Wednesday Morning, October 10th
SITE NEWS
New IceMD Recording: Had a heart attack? Be careful going back to work;
Dow Stock News
AA - FBRC likes the name here with a $49 price target
Reuters writes that IBM (IBM) and Second Life will work on ways to eventually let people use the a single online persona in different online services.
The Wall Street Journal writes that Home Depot (HD) will test stores geared toward women.
The New York Times writes that Wal-Mart (WMT) fights local taxes in many of the locations where it has stores.
Ice Man Stocks
Breakouts the Ice Man may consider trading:
ACH - 77
IFN - 56.50
AFL - 58.65
SNCR - 46.25
IRIS - 21
CY - 31
RTIX - 12
Regular Trades the Ice Man may consider:
TAM - 28.70
XING - 11.50 warning, 12
LM - 87.50
UBS - 58
MENT - 16.10
BT - 62.70 = 63.90 G
INSP - 19.50
HTE - 28
ARLP - 34.60
FPL - 63.60
Dollar Man Ideas:
XIDE - 7.31
CCYG - 6 - Very Thin
If coal stocks continue to be in favor:
ICO, PUDC, JRCC
Media Commentators
Cramer's Comments:
Cramer´s show was a repeat from July.
Ice Cold Commentators
Break Man Video Summary:
Break out buy (or short sell) watch list for short term gains October 10 includes: BKUNA, HON, STZ, GERN, LLTC, VIV, SOV, SINA, SGR.
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 market gapped up Tuesday morning on the heels of strong overseas action in both Asia and Europe. Within the first half hour, the SPX reached 1558 while the NDZ/Nasdaq again posted new bull cycle highs. For the next several hours stocks drifted slightly lower as the SPX pulled back to 1552 just before the release of the FOMC minutes. Yesterday, I stated that this important news would likely resolve the near term outlook. Needless to say, the market responded to the FED statement extremely well as most indices closed near their highs for the day. On the back of the Fed statement indicating more rate cuts may be on their way, the cyclical stocks led the way as the SPX/DOW gained 0.85% while the NDX/Nasdaq added another 0.50% on the day. It should be noted that commodities and commodity stocks had a strong day as Crude advanced $1.10 a barrel while Gold jumped nearly $6.00 an ounce.
I suppose the most appropriate statement that sums up the action off the August lows would be the following: “Don´t fight the Fed!’ Simply put, this market has been on a tear since for nearly two months and despite being overbought it continues to power its way higher. After analyzing the FOMC minutes, the market participants felt very comfortable that the FED seems to be in tune with their beliefs on the economy and what may be needed going forward. This resulted in a late day buying spree that saw virtually all the major indexes move into breakout mode. Are we overbought? Yes, but that alone is not a sell signal. Will there be pullbacks? Of course, but I expect them to be fairly mild as the indexes trend higher for some time. The Elliot wave targets on this move is around the 1620 level on the SPX and after some type of pullback the subsequent medium term target comes in approximately the 1700 area. Nasdaq has resistance at 2818 followed by 2913. If this area is cleared the next resistance is substantially higher around the 3300 area. Let´s not get ahead of ourselves but these are some longer term targets to keep in mind.
As I´ve been saying, keep looking to position new plays into pullbacks/weakness near areas of support or into stocks that are consolidating their recent moves up in a flag or handle formation. Markets all around the world are in bull mode and it´s prudent to have some international exposure in your portfolio as well. In particular, the Chinese/Hong Kong markets that we´ve been talking about for many weeks have produced some outstanding trades. Take things one day at a time and enjoy what is currently unfolding, but do not become complacent in your trading. Remember that we are fast approaching earnings season and you should take note of when such companies you own are scheduled to report.
Good Trading
Futures are higher as the 60's have at least unwound nicely.
However, keep in mind that the daily charts, especially on the Nas and Ndx, are extremely overbought. It says to be very careful near term on adding new plays. You have to find something special to get more active on the long side. A reminder that overbought is not a sell signal and we can stay overbought a long time thus predicting the moment we'll pull back is very difficult. Best to stay with the markets message and that is ultimately higher prices.
