Tuesday Morning, November 27th
Dow Stock News
Citigroup received a $7.5 billion capital infusion from Abu Dhabi's investment arm, which will become one of Citi's largest shareholders. Executives are studying cost-cutting moves. - WSJ
General Motors Corp. (GM) will start building high volume models in Russia and expects to sell one million cars in Russia and the former Soviet Union by early next decade, Automotive News Europe reports Tuesday, quoting GM Europe President Carl-Peter Forster. - MarketWatch
The Wall Street Journal also writes that the NBC arm of GE (GE) will begin to use data from Tivo (TIVO) to target advertising.
SunPower Corporation (SPWR) a Silicon Valley-based manufacturer of high-efficiency solar cells, solar panels, and solar systems, today announced that it is working with HP (HPQ) to design, install and operate a 1-megawatt solar electric power system on HP's printer manufacturing facility in San Diego. SunPower is also working with HP to provide HP employees with solar electric power systems on their homes at preferred rates.
MO - upgraded to Buy at GS
Ice Man Stocks
Breakouts the Ice Man may consider trading:
VIP - 35
Regular Trades the Ice Man may consider:
LNET - 18.60
DVA - 60
NTRI - 26.15
Depressed stocks the Ice Man may buy:
GS - 200.50 Gap
GOOG - 626 Gap
APOL - 66 Gap
DIA - 123.65 Gap
MSFT - 32 Gap
WYNN - 125 Gap
PBR - 90.50 Gap
S & P - 1387
Breakdown Shorts:
AFL - 58.50 = 57.20 Gap
Dollar Man Ideas:
JRCC - 7
FFHL - 4.35
PLUG - 3.83, 3.90
PEIX - 4.76
Media Commentators
Cramer's Comments:
Bullish: PEP, KO, PG, DECK, HAS, DISCA, SNCR
Bearish: GMKT
Zacks:
Positive: RGLD, CEO, OFG, ATRO, PDGI
Ice Cold Commentators
Break Man Video Summary:
Break out buy (or short sell) watch list for short term gains November 27 includes: RIG, CNX, VIP, KONG, CBMX, CAKE, AUXL.
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 post-holiday rally fails to extend as the downtrend continues in our markets. The market opened slightly lower Monday morning, and then rallied to the high of the day at SPX 1446 by 10:00. The market reversed down off this level (our 60 minute downtrend line) reaching 1430 by 11:00 before attempting to stage another rally over the next few hours. However, this rally failed to penetrate pivot resistance at 1438 during this time frame. Beginning around 1:00 the market began to head south and went into a freefall over the last hour and a half to make new lows for the downtrend at 1406. At the close the SPX/DOW were down 2.1% while the NDX/NAZ lost 2.05%. Money again flowed into bonds as they soared nearly 2 points. The SPX closed near the bottom end of our highlighted support range and it this gives way look for support around the 1370 level. Short term momentum did get a bit overbought this morning but now is oversold.
As I have stated for several weeks now, all the major indices are in confirmed downtrends. While it´s true that some indicators are nearing levels typically associated with some type of bottom, they have yet to reach extreme levels and thus we should expect this correction to continue. Sunday night, I talked about the falling wedge patterns that formed on our 60 minute charts and that for these patterns to be confirmed would require a volume break and hold above their current downtrend lines. Well, today the market managed to trade right up to our downtrend line on the SPX where price found resistance and reversed back down (see 60 minute SPX chart below). If the market had intended to extend this rally, these downtrend lines would have been broken, but it was not the case. Objectively, these types of patterns should lead to further upside, but the failure to break thru and hold above those downtrend lines foretold of the markets true intentions. Simply put, supply remains firmly in control of this market and until the bullish percents show otherwise expect the market to move lower. Keep tracking the bullish percents on a daily basis for they will be you´re best leading indicator.
