Monday Morning, October 29th
SITE NEWS
New IceMD Recording:
Circumcision to Curb HIV!
Ice Man Kudos:
I was on the Conference call today and want to buy some NCII. Very exciting. What is the best strategy to buy when the volume is so low?
Thanks for all of your advice, prodding and stock selections. You're helping to make me decent $$.
D.L.
Really enjoyed the teleconference yesterday a.m. Feel fortunate to have discovered your site. I'm not aware of any other individual or service that exposes you to so many potentially bona fide, life-altering opportunities.
Please, keep up the great work!
Thanks again.
B.R.
Dow Stock News
F, DD, INTC - disagree with talk about an upcoming recession.
HPQ - removed from the Conviction Buy List at Goldman Sachs
Citigroup Inc. ( C) said on Monday it had received approval to list shares in Tokyo early next month, as the largest U.S. bank continues to boost its presence in the world's second-largest economy. - Reuters
The FT writes that GE (GE) believes that its business in India and China will protect it from a downturn in the US.
Ice Man Stocks
Breakouts the Ice Man may consider trading:
X - 111.50
TXT - 68
POWI - 32.50
SDA - 68
IEV - 123.10
NKE - 65
HANS - 68.40
Regular Trades the Ice Man may consider:
CWT - 44
NT - 16.50
SNIC - 11.75
PMI - 19.40
TM - 110 = 112.50 Gap
LAVA - 15.10, 15.70 Breakout
ISLE - 21
Depressed stocks the Ice Man may buy:
FUQI
GVA
BLUD - 28.50 Gap * Best Bet
Extended Shorts:
YHOO - 36
Dollar Man Ideas:
ORBC - 8
Media Commentators
Cramer's Comments:
Bullish: SKX, NLY, FTI, RIG
Ice Cold Commentators
Break Man Video Summary:
Break out buy (or short sell) watch list for short term gains October 29 includes: CTCH, RIO, VZ, AA, VSCN, GS ,FCX, TS, NBR, HRP, CVG.
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:
The market remained under pressure through mid-week after last Friday´s option expiration sell off. On Monday, the SPX hit a pullback low of 1490 (twice) before rallying into the close. After another rally into the close on Tuesday, the SPX retreated and tested 1490 (twice) again on Wednesday before yet again staging a late day move up. Thursday the SPX traded in a higher range with the SPX reaching a low of 1500. The market capped off a very volatile earnings week on Friday with the SPX sporting a 20 point gain largely due to the positive Microsoft news released after the market closed on Thursday. The market experienced a rocky beginning to a week ending with solid gains, which served to negate some of the previous weeks selling momentum.
The uptrend form the mid-August low (1371) is still in place with the SPX closing the week at 1535. In the first chart of the SPX below, I have placed a potential Elliot Wave count from the August low. In the scenario depicted below, the SPX appears to be in the early stages of wave 5 up. Wave 1 traveled 108 points, and was corrected by an irregular flat Wave 2. Then Wave 3 encompassed a move up of 137 points which was followed by a nasty zigzag Wave 4. The potential target for Wave 5 would be approximately 1620. As Wave 5 moves higher and matures, we should look for some negative divergence to unfold in the oscillators. Technically speaking, the formation of negative divergence is typical during fifth waves. In the event, the index turns down and breaks below 1479 in the near term, that would most likely negate this count and raise a cautionary flag.
The NDX has led this recent advance and managed t again make new bull market highs during last week´s turbulence. As you can see in the chart of the NDX below, the index is beginning to display some slight negative divergence on last week´s push higher. One thing to note regarding this index is the rising trendline from March that has acted as resistance during this uptrend. A breach and hold above this index would be bullish and would likely indicate that the index is starting Wave 5 up. Although lagging the big cap NDX somewhat, the Nasdaq´s chart looks very similar to that of the NDX. Further, the Nasdaq 60 minute chart shown below displays a bullish potential reverse head and shoulders pattern. A break and hold above the depicted neckline on the chart would indicate that this index is also ready to move higher in Wave 5 up with a measured target exceeding the 2900 area.
Like the SPX, the other major all hold the potential to form Cup and Handle patterns at this time since all these indexes moved up off their respective 50 day moving averages last week. During the week, I highlighted how these indexes produced tails (on their candlestick charts) off their 50 day moving averages where buyers continued to respect that key moving average. Over the coming days, watch to see if these indexes can regain the support of their respective 20 period moving averages which would increase the likelihood of this pattern materializing.
