Thursday Morning, December 6th
Dow Stock News
Coca-Cola Co. (KO) on Thursday said President and Chief Operating Officer Muhtar Kent will succeed Neville Isdell as chief executive as of July 1. Isdell will remain chairman of the board until the company's annual meeting in April 2009. Kent joined the company in 1978. - MarketWatch
IBM (IBM) said that it will acquire Arsenal Digital Solutions, a privately held company based in Cary, North Carolina. Financial terms were not disclosed. The transaction is expected to close in the first quarter of 2008. Arsenal provides on-demand data protection solutions. - MarketWatch
The Wall Street Journal also writes that IBM (IBM) has developed a optical chip which will move more data than past generations of the product.
Reuters reports the Microsoft (MSFT) will double its customer service staff in Asia due to rising demand for its products.
The Wall Street Journal reports that Microsoft will test a PC for developing countries.
Ice Man Stocks
Breakouts the Ice Man may consider trading:
HPY - 33
MEE - 35
UNP - 130
HDB - 140
IIJI - 11
SWKS - 9.55
LKQX - 21
MTD - 119.25
RDK - 37
GHL - 75
ISRG - 339.50
Regular Trades the Ice Man may consider:
BT - 60.40
SWIR - 16.85
PCS - 17.50
NVR - 505
PDCO - 33
RBN - 71.26
ACH - 58.15
BRCM - 28.40
MCO - 38
LLNW - 7.50
FFIV - closed at high
YRCW - 18.12
TSRA - 42.20
MDVN - 14.75
IPCR - 30.31
CAF - 55.38
PGJ - 36
OMPI - 19.50
KBALB - 14.25
SIGI - 25
AWI - 43.50
CDS -10.25
INFY - 43.85
RVBD - 31.15
FLR - 149.60
BNI - 85
Depressed stocks the Ice Man may buy:
DRYS - 75.70 Gap
Dollar Man Ideas:
GRRF - 9
CMOS - 2.20
CRDC - 8.25
CPSL - 7.35 = 8.45
TNRO - 5.05
CBAK - 5
EXEL - 9.20
GBT - 4.95
TRID - 6.50
FFHL - 4.50
LVLT - 3.50
CPST - 1.30
Media Commentators
Cramer's Comments:
Bullish: FCX, HCBK
Zacks:
Positive: LEH, WFC
Ice Cold Commentators
Break Man Video Summary:
Break out buy (or short sell) watch list for short term gains December 6 includes: APD, HDB, HURN, ISRG, BKUNA, EXEL, MTZ.
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:
Overnight the Asian markets were nearly all higher, with Australia´s ASX the only exception. Europe came in over 1% higher as wee, as reports circled around the globe that several central banks stand ready to lower rates, if necessary, to ward off a potential economic slowdown. Steady buying in the US Index Futures overnight were aided by a strong ADP jobs report as well as a revised upward third quarter productivity report. As a result, the market gapped up at the opening with the SPX gaining 16 points within the first half hour to reach 1479. After an hour of consolidation, the SPX moved up to it highs for the day at 1486. Then a choppy session in the afternoon finished with the SPX closing near its highs at 1485. At the close the SPX/DOW gained 1.50% while the NDX/NAZ posted gains of 1.85%. After being up nearly $2.00 in the morning, crude oil reversed lower ending 90 cents lower on the session. Short term momentum is rising but is not yet overbought. Thus far the market continues to respond positively to all the developments. The rally is not yet a confirmed uptrend, but is displaying characteristics of wanting to impulse higher.
As I stated above, the market has yet to confirm an uptrend. The key levels that we need to watch for are SPX 1490 and Nasdaq 2700 which are the levels that correspond to our neckline resistance. These levels need to be breached and held for these indexes to validate their inverse head and shoulders patterns. The bears are keenly aware of the problems they´re likely to encounter once SPX 1490 clears and thus the reason the market struggled as it approached this level. It´s very tempting to believe this level will be taken out very soon but this can be a mistake as we´ve seen previously. If the pattern is breached it measures over 70 points higher so there will be ample time to become more aggressive. As you are aware, there are no guarantees in this business, but the pattern measures that distance. With that said, the financials need to be watched closely over the coming days since their heavy weighting in the SPX is likely to significantly influence the direction of that index. Wednesday, the financial sector was negatively impacted by a Moody´s report that suggested MBIA Inc. was likely to fall short of its capital requirements. This resulted in a 16% decline in the financial guarantor´s stock price. The constant negative news relating to this sector is one reason to refrain from becoming overconfident.
