Thursday Morning, October 11th
SITE NEWS
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Dow Stock News
Wal-Mart (WMT) rose 4% in early trading after the giant retailer surprised Wall Street by boosting its earnings estimate for the third quarter.
The Bentonville, Ark., company said it now expects to make 68 or 69 cents a share for the quarter, up from its previous forecast of 62 to 65 cents a share. The company cited gains in its expense control, which expanded profit margins.
Wal-Mart said same-store sales rose 1.4% from a year ago in September, with sales in established Wal-Mart stores inching up 0.8% and those at Sam's Clubs store jumping 4.4%. - the street.com
INTC - downgraded to Source of Funds at THNK
The FT writes that GE (GE) will decide the fate of NBC after the Olympics.
Reuters reports that Boeing (BA) has delayed delivery of its Dreamliner 787.
Ice Man Stocks
Breakouts the Ice Man may consider trading:
AAAC - 8.15, 8.40
YZC - 109.50
TWTI - 9.45
SMSC - 39.75
FREE - 10.40
HWAY - 50.40
Regular Trades the Ice Man may consider:
SORL - 8.90
GSF - 78.25
ITMN - 19.55
ACN - 42
ABBI - 25
ATV - closed great
EBS - 10.10
OSTK - 35
AMD - 14.10
ULTR - 19.15
GROW - 23.75
Depressed stocks the Ice Man may buy:
AIG - 65 Gap
AXR - 34.40 Gap
DSL - 48.30 Gap
UBB - 136.60 Gap
KMGB - 14
Extended Shorts:
BCSI - 49/50.50
Dollar Man Ideas:
NRMX - 3
GNBT - 1.65
BCON - 2.25
TGEN - 2.30
BQI - 4.50
VC - 6
FMT - 4.55
DNDN - 8.50
Media Commentators
Cramer's Comments:
Bullish: GOOG, ACL, SNN, SYK
Ice Cold Commentators
Break Man Video Summary:
Break out buy (or short sell) watch list for short term gains October 11 includes: CPSL, MHJ, NTES, SILC, LNUX, CKSW, IRIS, ICOC.
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:
We saw a mixed picture in the market Wed with the SPX/DOW retreating some while the NDX/Nasdaq managed to post small percentage gains. The Dow was negatively impacted by Boeing's announcement that it expects delays of its new Dreamliner aircraft. The fallout from this announcement also weighed on Honeywell's shares Wed. There were also a few warnings from companies in the oil patch, but the market seems intent on what's going to happen in the future. Like I've said many times before, it's how the market reacts to the announcements not the news itself that is meaningful to the traders. This market is displaying a great deal of resiliency at this point and you should not let your personal feelings enter into the equation. Instead, trade based upon what the charts are indicating will likely take place.
With that said, many indices are reaching extreme levels on their corresponding oscillators. The major indexes have RSI readings around 70 and stochastic readings exceeding 90. In addition, the SPX 60 minute chart below shows a possible rising wedge formation accompanied by negative divergence. If the uptrend line is breached to the downside look for some sort of pullback to occur.
As you are aware, the major indexes have been displaying overbought readings for several days now. This fact alone does not represent a sell signal, but is something to be aware of when positioning new trades or managing current ones. Every trader has different levels of risk tolerance and you should act accordingly with stops or deal with pullbacks if you intend to swing your trades' longer term. The uptrend is still most certainly intact and until support is lost one should look to add to positions on pullbacks near support.
In summary, the daily charts of the major indices remain overbought so it would not be surprising to see some selling occur which would enable the oscillators to recycle downward. However, it's extremely difficult to predict exactly when a pullback may occur in such a strong up trending market. Therefore, continue to play the best setups and look at any pullbacks as opportunities to scale into additional long positions.
Good Trading.
CNBC Fast Money Review
1. MARKET BRACING FOR EARNINGS
The headline: S&P 500 Stalls As Analysts Expect 1st Quarter Of Negative Earnings Growth In 5 Years.
Dylan Ratigan says the S&P 500 quarterly earnings have a "good chance" of dropping for the 1st time since 2002. GS, BSC and JPM all posted losses Wednesday.
Najarian reminds the panel that NASDAQ made 6-year highs on Wednesday. If you watch the show regularly you know that Najarian is very bullish on tech and tells the panel Google could become a $700 stock.
Tim Seymour feels differently. On Wednesday he sold steel and aluminum stocks because he´s worried about forthcoming inflation data and weak retail sales.
2. THE NIGHTMARE LINER
The headline: Boeing (BA) To Delay Delivery Of New 787 Dreamliners By At Least 6 Months
Karen Finerman says she´s not surprised or worried. They build lots of other planes, she says, and the supply chain is long.
