Thursday Morning, August 16th
Dow Stock News
DOW Support Levels (DJIA)
MA Support Levels:
200 EMA is 12,855
200 DMA is 12,830
Lower Bollinger Band Support: 12,930
Fib Retracement Support Levels:
Fib 50% Retracement is 12,980
Fib 62% Retracement is 12,735
The WSJ writes that several reporters have sued HP (HPQ) for spying on their phone calls and records.
General Electric Co. (GE) was awarded a $231.2 million cost-sharing contract to develop an "optimized" aircraft propulsion system for the U.S. Air Force, the Department of Defense said late Wednesday. GE, along with other companies, will participate in the Adaptive Versatile Engine Technology program to develop inlet, engine, exhaust nozzle, and integrated thermal management technologies for a propulsion system to be used over a broad range of altitude and flight velocity, the department said. Last year, GE chalked up $163.4 billion in sales. - MarketWatch
Ice Man Stocks
Depressed stocks the Ice Man may buy:
GS - 151 Gap
TASR - 12.75 Gap
CROX - 45.25 Gap
UA - 55.25 Gap
LVS - 85.75 Gap
GDX - 34.70 Gap
RTP - 231 Gap
CTSH - 74.50 Gap
CAT - 68.20 Gap
LFL - 68.60 Gap
GRMN - 83.90 Gap
UNP - 104 Gap
SMSI -12.60 Gap
CMG - 88.40 Gap
CSX - 41 Gap
RIO - 57.50 Gap
ICE - 127.30 Gap
SHLD - 118 Gap
MA - 115 Gap
HOKU - 7 Gap
FCSX - 42.35 Gap
JNPR - 27 Gap
LPHI - 36.10 Gap
ACL - 130 Gap
CEO - 99 Gap
CPA - 37.20 Gap
CIEN - 29.30 Gap
VIP - 91 Gap
MBT - 94.50 Gap
UAUA - 35.40 Gap
BA - 92.70 (200 Day MA)
Dollar Man Ideas:
EMMS - 6.50
TMY - 2.05 Bid
Breakdown Shorts:
MGM - Breaking 70 = 68.50 Gap
Media Commentators
Cramer's Comments:
Bullish: GRMN
Ice Cold Commentators
Break Man Video Summary:
Break out buy (or short sell) watch list for short term gains August 16 includes: MXIM, VZ, NAK, SGMO, EWZ, ILMN.
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.
CNBC Fast Money Review
1. THE RED FOR '07
The headline: Stock Market Rolls Over Today on Credit Crisis, Erasing S&P 500's Gain For the Year. Dylan Ratigan explains that the S&P 500 is down 6.1% over 5 days. It´s the biggest drop since January 2003.
Macke: The last hour of trading is a dangerous time lately, traders don´t want to hold stocks overnight.
2. COUNTRY FRIED FINANCIAL
Najarian: The Countrywide sell-off worsened on reports of a significant jump in its borrowing costs. Says options volume suggests to him that CFC has further to drop. If Goldman Sachs and Morgan Stanley are having problems, it will likely ripple through the entire space. He sees a lot of put buying in the XLF.
Adami: Warren Buffett sees something in BAC. Suggests that BAC might not have much exposure to the subprime.
Tim Seymour: Bought materials companies today. Recommends buying CurrencyShares Canadian Dollar Trust (FXC).
3. The Top 3
1. Last But No Least
Today, HPQ will be the last Dow average component to report earnings this season. There´s a healthy bit of optimism already in the stock. The Street will be listening closely for outlook – specifically for the guidance for Q4 and Q1 of ´08
Macke: Thinks tech is the anti-subprime market. He´s enthusiastic about the stock and the sector.
2. During this credit market fueled selloff of the past month, which group of stocks were the worst performers? If you thought the answer was the financials, you were...wrong. The correct answer? Material stocks.
Tim Seymour: Rising credit costs could squeeze global growth. When combined with China´s inflation and recent M&A takeover fever; the materials sector could be facing some challenges.