The market´s internal readings were quite strong which gave credence to today´s rally. Advancers greatly exceeded decliners and this was confirmed by strong readings in up volume versus down volume. We´re still not seeing many new highs, although they are slowing improving. More important of late has been the gradual improvement we´ve seen in the number of new lows. Truthfully, these figures are not likely to greatly until we break out to higher price levels. This is a process that´s takes time, especially in light of the recent declines which took its toll in this arena.
In summary, the market put in a solid performance today. We need to remain objective and open minded on a daily basis while trading in this environment. Although it´s tempting for one to get aggressive following Wednesday´s action, it´s best to buy dips or a breakout above our highlighted key resistance levels as long as the internals confirm the move. Certainly, I believe some exposure is appropriate at this time as we await further clues from the market. Let´s continue to take things one day at a time while remaining grounded.
Good Trading.
CNBC Fast Money Review
1. DOW SURGES 196 POINTS
The headline: Strong Employment / Productivity Growth Reports Set Positive Tone For Day.
Dylan Ratigan explains the S&P surged to its highest level in nearly a month.
Jeff Macke says the market didn´t break any resistance on the top, so it didn´t prove anything.
Guy Adami adds until we get above 1490 on the S&P, all bets are off.
Karen Finerman said jobs is the most important number coming out this week.
2. TECH TRIUMPHANT
The headline: Nasdaq Jumps As Tech Shares Lead Market Gain; HPQ, GOOG, AAPL, INTC Move Higher Today.
Pete Najarian says the iPhone is just a trigger to get consumers into the Apple´s PC market and I think it´s working.
Jeff Macke says This is the space to play. Why bother with financials.
3. WHY ARE CHIPS BREAKING OUT?
While some economists are calling for a recession, chips stocks led by INTC surged on Wednesday. What´s it all mean?
Pete Najarian says Intel isn´t just a chip company, They also make money on networking, so I´m not sure this was a chip run. He adds, NVDA is the trade because the demand for their graphic chips remains strong.
Both Guy Adami and Jeff Macke like INTC. INTC could have a 30-handle says Adami.
4. GLOBAL HOTSPOTS
Does the belief that the US government could relieve distress in the housing market set up a global trade?
Guy Adami says I think steel is going to be the trade in ´08 for global growth. Supplies are low and demand is growing. He recommends X and NUE.
Pete Najarian explains DE and MON were both up Wednesday. Those stocks are also strong global growth plays.
Karen Finerman says It used to be the US sneezes the world catches cold. But I don´t think that´s the case anymore.
5. CRUDE REFUSES TO RISE
The headline: Oil Reverses Early Gains After Report Shows Rise In U.S. Fuel Supplies.
Dylan Ratigan explains Initially, crude surged Tuesday after OPEC decided to keep production unchanged, but then data out of Oklahoma suggested supply was increasing.
Adami adds, with the supply of crude appearing to stabilize oil could go much lower. He recommends shorting crude.
6. POPS AND DROPS
CC popped 8%: Macke says sell the stock if you´re silly enough to own it.
GILD popped 4%: Adami predicts GILD will go higher still from here.
ORCL popped 6%: Finerman says a rising tide lifts all boats.
ADLR popped 20%: Adami said it´s a lottery ticket, but take a look.
CMCSA dropped 9%: Macke says don´t buy companies that blame outside forces “of evil’ for their misses.
MBI drops 16%: Finerman thinks they will be able to raise capital going forward.
IHP dropped 3%: Finerman said like this stock and am going to take a look.
CHS dropped 13%: Macke says walk away!
WDC popped 8%: Najarian likes this stock.
7. YOUR FIRST MOVE FOR THURSDAY
Jeff Macke likes GME.
Guy Adami recommends INTC.
Karen Finerman prefers CROX.
Pete Najarian says EMC is a buy.
News and Events Digest
Breaking News
GME - being added to the S&P 500 Index.
