Friday Morning, June 15th
Site
News
:
New IceMD Recording: Intestinal Health – What to do to keep it;
Dow Jones
News
:
Home Depot (HD) has received two, separate $10 billion offers for its supply unit that the company previously put on the block, Bloomberg News reported Friday, citing people familiar with the negotiations. The report said Bain Capital LLC, Carlyle Group and Clayton Dubilier & Rice Inc. make up one group, and the other includes Thomas H. Lee Partners LP and CCMP Capital Advisors LLC. Final bids are due today, the report added. - MarketWatch
INTC - upgraded to Buy at Goldman Sachs;
According to Reuters, the FTC will look at Microsoft's (MSFT) purcahse of aQuantive (AQNT) and Yahoo!'s (YHOO) buyout of Right Media with a eye toward anti-trust concerns.
The Wall Street Journal writes that AT&T (T) has a good chance of getting customers from rivals using the Apple (AAPL) iPhone, according to a new poll.
The New York Times writes that Johnson & Johnson (JNJ) has been cleared by the government to introduce the next generation of its Cypher stent.
Breakouts the Ice Man may consider trading:
KWK - 48
APH - 36.70
CAF - 39
STR - 110
NOK - 28.65
AMKR - 15
CHU - 15.55 warning 16 breakout
FFIV - 83
FMCN - 46
FWLT - 110
HXM - 64
NIHD - 82
VIP - 106
Regular Trades the Ice Man may consider:
EON - 52.60
JRCC - 14
ROCM - 16.35
PCCC - 12.40
CY - 22.10
DIVX - 19.50
ONNN - 11
VSEA - 40
EBS - 9 * Best Bet
CHDX - 24
Dollar Man Ideas:
BQI - 2.50 * Best Bet
IMMC - 2.30
NFI - 10
JDO - 2.30
Depressed:
CSUH - 1
Gorilla Trades:
New Potential Buys:
Euronet Worldwide (EEFT): ABOVE $29.26, with a $32.50 first target, a $39 second target, and a $26 stop loss. Confirmation Volume Area = 600K Risk Rating = 5
Wesco Intl. (WCC): ABOVE $65.18, with a $71 first target, an $81 second target, and a $59.25 stop loss. Confirmation Volume Area = 1.2M Risk Rating = 4
Special Situation Picks:
Consolidated Comm. Holdings (CNSL)
Break Man Video Summary:
Break out buy watch list for short term gains June 15 includes: KERX, LEH, MCD, WFT, MON, ADCT, CTXS, AAV.
Several candidates for break out or pullback plays for at least short term gains by buying the break out on good volume and selling at least some on the first day.
http://stocktiger.com
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CNBC Fast Money Review:
1. Word on the Street
Nothing's Gonna Stop Us Now
Bolling: Very Strong market.
Najarian: Don't get too complacent. Still volatile market.
Oil Surges 2%
Bolling: Energy stocks hit all time highs. Refineries at 89% capacity instead of 93-94%. Likes CVX, TSO, FTO.
Najarian: Likes MRO.
Seymour: Likes BP, RDS.
This is War
Najarian: Exchanges continue to print money. More and more people trade from home. ICE could be target.
Bolling: Still rumors aobut NMX takeover. Stock up 12% over past 3 days.
Mighty Russia
Seymour: Russia has been lagging all year. Great time to buy Russia.
Adami: South Korea up 30% since March.
Boling: Australia, Brazil continue to rip.
Down Jones
Najarian: Rupert Murdoch is onoy bidder. NWS doesn't need DJ. DJ will slip below $40 if no deal.
Adami: Deal will happen, just haggling now.
That New Loan Smell
Najarian: ACF go slammed for subprime exposure, now options speculaiton is very aggressive. Something happening.
2. Trade Update
Financials
Adami: Stick with banks as long term play. Be weary of short term selloffs until subprime problem is flushed out.
