Tuesday Morning, November 20th
Dow Stock News
Pfizer legal win may block suits Pfizer won a legal victory that might dismiss some suits alleging that painkiller Celebrex caused heart attacks and strokes. - WSJ
HPQ HPQ Hewlett-Packard Needham & Co Price Target Raised Buy $54 to $57
HPQ HPQ Hewlett-Packard Friedman Billings Price Target Raised Outperform $54 to $60
HPQ HPQ Hewlett-Packard Broadpoint Capital Price Target Raised Buy $51 to $60
HPQ HPQ Hewlett-Packard BMO Capital Markets Price Target Raised Outperform $57 to $58
C C Citigroup Deutsche Securities Price Target Raised Sell $34 to $29
XOM XOM Exxon Mobil UBS Upgraded from Neutral to Buy $92 to $96
Ice Man Stocks
Breakouts the Ice Man may consider trading:
POWI - 34.50
PEP - 75.40
Regular Trades the Ice Man may consider:
DAR - 10.33
ED - 48
RIMM - 109
ISRG - 289
PTRY - 27.70
CTB - 16.20
Depressed stocks the Ice Man may buy:
EJ - 21.60 Gap
CRDN - 41.25 Gap * Best Bet
STV - 26.65 Gap
AEM -44.20 Gap
PAAS - 29.80 Gap
SLV - 135 Gap
ADM - 34.50 Gap
BHP - 68.60 Gap
IBM - 100.25 Gap
Breakdown Shorts:
DE - Breaking 140
Dollar Man Ideas:
BXC - 3.85
AMRN - 0.47 Bid
FLML - 9
TNRO - 5.15
Media Commentators
Cramer's Comments:
This was a repeat show from Dec. 27, 2006.
Zacks:
Positive: GRMN
Ice Cold Commentators
Swing Man Market Recap:
The market again posted sizable losses as supply remains firmly in control of this market. Overnight the Asian markets were mostly lower and Europe came in nearly 1% lower as well, pressuring US stock index futures in early morning trading. As a result, stocks gapped down at the open and within minutes the market had fully retraced Friday´s rally with the SPX hitting 1445. A feeble rally attempt to the SPX up to 1450 by 10:00, but the market soon headed lower reaching 1435 by 11:00. Another rally attempt failed, and then the market made its low for the day at 1430. A last hour rally attempt to SPX 1444 failed again, and the market closed at 1433. For the day the DOW/SPX fell 1.68% while the NDX/NAZ lost 1.5%. Money continued to rotate into Treasury Bonds as they closed 0.75% higher. Short term momentum is displaying another positive RSI divergence at today´s lows. Tuesday will be a crucial day for the bulls as the major indexes are now in the midst of testing major support levels. If these support levels are breached, a retest of the August lows will likely be the next.
The recent market action can be summed up with one word – Bearish. As we have explicitly stated for several weeks, the market is in a confirmed downtrend with willing sellers at all resistance levels. The weakness exhibited in the price of the indices has been confirmed by the market internals. Throughout this entire sell off in the market, the internals have continued to deteriorate. I have posted a table below showing today´s market stats. As you can see, the NYSE had 28 declining issues versus only 6 advancing issues with down volume swamping up volume 89% to 11%. In addition, there were 545 new lows compared to 37 new highs on the exchange today. Similarly, the Nasdaq showed 24 declining stocks for every 6 advancing stocks with down volume dwarfing up volume 84% to 16%. New lows spiked to 362 issues with only 50 new highs. Even with Friday´s gains, the market internals were skewed to the negative side. Collectively, these statistics serve to embolden the bears that they are wise to remain short.
==========================================================================================================
ADVANCES & DECLINES
NYSE
AMEX
NASDAQ
BB
Advancing Issues
569 (16%)
301 (22%)
605 (19%)
545 (28%)
Declining Issues
2,837 (82%)
959 (71%)
2,437 (78%)
1,067 (54%)
Unchanged Issues
61 (2%)
95 (7%)
95 (3%)
352 (18%)
Total Issues
3,467
1,355
3,137
1,964
New Highs
37
47
50
193
New Lows
545
142
362
279
Up Volume
426,185,324 (10%)
99,494,618 (11%)
343,988,385 (16%)
320,480,018 (19%)
Down Volume
3,729,519,004 (89%)
782,264,904 (88%)
1,839,996,753 (84%)
604,505,976 (36%)
Unchanged Volume
15,618,580 (0%)
2,489,597 (0%)
15,703,317 (1%)
731,259,466 (44%)
===============================================================================================================
At Monday´s close, the major indexes are sitting just above the last major support areas before the August lows. The market must soon provide a strong inclination that it intends to rally hard or it risks heading at least back to the August lows. This may be an extremely difficult task since the market has already seen some its major sectors break down. The financials, semiconductors, and transports have all now undercut their August lows. In addition, the Russell 2000 lost support at 770 today and is now closing in on its August lows. Personally, I can´t think of anything that can energize buyers other than some FED intervention now that earnings are out of the picture. The market is sending us all a clear message and I suggest we take it to heart. Please take a close look at the charts since many are at important levels of support.
