Monday Morning, October 15th
SITE NEWS
New IceMD Recording: Genes Found That Slow Both Aging and Cancer;
Dow Stock News
Citigroup posted a 57% slump in third-quarter net income, in line with the banking giant's recent warning, as Chief Executive Charles Prince vowed to focus on the firm's weak points. - WSJ
According to Reuters, Citigroup (C) and other large banksare planning to create a roughly $80 billion fund to buy ailing mortgage securities and other assets.
The FT also reports that Pfizer (PFE) is leading big pharma into social networking.
Ice Man Stocks
Breakouts the Ice Man may consider trading:
CRM - 57.60
SSYS - 30
OMAB - 30.15
RBN - 60.40 warning 62.20
Regular Trades the Ice Man may consider:
CCRT - 25.50
MIR - 44.60
FRG - 12.60
CCJ - 44.30
Extended Shorts:
GM - 44
Dollar Man Ideas:
KRY - 3.25
HLYS - 9.40
CRTX - 2.55 -getting extended but could continue
Depressed Dollar:
CTEL
GBT
CSGH - 1.60 Gap
Media Commentators
Cramer's Comments:
Bullish: MCD, KO, UTX, MO, C, TTG
Bearish: WYNN (take a little off)
Zanger - Current Focus Stocks:
RIMM, AAPL, FWLT, BIDU, WYNN, LVS, FXI, BCSI, NOV, OIH, SLB, CMI, MPEL,
DRYS, EXM, GRMN, PCU,GS, MA, FSLR, AMZN, YGE,CIEN.
Ice Cold Commentators
Break Man Video Summary:
Break out buy (or short sell) watch list for short term gains October 15 includes: NSTC, AAV, ORBC, BRKS, TRMP, IRBT, MTOX, MEOH, UTI, RBN, UMC SANM, ARTG.
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:
On Friday, the market bounced back some on lighter volume after Thursday's high volume reversal day to the downside. The tech laden Nasdaq led the way rising 33 points while the Dow tacked on a gain of 77 points. Specifically, technology and auto stocks stood out amongst the strong sectors on Friday. As shown in the weekly performance chart below, it was a fairly good week for most asset classes with only the Russell 2000 showing losses on the week. Automobiles, computer hardware, precious metal and coal led the weekly advancers while the clothing/accessories sector showed the weakest performance.
During the week, the SPX was able to break though major resistance at 1556, which was the previous all time high point established in July. Similarly, all the major US indices (except the Russell 2000) made new bull market highs during the week. The NDX/Nasdaq continued to show leadership this past week. However, after advancing to new highs on Thursday, the market saw a pickup in volatility as all the major indices experienced a high volume reversal later in the trading day. While the market may attempt to push up again early next week, it is now quite overbought technically with many of the sentiment indicators also displaying some cautionary signals. Thus, we need to be on the look out for some type of pullback in the days ahead. Again, we may attempt to push higher early next week, but I still expect some type of corrective action to follow shortly thereafter. During strong market up trends like we are experiencing, it's very common to see the major indices pause/pullback to test their respective 20 day moving averages which also serves to relieve the overbought conditions by unwinding the oscillators.
We are now entering the heart of earnings reporting season for many corporations. Over the next two weeks, we'll be seeing earnings report and hearing forward guidance from the majority of the company's in the SPX. Remember it's not necessarily what they report, but how the market reacts to those reports. Personally, I tend to avoid holding many volatile issues thru earnings since it tends to be a crapshoot. However, I will be very interested to see which sectors emerge as leaders during this reporting period.
In summary, I would not be surprised to see a pullback in the market over the next 1-2 weeks. Look for initial support on any such pullbacks around the vicinity of the 20 day moving averages of each index. At this stage, the intermediate term outlook still looks good and thus I would expect higher prices to materialize this year. Look to add to your long positions into weakness, but be aware of the individual stocks that are due to report quarterly earnings.
Good Trading.
Looking at the 60 minute charts after the close, the NDX/Nasdaq may attempt another move up early next week (Monday/Tuesday) before joining the Cyclicals in a pullback. If this occurs the short term Fib target for the NDX would be 2215-2218.