Also, it's important to drill this point home. If you're going to short overbought, and there are no negative divergences, it's best to find a stock that has the combination of stochastic's above 90, preferrably 95 or higher and rsi at 80 or higher.
CNBC Fast Money Review
1. BACK TO RECORD HIGHS
The headline: After One-Day Pause, S&P, Dow Surge Back to Record Highs; Fed is the Gift that Keeps on Giving as Release of Notes Spark Tuesday´s Rally
Najarian says this is a commodities-driven market. It's getting help from other places, too. The financials – particularly investment banks like GS – as well as biotech and pharma are supporting the rally.
Carter Worth says, from the view of a technician, “we have a split market.’ While Goldman Sachs is working, big money centers like C on the other end of the financial spectrum won´t budge.
2. ENERGY
MOVES
The headline: COP, Oil Stocks Jump as Crude Rebounds Nearly 2% to Above $80; Dollar Rallies Against Euro to Highest Level in Almost 2 Weeks
Tim Seymour says there´s an inverse correlation between energy prices and the U.S. dollar. The Fed expressed worry, buried in its minutes, about the continued depreciation of the dollar. If inflation rises on a depressed dollar, “we´re in trouble.’
Macke says, if the Fed were truly worried about a weak dollar, “they would stop printing money and dumping money into the system.’
3. DOW THEORY
The headline: Dow Theory is Like Intelligent Design – It Doesn´t Explain Much of Anything; Dow Theory: Market in Upward Trend if Industrial, Transport Averages Cross Key Highs
Carter Worth says divergence
between the Dow Industrials and the Dow Transports fails to account for all that is shipped from overseas to the U.S. Once the shippers are added to the transports, the picture is much different and the chart actually shows a record high.
Tim Seymour is bullish on the overseas shipping companies over domestic transports like the rails.
Najarian especially likes the tankers. The shipment of oil from abroad to the U.S. is about as safe a bet you can make. And as rates go higher, the tanker names should too, he says.
4. RETAIL SALES
The headline: TGT, Major Retailers to Report Sept. Same-Store Sales Thursday
Macke says PLCE plunged after it cut its profit outlook by 60% this week. That should be an indicator of what to expect out of same-store sales and other retailers. The news is going to be dismal and it´s too late to short most of the retailers. That said, PLCE looks “interesting’ for a trade - and only a trade - Jeff says.
Carter Worth has a different strategy. Instead of looking for the retailers that bottomed and could rebound, find the ones that have yet to decline and short them all day long. Go for the high-end names like JWN, TIF or COH, Carter says. “Sell ‘em all.’
5. OIL SERVICES
Oil bounced back above $80 and brought the oil service stocks with it. Are stocks like HAL and SLB the best way to play crude´s volatility?
Seymour says demand forecasts for oil are changing all over the world. Countries in Asia and Eastern Europe are increasing their demand, and companies with good growth prospects in that region are poised to prosper. He likes HAL and BHI, which have operations in Russia and the Caspian Sea area.
Najarian says it isn´t just the stocks. The options activity in the oil services names has been explosive as well. While integrated oil and refineries have struggled, the services are going full-speed ahead in the options pits. BHI is experiencing especially wild options volume, he says.
Carter Worth recommends staying away from the “extended’ Schlumberger, and, by extension, the Oil Services ETF (OIH), because it is heavily weighted in SLB. Instead, he likes the trades in Halliburton and BHI.
6. MILK, EGGS, BREAD & MONEY
Earnings season is upon us, with company stocks such as KO, PEP, PG and CL are due to battle it out in the coming days. With so much retail data about to bombard the Street, Fast Money sent retail
analyst Jeff Macke to the front lines to find out who´s winning the consumer brand wars.
Macke thinks PG is probably the best company in consumer staples, in part because they´re selling slow growth brands. He finds it impressive that a company as large as Procter & Gamble is so aggressive with managing their catalogue.
Jeff says CLX is the loser in the consumer staples war. He feels PG is just trampling CLX.
Macke likes TAP, KO and PEP.