Finally, everyone should be cognizant of the recent volatility (mainly earnings related) and the subsequent whipsaws this has created in many stocks/indexes lately. With several key economic reports combined with a Fed decision, the recent volatility is likely to remain in place over the coming week. Therefore, I suggest you concentrate on the best performing sectors when looking for potential long candidates. Throughout the week, one should look to see if the recent theme of rotation and subsequent base formation from one group to another continues to hold true. One sector to keep a close eye on next week is the banking group. The BKX (shown below) posted a strong day on Friday and appears to have put in some type of tradable bottom as the index displayed positive divergence near the bottom of its down trending channel. As long as money continues to rotate versus exiting the market, one cannot get overly bearish. No doubt there are some mixed signals, but nothing at this stage to indicate the uptrend has run its course.
Good Trading.
CNBC Fast Money Review
This weeks Barrons summary includes the following articles...
1) Cover Story - Tech gets Its Groove Back.
Silicon Valley is humming again, and so are technology shares. Eight to buy and three to avoid. Why Google is inexpensive.
2) Interview - Follow the Money Flows.
An interview with Susan Byrne: Something's amiss in the oil trade plus three favorites among cash-generating software companies.
3) Feature Story - Is a Selloff in China Near?
The valuation gap between similar Chinese and U.S. companies is huge.
4) Feature Story - More Woes for Wall Street.
Merrill Lynch and other brokers could see diminished earnings and lower price shares as the credit cycle curdles and business slows.
5) Up and Down Wall Street.
It's tough to pin down where stock prices are headed. Beware whiplash. Goodbye to Stan O'Neal?
6) Streetwise - Time to Bet on an Oil Pullback?
Energy is due for a setback.
7) The Trader - Fed Fixation.
Investors on tenterhooks - will Bernanke make the cut? Companies missing earnings are getting dealt with harshly by the market.
8) International Trader - Asia.
Not everyone will follow Buffett out of China.
9) International Trader - Europe.
Ericsson needs to better manage its working capital. Time for ING to tell all.
10) Technology Trader - Microsoft Flexes its Muscles.
Microsoft knocks Wall Street dead.
11) Commodities Corner - Weather Watch.
Crude futures have hit record highs, but if winter isn't cold…
12) Current Yield - House Plowed.
Countrywide shares move in mysterious ways amid losses.
13) Fund of Information - Third Quarter Was Really Two Quarters.
For many hedge funds, the third quarter was really two quarters: a volatile August owing to the credit crunch, followed by a much stronger September as
the markets recovered.
14) Cash Track.
1. FINANCIALS
The headline: CFC Soars More Than 30% Friday After Saying It Expects To Be Profitable In 4th Quarter
Najarian asks, "Does anyone believe that Countrywide is out of the woods, I sure don´t!’ He says, “The trade is a put spread. Buy the $17.50 puts and sell the $15 put. Whatever your cost is, that´s the maximum you can lose.’
Adami likes RJF in the space. He thinks they have their act together.
Finerman finds the financials worrisome.
2. WHAT A WEEK FOR TECH
The headline: Microsoft, Apple, EMC, VMware Enjoy Enormous Gains This Week
Macke explains MSFT surged 15% this week after profits and revenues trounced estimates
Adami likes INTC because in an interview last week, the CEO revealed he didn´t have enough chips to meet demand.
Pete Najarian prefers AAPL for the surge in Mac computer sales. He tells the panel to avoid the chip names.
3. PROCTER & GAMBLE
The headline: PG To Report Earnings Tuesday Before The Bell.
Macke likes this stock.
Finerman likes that PG generates more than 50% of their sales from outside the US.
Adami expects PG to go higher.
4. ECONOMY'S D-DAY
With the Federal Reserve decision and the first reading of GDP coming Wednesday, our view of the financial world could change in one day. What´s the trade before the economy's D-Day?
Najarian believes the Fed will cut interest rates by 25 basis points. He recommends buying technology names that have been working as well as financials that have been doing a good job with their asset management.
5. CRUDE SURGES
The headline: Oil Crosses $92 For 1st Time Friday Before Closing Up 1% to $91.46
Adami explains oil jumped this week on supply concerns from new Iran sanctions and Turkey-Iraq tensions. He´s noticed that stocks are not climbing in tandem with the rally in crude. He doesn´t think current prices will sustain.
Macke agrees. He too thinks the price of crude will soon slide.
6. POPS AND DROPS FOR THE WEEK
MRK popped 8%: Adami says the stock is rich on valuation but it still looks good.
GS popped 8%: Finerman says the cream rising to the top.
