Friday Morning, November 9th
SITE NEWS
New IceMD Recording:
Bad Backs Need Good Exercise;
Dow Stock News
MMM - downgraded to Sell at Goldman Sachs
Merck & Co. (MRK) said Friday it agreed to settle the majority of product liability lawsuits related to its Vioxx painkiller for about $4.85 billion. The Whitehouse Station, N.J.-based drugmaker said if certain conditions under the agreement are met, Merck will pay a fixed amount of $4.85 billion into a settlement fund for qualifying claims that enter into the resolution process. This is not a class-action settlement, Merck said, and claims will be evaluated on an individual basis. The company expects to record a fourth-quarter 2007 pre-tax charge in the amount of $4.85 billion to cover the cost of the agreement. Under the terms of the agreement, Merck does not admit fault or causation. The company said it will continue to defend all claims that are not included in the resolution process. Shares rose more than 2% in premarket trading. - MarketWatch
Reuters writes that profits were up at Disney (DIS) on strength at theme parks and at ESPN.
Ice Man Stocks
Breakouts the Ice Man may consider trading:
MCD - 60
APOL - 80.75
CL - 76.40
Regular Trades the Ice Man may consider:
ISCA - 45.25
TSRA - 49.20
VTAL - 17.25
JAS - 18.05
MGI - 16.15
NVR - 479
AVCT - 25
ALOG - 51.85
FED - 39.75
Depressed stocks the Ice Man may buy:
BIDU - 334.30 Gap
ANH - 49.50 Gap
Dollar Man Ideas:
AKNS - 9
SPC -5.15
SMRT - 6.50
TRX - 8.60
AOI - 6.50
FBTX - 7.25
KRY - Closed at high
Media Commentators
Cramer's Comments:
Bullish: MO, FCX, FWLT, RIG, MHS;
Bearish: UA, PMI, MTG, MBI, ABK;
Ice Cold Commentators
Break Man Video Summary:
Break out buy (or short sell) watch list for short term gains November 9 includes: BWTR, TKC, AFR, AXCA, CVBF, QLGC, ABI.
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:
Wednesday night the NASDAQ-100 futures were down nearly 30 points on the heels of a disappointing report from Cisco Systems and it appeared likely the market would gap lower again Thursday morning. However, the futures steadily improved throughout the late evening and early morning hours and remarkably the market opened higher. In the opening minutes the SPX jumped 7 points to reach 1482, but that turned out to be the intraday high print as the market quickly reversed lower. By 10:00 things appeared to be settling down after Bernanke´s testimony to Congress were released. The relative calm lasted until approximately 11:30 when the market went into a free fall as the leading technology stocks were subjected to heavy profit taking.
By 1:00 the SPX had dropped through support at 1462 and hit 1450 where it became extremely oversold. A rally and subsequent retest followed, and by 3:00 the market rocketed higher nearing its best levels of the day. At the close the SPX was down less than one point, but the Nasdaq lost 52 points and the NDX dropped 63 points. Short term momentum became extremely oversold Thursday but after the rally it finished with a neutral reading. Overall, it was another extremely volatile day filled with high levels of emotion. Despite the intense selling over the past couple of days, the market still does not look like it has become sufficiently oversold. Therefore, one should expect the downtrend to continue over the intermediate term.
Over the past few weeks, we have been highlighting the severe negative divergence that had developed in the tech laden Nasdaq and NDX indexes. The selling in these indices during the past two days shows why it´s important to be aware of this situation. Negative divergences by themselves are not sell signals, but they tend to do a good job of flashing a warning signal of a possible impending reversal. When the negative divergences become quite severe, as they were in these indexes recently, one must be extremely cautious and be prepared for an intense bout of selling. Thursday, we saw the recent glamour stocks (GOOG, AAPL, RIMM, BIDU, etc.) come under severe selling pressure. The masses were buying at the very top and the big boys were more than happy to sell these latecomers their shares. The lesson to be learned here is to be cognizant of such divergences and adjust your trading (or tighten your stops) accordingly.