Tim Seymour explains that he sold BA short and bought it back Wednesday. He expected the market to be disappointed on this news.
3. COSTCO SURGES BEFORE RETAIL THURSDAY
The headline: COST Surges On Stronger-Than-Expected Earnings, Same-Store Sales.
Macke says TGT and most major retailers are due to report September same-store sales on Thursday. He reminds the panel numbers are expected to be weak and risk is to the upside. He recommends getting long GPS and PLCE.
Najarian likes KSS over Target.
Finerman is intrigued by AEO.
4. DELL DEAL
LXK options activity suggests the DELL takeover chatter may not be far off the mark.
Lexmark refuses to comment on the Dell speculation, as a matter of policy and Dell has not returned calls seeking comment.
Najarian says one look to the options pit suggests something is afoot. Investors were busy buying October, November and January call options in LXK. This is a stock that has been “absolutely crushed,’ and is just starting to make some headway. If you want in, Pete suggests the November calls as a way to “give you some time.’
5. OIL TURNS HIGHER
The headline: Oil Climbs 1.3% to $81.30 in a Midday Rally
Dylan Ratigan explains that both CVX and VLO issued Q3 profit warnings.
Tim Seymour thinks the stock market already priced in the fact that oil companies might report weaker profits because crack spreads had contracted. He adds inventory numbers come out Thursday and fundamentally nothing has changed in the space. He likes refiners such as COP as a long-term play.
Finerman tells the panel she´s been selling COP because she doesn´t feel that most of their business comes from refining.
6. POPS AND DROPS
NOK popped 1%: Najarian is quite bullish on this name.
FCX popped 4%: Najarian says forget gold and go for copper.
AKAM popped 4%: Macke doesn´t like this stock.
GOOG popped 2%: Tim Seymour says, “the beat goes on!’
AA dropped 3%: Seymour says Alcoa´s struggling with electricity costs.
PETM dropped 4%: Macke recommends buying this stock under $30.
WU dropped 3%: Finerman likes this company.
7. YOUR FIRST MOVE FOR THURSDAY
Jon Najarian likes GOOG and thinks it´s going to $700 before the end of the year.
Macke recommends MRK as a Big Pharma play.
Seymour prefers COP because of recent upgrades and growth in Europe.
Finerman says TEL is a buy for automotive exposure.
Pete Najarian likes VCLK as an on-line ad play.
News and Events Digest
Breaking News
Madonna is close to leaving Warner Music for a virtually unprecedented 10-year, $120 million deal with concert-promotion giant Live Nation, in the latest seismic shift to rock the music industry. - WSJ
HMIN - an article in the IBD speculates that the company´s business is booming and that the recent weakness was due to the weak dollar.
Telefonica said Thursday that it will bring forward plans to raise its dividend payout as the Spanish telecommunications giant hopes to grow earnings per share by more than 75% by 2010.
In an announcement ahead of an investor conference in London, Telefonica said it will pay a dividend of 1 euro a share for fiscal 2008. - MarketWatch
Nordstrom (JWN) cut third-quarter earnings guidance, citing rising inventory and below-plan sales performance in September.
The Seattle-based department store chain said it now expects to make 50 to 53 cents a share for the third quarter ending next month, down from its previous forecast of 61 to 64 cents a share. Nordstrom said sales in stores open at least a year rose 3.2% in September. - the street.com
Media Summary:
According to Reuters, several retailers cut holiday forecasts and the economy slows.
Reuters writes that Chrysler has reached an accord with the UAW.
Reuters reports that Sony Ericsson topped its forecasts but average handset prices were down.
The Wall Street Journal writes that Madonna is close to leaving Warner Music (WMG) for a $120 million deal with Live Nation.
The Wall Street Journal writes that cable companies are trying to catch up with satellite TV providers on the number of HDTV channels that they can offer.
The Wall Street Journal reports that the FDA approved a drug-coated stent from Medtronic (MDT)
The New York Times writes the SEC. has been asked to investigate stock sales by Angelo R. Mozilo, Countrywide´s (CFC) chief executive
The FT writes that Morgan Stanley (MS) and Goldman Sachs (GS) have had to write down more debt due to problems in the mortgage market.
Barron's writes that Merrill Lynch upgraded its price target on Google (GOOG) to $740.
CNN Money writes that Mattel (MAT) directors have been sued for insider trading.
