Friday Morning, October 12th
SITE NEWS
New IceMD Recording: Med Lists Save Lives;
Dow Stock News
C Citigroup Deutsche Securities Downgraded from Buy to Sell $60 to $44
Reuters (RTRSY) reports the Citigroup (C) has gone through another management shake-up.
WMT Wal-Mart Jefferies & Co Initiated at Buy
GE´s net income rose 14% amid the August sale of its plastics business and charges in its consumer-finance operations. - WSJ
Ice Man Stocks
Breakouts the Ice Man may consider trading:
AYE - 57
Regular Trades the Ice Man may consider:
ELX - 20.50
Depressed stocks the Ice Man may buy:
COMPX - 2733
YTEC - 11.50 Gap
CTDC - 8.40 Gap
QQQQ - 51.40 Gap
STV - 39.50 Gap
BIDU - 285 Gap
EWZ - 74.15 Gap
Extended Shorts:
LFC - Breaking 94 = 89.40 Gap
Dollar Man Ideas:
STAA - 3.25 * Best Bet
CDL - 4.80
GVRS - promotion starting
EMMS - 5.70
Media Commentators
Cramer's Comments:
Bullish: GOOG, STD, PETM
Bearish: CMG
Ice Cold Commentators
Break Man Video Summary:
Break out buy (or short sell) watch list for short term gains October 12 includes: ECA, NRMX, PRGO, TNH, ALTI, TQNT, ARTC, CPTS.
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:
Thursday we experienced a major reversal day in the market. Stocks opened strongly Thursday morning as overnight buying and relatively positive news propelled the futures nicely higher pre-market. The market continued to work its way higher into the early afternoon as the SPX touched 1576. Soon thereafter, some profit taking began to unfold with many on the Nasdaq leaders such as RIMM, GOOG, AAPL, ISRG, and BIDU. All of these stocks had huge intraday reversals to the downside which ultimately led to profit taking for the entire market. In total, the market reversed a nearly 1% gain into approximately a 1 percent loss before recovering somewhat just before the close. For the day, the market was led lower by the NDX/Nasdaq which lost 1.5% while the SPX/DOW dropped 0.50%.
As I´ve highlighted for several days now, the extreme overbought condition of the major indices when paired with strong resistance was a recipe for some selling. When the daily stochastics reach levels in the mid to high 90´s corresponding with RSI readings exceeding 70 on many indexes selling is nearly imminent. In addition, market participants have grown more complacent as this uptrend has progressed. Specifically, the Investors Intelligence Survey showed the bull to bear spread expanding to nearly 40 percent, a level that is consistent with some sort of market top. Further, the 21 day put/call ratio has fallen from around 1.2 to .92 and over the last few days we´ve seen several hourly readings in the 60´s and low 70´s.
Wed night, I showed a 60 minute chart of the SPX in a bearish rising wedge formation which normally breach to the downside due to the negative divergences in place. That is exactly what occurred today as the market simply got too extended short term. Intraday, I cautioned individuals to be on the lookout for a pullback soon since I noticed some intraday bull flags breaking to the downside and the fact that the recent market leaders mentioned above were rapidly losing their daily gains. In addition, I noticed that the VIX was at starting to bounce off its 200 day moving average/trend line (see last chart below). What ensued was a very rapid sell off in many of the strongest indices and sectors. Quite frankly, I was surprised at the just how ferocious the selling in such a short period of time Thursday afternoon.
The question now becomes how deep of a pullback is likely to develop as a result of today´s reversal candle. Truthfully, that´s impossible to say for certain. However, I would look for some decent support to materialize at the rising 20 day moving averages. Remember, there were not any negative divergences present on the daily charts and this alone should lessen the degree of the pullback. Personally, I´m going to be watching to see what type of follow thru selling may occur and how quickly these oscillators take to undo the previous extreme readings. I suggest we take it one day at a time and take things lightly for the time being.
Good Trading.