The Hang Seng saw a major reversal overnight as the Index closed up over 300 points after being down 1000 points earlier. The reversal was attributed to a possible surprise Federal Reserve meeting. The European markets are also bid up this morning on rumblings about possible Federal Reserve intervention. As a result of these rumors and HPQ´s solid results, the US stock index futures are called up nicely this morning. With the major indexes registering oversold readings and near important support levels, the early action in the US futures should not be unexpected. Many traders will be looking to square off there positions in front of the light holiday trading sessions. Let´s see if this morning´s positive action in the stock index futures can carry over and be sustained in the marketplace.
Good Trading.
CNBC Fast Money Review
1. THE SELLING CONTINUES
The headline: S&P 500 Sheds 1.8% as Bank Downgrades, Lowe´s Forecast, Housing Data Pummel Stocks
Karen Finerman said it seems like there are “storm clouds everywhere." Goldman Sachs´ downgrade of C – saying Citi may be forced to swallow another $15 billion in write-downs – just put “salt in the wounds’ of the market.
Jeff Macke pronounced: “The Street decided there´s a recession today.’
Pete Najarian was less bearish from a trading standpoint. Short term there are plenty of trades, he said. But long term the picture is less rosy – especially for the financials, which are in “dire straights,’ he said. He also expressed worry over GM, calling it a “major problem’ that the stock is trading below $27.
2. AFTER HOURS ACTION: NORDSTROM
The headline: JWN Shares Soar on Profit Growth, Expanded Buyback, Higher Forecast
Jeff Macke said Nordstrom is cheap. Generally bearish on retail, JWN is one of the few Jeff would own.
Karen Finerman said she wouldn´t be surprised to see an end-of-year rally in the retail names since expectations have gotten so low.
3. ECHOSTAR
The headline: DISH Shares Skyrocket After Citigroup Says 65% Chance T Will Buy Satellite Provider
Jeff Macke said Sell DISH in the upper-$40s and buy it back around $40. Most importantly, with the stock up 20% Monday, investors should take profits. The market is too fragile to play around with 20% gains.
Pete Najarian would sell DISH into the AT&T rumor.
4. IS TARGET A TURKEY
TGT will lead retail earnings this week ahead of Black Friday. Can things get any worse for this beleaguered bunch or is it due time for a bounce?
Pete Najarain says it should be noted that Target is trading well ahead of its earnings in the options pits. He noticed a high imbalance of call buying versus put buying which is an encouraging sign the retailer could be shaping up to go higher when it reports. TGT buyers are looking for a positive result.
Jeff Macke says a bounce is needed in these names. He said a trade in TGT could work but wouldn´t get long as an investment. Remember that the retailer missed sales two of the three months that make up the quarter. People are betting that it reports “not horrible’ numbers. The question is whether such low expectations are enough to give the stock the bounce it needs.
Karen Finerman wondered with the credit markets deteriorating further, would Target take the sale of its credit card business off the table for the foreseeable future.
5. HEWLETT-PACKARD
The headline: Strong PC Sales Fuel 28% Increase in profit for HPQ
Guy Adami called Hewlett a great growth story that´s been untouchable. It´s still a buy, he said, and could go to the mid-$50 range.
6. GOLD LOSING LUSTER:
The headline: Gold Drops 1.1% to $776.80 Following Worst Weekly Loss Since March
Guy Adami. says the next $50 to $60 in gold prices will be lower.
7. POPS AND DROPS
ICE popped 3%: Finerman: This shows the rally in the exchanges isn´t over.
VRSN popped 2%: Najarian: A new CEO and a new focus on its core business, internet security, is great news for the stock.
ETFC dropped 13%: Finerman: The coast is not clear yet. Don´t touch ETFC.
WYNN dropped 7%: Najarian: Emerging markets are hurting WYNN.
GCO dropped 24%: Finerman: If you feel compelled to invest in GCO, be smart and trade in options only.
DDS dropped 5%: Macke: Another retail stock that should be avoided.
EEM dropped 4%: Adami: Trading in emerging markets carries a lot of risk. These stocks go down twice as fast as anything else.
DIS dropped 4%: Macke: The stock should come back eventually.
GM dropped 8%: Adami: Incentive plans are never a good sign.
TWB dropped 13%: Macke: More evidence of the harsh times for specialty retail.