Let´s briefly discuss what defines a bull or bear market over the short term. One simple way to answer the question involves the 20 day moving average. When the price of a stock or index is trading above its respective 20 day MA it should be viewed as short term bullish and when the price of a security is below its respective 20 day moving average it should be viewed as short term bearish. The SPX initially lost support of its 20 day MA during the middle of October and outside of a few days in late October has remained well below its 20 day moving average. Further, when a stock or index goes into a stronger trend (momentum), it tends to follow its 9 day exponential moving average (EMA). As shown in the first two charts of the SPX and Nasdaq below, the 9 day EMA has contained most of the rallies during the month of November. At the very least, they would need to close above the 9 day EMA in the near term for more than a one day bounce to materialize. Again, over the short/intermediate term, the price of the underlying security needs to get over its 20 day moving average before a trend change might be in effect.
In summary, the markets continue to move lower as they extend there downtrends. Over the coming days/weeks, you should closely monitor the bullish percents for an early indication of when demand is starting to take control. Once demand takes control, it will be only a matter of time when price begins to reverse direction. Once price reclaims the 20 day moving average, the signal to become more aggressive will be established. For now, let´s continue to remain defensive and concentrate on buying support and selling resistance when trading. Several indices closed at/near support today so let´s see if we can get a bounce tomorrow.
Good Trading.
CNBC Fast Money Review
1. WALL STREET CORRECTION
The headline: S&P 500 Closes at 1407.22. Just Above Credit Crunch Low Of 1406.70 on August 15th
Guy Adami says 1400 is a critical number that investors should watch closely. If the S&P closes below that level the Dow will likely dive to 12,000.
Karen Finerman thinks a letter released by Senator Chuck Schumer is the reason behind Monday´s market weakness.
Pete Najarian feels uncertainty in the financials drove the market lower.
2. BLACK FRIDAY BUST
The headline: Retailers Help Drag Market Lower as Reports Show Shoppers Spending Less.
Karen Finerman explains that AAPL and BBY bounced Monday following Black Friday sales. According to ShopperTrak, Friday And Saturday sales totaled $16.4 billion, a 7% jump over last year.
Guy Adami adds that Morgan Stanley raised its price target on MA to $215. He thinks the credit card story is still in tact.
3. TECH TALK
EBAY, INTC AMZN, ADBE and TXN are all expected to reveal new information and insights at a Credit Suisse conference beginning Tuesday. What´s the trade amid all this tech talk?
Pete Najarian thinks INTC is the name to watch. He wants to hear what´s next for this company. And the company about which he's most curious is eBay. "The stock is only up a dollar for the year," says Najarian "and I wants to know why."
Guy Adami prefers HPQ in tech.
Karen Finerman is keeping an eye on MSFT.
4. HOME STILL WHERE THE HURT IS
Existing home sales figures will be released Wednesday while new home sales come out Thursday. What's the housing trade as the market braces for dismal data?
Guy Adami recommends looking AYI as a lighting fixture play. It´s down 45% from it´s 52-week high, he says. Adami also recommends TNB as another company worth watching.
Karen Finerman thinks some homebuilders may have bankruptcy risk. She explains many not only have debt building up but they are violating covenants. “At least one homebuilder will go under before (the slime) is cleaned up,’ she says.
5. WHALE WATCHING: ACKMAN HITS THE BOOKS
The headline: Wall Street Whale Bill Ackman Boosts Stake In BGP To 17.1%.
Karen Finerman explains that Border´s CEO also bought stock. She thinks it´s a straight valuation play.
Guy Adami adds It´s only worth a look, if you think it will pop on a short covering.
6. POPS AND DROPS
GRMN popped 5%: Finerman says it´s not a must-have stock, at least not for her.
MAT & HAS popped 1%: Macke says “I think HAS is the cream of the crop.’
DE popped 1%: Adami still likes this stock.
YHOO dropped 4%: Adami doesn´t like this stock.
PFE dropped 3%: Najarian doesn´t think the stock is a buy, until the company finds growth.
CC dropped 8%: Macke says stay away
7. YOUR FIRST MOVE FOR TUESDAY
Jeff Macke likes buying SPY with a tight stop. If the S&P drops 1% to 1395 -- sell he says.
Guy Adami prefers JBLU.