IPO Central:
Virgin Mobile USA, Inc. (VM) said it has priced its initial public offering of 27.5 million shares at $15 a share. The shares are expected to start trading on the New York Stock Exchange on Thursday. Lehman Brothers was lead manager and book runner for the offering, with Merrill Lynch and Bear Stearns acting as joint book-running managers. - MarketWatch
M&A Activity:
Garmin Ltd. (GRMN) announced today that it has signed a letter of intent for the proposed acquisition of Fairpoint Navigation A/S ("Fairpoint"), the distributor of Garmin's consumer products in Denmark. The completion of the acquisition is subject to the negotiation and execution of a definitive acquisition agreement, the completion of legal and financial due diligence and customary closing conditions. The acquisition is expected to be completed in January 2008.
Economic Data:
8:30 Export / Import Prices
8:30 Initial Claims
8:30 Trade Balance
10:30 Crude Inventories
12:00 TRSY Budget
Upgrades and Downgrades by Sector:
Advertising
VCLK ValueClick Citigroup Downgraded from Buy to Hold
Biotech
PCOP Pharmacopeia CIBC Wrld Mkts Upgraded from Sector Perform to Sector Outperform $8
BMRN Biomarin Pharm Wachovia Initiated at Outperform
GENZ Genzyme Wachovia Initiated at Outperform
GTXI GTX Wachovia Initiated at Outperform
MIPI Molecular Insight Pharma Wachovia Initiated at Outperform
QGEN Qiagen Piper Jaffray Initiated at Outperform $24
ZIOP Ziopharm Oncology Oppenheimer Initiated at Buy $10
Brokerage Services
NDAQ NASDAQ Piper Jaffray Downgraded from Outperform to Market Perform
NUAN Nuance Communications Citigroup Downgraded from Buy to Hold
Chemicals
ALTI ALTI - downgraded to Neutral at Merriman Downgraded
Computer Hardware
EMC EMC Corp Friedman Billings Price Target Raised Mkt Perform $17 to $25
SNDK SanDisk Oppenheimer Downgraded from Buy to Neutral
TTMI TTM Tech JP Morgan Downgraded from Overweight to Neutral
XRTX Xyratex Citigroup Downgraded from Buy to Hold
Computer Services
GIGM GIGM - initiated Outperform at Bear Stearns with a $27 price target Initiated
Computer Software
VMW VMW - initiated with a Market Perform at BMOC with $90 price target Initiated
WBSN Websense Credit Suisse Cut Price Target Neutral $24 to $19
Construction
URS URS Friedman Billings Price Target Raised Outperform $62 to $72
DXPE DXP Enterprises BB&T Capital Mkts Initiated at Buy $49
PCR Perini Morgan Joseph Downgraded from Buy to Hold
Healthcare
ISIS ISIS Pharm Wachovia Initiated at Outperform
ABT Abbott Labs Wachovia Downgraded from Outperform to Mkt Perform
Insurance
UNH UnitedHealth Jefferies & Co Price Target Raised Hold $48 to $52
AFL AFLAC Friedman Billings Initiated at Outperform $67
MET MetLife Friedman Billings Initiated at Outperform $83
AXA AXA Deutsche Securities Downgraded from Buy to Hold
ABK AMBAC Fincl Friedman Billings Cut Price Target Outperform $106 to $90
Manufacturing
CLS Celestica JP Morgan Upgraded from Underweight to Neutral
Mining Non-Ferr Metal
RT Ruby Tuesday Credit Suisse Cut Price Target Outperform $30 to $22
Regional Banks
FED FirstFed Financial Friedman Billings Downgraded from Outperform to Mkt Perform $60 to $50
REITs
BRE BRE Properties Credit Suisse Upgraded from Neutral to Outperform $50 to $65
SLG SL Green Rlty Stifel Nicolaus Upgraded from Hold to Buy $135
Semiconductors
MSCC Microsemi CIBC Wrld Mkts Price Target Raised Sector Outperform $32 to $35
BRCM Broadcom UBS Initiated at Buy
CREL Corel CIBC Wrld Mkts Downgraded from Sector Outperform to Sector Perform $18.50 to $16
NVDA NVDA - downgraded to Accumulate at THNK Downgraded
Solar Energy
FSLR First Solar Collins Stewart Initiated at Buy $160
JASO JA Solar Collins Stewart Initiated at Buy $60
FSLR FSLR - initiated with a Buy at CEUT with a $160 Initiated
JASO JASO - initiated with a Buy at CEUT with a $61 - JASO also priced a 6.3M share secondary at $42 Initiated
Tech - Media Svcs
DIVX DivX Barrington Research Initiated at Outperform $20
Transportation
NSC Norfolk Southern Lehman Brothers Upgraded from Underweight to Equal-weight
BNI Burl Nrth Santa Fe Lehman Brothers Downgraded from Overweight to Equal-weight
CSX CSX Corp Lehman Brothers Downgraded from Equal-weight to Underweight
EXPD Expeditors Intl UBS Downgraded from Buy to Neutral