Both Tim Seymour and Pete Najarian like PEP, too.
7. POPS AND DROPS
YUM popped 5%: Macke recommends getting long YUM.
STV popped 29%: Seymour says this company is the main player in China´s
digital TV industry.
MNG popped 24%: Carter Worth says the pop speaks to the strength of the group.
ALTI popped 31%: Najarian calls the pop, “huge.’
IBN popped 4%: Najarian says the stock popped because they received entrance into the US market.
MTL popped 12%: Seymour explains MTL just bought the world´s largest coal deposit.
CPKI popped 5%: Carter Worth says the company´s chart is bearish. He says, "stay away."
CSUN popped 21%: Seymour thinks this company is a buy.
COH dropped 3%: Carter Worth anticipates more downside in this stock.
8. YOUR FIRST MOVE FOR WEDNESDAY
Macke likes JNJ.
Seymour prefers Integra Group, an international oil services company.
Carter Worth recommends shorting BDK.
Najarian says CY is a buy.
Ned Riley, The CEO of Riley Asset Management says his pick is QQQQ.
News and Events Digest
Breaking News
Costco´s net income rose 4%, as the largest warehouse retailer in the U.S. reduced income taxes payable by about $20 million amid membership fee changes. - WSJ
Valero Energy Inc. joined Wednesday the parade of big oil refiners issuing profit warnings, becoming the latest victim of higher crude prices squeezing margins. - MarketWatch
U.K. confectionery giant Cadbury Schweppes said Wednesday it's now planning to spin off its U.S. soft-drink unit through a stock listing as conditions in the debt market remain too tough for a sale, adding it's seen "very strong" growth in candy sales in the latest quarter. - MarketWatch
Nasdaq Stock Market Inc. (NDAQ) Wednesday launched a new index made up of the 50 companies that are poised to enter the Nasdaq-100 Index, the tracking benchmark for the PowerShares QQQ Trust (QQQQ) an exchange-traded fund and often the most highly traded security on any given day. The Nasdaq- Q-50 Index is comprised of the 50 non-financial stocks next eligible for inclusion in the Nasdaq-100, ranked by market capitalization across major sectors, the exchange said. "The Nasdaq Q-50 Index is a new benchmark for some of the world's most up-and-coming growth companies," said Nasdaq Senior Vice President Steven Bloom in a press release. - MarketWatch
Media Summary:
According to Reuters, economists cut forecasts for US growth for the third month in a row.
Reuters writes that Starbucks (SBUX) recalled 250,000 plastic children's cups.
The Wall Street Journal reports that foreign car companies are building plants in areas where the UAW cannot get a foothold.
The Wall Street Journal also reports that banks could be stuck with hundreds of billions of dollars in LBO loans.
The Wall Street Journal writes that China is taking aim at the quality of some US products.
The New York Times said that there have been large protests against foreign stores in India.
The FT writes that Toyota (TM) is missing its targets for car sales in Japan.
The FT reports that the SEC feels that disclosure on executive pay is still often inadequate.
Bloomberg reports that CostCo (COST) profits rose almost 5%, lead by sales of flat screen TVs.
IPO Central:
Compellent Technologies (CML) priced its initial public offering above the high end of its estimated price range in a bullish sign for its stock market debut Wednesday. The storage area networking specialist raised $81 million by offering 6 million shares at $13.50 a share, above its $10-$12 price range with lead underwriter Morgan Stanley. - MarketWatch
Morgan Stanley (MS) said Wednesday it has received an investment banking license for India, eight months after it sold its deal-making operations in the country to its joint-venture partner. - MarketWatch
M&A Activity:
Natus Medical Inc. (BABY) agreed to acquire Canadian developer of diagnostic systems Excel-Tech Ltd. (NRV.T) for about $63.6 million. Natus, a San Carlos, Calif., maker of crib-side screening devices, said it will acquire all of the outstanding common shares of Excel-Tech at a cash price of C$3.25 a share. In addition, each share subject to an Excel-Tech stock option will convert into an amount equal to the excess of C$3.25 over the exercise price of the option. Natus said Excel-Tech reported revenue of C$32.5 million in the twelve months ended July 31. Natus said the deal will immediately add to earnings, excluding one-time charges. Natus intends to finance a portion of the deal through a commitment from Wells Fargo Bank N.A. - MarketWatch
Wednesday Split Update
Stock Splits which become effective in the next several trading days.