Market participants are growing more complacent with the 21 day put/call ratio now at .89 (down from 1.22 in August) so sometime soon a little deeper pullback would help for another run up into year end. However, there is no reason to enter a short trade unless the bearish flags break to the downside since the market may elect to make one more quick push higher.
Personally, I went home long some of the Uranium, Techs, and Autos. The Chinese play CPHI has good fundamentals. Like Darwin says, you must adapt. Love that line.
IBD Top 100 - (many Chinese plays added to the list)
Updated Investor's Business Daily Top 100
1 BAIDU.COM INC ADS
2 FLOTEK INDUSTRIES INC
3 RESEARCH IN MOTION LTD
4 VASCO DATA SECURITY INTL
5 POTASH CORP SASKATCHEWAN
6 DRYSHIPS INC
7 CERAGON NETWORKS LTD
8 FOSTER L B COMPANY
9 I C O INC
10 CHINA LIFE INSURANCE ADR
11 COMP VALE DO RIO ADR
12 V S E CORP
13 CHIPOTLE MEXICAN GRILL A
14 THREE S BIO ADS
15 VIMPEL COMMUNICATIONS
16 BOLT TECHNOLOGY CORP
17 T B S INTERNATIONAL LTD
18 INTUITIVE SURGICAL INC
19 NATIONAL OILWELL VARCO
20 SOUTHERN COPPER CORP
21 CYNOSURE INC
22 PRICELINE.COM INC
23 EXCEL MARITIME CARRIERS
24 MECHEL OAO ADS
25 GARMIN LTD
26 COMPANHIA SIDERURGIC ADS
27 CORE LABORATORIES NV
28 APPLE INC
29 C N H GLOBAL NV
30 E-HOUSE HOLDINGS LTD ADS
31 MINDRAY MEDICAL INTL ADS
32 TURKCELL ILET HIZME ADR
33 DIANA SHIPPING INC
34 SUN HYDRAULICS INC
35 B H P BILLITON PLC ADS
36 NEW ORIENTL EDU&TECH ADS
37 GULFPORT ENERGY CORP
38 CHINA PETROLM & CHEM ADR
39 P O S C O
40 GAMESTOP CORP CL A
41 B H P BILLITON LTD ADR
42 FLIR SYSTEMS INC
43 SYNAPTICS INC
44 AMAZON.COM INC
45 CAPELLA EDUCATION CO
46 F M C TECHNOLOGIES INC
47 AMERIGON INC
48 HARDINGE INC
49 A B B LTD
50 LIFECELL CORP
51 MOBILE TELESYSTEMS ADR
52 CHINA MEDICAL TECH ADS
53 STERLITE INDS INDIA ADS
54 I T T EDUCATIONAL SVCS
55 H D F C BANK LTD ADR
56 ARCELOR MITTAL CL A
57 SHANDA INTERACTIVE ENTMT
58 DEALERTRACK HOLDINGS INC
59 LAYNE CHRISTENSEN CO
60 SCHLUMBERGER LTD
61 GLOBAL SOURCES LIMITED
62 CAMERON INTL CORP
63 TEAM INC
64 SMITH INTERNATIONAL
65 C F INDUSTRIES HOLDINGS
66 GOLAR LNG LTD
67 AIR METHODS CORP
68 VARIAN SEMI EQPMNT ASSOC
69 CELGENE CORP
70 HURON CONSULTING GRP INC
71 FOCUS MEDIA HOLDING ADS
72 MASTERCARD INC CL A
73 TRANSDIGM GROUP INC
74 H M S HOLDINGS CORP
75 W M S INDUSTRIES INC
76 AECOM TECHNOLOGY CORP
77 CTRIP.COM INTL LTD ADR
78 ATWOOD OCEANICS INC
79 CREDICORP LTD
80 TELEFONICA S A ADR
81 PERDIGAO SA ADR
82 MORNINGSTAR INC
83 ANSYS INC
84 NVIDIA CORP
85 SADIA SA ADR
86 PRECISION CASTPARTS CORP
87 OMNICELL INC
88 GREEN MTN COFFEE ROASTRS
89 SCHNITZER STEEL INDS A
90 MERIDIAN BIOSCIENCE INC
91 LIFEWAY FOODS INC
92 OCEANEERING INTL INC
93 CHINA MOBILE LTD ADR
94 BLUE NILE INC
95 AMTRUST FINANCIAL SVCS
96 GUESS INC
97 EXLSERVICE HOLDINGS INC
98 GOOGLE INC
99 DRESSER-RAND GROUP INC
100 VERIFONE HOLDINGS INC
CNBC Fast Money Review
1. BIOGEN UP FOR SALE
The headline: BIIB Board Puts Company Up for Sale
CNBC´s Mike Huckman reveals that the stock was halted for trading (although it began trading again after hours) and the company has hired Goldman Sachs and Merrill Lynch to broker the deal.
