39
NEOG Neogen Roth Capital Price Target Raised Buy $23.33 to $28
DVA DVA - price target raised to $75 at Smith Barney Price Target Raised
Homebuilders
KBH KBH - price target lowered to $28 but reiterate a Buy at UBS
Industrial Equipment
RSTI Rofin-Sinar Technologies Bear Stearns Initiated at Outperform
Insurance
CNO Conseco Friedman Billings Upgraded from Mkt Perform to Outperform $17 to $19
Major Pharmaceutical
WYN Wyndham Wldwide Deutsche Securities Initiated at Buy $41
Manufacturing
WCC Wesco CIBC Wrld Mkts Initiated at Sector Outperform $46
Mfg - Fiber Lasers
IPGP IPG Photonics Bear Stearns Initiated at Outperform
Multi-National Banks
CFR Cullen/Frost Bnkrs Keefe Bruyette Upgraded from Mkt Perform to Outperform
HDB HDFC Bank Credit Suisse Upgraded from Neutral to Outperform
Oil and Gas
MWE MarkWest Energy Morgan Keegan Initiated at Outperform
SUN SUN - initiated with a Buy at SOLE with $96 price target Initiated
VLO VLO - initiated with a Buy at SOLE with $88 price target Initiated
ATNI Atlantic Tele-Network UBS Downgraded from Buy to Neutral
ATNI ATNI - downgraded to Neutral at UBS Downgraded
Real Estate
LUM Luminent Mortgage Capital Deutsche Securities Upgraded from Sell to Hold $3 to $1.50
GBE Grubb & Ellis JMP Securities Initiated at Mkt Outperform $15
Recreational Vehicles
THO Thor Industries RBC Capital Mkts Upgraded from Underperform to Sector Perform
Regional Banks
SNV Synovus Keefe Bruyette Upgraded from Mkt Perform to Outperform
CNB Colnl BancGrp Keefe Bruyette Downgraded from Outperform to Mkt Perform
CPF CPB Inc Keefe Bruyette Downgraded from Mkt Perform to Underperform
CSFL Centerstate Banks of Florida Keefe Bruyette Downgraded from Mkt Perform to Underperform
GBTS Gateway Financial Holdings Keefe Bruyette Downgraded from Outperform to Mkt Perform
Restaurants
BIDZ Bidz.com Roth Capital Initiated at Buy $18
TAST Carrol's Restaurant Group JP Morgan Initiated at Overweight
CMG Chipotle Mexican Grill Citigroup Downgraded from Buy to Hold
Retail Trade
TGT TGT - upgraded to Buy at Merrill with a $77 price target Upgraded
SE Spectra Energy Jefferies & Co Downgraded from Buy to Hold $27.50 to $26
PTRY Pantry Friedman Billings Cut Price Target Outperform $52 to $42
Savings & Loan
FBTX Franklin Bank Corp Keefe Bruyette Downgraded from Mkt Perform to Underperform
FHN First Horizon Keefe Bruyette Downgraded from Mkt Perform to Underperform
Semiconductors
NETL NetLogic Stifel Nicolaus Price Target Raised Buy $36 to $42
ISIL Intersil FTN Midwest Initiated at Buy $40
LLTC Linear Tech FTN Midwest Initiated at Buy $42
AMD Advanced Micro Am Tech/JSA Research Cut Price Target Buy $19 to $17
Telecommunications
TLAB TLAB - negative comments at PACS Negative
CMTL Comtech Telecom Boenning & Scattergood Initiated at Market Outperform $70
Transportation
GNK Genco Shipping & Trading Cantor Fitzgerald Price Target Raised Buy $70 to $81
Homebuilders:
KBH - price target lowered to $28 but reiterate a Buy at UBS