3. The Top 3
Yet Another iPhone Trade
Seymour: NOK is 50% ahead of MOT in emerging markets, owns 36% of global market share.
People will pay for premium phones.
Adami: Once NOK n95 model is available in US stock will rip.
Bolling: RIMM will benefit if people willing to pay for premium phones.
CPI: Inflation Investigator
Seymour: Market ignoring inflation, concentrating on global growth.
Bolling: Core inflation under control. People still spending money. When consumer bails then time to worry.
Najarian: Options expiration could create extra volatility.
A Memorable Trade
Adami: IACI is obvious choice to buy out SFLY.
Najarian: Yahoo closing photo biz is good news for SFLY.
4. Dirty Trades
Cruising For a Trade
Bolling: Fuel cost too much to recommend cruise sector. Prefer shipping
companies. Likes TK, SSW, DRYS.
5. Final Trade
Seymour: COP is a buy. Penetration in Russia.
Najarian: TYC is a buy.
Adami: SFLY is a buy. Possible takeover.
Bolling: NMX is a buy.
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Breaking
News
:
Tishman Speyer and Lehman lowered their bid for Archstone-Smith before the deal was announced May 29, as higher borrowing costs damp deal-making. - WSJ
Novartis (NVS) said a study presented at the Annual European Congress of Rheumatology showed that its Cox-2 inhibitor Prexige has significantly less impact on blood pressure than ibuprofen in osteoarthritis patients with controlled hypertension. Independent research shows that even small elevations in blood pressure can contribute to an increased risk of cardiovascular events, Novartis said. Prexige is approved in the European Union, Canada and Latin America to treat certain types of patients with osteoarthritic pain of the knee and hip and is under review the U.S. Food and Drug Administration. - MarketWatch
The credit rating of Swedish telecommunications equipment maker Ericsson (ERIC) was upped to BBB+ from BBB- at Standard & Poor's. "The upgrade is predicated on our expectations that Ericsson will continue to benefit significantly from the expansion of the global mobile-systems market, thanks to its leading market positions in key second- and third-generation mobile-network systems technologies and its low cost break-even point," said Standard & Poor's credit analyst Leandro de Torres Zabala. - MarketWatch
EXPE - work is being done by Barry Dillard to take private;
Zachs Upgrades:
MER, MET, NOV;
Return on Equity Picks: BGC, PCR, SCHN, UHAL
Media Summary:
According to the FT, the head of Sony (SNE) is considering price cuts for the PS3 game console.
The FT writes that TIme Warner (TWX) will begin to market animated features in India through three joint ventures.
Barron's writes that Micron (MU) says contract pricing for DRAMs is beginning to bottom.
The Wall Street Journal also writes that Clearwire (CLWR) has signed deals with Echostar (DISH) and DirecTV (DTV) to sell its WiMax product.
The Wall Street Journal writes that NYSE Euronext (NYX) has no interest in buying The London Stock Exchange, opending the door for Nasdaq.
The Wall Street Journal also writes that Sony (SNE) TV is making a big push to move programming online.
Reuters writes that the US Senate is looking at increasing taxes on companies like Blackstone so that they would be as high as they currently are for corporations.
Reuters writes that Sun Micro (SUNW) expects double-digit growth in China for its next fiscal quarter.