Adami thinks PFE might be a buyer for $23 or $24 billion.
Najarian doesn´t understand the need for a strategic investor, however he thinks it will add value to the stock. He feels the best trade is ELN who has partnered with Bigoen on the development of some drugs.
Huckman adds that MRK is rallying after hours, on FDA approval of a new HIV drug.
2. MARKET REACHES RECORD ON WEEK
The headline: Stocks Surge To New Highs, Then Stall As Investors Await Earnings Deluge.
Dylan Ratigan explains nearly half the Dow as well as 85 stocks on the S&P 500 are expected to report earnings next week.
Najarian says tech is driving the current surge. He likes AAPL, which Najarian calls “cheap.’
3. CAN TECH STAY ON TOP
Many tech stocks are at record highs and getting a lot of love from investors. Will their earnings reports next week justify their market-leading run?
CNBC Silicon Valley Bureau Chief Jim Goldman joins the panel for this conversation. Following are excerpts from what was said.
Here´s the tech earnings calendar breakdown.
Tue. 10/ 16 – IBM, YHOO, INTC
Wed. 10/17 - EBAY
Thur. 10/18 - GOOG, NOK, SNDK
Goldman tells the panel he doesn´t anticipate hearing anything big from Yahoo! or eBay however he does expect upside surprises from IBM and Intel.
Macke disagrees with Goldman. He says Yahoo probably can´t get much worse which makes it a viable trade.
Najarian is also bullish on Yahoo! He also says options volume in SanDisk suggests to him the company could be a takeover target.
Adami thinks Intel could “knock the cover off the ball.’ He recommends buying INTC above $23.75.
4. THE BANK TRADE
Now that the Federal Reserve has lowered the cost of borrowing, will regional banks such as USB and PNC report an earnings boost thanks to the steeper yield curve?
Here´s the regional earnings calendar breakdown.
Mon. 10/ 15 - WFC & USB
Tue. 10/16 - SOV & WM
Wed. 10/17 - PNC
Thur. 10/18 - FITB
A few weeks ago strategic investor Dennis Gartman told the traders he was bullish on the regional banks and liked KRE.
Finerman doesn´t agree with Gartman. Although most of the credit crisis is probably over, the risk reward just isn´t there.
Guy Adami likes some of the regional banks and says buy USB going into earnings. He expects the stock to trade around $36.
Najarian says on Friday he bought the $47.50 C put and sold the $50 call. He also owns the stock.
5. OIL RECORD HIGH
The headline: Crude Oil Cruises 3% This Week To $83.69, New Record High.
Adami explains that XOM and COP jumped this week on crude´s price surge. He thinks it may be time to buy refiners again and recommends VLO and TSO which he thinks can go to $60.
Karen Finerman likes COP.
6. POPS AND DROPS FOR THE WEEK
GOOG popped 7%: Finerman is impressed by the action.
MON popped 3%: Najarian says it´s all about global growth.
PTR popped 13%: Adami recommends investors take profit.
STV popped 48%: Macke doesn´t know what to say.
BA dropped 5%: Adami says if the stock holds at $93, buy it.
JCP dropped 9%: Macke says it wasn´t a good week for any of the department stores.
SNDK dropped 9%: Najarian tells the traders to watch this stock because options are on fire.