Ex-Date Split Symbol Company
10/10 3:2 PCAR PACCAR, Inc.
10/11 3:2 RUSHA Rush Enterprises, Inc.
10/16 2:1 JBX Jack in the Box Inc.
10/17 2:1 CTSH Cognizant Technology Solutions
Economic Data:
10:00 Wholesale Inventories
10:30 Crude Inventories
Upgrades and Downgrades by Sector:
Ocean Shipper:
Sector upgraded at Bear Stearns
Advertising
AQNT aQuantive Cantor Fitzgerald Coverage Dropped
Aerospace
BOOM Dynamic Materials Jefferies & Co Downgraded from Buy to Hold $45 to $58
Apparel
OXM Oxford Industries Morgan Joseph Downgraded from Buy to Hold
Biotech
DNA Jeffries Thinks the stock is a Buy
ALNY Alnylam Pharmaceuticals Piper Jaffray Downgraded from Outperform to Market Perform
Chemicals
APD Air Products UBS Initiated at Buy $115
PX Praxair UBS Initiated at Buy $94
Computer Hardware
SIGM Sigma Designs UBS Initiated at Buy $65
OMCL Omnicell BB&T Capital Mkts Downgraded from Buy to Hold
Computer Services
WIT Wipro Lehman Brothers Initiated at Underweight
Computer Software
ADSK Autodesk Robert W. Baird Price Target Raised Outperform $47 to $57
CRM Salesforce.com Robert W. Baird Price Target Raised Neutral $50 to $58
CTXS Citrix Systems Robert W. Baird Price Target Raised Outperform $41 to $43
OMTR Omniture Robert W. Baird Price Target Raised Neutral $25 to $35
BEAS BEA Systems Banc of America Sec Downgraded from Buy to Neutral
COGN Cognos Robert W. Baird Downgraded from Outperform to Neutral $50
DRIV Digital River Oppenheimer Downgraded from Buy to Neutral $50
SAY Satyam Computer Lehman Brothers Initiated at Underweight
Cruise Lines
CCL Carnival Lehman Brothers Upgraded from Equal-weight to Overweight
Education
CPLA Capella Education Stifel Nicolaus Downgraded from Buy to Hold
Finance Companies
CLMS Goldman Sachs Upgraded to Neutral
Gaming Operations
LVS Smith Barney Price Target Raised Maintain Hold $135
MGM Smith Barney Price Target Raised Maintain Hold $100.00
WYNN Smith Barney Price Target Raised Maintain Hold $153
Healthcare
MOGN MGI Pharma JP Morgan Upgraded from Neutral to Overweight
Healthcare Equipment
CMN Cantel Medical Brean Murray Price Target Raised Buy $20 to $21
CAMH Cambridge Heart, Inc. Boenning & Scattergood Downgraded from Market Outperform to Market Perform
Healthcare Facilities
AMED AMEDISYS Deutsche Securities Downgraded from Buy to Hold $44
Healthcare Service
MATR Matria Healthcare Credit Suisse Cut Price Target Neutral $28 to $25
Homebuilders
BZP BPZ Energy Morgan Keegan Initiated at Outperform
Industrial Equipment
AME Ametek Friedman Billings Downgraded from Outperform to Mkt Perform $46
Insurance
PRE PartnerRe Banc of America Sec Upgraded from Neutral to Buy $77 to $89
RE Everest Re Banc of America Sec Upgraded from Neutral to Buy $112 to $128
AHL Aspen Insurance Banc of America Sec Initiated at Buy $35
AXS AXIS Capital Banc of America Sec Initiated at Buy $46
CB Chubb Banc of America Sec Initiated at Buy $63
HIG Hartford Financial Banc of America Sec Initiated at Buy $110
MXGL Max Capital Group Banc of America Sec Initiated at Buy $33
RNR RenaissanceRe Banc of America Sec Initiated at Buy $75
SIGI Selective Insurance Banc of America Sec Initiated at Buy $28