Karen Finerman recommends shorting BIG.
Pete Najarian says ACI is a buy as a global growth play.
News and Events Digest
Breaking News
Google is preparing a service that would let users store data from their own computers on the company's hard drives. - WSJ
Chevron Corp. (CVX) may sell its 5% stake in India's Reliance Petroleum Ltd. to Reliance Industries Ltd., the Business Standard reported Tuesday, without citing sources. - MarketWatch
Russian cellular operator OAO Mobile Telecasters (MBT) plans to start selling Blackberries in the first quarter of 2008, after reaching an agreement with the regulator, business daily Vedomosti reports Tuesday, citing Vice President Mikhail Shamolin.
OAO Vimpel Communications (VIP) has also received permission to start selling the hand-held email devices, which are made by Research in Motion (RIMM), the paper reports, without saying when the company plans to start sales. - MarketWatch
Russian gas monopoly OAO Gazprom Tuesday said it had signed a memorandum of understanding with U.S. Dow Chemical Co. (DOW) on future cooperation.
State-controlled Gazprom said the document envisages creating a joint venture on the basis of Dow's new petrochemical facilities in Germany, joint refining of gas from the Yamalo-Nemets autonomous district and other projects.
The value of U.S. homes will fall by $1.2 trillion, and "at least" 1.4 million homeowners will lose their properties to foreclosure in 2008, according to a study by the U.S. Conference of Mayors and the Council for the New American City. - WSJ
Solarfun Power Holdings Co. Ltd. (SOLF) on Tuesday filed to sell up to $75 million in American depositary shares with underwriter Morgan Stanley. The Qidong, China manufacturer of photovoltaic cells closed at $11.19 a share on Monday. Solarfun debuted its initial public offering on Dec. 20, 2006 at a price of $12.50 a share. - MarketWatch
Media Summary
Reuters writes that retail stocks fell despite information that sales were good for Black Friday.
Reuters reports that the president of Merrill Lynch (MER) told employees that the firm's strategy is sound.
The Wall Street Journal writes the the FCC's proposal to further regulate cable companies may be in trouble due to pressure from Congress.
The Wall Street Journal writes that HSBC (HBC) has become the first bank to bail out SIVs by taking more than $45 billion of SIV assets onto its balance sheet.
The Wall Street Journal writes that Google (GOOG) will start a service which will allow users to store data from their PCs on the search company's hard drives.
The New York Times writes that the head of Commerzbank says that the extent of the current banking crisis is still unclear.
According to the FT, online retail sales should rise 20% for this holiday season.
Barron's writes that shares of Cisco (CSCO) fell on concerns about revenue in emerging markets.
Barron's writes that VMWare's (VMW) stock is under pressure because of mixed views about the company's long term future
CNN Money writes that Senator Schumer wants the government to look into loans taken out by Countrywide Financail (CFC)
M&A Activity:
Terms of the deal announced late Monday call for Philadelphia-based Cigna (CI) to pay about $1.5 billion in cash for Great-West Healthcare and to supply some $400 million of additional capital to support the acquired business.