8. YOUR FIRST MOVE FOR TUESDAY
Jeff Macke recommended DKS and TGT for a “quickie trade’ off JWN earnings.
Pete Najarian would buy DISH on the likely pullback after T denied being in talks to buy it. Under $44 is the optimal level for DISH.
Karen Finerman reiterated her frequent final trade: Long GS, short LEH.
Guy Adami was bullish on VOD as a play on the booming Chinese telecom industry.
News and Events Digest
Breaking News
Target announces a 10 Billion Dollar Buyback.
Billionaire investor Edward Lampert bought $10 million worth of AutoNation Inc. (AN) shares on Thursday, according to a regulatory filing.
The prominent investor and chairman of Sears Holding Corp. (SHLD) bought 598,300 shares of AutoNation for $16.96 each, according to a document filed late Monday with the Securities and Exchange Commission. - MarketWatch
Goldman Sachs Group Inc.'s Global Alpha hedge fund may show a $6 billion asset loss this year -- a 60% decline -- due to trades that went awry and clients withdrawals, Bloomberg news reported citing two investors. Global Alpha started the year with more than $10 billion in assets, according to the report. - MarketWatch
Air and water pollution in China is costing $100 billion a year, or roughly 5.8% of gross domestic product in healthcare costs and lost productivity due to absenteeism and other problems, Xinhua reported, citing a study by the World Bank which used data from China's State Environmental Protection Administration. Air pollution ranked above water pollution in terms of potential hazards to health, Xinhua reported, citing excerpts of the report read by David Dollar, the World Bank country director for China and Mongolia. Dollar was cited as saying that air pollution, especially in larger cities, was leading to higher incidence of lung diseases, including cancer, respiratory system problems which added to absenteeism. - MarketWatch
Mortgage investor Freddie Mac (FRE) said Tuesday that its third quarter loss more than doubled from year ago levels, falling to $2.03 billion, or $3.29 a share, from a loss of $715 million, or $1.17 a share. Freddie cited higher credit loss provisions and the marking- to-market of securities for the increased loss. It said the fair market value of its net assets fell by $8.1 billion in the quarter, and added that it has taken steps to address continuing challenges in the mortgage market, but that it will take time for the market to turn around and improve. The firm said it has hired an adviser to study capital-raising options. The firm said it is considering cutting its dividend by 50%. - MarketWatch
Chinese online game operator, The9 Ltd (NCTY) said its board approved the repurchase of up to $50 million of its outstanding American Depository Shares (ADS). - Reuters
Hormel Foods Corp (HRL) posted higher quarterly profit on Tuesday, helped by higher sales across all product lines and one-time gains.
The company, which sells Hormel meats, Spam processed meats and Jennie-O Turkey said profit was $101.2 million, or 73 cents a share, in the fourth quarter ended Oct. 28, compared with $90.0 million, or 64 cents a share, a year earlier.
The Austin, Minnesota-based company forecast 2008 earnings per share of $2.30 to $2.40 and expects to return to its earnings per share growth objective of 10 percent. Starting in 2008, it plans to issue its forecasts on an annual basis.
Hormel also declared an annual dividend of 74 cents per share for 2008, up from its dividend of 60 cents per share in 2007. - Reuters
Media Summary
M&A Activity:
Mining giant Rio Tinto PLC (RIO) is considering joint ventures with BHP Billiton PLC (BHP) as an alternative to the proposed merger of the two companies, according to The Daily Telegraph on Tuesday. - MarketWatch
Economic Data:
8:30 Housing Starts
8:30 Housing Permits
2:00 FOMC Minutes
Upgrades and Downgrades by Sector:
Diversified Communication Services:
Apparel
UA UA Under Armour UBS Upgraded from Neutral to Buy
Biotech
CELG CELG Celgene BMO Capital Markets Upgraded from Market Perform to Outperform $66 to $76
Brokerage Services
NITE NITE Knight Trading Keefe Bruyette Upgraded from Underperform to Mkt Perform $13 to $15
ICE ICE ICE - removed from focus list at JP Morgan R