While the market put on an impressive bounce near the end of the day, it did so without any positive divergences being present on the 60 minute charts. Today´s late rally can be best described as an oversold bounce. Without the indexes exhibiting positive divergence on at least the 60 minute charts, the likelihood is that the bounce will not be sustained for long. In other words, don´t get overly excited about Thursday´s late rally. Instead, continue to focus on the support and resistance levels with respect to what you´re trading. Look for buying opportunities at support and selling opportunities at resistance – it sounds simple but the key is to correctly identify valid support and resistance. Finally, it´s best to keep things light and stay focused on a limited number of plays due increasing volatility. Take advantage of what the market offers, but don´t force trades – preserve your capital.
Good Trading.
CNBC Fast Money Review
1. DISASTER AVERTED IN FINAL HOUR
The headline: Late-Day Recovery By Bank Stocks Brings Dow Back from 200 Pt. Decline
Guy Adami said Thursday´s market action wasn´t pretty, the traders agree. Look for the market to continue being volatile and be prepared for it to continue to go lower.
Pete Najarian says the financials have been one of the most volatile spaces and putting on a spread for protection when trading bank stocks.
Tim Seymour says many of the regional banks don´t have the balance sheet to announce huge write-downs, but that doesn´t mean the market hasn´t heard from them yet.
2. IS THE TECH TRADE OVER
The headline: Nasdaq Suffers Worst 2-Day Drop Since 2002 As CSCO Forecast Triggers Tech Sell-Off
Guy Adami said Thursday´s tech wreck was disastrous, but look for bright spots like EMC and its spin-off, VMW. The story that has propelled those two particular stocks is “far from over.’
The red-hot tech stocks of late performed particularly poorly, with AAPL losing 6%, GOOG losing 5%, INTC losing 4% and RIMM losing 6%. Have these stocks lost their steam?
Pete Najarian said he would hold off on buying a stock like Apple, saying it still has room to go lower before it bounces back.
Tim Seymour said Cisco, hammered after reporting earnings, has been oversold and “looks good’ at current levels. Cisco has proven it isn´t reliant on U.S. sales, so any bearish domestic guidance shouldn´t hold so much weight.
3. SOLAR INSANITY
The headline: FSLR Leads Monster Solar Stock Rally Amid Broader Market Sell-Off, Soaring 28% After Earnings Scorch Street Expectations
Pete Najarian says the upside moves in the solar complex provides a perfect opportunity to sell CY into strength. A lot of these names have run so much that they are becoming overheated, he said. Take some profit now before it´s too late.
Guy Adami added: Take profits in ESLR, which was up over 17% Thursday on nearly twelve times normal trading volume.
4. BIOGEN COURTSHIP BEGINS
The headline: PFE, MRK, JNJ, Frontrunners As Bidding For BIIB Begins
Karen Finerman said the beauty of the Biogen deal is that it will happen no matter what the state of the market is. The suitors are all companies with strategic and long-term interests in Biogen, and market volatility won´t keep the acquisition from taking place.
Guy Adami said Biogen´s pipeline is four times the size of Pfizer´s, making PFE the perfect acquirer. The pharmaceutical giant should scoop BIIB up even if it has to overpay because the pipeline is that important.
5. WORST OCTOBER SALES IN 12 YEARS
The headline: Retailers Report Worst October Same-Store Sales Since 1995; Is It Time to Bottom Fish Consumer Names After Poor Sales Figures?
Karen Finerman says many of the retail numbers are not as disappointing as they sound. She feels comfortable owning retail stocks with good balance sheets and said the children´s retail space, including GYMB and PLCE, look especially appealing.
6. POPS AND DROPS
MCD popped 2%: Finerman recommended MCD and YUM as buys.
MBT popped 9% and VIP popped 8%: Seymour called these stocks an oasis in consumer staples.
KG popped 14%: Adami said, “I think it´s a buy.’