Najarian: Names such as DOW, DD, AA, MON, FCX, X, NUE, and RIO have all been murdered.
Macke: There´s a disconnect between the global economy and the current value of many materials stocks.
Adami: Suggests materials names might be getting close to a bottom.
3. $1 Billion Friends & Family Plan
As wealth among the Chinese people increases and the migration to cities continues, mobile telephone growth in China is booming. CHL is expected to report that profit jumped 20% last quarter. Earnings from the other 3 biggest Chinese telephone companies follow the next two weeks. Is it too late to play the Chinese mobile boom?
Adami: CHL still has room for growth.
Najarian: Loves the whole sector.
Seymour: The consumer is the best way to play emerging markets. Mobiles are the best way to play the consumer.
4. AMGEN AFTER HOURS
The headline: AMGN, the Biggest Biotech, Rises After Hours On Job Cut Plans.
Najarian: The pop stems from an announcement that Amgen intends to reduce its work force by 14%, feels the stock will move until late 2008.
5. DEERE IN THE SPOTLIGHT
The headline: Ag Trade Still Going Strong As DE Reports 23% Surge In Profit.
Adami: DE beat earnings, but the news was swept under the carpet because of the distress in the market.
6. POPS & DROPS
TMA popped 39% Najarian says this is a “fake’ pop.
HNZ popped 3% Seymour says this company is doing okay.
VMW popped 13% Adami says don´t chase the stock.
ZQK popped 2% Macke calls it a dead cat bounce.
ETFC dropped 7% Najarian thinks ETFC could go lower.
LEH dropped 4% Adami thinks LEH is going lower.
EEM dropped 4% Seymour says if liquidity dries up, emerging markets will suffer.
A dropped 11% Macke expects another drop.
UAUA & AMR both dropped 9% Najarian thinks these stocks are going lower.
7. The Final Trade. Your First Move For Thursday
Najarian: Short ETFC.
Adami: For the third day in a row, recommends shorting The Dow with Short Dow 30 Proshares (DOG).
Seymour: Likes buying Mobile TeleSystems OJSC (MBT) as an emerging markets play.
Macke: Doesn´t want to buy a darn thing in this tape.
News and Events Digest
Breaking News
Kraft is in the early stages of finding a buyer for its Post cereals unit. Potential bidders could include Pepsi and General Mills. - WSJ
A stubborn inflation rate along with stronger factory output could keep Fed officials wary of cutting interest rates despite the latest turmoil hitting markets. - WSJ
The Japanese yen's gains accelerated on Thursday as New York traders arrived, with the dollar going from above the 115 yen level to as low as 113.55 yen -- the greenback's worst level since August 2006. The dollar traded at 116.26 yen late Wednesday. - MarketWatch
Biopharmaceutical research and development firm Adventrx Pharmaceuticals Inc. (ANX) said Thursday that the U.S. Food and Drug Administration has granted fast track designation for ANX-510, or CoFactor injection, which is being investigated in a Phase 3 study on colorectal cancer. "The FDA's fast track designation represents a significant step towards bringing CoFactor to market as rapidly as possible," said CEO Evan Levine in a statement. - MarketWatch
Biotechnology firm Amgen said after U.S. markets closed Wednesday that it will slash its employee base by between 12 and 14% in hopes of reducing its 2008 cost forecasts by $1 billion to $1.3 billion on a pre-tax basis. - CNBC
Goldman Sachs and Deutsche Bank have withdrawn their commitment to underwrite a US$1 billion deal to finance films for Metro-Goldwyn-Mayer (MGM), the Financial Times reports. - CNBC
Ctrip.com International, Ltd. (CTRP) a leading travel service provider of hotel accommodations, airline tickets and packaged-tours in China, today announced the closing of a secondary offering of 13,290,000 American depositary shares ("ADSs"), each representing 0.5 ordinary share, at a price to the public of $38 per ADS. All of the 13,290,000 ADSs are sold by Rakuten, Inc., a Japanese public company listed on the JASDAQ market (Jasdaq: 4755) which was a shareholder of Ctrip until the closing of the offering. Ctrip will not receive any proceeds from the sale of ADSs by Rakuten.