DV popped 47%: Guy Adami says DeVry received 4 upgrades.
BIDU popped 12%: Najarian says the stock is working.
M popped 9%: Finerman is impressed.
BDK popped 18%: Macke likes their overseas exposure.
MNST popped 12%: Adami thinks it has room to grow.
SGP dropped 7%: Najarian thinks the company has a weak pipeline.
WCG dropped 73%: Finerman says “Don´t catch a falling knife.’
WWY dropped 10%: Najarian says the stock was already up 30% on the year and the drop is profit taking.
7. YOUR FIRST MOVE FOR MONDAY
Macke likes INTC.
Adami prefers DELL.
Karen Finerman recommends shorting the USO.
Najarian says BHI is a buy.
News and Events Digest
Breaking News
Merrill's Stan O'Neal was negotiating the terms of his departure as CEO in the wake of a multibillion-dollar writeoff at the firm. His resignation would be the most dramatic fallout yet from the global credit crunch triggered by the subprime mortgage mess. - WSJ
Health benefits firm Humana Inc. (HUM) said that third-quarter net income rose 90% to $302.4 million, or $1.78 a share, from $159.2 million, or 95 cents a share, a year ago. Analysts had been expecting earnings of $1.49 a share, according to data compiled by Thomson Financial. Total sales rose 11.9% to $6.3 billion. The company said that the quarter included non-recurring earnings of 25 cents a share and a 5 cent-a-share lift from improvements in its commercial operations and stand-alone Medicare Prescription Drug Plans. These improvements are also expected to positively impact fourth quarter 2007 and fiscal 2008 results. Humana is now targeting fourth-quarter earnings per share of between $1.27 to $1.32 and fiscal-year earnings of $4.75 to $4.80 a share. In 2008, the firm expects to report earnings in a range of $5.30 to $5.50 a share. - MarketWatch
EnerNoc Inc. (ENOC) on Monday filed to sell 4 million shares of its common stock. The Boston-based network operations center manager for power companies will raise about $169 million in the offering based on its Friday closing price of $42.13 a share. - MarketWatch
The board of directors of Key Energy Services (KEG) authorized the repurchase of up to $300 million of the company's common stock, the provider of oilfield services said. The buyback program is expected to commence during the fourth quarter, and the authorization is effective through March 31, 2009. Repurchases are anticipated to be made from time to time on the open market or in privately negotiated transactions, Key Energy said. In addition, the company has received a commitment letter from a pair of banks for a $400 million term loan and a $350 million revolving-credit facility. The company also said it's closed on the acquisition of Louisiana-based rig firm Moncla Cos., paying $145.8 million including $123.3 million in cash. - MarketWatch
Dominion Resources Inc. (D) Monday said its board declared a 2-for-1 stock split and an 11% increase in the company's presplit quarterly dividend to 79 cents from 71 cents. The Richmond, Va., utility holding company said the action increases the annual dividend rate to $3.16 from $2.84, equating to slightly more than a 50% payout ratio to its current range of 2008 expected operating earnings of $6.10 to $6.25 a share. Dominion said the stock split is payble Nov. 19 to shareholders of record Nov. 9. The cash dividend is payable on Dec. 20 to shareholders of record on Nov. 30. Because the payment will be made after the stock split, shareholders will receive a dividend of 39.5 cents. Shares of dominion closed Friday at $88.64, up 93 cents, or 1.06%. - MarketWatch
Teco Energy (TE) said Monday that it has agreed to sell Teco Transport Corp. to an investment group led by an affiliate of private-equity firm Greenstreet Equity Partners for $405 million in cash. The Tampa-based energy company estimates net proceeds of about $370 million to $380 million and expects the deal to close before year-end. Shares of Teco closed Friday at $16.74. - MarketWatch
Melco PBL Entertainment (Macau) Ltd (MPEL) filed with U.S. regulators on Thursday to raise up to $800 million in an offering of American Depositary Shares (ADS). - Reuters
Media Summary:
According to Reuters, Oracle (ORCL) has withdrawn its bid for BEA Systems (BEAS).
Reuters writes that profits at Toahiba rose 38%.
Reuters reports that Chrysler workers have approved the UAW contract with the company.
The Wall Street Journal writes that Merrill Lynch (MER) CEO Stan O'Neal has been forced out of the firm.
The Wall Street Journal writes that shares in multinational companies are moving stock indices up while shares in companies doing business with the US consumer are falling.
The Wall Street Journal writes that Carl Icahn is pushing for Biogen to be sold to a larger drug company.