GFA popped 11%: Seymour called the stock, “a great place to
be.’
PTR dropped 6%: Seymour felt that this trade was broken.
ORCL dropped 8%: Adami recommended buying ORCL for a trade.
7. YOUR FIRST MOVE FOR FRIDAY
Seymour recommended AA.
Adami thought DOG was a buy.
Karen Finerman liked WTS.
Pete Najarian preferred BSX
News and Events Digest
Breaking News
Standard & Poor's said Thursday it will make several changes to its indices.
Manitowoc Co., which makes cranes and other equipment, will replace Tektronix Inc., which makes test and measurement equipment, on the S&P 500 index the close of trading Nov. 15. Tektronix is being acquired by Danaher Corp., a hand tool and bar-code reader maker.
Wright Express Corp., a provider of payment processing and information management services, will take Manitowoc's place in the S&P SmallCap 600 after the close of trading next Thursday.
American Tower Corp., which develops communication-tower sites, will replace wireless carrier Alltel Corp. in the S&P 500 on a date to be determined. Alltel is being acquired by two private equity companies.
Real-estate investment company Realty Income Corp., will replace investment-services company Nuveen Investments Inc. on the S&P MidCap 400 after the close of trading on Tuesday. Nuveen is being acquired by an investor group led by Madison Dearborn Partners. - AP
Starwood Hotels & Resorts Worldwide Inc. said Thursday its board increased the company's share repurchase authorization by an additional $1 billion, and lifted its annual dividend by 7 percent.
In the nine months ended Sept. 30, Starwood repurchased approximately 19.2 million shares for more than $1.22 billion. The company currently has about 201.3 million shares outstanding. - AP
Sprint and Clearwire scrapped a pact to build a nationwide high-speed wireless network based on WiMax. The move is a blow to Clearwire founder and cellphone pioneer Craig McCaw. - WSJ
Wachovia Corp. (WB) said in a filing to the Securities and Exchange Commission that it's anticipating loan losses between $500 million and $600 million in the fourth quarter, citing anticipated loan growth and the impact of continuing credit deterioration in its loan portfolio. Due to the October market deterioration, its asset-backed CDOs experienced further declines in value in the month of October 2007 by an amount it currently estimates to be approximately $1.1 billion pre-tax. Third quarter 2007 market disruption-related losses totaling $1.3 billion pre-tax included $347 million of subprime-related valuation losses, net of hedges, on ABS CDOs. - MarketWatch
JA Solar Holdings Co. Ltd.'s (JASO) third-quarter net income rose to $22.1 million, or 47 cents a share, from $5.3 million, or 2 cents a share, a year ago, helped in part by announcements of supply deals and the strengthened customer partnership, the company said. The Hebei, China, maker of monocrystalline solar cells said revenue rose to $113.4 million from $33.1 million a year ago. The company raised its 2007 revenue estimate to $320 million to $310 million from the previously stated $280 million to $290 million. - MarketWatch
IPO Central:
Media Summary:
According to Reuters, Qualcomm (QCOM) posted weaker that expected guidance and its shares fell sharply.
Reuters writes that BHP Billiton's (BHP) bid for Rio Tinto (RTP) is likely to start a bidding war for the company.
According to Reuters, Qualcomm (QCOM) posted weaker that expected guidance and its shares fell sharply.
Reuters writes that BHP Billiton's (BHP) bid for Rio Tinto (RTP) is likely to start a bidding war for the company.
The Wall Street Journal writes that Sprint (S) and Clearwire (CLWR) cancelled an agreement to cooperate on a nationwide WiMax network.
The Wall Street Journal writes that ratings agencies are preparing to downgrade hundreds of mortgage-related investments.
The New York Times writes that Ford (F) will keep its Volvo unit.
Barron's writes that Nvidia (NVDA) sees strong revenue growth in the next quarter.
The Wall Street Journal writes that Sprint (S) and Clearwire (CLWR) cancelled an agreement to cooperate on a nationwide WiMax network.