Media Summary:
According to Reuters, China Mobile's (CHL) net rose 28%.
Reuters writes that Amgen (AMGN) will fire 14% of its sales force.
Reuters reports that Hasbro (HAS) will increase inspection of products from China after Mattel (MAT) recalls.
Reuters also reports that Take Two (TTWO) has received a Wells Notice from the SEC.
The Wall Street Journal reports that Kraft (KFT) is working on selling its Post cereals business.
The Wall Street Journal writes that a KKR affilate is delaying paying $5 billion in short term debt.
The WSJ writes that Paul Allen is considering taking Charter (CHTR) private.
The Wall Street Journal writes that Google (GOOG) has begun to market Sun's (SUNW) StarOffice product.
The New York Times writes that NetFlix (NFLX) is using high-end customer service to compete with Blockbuster (BBI).
The FT writes that the EU will investigate bond rating agencies Moody's and S&P for poor calls on sub-primce issues.
Batton's writes that buying EMC (EMC) could be a cheap way to get part of the IPO of one of its divisions VMWare (VMW)
M&A Activity:
Fifth Third Bancorp (FITB) signed a definitive agreement to buy First Charter Corp. (FCTR), a Charlotte-based bank, for $1.09 billion, or $31 per share. The Cincinnati-based bank said 70% of the deal will be paid in the form of Fifth Third stock, and 30% in cash. Fifth Third said the deal is expected to close in the first quarter of 2008. The deal will cut 2008 per-share earnings by 2%, will be "relatively neutral" to 2009 earnings and will add "modestly" to 2009 earnings excluding amortization. The deal is expected to cut annual costs by $22 million, phased in over two years, and will result in one-time charges of up to $39 million. First Charter has 57 branches in North Carolina and two in suburban Atlanta. First Charter President and Chief Executive Officer Bob James will become president of Fifth Third's Charlotte affiliate. - MarketWatch
Fluor Corporation (FLR) announced today that its Power Group was awarded a contract by Toshiba International Corporation, a U.S. business unit of the Toshiba Corporation for engineering, procurement and construction-related services for two new nuclear reactors planned for the South Texas Project (STP) Nuclear Generating Station in Bay City, Texas.
Economic Data:
8:30 Housing Starts
8:30 Building Permits
8:30 Initial Claims
12:00 Philadelphia Fed
Upgrades and Downgrades by Sector:
Aerospace
ERJ Embraer SA Calyon Securities Cut Price Target Add $56 to $48
Beverages
COV Covidien Bear Stearns Initiated at Outperform $51
Biotech
AMGN Amgen Credit Suisse Cut Price Target Neutral $56 to $54
AMGN Amgen Friedman Billings Cut Price Target Mkt Perform $59 to $56
Broadcasting
MCCC Mediacom Comm Banc of America Sec Resumed Coverage Buy $10
Business Services
GKSR G&K Svcs Barrington Research Upgraded from Mkt Perform to Outperform $50
NCI Navigant Consult Piper Jaffray Upgraded from Market Perform to Outperform $18 to $21
Cable Services
TWC Time Warner Cable Banc of America Sec Resumed Coverage Buy $43
Chemicals
TRA Terra Industries Matrix Research Upgraded from Hold to Strong Buy
Computer Hardware
NTAP Network Appliance AG Edwards Upgraded from Hold to Buy $33
NTAP Network Appliance Caris & Company Upgraded from Above Average to Buy $31 to $35
NTAP Network Appliance Friedman Billings Price Target Raised Outperform $36 to $38