CNBC Fast Money Review
1. REVERSAL OF FORTUNE
The headline: Market Mysteriously Rolls Over After Earlier Soaring To Record Highs.
Dylan Ratigan explains tech stocks suddenly turned negative and dragged the NASDAQ down more than
1%.
Pete Najarian says some traders blame JPMorgan for Thursday´s market reversal because they cut BIDU estimates.
Adami recommends taking profits on both EMC and its spin-off VMW. He feels investors can buy them back cheaper.
2. TECHNOLOGICAL REVERSAL
The headline: GOOG, WMW, Tech Stocks Slide After Midday Reversal Erases Strong Morning Gains.
Jeff Macke feels these stocks had huge runs and he´s not surprised by Thursday´s selling. Also, he feels Thursday´s close was ugly.
Karen Finerman agrees and adds, there could be a lot more reversal ahead of us.
3. WINDOWS
The headline: Can Software Behemoth MSFT Break Out Above Key $31 Level?
Dylan Ratigan says Microsoft shares have failed 3 times this year to cross $31.
Guy Adami says I love Microsoft!’ replies Guy Adami. He adds, “I think $32 which was resistance will become support.’
Pete Najarian doesn´t like Microsoft because he feels the company is often behind the curve in their developments. He prefers EMC and reveals he bought EMC calls on Thursday.
Jeff Macke reveals he too is long, EMC.
Karen Finerman warns the panel if EMC spins-off the rest of VMWare, EMC´s value will come down considerably.
4. PUT IT ON PLASTIC
Retail numbers might have been the big story on Thursday but it´s a derivative play that we think will grab you on Friday.
Jeff Macke believes a tech derivative play is the credit card companies such as MA. He feels they will benefit from the explosive growth of internet shopping. Although there are other methods of payment, Macke thinks consumers will prefer using their charge cards.
Karen Finerman thinks plastic will grow in all areas of retail and suggests that both MA and AXP will benefit from the phenomenon.
Guy Adami concurs. By 2009, he says 65% of transactions will be by credit card.
5. OIL SURGES ABOVE $83
The headline: Crude Jumps 2% To Above $83 On Unexpected Decline In
Supplies.
Adami is somewhat surprised because he expected oil to go lower. He likes TSO as a trade and anticipates the stock will have a $60 handle by the end of the month.
6. POPS AND DROPS
F popped 6%: Finerman thinks the Chrysler agreement improved Ford's chances of cutting a deal with the Union without a strike.
GLD popped 1%: Adami says he´s scared of gold.
WYNN popped 1%: Najarian likes WYNN.
WGO popped 1%: Adami doesn´t think the stock is going to move anymore.
PSUN popped 6%: Macke recommends taking gains.
INTC popped, and then dropped 2%: Macke says he´s long.
ATI dropped 10% after hours: Adami suggests there might be problems in the base metals as a result of high input costs.
FAST dropped 10%: Adami doesn´t know what to say.
7. YOUR FIRST MOVE FOR FRIDAY
Macke recommends buying UltraShort QQQ ProShares (QID) to short the NASDAQ.
Adami prefers Short Dow30 ProShares (DOG) to short the Dow Jones Industrial Average.
Finerman tells the panel to short BIDU and cover by Monday.
Najarian thinks EMC is a buy.