7. YOUR FIRST MOVE FOR MONDAY
Najarian likes MCD as a global growth play.
Finerman prefers KRT.
Adami says TSO is a buy as a refiner play.
Macke didn't have a stock pick.
News and Events Digest
Breaking News
Medtronic is suspending sales of an electrical wire that connects the hearts of 235,000 patients world-wide to the defibrillators implanted in their chests, saying they may have contributed to five deaths. - WSJ
Irish drug company Elan Corp. Plc (ELN) on Monday said it hired Lehman Brothers (LEH) to advise it on options for its Tysabri drug collaboration with Biogen Idec (BIIB) in light of the latter company putting itself up for sale.
Elan has a 50 percent interest with Biogen in Tysabri, a multiple sclerosis drug that is rebounding after being pulled from the market in 2005 due to safety concerns.
Under the terms of the agreement, if Biogen is sold, Elan has various rights, including a right to acquire Biogen's interest for "fair value." It also has the right to sell its Tysabri interest, continue the pact or restructure it, it said. - Reuters
Shares of Asia's top oil and gas company, PetroChina Co Ltd (PTR), jumped 13 percent on Monday as news of increased production and hopes of major new discoveries spurred optimism about its performance in the fourth quarter. - Reuters
New Oriental Education & Technology Group Inc. (EDU) which provides private education services in China, on Monday posted a higher quarterly profit due to higher student enrollments.
Net income rose to 256 million yuan ($33.9 million), or 6.56 yuan (87 cents) per American Depositary Share, in the first quarter ended on Aug. 31 from 165.1 million yuan, or 5.84 yuan per ADS, a year earlier. - Reuters
Telik Inc. (TELK) said Monday that the U.S. Food and Drug Administration will allow the biopharmaceutical company to continue clinical testing of its lead drug candidate, Telcyta. - AP
Apria Healthcare Group (AHG), the Lake Forest, Calif., provider of home therapies and equipment, definitively agreed to acquire closely held Coram Inc., the Denver provider of home-infusion and specialty pharmaceutical services, for $350 million cash, the companies said on Monday. "The two organizations care for more than 100,000 patients annually and together are licensed to serve patients in all 50 states," they said. The deal also enables Apria to enter the specialty pharmaceutical market, "while expanding existing managed-care relationships associated with its respiratory/home medical equipment business," they said. Subject to conditions including regulatory clearances, the companies hope to close the deal as early as mid-November. - MarketWatch
Media Summary:
Reuters writes that Medtronic (MDT) is suspending sales of a heart devices that may have caused some deaths.
Reuters writes that Ford (F) believes it will sell Jaguar and Rover within the next two months.
The Wall Street Journal writes that Gabelli funds will vote against a plan to take Cablevision (CVC) private.
The Wall Street Journal reports that Chrysler will try to get a piece of China's small car market.
The Wall Street Journal writes that Broadcom (BRCM) has invented a chip that could bring down the cost of making mobile handsets.
The New York Times writes Nokia (NOK) has started shipping its N95 with 8 Gigabyte memory.
The New York Times writes that Sallie Mae (SLM) is seeking to speed up the trial involving private equity groups that dropped a bid to buy the company.
The New York Times writes that six banks will start selling today at least $11 billion in debt to finance the buyout of the Texas energy giant TXU, one of the largest LBOs of the year.
The FT writes that Carl Icahn may make another run at Motrola (MOT).
CNN Money writes that Airbus will deliver its first A380 superjumbo today.