The Wall Street Journal writes that News Corp (NWS) Fox and (GW) NBC Universal have launched their online video site Hulu.
The Wall Street Journal writes that Nintendo plans to launch more features for its video game platforms to make them practical alternatives for casual gamers.
The New York Times writes that the FCC will allow multiple companies to offer cable service in large apartment buildings.
The New York Times writes that, after weathering the dotcom bubble, TheStreet.com (TSCM) has slowly moved its business to a highly successful model.
Barron's writes that the valuation gap between US and Chinese companies is getting huge.
Bloomberg writes that oil pushed above $93 for the first time.
M&A Activity:
Oracle let its $17-a-share offer for BEA expire and invited holders to confront the company, following Icahn's similar call. - WSJ
IPO Central:
Filings:
Symetra Financial Corp. on Monday filed to sell 39.5 million shares at $18 to $20 a share in a bid to raise about $750 million in its initial public offering. The Bellevue, Wash. insurance firm plans to trade under the symbol SYA. Shareholders in the company include Berkshire Hathaway and White Mountins Insurance Group.
IPOs on schedule for the week of 10/29/2007:
012 Smile.Communications Ltd. (SMLC). The company is an Israeli provider of broadband and voice services to businesses and residental. The company is selling 6.7M shares at the initial range between $14-$16. The company announced Revenues for the last 12 months of $260M and Net Income of $19M. The Lead Managers is CIBC and Cowen & Co. is Co-Manager. 012 Smile.Communications Ltd. (SMLC) is headquartered in Petach-Tikva, Israel and their website is www.012.net.
Akela Pharma (AKLA). The company is a Biotech focused on therapeutics for treatment of cancer pain. The company is selling 5.3M shares at the initial range between $6-$8. The company announced Revenues for the last 12 months of $9M and Net Income of $(-1)M. The Lead Managers is Lazard and Oppenheimer is Co-Manager. Akela Pharma (AKLA) is headquartered in Saint-Laurent, Quebec, Canada and their website is www.akelapharma.com.
CNinsure Inc. (CISG). The company is an Independent insurance agency and brokerage company operating in China. The company is selling 11.6M shares at the initial range between $11-$13. The company announced Revenues for the last 12 months of $41M and Net Income of $12M. The Lead Managers is Morgan Stanley and William Blair is Co-Manager. CNinsure Inc. (CISG) is headquartered in Guangzhou, China and their website is www.cninsure.net.
Deltek (PROJ). The company Provides enterprise applications software to project-focused firms. The company is selling 9M shares at the initial range between $17-$19. The company announced Revenues for the last 12 months of $228M and Net Income of $15M. The Lead Managers is Credit Suisse and J.P. Morgan is Co-Manager. Deltek (PROJ) is headquartered in Herndon, VA and their website is www.deltek.com.
Genoptix (GXDX). The company Provides specialized laboratory services to hematologists and oncologists. The company is selling 5M shares at the initial range between $14-$16. The company announced Revenues for the last 12 months of $31M and Net Income of $(-1)M. The Lead Managers is Lehman Brothers and Bank of America is Co-Manager. Genoptix (GXDX) is headquartered in Carlsbad, CA and their website is www.genoptix.com.