News and Events Digest
Breaking News
Economists are more optimistic, seeing lower chances of a recession and stronger job growth, a WSJ.com survey found. - WSJ
Home builder Centex Corp. (CTX) on Friday flagged that it expects to take around $1 billion in charges for its fiscal second-quarter and said sales have fallen 13% due to "extremely difficult" housing market conditions. The company said it will record an impairment of around $850 million for neighbourhood and land inventory as well as a $40 million write-off for land holdings in joint ventures. Other charges include $40 million for option deposits and pre-acquisition costs, $65 million of goodwill impairment and $60 million of losses related to a subsidiary's mortgage market and credit exposure. The company closed 7,350 units in the quarter, down 14% and sales net sales were 5,953 units. Backlog slumped 38% to 9,633 units. Centex also cut its cash flow forecast for the year to $500 million from $750 million. - MarketWatch
Mining firm Gold Fields (GFI) said that it has agreed to dispose of its assets in Venezuela to Rusoro Mining for $532 million. Rusoro will pay Gold Fields a minimum of $150 million in cash, $30 million in convertible debt, and 140 million Rusoro shares. The transaction includes Rusoro acquiring Gold Fields' stake in the Choco 10 gold mine, as well as the contiguous mineral rights owned by Gold Fields. - MarketWatch
IIG - receives a warning of delisting from the exchange.
Media Summary:
According to Reuters, a sharp fall in shares of China internet company Baidu (BIDU) raised fear that the tech market has topped.
Reuters writes that JC Penney recalled toys because of high lead content.
The Wall Street Journal reports that the wealthiest 1% of Americans earned over 21% of all national income in 2005.
Electronic Arts (ERTS) will buy a videogame developer for $860 million from private-equity firm Elevation Partners
The Wall Street Journal writes that doube-digit gains in Chinese IPO are now routine.
The Wall Street Journal writes that the major business magazines are being hurt badly by financial websites.
The New York Times writes that the sale of Jaquar is dragging.
The New York Times writes that Tata Motors will introduce a $2,500 car in India.
The New York Times writes that ABC is producing a 15 minute version of its evening new for the internet.
The FT writes that the head of Toyota's (TM) Lexus operation is moving to Ford (F)
Barron's writes that Limelight (LLNW) said it Q3 numbers would beat expectations.
CNN Money writes that oil prices jumped and a near a record.
M&A Activity:
Oracle Corporation (ORCL) said Friday that it has proposed to buy BEA Systems Inc. (BEAS) for $17 a share in cash. This price represents a 25% premium over BEA's Thursday $13.62 closing price, Oracle said. "This proposal is the culmination of repeated conversations with BEA's management over the last several years. We look forward to completing a friendly transaction as soon as possible," Oracle added. - MarketWatch
IPO Central:
IPOs on schedule for this week:
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.
Eyetel Imaging (EYT). The company designs and develops technologies to help diagnose causes of preventable blindness. The company is selling 3.5M shares at the initial range between $7-$8. The company announced Revenues for the last 12 months of $1M and Net Income of $(-8)M. The Lead Manager is Stanford and Maxim is co-manager. Eyetel Imaging (EYT) is headquartered in Columbia, MD.
IPOs on schedule for the week of 10/15/2007:
DuPont Fabros Technology (DFT). The company is an owner, developer, operator and manager of wholesale data centers primarily for technology companies. The company is selling 30.5M shares at the initial range between $19-$21. The company announced Revenues for the last 12 months of $17M and Net Income of $0M. The Lead Managers are Lehman and UBS. DuPont Fabros Technology (DFT) is headquartered in Washington D.C. and their website is www.dftechnology.com.
Maxcom Telecommunications (MXT). The company is in telecommunications service provider for residential and business customers in Mexico. The company is selling 12.1M shares at the initial range between $15.50-$17.50. The company announced Revenues for the last 12 months of $155M and Net Income of $(-3)M. The Lead Manager is Morgan Stanley. Maxcom Telecommunications (MXT) is headquartered in Mexico City, Mexico and their website is www.maxcom.com.
Noah Education Holdings (NED). The company is a provider of interactive education content in China. The company is selling 9.8M shares at the initial range between $9.80-$11.80. The company announced Revenues for the last 12 months of $73M and Net Income of $9M. The Lead Manager is Deutsche Bank and CIBC is co-manager. Noah Education Holdings (NED) is headquartered in Shenzhen, China and their website is www.noahedu.com.