M&A Activity:
Danaher agreed to pay $2.8 billion for electronic test and measurement firm Tektronix (TEK). - WSJ
HSW International announces that its largest shareholder, HowStuffWorks, had agreed to be acquired by Discovery Communications. HSW International will remain a separate company. The co will continue to hold exclusive and perpetual rights to HowStuffWorks content in China and Brazil, as well as an option for content licenses in Russia and India. Discovery Communications and HSWI also plan to enter into an arrangement that will give HSWI digital publishing rights for Brazil and China to Discovery content that has been published on or integrated within the howstuffworks.com website. In addition, if such arrangement is entered into, it will provide that those rights would also be extended to India and Russia if HSW International exercises its option for those countries under the terms of its existing agreement with HowStuffWorks. - Briefing
IPO Central:
IPOs on schedule for the week of 10/15/2007:
DuPont Fabros Technology (DFT). The company is an owner, developer, operator and manager of wholesale data centers primarily for technology companies. The company is selling 30.5M shares at the initial range between $19-$21. The company announced Revenues for the last 12 months of $17M and Net Income of $0M. The Lead Managers are Lehman and UBS. DuPont Fabros Technology (DFT) is headquartered in Washington D.C. and their website is www.dftechnology.com.
Maxcom Telecommunications (MXT). The company is in telecommunications service provider for residential and business customers in Mexico. The company is selling 12.1M shares at the initial range between $15.50-$17.50. The company announced Revenues for the last 12 months of $155M and Net Income of $(-3)M. The Lead Manager is Morgan Stanley. Maxcom Telecommunications (MXT) is headquartered in Mexico City, Mexico and their website is www.maxcom.com.
Noah Education Holdings (NED). The company is a provider of interactive education content in China. The company is selling 9.8M shares at the initial range between $9.80-$11.80. The company announced Revenues for the last 12 months of $73M and Net Income of $9M. The Lead Manager is Deutsche Bank and CIBC is co-manager. Noah Education Holdings (NED) is headquartered in Shenzhen, China and their website is www.noahedu.com.
Rodman & Renshaw Capital (RODM). The company is a boutique investment bank focused on life science PIPEs and private placements. The company is selling 8M shares at the initial range between $5-$7. The company announced Revenues for the last 12 months of $64M and Net Income of $12M. The Lead Managers are Sandler O‘Neill and Fox-Pitt Kelton. Rodman & Renshaw Capital (RODM) is headquartered in New York, NY and their website is www.rodmanandrenshaw.com.
SoundBite Communications (SDBT). The company is a provider of on-demand automated voice messaging solutions to organizations. The company is selling 6M shares at the initial range between $12-$14. The company announced Revenues for the last 12 months of $29M and Net Income of $0M. The Lead Managers are Cowen & Co. and Thomas Weisel. SoundBite Communications (SDBT) is headquartered in Burlington, MA and their website is www.soundbite.com.
Economic Data:
8:30 NY Empire State Index
Upgrades and Downgrades by Sector:
Apparel
WRNC Warnaco Group Broadpoint Capital Price Target Raised Buy $46 to $48
Biotech
IMGN Immunogen RBC Capital Mkts Upgraded from Sector Perform to Outperform
GENZ Bear Stearns says Next M&A Target
SGEN Seattle Genetics RBC Capital Mkts Downgraded from Outperform to Sector Perform
Business Services
FCN FTI Consulting Deutsche Securities Initiated at Buy $65
Business Svcs-Data
RVBD THNK Downgraded to Accumulate
Chemicals
AGU Agrium CIBC Wrld Mkts Upgraded from Sector Perform to Sector Outperform $56 to $63
GGC Georgia Gulf UBS Upgraded from Neutral to Buy
Chemicals-Methanol
MEOH Methanex HSBC Securities Initiated at Overweight $35