The Wall Street Journal writes that ratings agencies are preparing to downgrade hundreds of mortgage-related investments.
The New York Times writes that Ford (F) will keep its Volvo unit.
Barron's writes that Nvidia (NVDA) sees strong revenue growth in the next quarter.
IPO Central:
IPOs on schedule for the week of 11/12/07:
3Par Inc. (PAR). The company provides utility storage solutions for large to medium enterprises. The company is selling 7.5M shares at the initial range between $11-$13. The company announced Revenues for the last 12 months of $75M and Net Income of $(-18)M. The Lead Managers are Goldman Sachs and Credit Suisse. 3Par Inc. (PAR) is headquartered in Fremont, CA and their website is www.3par.com.
Pricing:
OSG America L.P. (OSP) an operator of U.S. flag product carriers and barges, said its initial public offering of 7.5 million common units was priced at $19 per unit. OSG America, a unit of Overseas Shipholding Group Inc (OSG) said the units on offer represent a 24.5 percent limited partner interest in the partnership. - Reuters
Economic Data:
8:30 Export Prices
8:30 Import Prices
8:30 Trade Balance
10:00 Much Sentiment
Upgrades and Downgrades by Sector:
Apparel
UA Under Armour Caris & Company Initiated at Above Average $60
Beverages
HANS Hansen Natural Stifel Nicolaus Upgraded from Hold to Buy $55
JSDA THNK Downgraded to Source of Funds
DEO Diageo plc JP Morgan Initiated at Underweight
Biotec
h ALTU Altus Pharma Jefferies & Co Initiated at Buy $19
MNKD Mannkind JP Morgan Downgraded from Overweight to Neutral
VNDA Vanda Pharma Friedman Billings Cut Price Target Outperform $31 to $16
Broadcasting
CCU Clear Channel Stanford Research Upgraded from Hold to Buy
Computer Hardware
AVCT Avocent Morgan Keegan Upgraded from Mkt Perform to Outperform
CGT CAE CIBC Wrld Mkts Upgraded from Sector Perform to Sector Outperform
HTCH Hutchinson Caris & Company Upgraded from Average to Above Average $25 to $27
HTCH Hutchinson Needham & Co Price Target Raised Buy $24 to $28
HTCH Hutchinson Brean Murray Price Target Raised Hold $24 to $26
MRVC MRV Comms Needham & Co Cut Price Target Buy $6 to $5
MRVC MRV Comms Roth Capital Cut Price Target Buy $3.80 to $3.60
Computer Software
KNXA Kenexa Cantor Fitzgerald Upgraded from Hold to Buy $27
CYBS CyberSource Needham & Co Price Target Raised Buy $15 to $20
MDRX Allscripts Jefferies & Co Downgraded from Buy to Hold $33 to $22.50
MDRX Allscripts JP Morgan Downgraded from Overweight to Neutral
KNXA Kenexa Boenning & Scattergood Cut Price Target Market Outperform $43 to $35
MDRX Allscripts Stifel Nicolaus Cut Price Target Buy $34 to $28
PRFT Perficient Roth Capital Cut Price Target Hold $22 to $20
Computer Technology
ISLN Isilon Systems Friedman Billings Downgraded from Outperform to Mkt Perform $8
Construction
PCR Perini Morgan Joseph Upgraded from Hold to Buy $75
URS URS Morgan Joseph Price Target Raised Buy $54 to $66
RPM RPM Inc Banc of America Sec Downgraded from Buy to Neutral
STRL Sterling Construction Morgan Joseph Cut Price Target Buy $33 to $32
AIG American Intl Friedman Billings Cut Price Target Outperform $86 to $74
Electronics
DEIX Directed Electronics Needham & Co Cut Price Target Buy $10 to $4