British stocks rose on Thursday after the Bank of England decided to cut interest rates by a quarter-point, with gains from banking stocks led by Royal Bank of Scotland. - MarketWatch
W&T Offshore Inc. (WTI) Thursday said it declared a special cash dividend of $30 million, equal to about 39.25 cents a share, payable Jan. 11 to shareholders of record Dec 21. The Houston energy company's boards also declared a regular cash quarterly dividend of 3 cents a share, also payable Jan. 11 to shareholders of record on Dec. 21. - MarketWatch
Drug maker Eli Lilly & Co. on Thursday reaffirmed its profit outlook for 2007 and forecast that earnings growth in 2008 will be driven by increased volume and strong sales of antidepressant Cymbalta, ED treatment Cialis and diabetes drug Byetta.
The company made the comments ahead of its investor meeting. Lilly still expects to report 2007 adjusted profit of $3.50 to $3.55 per share, and projected 2008 earnings per share between $3.85 and $4 on sales growth in the mid- to high-single digits. - AP
Switzerland-based eye care products maker Alcon Inc. (ACL) said Wednesday it approved a stock buyback program of up to $1.1 billion. - AP
Hoku Scientific Inc (HOKU) said it signed an agreement to borrow up to $185 million from Merrill Lynch for setting up a polysilicon plant in Idaho.
Subsidiary Hoku Materials, which will build the plant, will get about $35 million in cash from its parent prior to getting any of the loan proceeds, the Hawaii-based company said. - Reuters
Media Summary
According to Reuters, Nikon is seeing a sharp increase in demand from LCD makers.
Reuters writes that the housing slump will last through 2009 and some home prices will drop 30%.
The Wall Street Journal reports that Big Pharma will lose so many patents on key drugs that by 2012 generics will take away $67 billion in annual US sales.
The Wall Street Journal writes that auto loan delinquency rates are up sharply.
The Wall Street Journal writes that the Super Fund designed to buy SIV assets will be much smaller than the $100 billion pool that was planned.
The Wall Street Journal writes that negative comments from Moody's about shares in MBIA (MBI) caused a sell-off in the company's shares.
The Wall Street Journal writes that Chrysler will loss $1.6 billion this year.
The Wall Street Journal writes that internet service providers are analyzing customer data in the hope of getting into the online ad business.
The New York Times writes that Costco (COST) same-store sales rose 9%. Analysts had expected 6.6%.
The New York Times reports that Bristol-Myers (BMY) will cut 4,800 jobs.
The New York Times writes that an FDA panel rejected Genentech (DNA) drug Avastin for beast cancer use.
The FT writes that Nokia (NOK) plans to take the lead in handset market share in the US.
The FT reports that hackers are now targeting the Apple (AAPL) Mac
Barron's writes that Yahoo! (YHOO) shares dropped because of an analyst concerns about it search market share.
M&A Activity:
Genzyme's CEO said the biotechnology company doesn't plan to put itself up for sale despite interest shown by Icahn. - WSJ
IPO Central:
Titan Machinery Machinery (TITN) said it priced 6 million shares at $8.50 a share in a bid to raise $51 million in its initial public offering on Thursday. The Fargo, N.D. retailer of agricultural and construction equipment priced in the middle of its $7.50 to $8.50 range and raised the size of the deal from 5.3 million shares. Craig-Hallum Capital Group and Robert W. Baird & Co. are underwriters of the IPO. - MarketWatch
WSP Holdings Ltd. (WH) priced 25 million American depositary shares at $8.50 a share, raising $213 million in its initial public offering on Thursday. The Xinqu, China maker of metal tubing for oil and natural gas exploration, drilling and extraction priced below its estimated range of $10.50 to $12.50 a share. - MarketWatch