IPO Central:
Business software maker Pros Holding Inc. on Friday said it plans to offer 6.825 million shares at $10-$12 a share in a bid to raise about $75 million in its upcoming initial public offering with underwriter J.P. Morgan. The Houston firm plans to trade on the New York Stock Exchange under the symbol PRO. - MarketWatch
Quicksilver Gas Services, unit of Quicksilver Resources Inc. (KWK), on Friday fattened its upcoming initial public offering to 4.4 million units from 3.38 million units. The Fort Worth, Texas, limited partnership plans to trade on the NYSE Arca under the symbol KGS. Quicksilver Gas Resources has yet to set an estimated price range for its IPO. - MarketWatch
Economic Data:
8:30 Current Account
8:30 NY Empire State Index:
8:30 CPI
9:00 Net Foreign Purchases
9:15 Industrial Production
9:15 Capacity Utilization
10:00 Mich Sentiment
Upgrades and Downgrades by Sector:
Aerospace
BOOM Dynamic Materials First Albany Initiated at Buy $43
Airlines - Passenger
CAL Goldman Sachs Downgraded to Neutral
Aluminum Mining
CENX Century Aluminum BMO Capital Markets Downgraded from Outperform to Market Perform
Audio-Video Equipmnt
LPL LG. Philips LCD Citigroup Upgraded from Hold to Buy
Beverages
HANS Goldman Sachs Upgraded to Buy
TAP Goldman Sachs Downgraded to Neutral
Broadcasting
DTV DIRECTV Stifel Nicolaus Initiated at Buy $28
Business Services
ABCO Advisory Board CIBC Wrld Mkts Initiated at Sector Outperform $63
FCN FTI Consulting CIBC Wrld Mkts Initiated at Sector Outperform $45
Chemicals
LZ Lubrizol KeyBanc Capital Mkts / McDonald Downgraded from Buy to Hold
Computer Software
SYMC Symantec UBS Price Target Raised Buy $22 to $25
Construction
WSO Watsco BB&T Capital Mkts Downgraded from Buy to Hold
Finance Companies
FRE Freddie Mac Friedman Billings Upgraded from Mkt Perform to Outperform $65 to $77
Foods
CQB Chiquita Brands Morgan Joseph Initiated at Buy $26
KFT Kraft Foods BMO Capital Markets Cut Price Target Market Perform $35 to $34
Gaming Operations
TRMP Trump Entertainment Morgan Joseph Upgraded from Hold to Buy $18
MGM Jeffries Price Target Raised $94
Gold and Silver Mining
GFI Gold Fields BMO Capital Markets Upgraded from Market Perform to Outperform
GG Goldcorp BMO Capital Markets Downgraded from Outperform to Market Perform
Healthcare
IMA Inverness Medical Cowen & Co Upgraded from Underperform to Neutral
KNDL Kendle Jefferies & Co Upgraded from Hold to Buy $38 to $40
KV.A K-V Pharmaceutical Roth Capital Downgraded from Buy to Hold $32 to $28
HNSN Hansen Medical Oppenheimer Initiated at Buy $24
BKD Brookdale Senior Living Jefferies & Co Initiated at Buy $58
Household Goods
CLRK Color Kinetics Needham & Co Downgraded from Buy to Hold
Insurance
NFS Nationwide Citigroup Upgraded from Hold to Buy
SFG StanCorp Fin Citigroup Upgraded from Hold to Buy
PGR Progressive Stifel Nicolaus Downgraded from Hold to Sell
PNX The Phoenix Cos Citigroup Downgraded from Buy to Hold
PGR Progressive UBS Cut Price Target Reduce $22 to $20
Mfg-Sporting Goods
SWHC Smith & Wesson Northland Securities Price Target Raised Outperform $18 to $19
Mining Non-Ferr Metal
USU USEC Inc. Friedman Billings Price Target Raised Outperform $22 to $29
FCX Freeport-McMoRan BMO Capital Markets Downgraded from Outperform to Market Perform
Motion Pictures
NFLX Netflix Soleil Upgraded from Hold to Buy
Oil and Gas
LGCY Legacy Reserves Oppenheimer Initiated at Buy $31
Recreation
MVL Marvel Enterprises Matrix Research Upgraded from Strong Sell to Hold
Regional Banks
NCC National City BMO Capital Markets Cut Price Target Underperform $34 to $33
REITs
HCP Health Care Ppty KeyBanc Capital Mkts Initiated at Buy $36
HCP Health Care Ppty BMO Capital Markets Cut Price Target Market Perform $37 to $32
Restaurants
BNHNA Benihana Morgan Joseph Cut Price Target Buy $36 to $24
Retail Trade
PTRY Pantry Jefferies & Co Upgraded from Hold to Buy $55
BBW Build-A-Bear Workshop Stifel Nicolaus Cut Price Target Buy $36 to $33
BBW Build-A-Bear Workshop Credit Suisse Cut Price Target Outperform $37 to $34
Savings & Loan
HCBK Hudson City Banc Bear Stearns Initiated at Underperform
Semiconductors
AXTI AXT Inc First Albany Initiated at Buy $6
Telecommunications