DEIX Directed Electronics RBC Capital Mkts Cut Price Target Sector Perform $9 to $4
BRLC Syntax-Brillian CIBC Wrld Mkts Cut Price Target Sector Outperform $15 to $8
Foods
CPO Corn Products BMO Capital Markets Upgraded from Market Perform to Outperform
DAR Darling International Inc Morgan Joseph Price Target Raised Buy $13 to $15
Gaming Equipment
CKNN Cash Systems Morgan Joseph Cut Price Target Buy $9 to $8
Gaming Operations
SHFL Shuffle Master Morgan Joseph Upgraded from Sell to Hold
STN Station Casinos CIBC Wrld Mkts Coverage Dropped
Gold and Silver Mining
AUY Yamana Gold RBC Capital Mkts Price Target Raised Sector Perform $15 to $16
KGC Kinross Gold HSBC Securities Price Target Raised Neutral $16 to $20
NG NovaGold Resources RBC Capital Mkts Price Target Raised Sector Perform $18.50 to $21
Health-Beauty Prod
EL Estee Lauder Bear Stearns Upgraded from Peer Perform to Outperform
IPAR Inter Parfums Oppenheimer Cut Price Target Neutral $26 to $25
Healthcare
ALKS Alkermes JP Morgan Initiated at Overweight
CEPH Cephalon JMP Securities Downgraded from Strong Buy to Mkt Outperform
CHDX Chindex Brean Murray Price Target Raised Buy $38 to $45
HDIX Home Diagnostics Deutsche Securities Downgraded from Buy to Hold $10 to $8
FVE Five Star Quality Care RBC Capital Mkts Price Target Raised Outperform $11 to $12
HYTM Hythiam RBC Capital Mkts Cut Price Target Outperform $11 to $8
Hotels and Motels
SVLF Silverleaf Resorts Morgan Joseph Initiated at Buy $8.50
Industrial Equipment
RSTI Rofin-Sinar Technologies Needham & Co Price Target Raised Buy $79 to $88
RSTI Rofin-Sinar Technologies Friedman Billings Price Target Raised Outperform $92 to $100
RSTI Rofin-Sinar Technologies Brean Murray Price Target Raised Buy $72 to $82
Insurance
NAHC National Atlantic Holdings Citigroup Upgraded from Hold to Buy
Internet Services
PCLN priceline.com Stifel Nicolaus Price Target Raised Buy $105 to $110
Major Pharmaceutical
PWR Quanta Services Stifel Nicolaus Price Target Raised Buy $36 to $37
WYE Wyeth HSBC Securities Cut Price Target Overweight $57.50 to $53
Media Services
LLNW Limelight Networks Friedman Billings Downgraded from Outperform to Mkt Perform $15 to $11
Mfg-A/V Equip
DLB Dolbys Labs Kaufman Bros Price Target Raised Buy $45 to $50
DTSI DTS Kaufman Bros Cut Price Target Buy $32 to $30
Motion Pictures
NOOF New Frontier Media Roth Capital Cut Price Target Buy $10 to $9
NFLX Netflix Utendahl Initiated at Under-weight $24
Multi-National Banks
FIF Financial Federal Friedman Billings Downgraded from Mkt Perform to Underperform $30 to $18
Oil and Gas
CRZO Carrizo Oil & Gas RBC Capital Mkts Price Target Raised Outperform $51 to $54
NS NuStar Energy RBC Capital Mkts Price Target Raised Sector Perform $65 to $68
PBR Bear Stearns Price Target Raised $90
PXD Pioneer Natural Citigroup Downgraded from Buy to Hold
Paper and Packaging
SPP Sappi Limited Citigroup Upgraded from Sell to Hold
Pharmaceutical
BVF Biovail Broadpoint Capital Downgraded from Buy to Neutral
REITs
SPPR Supertel Hospitality, Inc JMP Securities Downgraded from Mkt Outperform to Mkt Perform
SPPR Supertel Hospitality, Inc Robert W. Baird Downgraded from Outperform to Neutral $9 to $7