Economic Data:
8:30 Initial Claims
Upgrades and Downgrades by Sector:
Aerospace
Design SPR Spirit Aerosystems Bernstein Initiated at Outperform
Beverages
HANS Hansen Natural Lazard Capital Initiated at Buy
Biotech
DNA Genentech Cowen & Co Upgraded from Neutral to Outperform
PDLI PDL BioPharma Lehman Brothers Upgraded from Equal-weight to Overweight
BMTI Biomimetic Therapeutics Boenning & Scattergood Initiated at Market Outperform $18
PCOP Pharmacopeia Rodman & Renshaw Initiated at Mkt Outperform $9
DNA Genentech Jefferies & Co Downgraded from Buy to Hold
DNA Goldman Sachs Cut Price Target $87
DNA Genentech Stifel Nicolaus Cut Price Target Buy $96 to $87
DNA Genentech Friedman Billings Cut Price Target Mkt Perform $83 to $67
DNA Genentech CIBC Wrld Mkts Cut Price Target Sector Outperform $99 to $82
IMCL Imclone Friedman Billings Cut Price Target Mkt Perform $42 to $37
Broadcasting
ETM Entercom Wachovia Downgraded from Outperform to Mkt Perform
Brokerage Services
GS Merrill Lynch Downgraded to Neutral
Business Services
ETEL eTelecare Friedman Billings Initiated at Outperform $14
WNS WNS Friedman Billings Initiated at Underperform $14
Chemicals
FUL H.B. Fuller KeyBanc Capital Mkts Upgraded from Buy to Aggressive Buy $36
Chemicals-Ethanol
VSE VeraSun Energy SMH Capital Upgraded from Sell to Neutral
Computer Hardware
AAPL Bear Stearns Price Target Raised $249
AAPL Apple Bear Stearns Price Target Raised Outperform $243 to $249
Computer Software
PRFT Perficient Brean Murray Initiated at Buy $20
ANSS ANSYS Deutsche Securities Downgraded from Buy to Hold $40
DRIV Digital River Deutsche Securities Downgraded from Buy to Hold $42
Ecommerce-Korea
GMKT GMarket Stifel Nicolaus Initiated at Buy $29
Electronics
OPTM Optium Broadpoint Capital Upgraded from Neutral to Buy $13.50
Finance Companies
SLM Smith Barney Cut Price Target $40
Foods
CAG ConAgra Bear Stearns Initiated at Outperform
LWAY Lifeway Foods Lazard Capital Initiated at Buy
Healthcare
ADLR Adolor Friedman Billings Price Target Raised Mkt Perform $4 to $5
Insurance
MBI MBIA Inc Friedman Billings Cut Price Target Mkt Perform $50 to $40
Manufacturing
HOKU HOKU Scientific Broadpoint Capital Price Target Raised Buy $10 to $15
Medical Equipment
CRDC Cardica Oppenheimer Initiated at Buy $11
Oil and Gas
CRK Comstock Lehman Brothers Upgraded from Underweight to Equal-weight
CVI CVR Energy Deutsche Securities Initiated at Buy $27
TLM Talisman Energy BMO Capital Markets Downgraded from Outperform to Market Perform
Pharmaceutical
WCRX Warner Chilcott PLC Jefferies & Co Initiated at Hold
Real Estate
FCE.A Forest City Enterprises Wachovia Downgraded from Outperform to Mkt Perform
MPG Maguire Properties Wachovia Downgraded from Outperform to Mkt Perform
PKY Parkway Prop Wachovia Downgraded from Outperform to Mkt Perform
REITs
DEI Douglas Emmett Wachovia Upgraded from Mkt Perform to Outperform
OFC Corp Office Props Wachovia Downgraded from Outperform to Mkt Perform
Retail Trade
CHS Chico's FAS Friedman Billings Price Target Raised Mkt Perform $11 to $10
ZUMZ Zumiez Caris & Company Downgraded from Above Average to Average $33 to $27
CHS Chico's FAS Roth Capital Cut Price Target Buy $14 to $12
DECK Deckers Outdoor Lazard Capital Price Target Raised Buy $150 to $180
Semiconductors
AIXG Aixtron AmTech Research Price Target Raised Buy $17 to $18.25
ASML ASML Holding Friedman Billings Cut Price Target Mkt Perform $35 to $30
Technology
EXLS ExlService Friedman Billings Initiated at Underperform $18
Telecommunications
SURW SureWest Comm Jefferies & Co Initiated at Buy $21
Transportation
DHT Double Hull Tankers Jefferies & Co Initiated at Buy
Utilities
COMV Comverge Broadpoint Capital Initiated at Buy $35