TKLC TEKELEC Matrix Research Upgraded from Strong Sell to Buy
FDRY Foundry Ntwks Robert W. Baird Price Target Raised Outperform $18 to $20
GRMN Garmin CIBC Wrld Mkts Price Target Raised Sector Outperform $67 to $79
IIVI II-VI Inc First Albany Initiated at Buy $33
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SEC SHO List Rule:
SEC Votes on Regulation SHO Amendments and Proposals; Also Votes to Eliminate "Tick" Test
Washington, D.C., June 13, 2007 - The Securities and Exchange Commission today voted to take additional steps to better safeguard investors and protect the integrity of the markets during short selling transactions by closing loopholes in Regulation SHO and further reducing persistent failures to deliver stock by the end of the standard three-day settlement period for trades.
Erik Sirri, Director of the SEC's Division of Market Regulation, said, "Today the Commission voted on steps to streamline and tighten short selling provisions so that markets and investors are better served by our rules."
1. Final Amendments to Rules 200 and 203 of Regulation SHO
The Securities and Exchange Commission voted to adopt final amendments to Rules 200 and 203 of Regulation SHO (17 CFR 242.200 and 242.203). The amendments will further reduce fails to deliver in certain equity securities by eliminating the grandfather provision. The amendments also modify the close-out requirement for fails to deliver resulting from sales of threshold securities pursuant to Rule 144 of the Securities Act of 1933 (Securities Act). In addition, the amendments update the market decline limitation referenced in Regulation SHO. The amendments will be effective 60 days from the date of publication of the amendments in the Federal Register.
Regulation SHO, which became fully effective in January 2005, provides a regulatory framework governing short sales of securities and, among other things, includes the following:
A definition of ownership for short sale purposes and a requirement to determine a short seller's net aggregate position.
A locate requirement, which requires that before accepting or effecting a short sale order, brokers and dealers must (i) borrow securities, (ii) make arrangements to borrow securities, or (iii) have a reasonable basis to believe that securities can be borrowed in order to make timely delivery.
Additional delivery or close-out requirements on designated "threshold securities." A threshold security means an equity security registered or required to file reports with the Commission for which there is an aggregate fail to deliver position for five consecutive settlement days at a registered clearing agency of 10,000 shares or more and that is equal to at least 0.5% of the issue's total shares outstanding. Where a clearing agency participant has a fail to deliver position in threshold securities that persists for 13 consecutive settlement days, the participant must take action to close out the position. Until the position is closed out, the participant, and any broker-dealer for which it clears transactions, including market makers, may not effect further short sales in the particular threshold security without borrowing or entering into a bona fide arrangement to borrow the security.
A grandfather provision that provides that the requirement to close-out fail to deliver positions in threshold securities that remain for 13 consecutive settlement days does not apply to positions that were established prior to the security becoming a threshold security or prior to the effective date of Regulation SHO. The grandfather provision was adopted because the Commission was concerned about creating volatility where there were large pre-existing fail to deliver positions.
The amendments voted on today will:
Eliminate the grandfather provision in Rule 203(b)(3)(i) so that all fail to deliver positions in threshold securities will have to be closed out within 13 consecutive settlement days, regardless of whether they occurred before the security became a threshold security.
Permit previously-excepted grandfather positions that are threshold securities on the effective date of the amendment to be closed out within 35 settlement days of the effective date of the amendment.