Economic Data:
8:30 Retail Sales
8:30 PPI
10:00 Business Inventories
10:00 Michigan Sentiment
Upgrades and Downgrades by Sector:
Advertising
VCLK ValueClick Needham & Co Price Target Raised Buy $27 to $33
VCLK ValueClick Jefferies & Co Downgraded from Buy to Hold $25 to $27
Airlines - Passenger
ALK Alaska Air Bear Stearns Downgraded from Outperform to Peer Perform
JBLU Jetblue Airways Bear Stearns Downgraded from Peer Perform to Underperform
LUV Southwest Air Bear Stearns Downgraded from Outperform to Peer Perform
Beverages
PBG Pepsi Bottling Banc of America Sec Downgraded from Buy to Neutral
Biotech
AMGN AMGN - Businessweek calls AMGN a buy here Positive
MNTA Momenta Pharma Bear Stearns Downgraded from Peer Perform to Underperform
NPSP NPS Pharm Oppenheimer Downgraded from Buy to Neutral $6
NPSP NPS Pharm Jefferies & Co Downgraded from Buy to Hold
CRGN CuraGen Boenning & Scattergood Cut Price Target Market Outperform $4.30 to $3
Business Services
FCN FTI Consulting Robert W. Baird Initiated at Outperform $64
HURN Huron Consulting JMP Securities Initiated at Mkt Outperform $82
HURN Huron Consulting Robert W. Baird Cut Price Target Outperform $91
Chemicals
ROG Rogers Corp Broadpoint Capital Price Target Raised Buy $50 to $54
Computer Hardware
AAPL Morgan Stanley Price Target Raised $180
ELX Emulex Wachovia Initiated at Outperform
EMC EMC Corp Wachovia Initiated at Outperform
NTAP Network Appliance Wachovia Initiated at Outperform
STX Seagate Tech Wachovia Initiated at Outperform
SNDK SanDisk Needham & Co Downgraded from Buy to Hold
Computer Services
RATE Bankrate RBC Capital Mkts Downgraded from Top Pick to Outperform
Computer Software
VMW Vmware Inc. Caris & Company Upgraded from Above Average to Buy $90 to $150
ERTS Electronic Arts Kaufman Bros Price Target Raised Hold $58 to $61
TLEO Taleo Brean Murray Price Target Raised Buy $26 to $32
BOBJ Business Objects Roth Capital Downgraded from Buy to Hold $59
CVLT Commvault Systems Morgan Keegan Downgraded from Outperform to Mkt Perform
Consumer Electronics
NTDOY NTDOY - bullish article in Barrons on the stock. The company is Nintendo and trades on the pink sheets. Positive
Finance Companies
SLM SLM Corp Friedman Billings Cut Price Target Outperform $60 to $57
Gold and Silver Mining
IAG IAMGOLD CIBC Wrld Mkts Upgraded from Sector Underperform to Sector Perform $8 to $11
ABX Barrick Gold CIBC Wrld Mkts Price Target Raised Sector Perform $40 to $47
AEM Agnico-Eagle Mines CIBC Wrld Mkts Price Target Raised Sector Perform $48 to $60
AU Anglogold CIBC Wrld Mkts Price Target Raised Sector Underperform $46 to $50
AUY Yamana Gold CIBC Wrld Mkts Price Target Raised Sector Perform $14 to $15
EGO Eldorado Gold CIBC Wrld Mkts Price Target Raised Sector Outperform $7.10 to $8.30
GFI Gold Fields CIBC Wrld Mkts Price Target Raised Sector Underperform $19 to $21
GG Goldcorp CIBC Wrld Mkts Price Target Raised Sector Outperform $31 to $38
GSS Golden Star Resources CIBC Wrld Mkts Price Target Raised Sector Perform $4.50 to $5
KGC Kinross Gold CIBC Wrld Mkts Price Target Raised Sector Outperform $18 to $20
MDG Meridian Gold CIBC Wrld Mkts Price Target Raised Sector Underperform $27 to $33.50