NCT Newcastle Investment Friedman Billings Cut Price Target Outperform $26 to $20
Restaurants
CPKI California Pizza Friedman Billings Cut Price Target Outperform $23 to $18
RRGB Red Robin Gourmet Friedman Billings Cut Price Target Mkt Perform $43 to $42
Retail Trade
EBAY eBay Piper Jaffray Upgraded from Market Perform to Outperform
FBN Furniture Brands Stifel Nicolaus Upgraded from Sell to Hold
LTD Limited Caris & Company Upgraded from Below Average to Average $20
GPS Gap Inc Friedman Billings Price Target Raised Outperform $24 to $25
URBN Urban Outfitters Roth Capital Price Target Raised Buy $27 to $30
JCP JC Penney Bear Stearns Downgraded from Outperform to Peer Perform
JWN Nordstrom Bear Stearns Downgraded from Outperform to Peer Perform
ANN AnnTaylor Friedman Billings Cut Price Target Mkt Perform $34 to $33
CHS Chico's FAS Caris & Company Cut Price Target Average $13 to $11
CHS Chico's FAS Friedman Billings Cut Price Target Mkt Perform $13 to $11
CHS Chico's FAS Roth Capital Cut Price Target Buy $16 to $14
LTD Limited RBC Capital Mkts Cut Price Target Outperform $33 to $27
ABH AbitibiBowater Banc of America Sec Initiated at Sell $18
Semiconductors
AMAT Applied Materials Citigroup Upgraded from Hold to Buy
AMAT Applied Materials JP Morgan Upgraded from Neutral to Overweight
CY Cypress Semi Kaufman Bros Price Target Raised Buy $41 to $44
NVDA NVIDIA Caris & Company Price Target Raised Average $35 to $37
NVDA NVIDIA Kaufman Bros Price Target Raised Buy $42 to $43
BRCM Broadcom Needham & Co Cut Price Target Buy $43 to $40
QI Qimonda AmTech Research Cut Price Target Buy $19 to $12
CNXT Conexant Roth Capital Coverage Dropped
Solar Energy
FSLR Goldman Sachs Price Target Raised $275
SPWR Sunpower AmTech Research Price Target Raised Buy $110 to $168
Specialty Funds
ARCC Ares Capital RBC Capital Mkts Cut Price Target Sector Perform $19 to $17
Telecommunications
PWAV Powerwave Piper Jaffray Upgraded from Market Perform to Outperform
S Sprint Nextel Stifel Nicolaus Upgraded from Sell to Hold
SONS Sonus Networks Merriman Curhan Ford Upgraded from Sell to Neutral
CELL Brightpoint CIBC Wrld Mkts Price Target Raised Sector Outperform $18 to $22
COGO Comtech Roth Capital Price Target Raised Buy $20 to $25
COGO Comtech Piper Jaffray Downgraded from Outperform to Market Perform
FNSR Finisar Jefferies & Co Downgraded from Buy to Hold $5 to $3
TKC Turkcell UBS Downgraded from Buy to Neutral
TLAB Tellabs Lehman Brothers Downgraded from Overweight to Equal-weight
ALLT Allot Comms RBC Capital Mkts Cut Price Target Sector Perform $8 to $6
Transportation
FREE Freeseas Cantor Fitzgerald Initiated at Buy $10
CP Canadian Pacific CIBC Wrld Mkts Upgraded from Sector Perform to Sector Outperform
PACR Pacer Intl UBS Upgraded from Sell to Neutral
Utilities
CTWS Connecticut Water Boenning & Scattergood Price Target Raised Market Outperform $29 to $30
EIX Edison Credit Suisse Downgraded from Outperform to Neutral
ETR Entergy Credit Suisse Downgraded from Outperform to Neutral
NRG NRG Energy Credit Suisse Downgraded from Outperform to Neutral
SRP Sierra Pacific Citigroup Downgraded from Buy to Hold
INT World Fuel Svcs Calyon Securities Cut Price Target Add $46 to $45