Amend Rule 203 of Regulation SHO to extend the close out requirement from 13 to 35 consecutive settlement days for fails to deliver resulting from sales of threshold securities pursuant to Rule 144 of the Securities Act.
Amend Rule 200(e)(3) to (i) reference the NYSE Composite Index (NYA) instead of the Dow Jones Industrial Average (DJIA); (ii) add language to clarify that the two-percent limitation is to be calculated in accordance with NYSE Rule 80A; and (iii) provide that the market decline limitation will remain in effect for the remainder of the trading day.
2. Proposed and Re-proposed Amendments to Regulation SHO
The Commission voted to propose amendments to Rule 200 and re-propose amendments to Rule 203 of Regulation SHO (17 CFR 242.200 and 242.203). The proposed amendments would modify the long sale marking requirements of Regulation SHO to require that broker-dealers marking a sale as "long" document the present location of the securities being sold. The re-proposed amendments are intended to further reduce fails to deliver in certain equity securities by eliminating the options market maker exception to the close-out requirement of Regulation SHO. In addition, the Commission voted to solicit comment regarding two narrowly-tailored alternatives to elimination of the options market maker exception.
The comment period for the proposals will end 30 days from the date of publication of the proposed rules in the Federal Register.
The options market maker exception provides that any fail to deliver position in a threshold security resulting from short sales effected by a registered options market maker to establish or maintain a hedge on options positions that were created before the underlying security became a threshold security do not have to be closed out. Today's proposed amendments would eliminate this exception to the close-out requirement of Regulation SHO. In addition, the proposed amendments to eliminate the options market maker exception would include a one-time 35 consecutive settlement day phase-in period for previously-excepted fail to deliver positions.
3. Amendments to Rule 10a-1 and Regulation SHO
The Commission voted to adopt amendments to Rule 10a-1 (17 CFR 240.10a-1) and Regulation SHO (17 CFR 242.200 et seq.) that will remove Rule 10a-1 as well as any short sale price test of any self-regulatory organization (SRO). In addition, the amendments will prohibit any SRO from having a price test. The amendments will also include a technical amendment to Rule 200(g) of Regulation SHO that will remove the "short exempt" marking requirement of that rule. The amendments will be effective immediately upon publication of the release in the Federal Register.
The Commission adopted Rule 10a-1 in 1938 after several years of considering the effects of short selling in a declining market. Rule 10a-1 provides that, subject to certain exceptions, a security may be sold short (A) at a price above the price at which the immediately preceding sale was effected (plus tick), or (B) at the last sale price if it is higher that the last different price (zero-plus tick). Short sales are not permitted on minus ticks or zero-minus ticks, subject to narrow exceptions. The operation of these provisions is commonly described as the "tick test." The tick test applies only to listed securities, other than Nasdaq-listed securities, traded on an exchange, or otherwise.
In addition to the tick test of Rule 10a-1, the NASD and Nasdaq have adopted their own short sale price tests based on the last bid rather than on the last reported sale for purposes of determining the execution prices of short sales. These bid tests apply only to Nasdaq Global Market securities that are traded on Nasdaq or the over-the-counter market and reported to a NASD facility.
On July 28, 2004, the Commission issued an order creating a one-year pilot temporarily suspending the tick test and any short sale price test of any exchange or national securities association for certain securities. The pilot was created so that the Commission could study the effectiveness of short sale price tests. The Commission's Office of Economic Analysis and academic researchers provided the Commission with analyses of the empirical data obtained from the pilot. In addition, the Commission held a roundtable to discuss the results of the pilot. The general consensus from these analyses and the roundtable was that the Commission should remove price test restrictions because they modestly reduce liquidity and do not appear necessary to prevent manipulation. In addition, the empirical evidence did not provide strong support for extending a price test to either small or thinly-traded securities not currently subject to a price test.
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