NEM Newmont Mining CIBC Wrld Mkts Price Target Raised Sector Underperform $45 to $52
NXG Northgate Minerals CIBC Wrld Mkts Price Target Raised Sector Underperform $3.25 to $3.35
Healthcare
MLNM Millennium Pharm Robert W. Baird Upgraded from Neutral to Outperform $11 to $14
LCI Lannett Roth Capital Cut Price Target Hold $7 to $5.50
Healthcare Equipment
WMGI Wright Medical SMH Capital Price Target Raised Buy $29 to $32
SYNO Synovis Life Tech Northland Securities Initiated at Outperform $28
Healthcare Services
LNCR Lincare Citigroup Downgraded from Buy to Hold
Insurance
CNC Centene Lehman Brothers Upgraded from Equal-weight to Overweight
PRA ProAssurance KeyBanc Capital Mkts Initiated at Buy $64
Internet Services
BIDU Baidu.com Credit Suisse Price Target Raised Underperform $109 to $143
GOOG Google Oppenheimer Price Target Raised Buy $625 to $700
Manufacturing
UQM UQM Technologies Merriman Curhan Ford Downgraded from Buy to Neutral
Mining - Minerals
ANR Alpha Natural Resources Friedman Billings Downgraded from Outperform to Mkt Perform $28.50
MEE Massey Energy Friedman Billings Downgraded from Mkt Perform to Underperform $22
Motor Vehicles
KEYS Keystone Auto Kevin Dann Price Target Raised $48
BWA Borg Warner Robert W. Baird Downgraded from Neutral to Underperform $82
Oil and Gas
MRO Marathon Oil Caris & Company Initiated at Above Average $64
BRNC Bronco Drilling Friedman Billings Cut Price Target Underperform $15.50 to $13
NBR Nabors Ind Friedman Billings Cut Price Target Outperform $37 to $35
Pharmaceutical
PDGI PharmaNet Devlpmt Jefferies & Co Upgraded from Hold to Buy $30 to $39
Real Estate
FMP Feldman Mall Properties RBC Capital Mkts Cut Price Target Underperform $10 to $5
REITs NLY Annaly Mortgage RBC Capital Mkts Upgraded from Sector Perform to Outperform
Restaurants
RARE Rare Hospitality KeyBanc Capital Mkts Price Target Raised
Retail Trade
SWY Safeway CIBC Wrld Mkts Upgraded from Sector Perform to Sector Outperform $39 to $40
BJ BJ's Wholesale Jefferies & Co Initiated at Buy $46
COST Costco UBS Downgraded from Buy to Neutral
CWTR Coldwater Creek Lehman Brothers Downgraded from Overweight to Equal-weight
CWTR Coldwater Creek Wachovia Downgraded from Outperform to Mkt Perform
NILE Blue Nile Citigroup Downgraded from Hold to Sell
CHRS Charming Shoppes Caris & Company Cut Price Target Average $10 to $8.50
CWTR Coldwater Creek CIBC Wrld Mkts Cut Price Target Sector Outperform $25 to $13
LTD Limited RBC Capital Mkts Cut Price Target Outperform $34 to $33
SWY Safeway HSBC Securities Cut Price Target Overweight $43 to $41
Semiconductors
UMC United Micro UBS Downgraded from Buy to Neutral
Telecommunications
S Sprint Nextel Wachovia Upgraded from Mkt Perform to Outperform
TEF Telefonica S.A. Citigroup Upgraded from Hold to Buy
AIRN Airspan Networks Needham & Co Initiated at Buy $3.30
CSCO Cisco Systems Wachovia Initiated at Outperform
QXM Qiao Xing Mobile CIBC Wrld Mkts Downgraded from Sector Outperform to Sector Perform
ALU Alcatel-Lucent RBC Capital Mkts Cut Price Target Sector Perform $14 to $12
Utilities
SGR Shaw Group Citigroup Downgraded from Buy to Hold