THG The Hanover Insurance Grp Banc of America Sec Initiated at Buy $52
XL XL Capital Banc of America Sec Initiated at Buy $96
AHL Aspen Insurance Credit Suisse Downgraded from Outperform to Neutral $29
ENH Endurance Specialty Credit Suisse Downgraded from Outperform to Neutral $43
GNW Genworth Financial Banc of America Sec Downgraded from Buy to Neutral
Mfg-Instruments
TRMB Trimble Navigation Lehman Brothers Initiated at Overweight
Motion Pictures
WWE World Wrestling Roth Capital Initiated at Buy $21
Motor Vehicles
VOLV Volvo AB JP Morgan Upgraded from Underweight to Neutral
Oil and Gas
TSO Tesoro Petroleum Bernstein Upgraded from Mkt Perform to Outperform
RRC Range Resources KeyBanc Capital Mkts Price Target Raised Buy $48 to $53
WLL Whiting Petroleum KeyBanc Capital Mkts Price Target Raised Buy $52 to $55
CPE Callon Petroleum Morgan Keegan Initiated at Outperform
TRV Travelers Banc of America Sec Initiated at Buy $64
TXCO TXCO Resources Morgan Keegan Initiated at Outperform
AOG Aurora Oil & Gas KeyBanc Capital Mkts Downgraded from Buy to Hold
Publishing
SCHL Scholastic Corp Friedman Billings Price Target Raised Outperform $38 to $41
Real Estate
JLL Jones Lang LaSalle Wachovia Downgraded from Outperform to Mkt Perform
Regional Banks
SYBT SY BANCORP Robert W. Baird Initiated at Outperform $33
REITs
TMA Thornburg Mortg Keefe Bruyette Downgraded from Mkt Perform to Underperform
TMA Thornburg Mortg Friedman Billings Cut Price Target Outperform $14 to $13
Restaurants
YUM YUM! Brands Friedman Billings Price Target Raised Outperform $41 to $46
Retail Trade
DSCM Drugstore.com Oppenheimer Initiated at Buy $5
MSO Martha Stewart Roth Capital Initiated at Buy $20
TGT Target Piper Jaffray Downgraded from Outperform to Market Perform
TUES Tuesday Morning JP Morgan Downgraded from Overweight to Neutral
Security Systems
JCI Johnson Controls Credit Suisse Price Target Raised Outperform $45 to $50
Semiconductors
MCHP Microchip Lehman Brothers Upgraded from Underweight to Equal-weight
AMAT Applied Materials Lehman Brothers Downgraded from Overweight to Equal-weight
KLAC KLA-Tencor Lehman Brothers Downgraded from Overweight to Equal-weight
LTXX LTX Corp Lehman Brothers Downgraded from Overweight to Equal-weight
MCHP Microchip Banc of America Sec Downgraded from Buy to Neutral
NVLS Novellus Lehman Brothers Downgraded from Equal-weight to Underweight
Services - Consumer
SFLY Shutterfly Oppenheimer Initiated at Buy $42
Telecommunications
SI ING Upgraded to Buy
AUDC Audiocodes Lehman Brothers Upgraded from Equal-weight to Overweight
SIRF SiRF Technology Lehman Brothers Initiated at Overweight
ALLT Allot Comms CIBC Wrld Mkts Downgraded from Sector Outperform to Sector Perform
Q Qwest UBS Downgraded from Buy to Neutral
WU Western Union Sun Trust Rbsn Humphrey Downgraded from Buy to Neutral
Transpo - Shipping
ESEA Euroseas Ferris Baker Watts Price Target Raised Buy $17.50 to $20.50
Transportation
RCL Royal Caribbean Lehman Brothers Upgraded from Equal-weight to Overweight
GMR General Maritime Bear Stearns Downgraded from Outperform to Peer Perform
Utilities
NRG NRG Energy Calyon Securities Downgraded from Buy to Neutral $43