Business Services
TGH TGH Textainer Group Wachovia Initiated at Outperform
Computer Hardware
SYKE SYKE Sykes Enterprises Susquehanna Financial Upgraded from Neutral to Positive
Computer Software
IGTE IGTE iGATE Roth Capital Upgraded from Hold to Buy $10
MFE MFE McAfee Jefferies & Co Upgraded from Hold to Buy $37 to $40
MFE MFE McAfee Deutsche Securities Resumed Coverage Buy $40
PLUS PLX Protalix BioTherapeutics CIBC Wrld Mkts Initiated at Sector Outperform $7
IGLD IGO InterSearch BWS Financial Price Target Raised Buy $6 to $3
OMTR OMTR Omniture Broadpoint Capital Initiated at Buy $35
Construction
CBI CBI CB&I Credit Suisse Resumed Coverage Outperform $48 to $70
Foods
FDP FDP Fresh Del Monte Piper Jaffray Upgraded from Neutral to Buy
TSN TSN Tyson Foods BMO Capital Markets Upgraded from Market Perform to Outperform $18
Gaming Operations
PGIC PGIC Progressive Gaming Roth Capital Upgraded from Hold to Buy $5 to $3.50
WYNN WYNN Wynn Resorts Jefferies & Co Upgraded from Hold to Buy $152
Healthcare
KNDL KNDL Kendle UBS Upgraded from Neutral to Buy
MOGN MOGN MOGN - downgraded to Market Perform at TWPT d
HR HR Healthcare Realty Deutsche Securities Initiated at Buy $27
Hotels - China
HMIN HMIN Home Inns Susquehanna Financial Upgraded from Negative to Neutral
Industrial Equipment
KMT KMT Kennametal Wachovia Downgraded from Outperform to Mkt Perform
Insurance
BRK.A BRK.A Berkshire Hathaway Credit Suisse Price Target Raised Neutral $115000 to $125000
WCG WCG WellCare Group CIBC Wrld Mkts Upgraded from Sector Perform to Sector Outperform
Internet Services
GOOG GOOG Google Credit Suisse Price Target Raised Outperform $800 to $900
GOOG GOOG GOOG - price target raised to $900 at Credit Suisse P
Major Pharmaceutical
PHRM PHRM Pharmion BMO Capital Markets Downgraded from Outperform to Market Perform $57 to $72
Manufacturing
PH PH Parker-Hannifin Deutsche Securities Initiated at Buy $92
Mfg - Aircraft
TDG TDG Transdigm Group Credit Suisse Price Target Raised Neutral $44 to $48
TDG TDG Transdigm Group Calyon Securities Downgraded from Buy to Neutral $45
Mining - Steel & Iron
NUE NUE Nucor Soleil Upgraded from Sell to Hold
Motion Pictures
MVSN MVSN Macrovision Needham & Co Price Target Raised Buy $30 to $31
Oil and Gas
HES HES Hess UBS Upgraded from Neutral to Buy
SNP SNP China Petroleum (Sinopec) UBS Upgraded from Sell to Neutral
STO STO Statoil ASA UBS Upgraded from Neutral to Buy
ETE ETEL eTelecare Susquehanna Financial Initiated at Positive
SU SU Suncor Energy CIBC Wrld Mkts Upgraded from Sector Perform to Sector Outperform
Paper and Packaging
BKI BKI Buckeye Tech Citigroup Upgraded from Sell to Buy
Pharmaceutical
SCRX SCRX Sciele Pharma Roth Capital Price Target Raised Buy $33 to $34
Recreational Vehicles
PII PII Polaris Inds Banc of America Sec Upgraded from Sell to Neutral
REITs
QRR QRR Quadra Realty Wachovia Downgraded from Outperform to Mkt Perform
AHT AHT Ashford Hospitality Trust RBC Capital Mkts Downgraded from Sector Perform to Underperform
OFC OFC Corp Office Props BMO Capital Markets Price Target Raised Outperform $50 to $45
Rental Services
URI URI United Rentals JP Morgan Upgraded from Underweight to Neutral
Restaurants
SBUX SBUX Starbucks Friedman Billings Upgraded from Mkt Perform to Outperform $22 to $27
SBUX SBUX Starbucks CIBC Wrld Mkts Downgraded from Sector Outperform to Sector Perform $27 to $23
Retail Trade
DLTR DLTR Dollar Tree Lehman Brothers Upgraded from Equal-weight to Overweight
TWB TWB Tween Brands Friedman Billings Price Target Raised Outperform $36 to $32
RSTO RSTO Restoration Hrdwr Caris & Company Price Target Raised Average $3 to $6.70
TWB TWB Tween Brands Caris & Company Price Target Raised Average $33 to $31
LOW LOW Lowe's BMO Capital Markets Price Target Raised Underperform $26 to $22
JWL JWM JWM - price target raised to $52 at Smith Barney P
Savings & Loan
FBTX FBTX Franklin Bank Corp Keefe Bruyette Upgraded from Underperform to Mkt Perform $6.50
Telecommunications
EQ EQ Embarq Lehman Brothers Upgraded from Underweight to Equal-weight
DGIT DGIT DG FastChannel Ferris Baker Watts Initiated at Buy $30
RIMM RIMM RIMM - initiated with an Overweight at TWPT with $130 price target I
Transpo - Shipping
ESEA ESEA Euroseas Wachovia Initiated at Outperform