Computer Services
CNET CNET Stanford Research Initiated at Buy $10
Computer Software
ANST Ansoft Boenning & Scattergood Upgraded from Market Perform to Market Outperform $35
WSTG Wayside Technology Henley & Company Initiated at Buy $31
CTXS Citrix Systems RBC Capital Mkts Cut Price Target Sector Perform $37 to $36
INTC Intel Credit Suisse Upgraded from Underperform to Outperform $22.50 to $35
Educational Services
CECO Career Education Bear Stearns Upgraded from Peer Perform to Outperform
Finance Companies
KFN KKR Financial Friedman Billings Upgraded from Mkt Perform to Outperform $17 to $20
CFC Countrywide Friedman Billings Cut Price Target Underperform $25 to $17
Finance-Prop Mngmt
MMPI Meruelo Maddux UBS Downgraded from Neutral to Sell
Gaming Operations
DDE Dover Downs Gaming KeyBanc Capital Mkts / McDonald Downgraded from Buy to Hold
Healthcare
ACUS Acusphere Susquehanna Financial Downgraded from Positive to Neutral
Manufacturing
WGOV Woodward Governor Matrix Research Downgraded from Buy to Hold
Medical Services
EMS Emergency Medical Services Jefferies & Co Upgraded from Hold to Buy $42
Mfg - Materials
PPO Polypore Intl Robert W. Baird Initiated at Outperform $19
Mining - Steel & Iron
CMC Commercial Metals CIBC Wrld Mkts Upgraded from Sector Perform to Sector Outperform
Oil and Gas
DRQ Dril-Quip Jefferies & Co Upgraded from Hold to Buy $48 to $51
PTR PetroChina Bear Stearns Upgraded from Peer Perform to Outperform
SNP China Petroleum (Sinopec) Bear Stearns Upgraded from Underperform to Peer Perform
MWE MarkWest Energy RBC Capital Mkts Price Target Raised Outperform $39 to $40
Personal Services
SHOR Shoretel Lehman Brothers Initiated at Overweight
Regional Banks
SOV Sovereign Banc Citigroup Upgraded from Hold to Buy
REITs
CBL CBL & Assoc JP Morgan Upgraded from Neutral to Overweight
MFA MFA Mortgage JP Morgan Upgraded from Neutral to Overweight
UDR United Dominion RBC Capital Mkts Cut Price Target Sector Perform $33 to $26
Retail Services
TA TravelCenters of America UBS Initiated at Buy
Retail Trade
ANN AnnTaylor Piper Jaffray Upgraded from Market Perform to Outperform
Security Systems
BCO Brinks Matrix Research Upgraded from Hold to Buy
Semiconductors
ARMHY ARM Holdings RBC Capital Mkts Initiated at Outperform
MU Micron Credit Suisse Initiated at Outperform $18 to $17.50
MXIM Maxim Integrated Credit Suisse Initiated at Outperform $36
QI Qimonda Credit Suisse Initiated at Outperform $20
SPSN Spansion Credit Suisse Initiated at Outperform $15 to $13
TXN Texas Instruments Credit Suisse Initiated at Outperform $43
Solar Energy
FSLR First Solar Lazard Capital Upgraded from Hold to Buy $115
Telecommunications
PLT Plantronics Bear Stearns Upgraded from Peer Perform to Outperform
CMCSA Comcast Banc of America Sec Resumed Coverage Buy $32
CCBL C-COR.net Kaufman Bros Initiated at Buy $16.50
FTWR FiberTower Merriman Curhan Ford Initiated at Buy
HLIT Harmonic Jefferies & Co Initiated at Buy $10.50
IDSY I.D. Systems Merriman Curhan Ford Initiated at Buy
NMRX Numerex Corp. Merriman Curhan Ford Initiated at Buy
WPCS WPCS Intl Merriman Curhan Ford Initiated at Buy
DITC Ditech Roth Capital Cut Price Target Hold $6.10 to $5.20
ORCT Orckit Comms RBC Capital Mkts Cut Price Target Sector Perform $10 to $7
Utilities
SBS Companhia de Saneamento Brean Murray Upgraded from Hold to Buy $54