Upgrades and Downgrades by Sector:
Biotech
BTRX Barrier Therapeutics Roth Capital Cut Price Target Buy $10 to $9
BIVN Bioenvision Friedman Billings Coverage Dropped
Business Services
CVG STFL Upgraded from Hold to Buy
CVG Convergys Stifel Nicolaus Upgraded from Hold to Buy $23
TSS Total System First Analysis Sec Upgraded from Equal-Weight to Overweight
CBZ CBIZ Inc Boenning & Scattergood Price Target Raised Market Outperform $10 to $11
HSOA Home Solutions Rodman & Renshaw Cut Price Target Mkt Outperform $9 to $7
SRTI Sunrise Telecom Roth Capital Coverage Dropped
RVBD PACS Upgraded from Underperform to Sector Perform
Chemicals-Ethanol
VSE VeraSun Energy Calyon Securities Downgraded from Buy to Add $14
AVR Aventine Renewable Energy Calyon Securities Cut Price Target Add $16 to $14
Computer Hardware
BRCD Brocade Caris & Company Price Target Raised Buy $9 to $12
NTAP Network Appliance Caris & Company Price Target Raised Above Average $28 to $37
Computer Services
SOHU Piper Jaffrey Price Target Raised Outperform $61
Computer Software
MANT ManTech Cowen & Co Upgraded from Neutral to Outperform
CRM Salesforce.com Roth Capital Price Target Raised Buy $55 to $70
ORCC Online Resources Friedman Billings Cut Price Target Outperform $18 to $12
APLX Applix Roth Capital Coverage Dropped
Construction
URS URS Friedman Billings Price Target Raised Outperform $72 to $74
Defense
SXE Stanley Inc. Citigroup Downgraded from Buy to Hold
Ethanol
USBE US BioEnergy Calyon Securities Cut Price Target Add $13 to $11
Finance Companies
CFC Countrywide Friedman Billings Price Target Raised Mkt Perform $20 to $15
CLAY Clayton Holdings JMP Securities Downgraded from Mkt Outperform to Mkt Perform
Foods
SDA Sadia S.A. HSBC Securities Downgraded from Overweight to Neutral
Gaming Operations
PENN Penn Natl Gaming Brean Murray Downgraded from Buy to Hold
PGIC Progressive Gaming Brean Murray Cut Price Target Buy $8.50 to $7.50
Healthcare Equipment
KNSY Kensey Nash Oppenheimer Downgraded from Buy to Neutral
Healthcare Services
CAH Cardinal Health Credit Suisse Upgraded from Neutral to Outperform $74 to $77
Homebuilders
EME EMCOR Group Friedman Billings Price Target Raised Outperform $42.50 to $45.50
Hotels - China
HMIN Home Inns Susquehanna Financial Initiated at Negative
Household Goods
LYTS LSI Industries Needham & Co Cut Price Target Hold $23 to $22
Insurance
HIG Hartford Financial Friedman Billings Price Target Raised Mkt Perform $108 to $112
WCG WellCare Group Jefferies & Co Cut Price Target Hold $107 to $35
Mfg - Footwear
CROX Baird Reiterated at Outperform
Mining - Minerals
POT Potash Banc of America Sec Upgraded from Neutral to Buy
MEE Massey Energy Caris & Company Price Target Raised Above Average $26 to $36
Motor Vehicles
AXL American Axle KeyBanc Capital Mkts Upgraded from Buy to Aggressive Buy $30 to $34
Oil and Gas
HNR Harvest Natural Jefferies & Co Upgraded from Hold to Buy $11 to $17
WNR Western Refining UBS Upgraded from Sell to Neutral
DO Diamond Offshore Friedman Billings Price Target Raised Outperform $139 to $174
BHI Baker Hughes Friedman Billings Downgraded from Outperform to Mkt Perform $96
OIS Oil States Oppenheimer Downgraded from Buy to Neutral
TSO Tesoro Corp. BMO Capital Markets Downgraded from Outperform to Market Perform
Personal Svcs-Fitness
LTM LIFE TIME Fitness Banc of America Sec Downgraded from Buy to Neutral
Pharmaceutical
PDGI PharmaNet Devlpmt Jefferies & Co Downgraded from Buy to Hold $39 to $37
Publishing
WPO Washington Post Deutsche Securities Upgraded from Hold to Buy $740 to $910
Real Estate
DDR Dvlps Divers Realty Deutsche Securities Downgraded from Buy to Hold
Regional Banks
EUBK EuroBancshares Kaufman Bros Downgraded from Buy to Hold $10 to $7.50
BBX BankAtlantic Friedman Billings Cut Price Target Underperform $5 to $4.50
Retail Trade
ODP Office Depot JP Morgan Downgraded from Overweight to Neutral
ODP Office Depot Credit Suisse Downgraded from Neutral to Underperform $24 to $17
Savings & Loan
SOMH Somerset Hills Bancorp Stifel Nicolaus Downgraded from Buy to Hold
Semiconductors
ATHR Atheros Communications Collins Stewart Upgraded from Market Perform to Buy
WFR MEMC Elec Friedman Billings Price Target Raised Outperform $75 to $100
BRCM Piper Jaffrey Lowers Estimates
ARMHY ARM Holdings Jefferies & Co Initiated at Buy
NVDA NVIDIA Lehman Brothers Downgraded from Overweight to Equal-weight
Telecommunications
DCM NTT DoCoMo Citigroup Upgraded from Sell to Hold
PWAV Powerwave Brean Murray Initiated at Buy $8
Transportation
PTSI P.A.M. Transport Morgan Keegan Downgraded from Outperform to Mkt Perform
Utilities
PSD Puget Energy Soleil Downgraded from Hold to Sell
PSD Puget Energy Robert W. Baird Downgraded from Outperform to Neutral $29 to $30