Economic Data:
10:00 Consumer Confidence
Upgrades and Downgrades by Sector:
Airlines - Passenger
UAUA UAUA - upgraded to Buy at Goldman Sachs
Automobiles
Auto Sector downgraded to cautious at Goldman Sachs
TRW - downgraded to Neutral at Goldman
Biotech
VIAP VIA Pharmaceuticals Rodman & Renshaw Initiated at Mkt Outperform $4
CYCC Cyclacel Pharma Cantor Fitzgerald Cut Price Target Buy $14 to $10.50
XOMA XOMA Limited Canaccord Adams Cut Price Target Buy $5.50 to $4.70
Biotech: Global Biotech downgraded at Bernstein
Business Services
TTGT Techtarget Oppenheimer Upgraded from Neutral to Buy $18 to $17
SCOR ComScore Jefferies & Co Price Target Raised Hold $25 to $30
ARB Arbitron Bear Stearns Downgraded from Outperform to Peer Perform
Computer Hardware
EFII Elec For Imaging Banc of America Sec Initiated at Buy $26.50
PBI Pitney Bowes Banc of America Sec Initiated at Buy $44.50
XRX Xerox Banc of America Sec Initiated at Buy $19.50
Computer Services
ACS Affiliated Computer Stifel Nicolaus Upgraded from Hold to Buy $51
Computer Software
EMAG Emageon Friedman Billings Upgraded from Mkt Perform to Outperform $6
SKIL SkillSoft Stifel Nicolaus Price Target Raised Buy $11 to $13
FNDT Fundtech JMP Securities Initiated at Mkt Outperform $19
SMCI Super Micro Computer Broadpoint Capital Initiated at Buy $13
Tobacco
Tobacco Sector upgraded to attractive at GS
Gold and Silver Mining
NG NovaGold Resources Bear Stearns Downgraded from Outperform to Peer Perform
NG NovaGold Resources RBC Capital Mkts Cut Price Target Sector Perform $21 to $13
Healthcare
MLNM Millennium Pharm Friedman Billings Price Target Raised Outperform $16 to $20
Healthcare Equipment
ASEI American Science & Engineering Jefferies & Co Upgraded from Hold to Buy $50 to $65
Heavy Machinery
CNH CNH upgraded to Buy at Goldman Sachs
Homebuilders
CTX Centex Soleil Initiated at Buy
LEN Lennar Soleil Initiated at Buy
TOL Toll Brothers Soleil Initiated at Buy
Insurance
AXA AXA Credit Suisse Upgraded from Neutral to Outperform
FAF First American Keefe Bruyette Downgraded from Outperform to Mkt Perform
Manufacturing
GLYT Genlyte Robert W. Baird Downgraded from Outperform to Neutral $95
Media Services
LLNW Limelight Networks CIBC Wrld Mkts Initiated at Sector Outperform $10
Motor Vehicles
MGA MGA - downgraded to Sell at Goldman
Oil and Gas
BP BP Bear Stearns Upgraded from Peer Perform to Outperform
CVX Chevron Bear Stearns Upgraded from Peer Perform to Outperform
MRO Marathon Oil Bear Stearns Upgraded from Underperform to Peer Perform
WG Willbros Group Calyon Securities Initiated at Buy $41
Regional Banks
BBT BB&T Corp Punk, Ziegel & Co Upgraded from Mkt Perform to Buy
KEY KeyCorp Punk, Ziegel & Co Upgraded from Sell to Mkt Perform
PNC PNC Bank Punk, Ziegel & Co Upgraded from Mkt Perform to Buy
RF Regions Fincl Punk, Ziegel & Co Upgraded from Mkt Perform to Buy
WM Washington Mutual Punk, Ziegel & Co Upgraded from Sell to Mkt Perform
REITs
SFI iStar Financial UBS Initiated at Buy
AVB AvalonBay UBS Downgraded from Buy to Neutral
BRE BRE Properties UBS Downgraded from Neutral to Sell
EQR Equity Res UBS Downgraded from Neutral to Sell
Retail
DECK Deckers Outdoor Sterne Agee Initiated at Buy $155
Savings & Loan
FBTX Franklin Bank Corp Friedman Billings Cut Price Target Mkt Perform $7 to $4
Semiconductors
CAVM Cavium Networks Lehman Brothers Upgraded from Equal-weight to Overweight
SMTC Semtech Caris & Company Upgraded from Below Average to Average $15
KLAC KLAC - Semi equipment downgraded at Bank of America, Specific names downgraded are KLAC, LRCX, and VSEA
Telecommunications
DGIT DG FastChannel Morgan Joseph Initiated at Buy $30
Transportation
KNX KNX - Trucking sector downgraded to Cautious at Goldman Sachs, Specific names downgraded include KNX, OSK, and YRCW
Transpos -Shipping
PRGN Paragon Shipping Cantor Fitzgerald Cut Price Target Buy $32 to $28
Utilities
WR Westar Energy JP Morgan Initiated at Overweight
Utilities: Regulated Utilities sector upgraded at Goldman Sachs