MEOH Methanex CIBC Wrld Mkts Downgraded from Sector Perform to Sector Underperform $23
Computer Hardware
KEI Keithley Brean Murray Upgraded from Sell to Buy $11.60 to $12.50
AAPL Apple Lehman Brothers Price Target Raised Overweight $160 to $190
Computer Services
CNET CNET Stifel Nicolaus Downgraded from Buy to Hold
Computer Software
MSTR MicroStrategy Sun Trust Rbsn Humphrey Upgraded from Neutral to Buy $96
DBTK Double-Take Software CIBC Wrld Mkts Price Target Raised Sector Outperform $20 to $23
BEAS BEA Systems Citigroup Downgraded from Buy to Hold
BEAS BEA Systems Bear Stearns Downgraded from Outperform to Peer Perform
CNQR Concur Tech Cantor Fitzgerald Downgraded from Buy to Hold $34 to $36
COGN Cognos UBS Downgraded from Buy to Neutral
CRM Salesforce.com Cantor Fitzgerald Downgraded from Buy to Hold $58
MANH Manhattan Assoc Cantor Fitzgerald Downgraded from Buy to Hold $29 to $30
TLEO Taleo Cantor Fitzgerald Downgraded from Buy to Hold $28 to $30
VTAL Vital Images Needham & Co Downgraded from Buy to Hold
Finance Companies
WDR Waddell & Reed Credit Suisse Upgraded from Neutral to Outperform $29 to $34
CLMS Calamos Asset Credit Suisse Downgraded from Outperform to Neutral $32
MGI MoneyGram Calyon Securities Cut Price Target Neutral $30 to $26
Gaming Operations
SGMS Scientific Games Jefferies & Co Price Target Raised Buy $45 to $50
Healthcare
ICLR ICON plc Jefferies & Co Price Target Raised Buy $55 to $64
Healthcare Equipment
OSUR OraSure Tech Needham & Co Price Target Raised Buy $10 to $14
DXCM Dexcom Lazard Capital Downgraded from Hold to Sell
Healthcare Services
BIOS Bioscrip Broadpoint Capital Downgraded from Buy to Neutral
DGX Quest Diagnostics Wachovia Downgraded from Outperform to Mkt Perform
Homebuilders
KBH KB Home UBS Downgraded from Buy to Neutral
Insurance
AIZ Goldman Sachs Upgraded to Buy $66
Mining - Minerals
POT Potash CIBC Wrld Mkts Price Target Raised Sector Perform $89 to $115
Multi-National Banks
STD Banco Santander Central UBS Upgraded from Neutral to Buy
Oil and Gas
SNP China Petroleum (Sinopec) Citigroup Upgraded from Sell to Buy
TLM Talisman Energy Credit Suisse Upgraded from Neutral to Outperform
CNQ Canadian Natrl Res Credit Suisse Downgraded from Outperform to Neutral
DRQ Dril-Quip UBS Downgraded from Neutral to Sell
ECA EnCana Credit Suisse Downgraded from Outperform to Neutral $70
CPX Complete Production Services Jefferies & Co Cut Price Target Buy $36 to $28
REITs
NLY Annaly Mortgage UBS Upgraded from Neutral to Buy
NLY Annaly Mortgage Friedman Billings Price Target Raised Outperform $17.50 to $20
BFS Saul Centers Robert W. Baird Downgraded from Outperform to Neutral $58 to $61
Retail Trade
BEBE bebe stores Brean Murray Upgraded from Sell to Buy $12 to $18
LDG Longs Drug Lehman Brothers Upgraded from Equal-weight to Overweight
BJ BJ's Wholesale Banc of America Sec Downgraded from Neutral to Sell
CWTR Coldwater Creek Stanford Research Downgraded from Buy to Hold $7
CWTR Coldwater Creek Stifel Nicolaus Downgraded from Buy to Hold
DKS Dick's Sporting Goods Robert W. Baird Downgraded from Outperform to Neutral
MHS Medco Health Solutions Wachovia Downgraded from Outperform to Mkt Perform
ODP Office Depot Credit Suisse Downgraded from Outperform to Neutral $30 to $24
PETM PETsMART Credit Suisse Downgraded from Outperform to Neutral $36 to $29
CWTR Coldwater Creek Nollenberger Capital Cut Price Target Buy $20 to $15
Savings & Loan
BKUNA Bankunited Fin JP Morgan Downgraded from Overweight to Neutral
Semiconductors
NVLS Novellus RBC Capital Mkts Upgraded from Sector Perform to Outperform
EMKR Emcore Jefferies & Co Price Target Raised Buy $11 to $13
Telecommunications
ATNI Atlantic Tele-Network BWS Financial Price Target Raised Buy $33 to $40
NTE Nam Tai Electronics Jefferies & Co Price Target Raised Hold $12 to $13.50
CHA China Telecom Bear Stearns Downgraded from Peer Perform to Underperform
TLAB Tellabs Kaufman Bros Cut Price Target Hold $14 to $12