Posted By Optiondragon for myhappytrading.com
From Briefing.com
Periodicals Wrap-Up for Thursday, October 16th
WALL STREET JOURNAL: Citadel Investment Group’s returns have fallen nearly 30% this year and rumors suggests that it’s in far worse shape. Yesterday the firm sought to dispel that, the Wall Street Journal reported, telling clients its borrowing lines haven’t been cut and terms of its borrowings haven’t been changed. The firm says its on solid ground and has $6B in cash…Natural gas drillers such as Chesapeake Energy (CHK) are conserving their cash and drastically cutting exploration and production expenses, according to the Wall Street Journal’s “Heard on the Street”. For highly leveraged companies it’s a matter of survival, or consolidation, until a recovery takes hold…SEATTLE TIMES: The Seattle Times reported that U.S. Attorney Jeffrey Sullivan will conduct an investigation of Washington Mutual and the events leading up to its takeover by the FDIC and sale to JP Morgan (JPM)…CNBC: Treasury Secretary Henry Paulson told CNBC that the FDIC interbank lending guarantee that is part of the U.S. government’s banking rescue plan will begin immediately and will last through June of next year. Paulson said the plan is designed to spur private investment in financial institutions…
Asian Markets Wrap-Up for Thursday, October 16
Asian stocks fell sharply due to investors’ intensified worries about the world’s economy. JAPAN: Stocks tumbled in the wake of a decline in U.S. retail sales. The Nikkei 225 plummeted 11% to 8,458.45. Exporters led the decline, with Honda (HMC) sinking 10%, Sony (SNE) plunging 13%. Toyota (TM) slumping 9.3%, and Nintendo (NTDOY) dropping 10%. A number of brokerage houses fell sharply, as Mitsubishi Corp. dropped 15% and Mitsui & Co. (MITSY) retreated 17%. Oil company Inpex sank 14%. CHINA: Stocks declined, with airlines leading the way down. The CSI 300 Index dipped 4.9% to 1,820.90. Air China (AIRYY) sank 10%, after reporting that it likely had a loss over the first nine months of the year. China Southern Airlines (ZNH) fell 9.2% and China Eastern Airlines (CEA) retreated 10%. Brokerage house Citic Securities slumped 7.7% and Hong Yuan Securities declined 10%. Shanghai Pudong Development Bank dropped 5.5%. AROUND ASIA: Hong Kong’s Hang Seng Index fell 4.80%, while Taiwan’s Taiex retreated 3.25% and South Korea’s KRX 100 sank 9.49%… India’s airlines may cancel their orders for about 300 planes from Boeing (BA) and Airbus as a result of the credit crisis.
Paulson says interbank loan guarantees will kick off immediately-CNBC
Treasury Secretary Henry Paulson said that the government’s interbank lending guarantee will start immediately. The government’s overall goal is to encourage more private investment in banks, Paulson added.
Hedge funds are having problems-CNBC
Hedge fund losses rattled the markets yesterday, and Citadel, a hedge fund, confirmed that two of its major funds have lost between 26%-30% in 2008. However, Citadel denied reports that it is having trouble meeting margin calls and may have to deal with large number of redemptions. Meanwhile Highland, another hedge fund, is reportedly unwinding its positions, traders with inside knowledge of the situation say.
U.S. equity futures move higher
Equity futures are higher after the release of several key economic reports. The Consumer Price Index showed that prices were flat (+0.0%) versus an expected increase of 0.1%. But if you take out the volatile components of food and energy prices rose 0.2% equal to an expected 0.2% increase. Also, the weekly jobless claims report which showed an increase of 461,000 jobless claims versus an expected 470,000. The continuing jobless claims report was in line at 3.71M. The futures on these rose on the reports and investors will now look forward to the industrial production report due out at 9:15 am.
Steve Jobs may be leaving Apple ‘very soon’-Gizmodo
Gizmodo speculates that Steve Jobs actions were portrayed as telling everyone that Apple (AAPL) is more than just ‘Jobs’, at the latest MacBook presentation on Tuesday. Gizmodo says that while Steve Jobs is not leaving Apple tomorrow, he will probably be ‘very soon.’
First Solar-FSLR upgraded to Outperform from Market Perform at Raymond James
Google-GOOG target lowered to $525 from $690 at Needham
Needham lowered their estimates to reflect slower spending in the current environment and the potential FX-related drag on international growth. However, the firm believes the 51% sell-off in shares year-to-date already prices in these expectations. Needham maintains a Buy rating.
Friday Lows in Sight
The major averages look set to test the lows of last Friday. A failure at those Friday lows means a probable trip to the 2002/2003 lows. Beyond that, there is scant support until we reach levels last seen in 1996. To put this in the simplest terms, the downside risk to the 2002/2003 lows is roughly 10% down from Friday last, and the 1996 support area is a further 10% down from that area. One prominent feature to watch is the extremely large potential double top in the S&P 500. This would become an active pattern if we broke the 2002/2003 lows. For the SPX that is at 768.63. On a breakdown we would likely see a substantial downside push to support levels from 1996 at the 680. This isn’t a forecast but rather a warning of what we can expect if we breakdown badly from here. Anything in this sort of environment can happen and it is best to be prepared for all outcomes. On the upside, we have a long way to go to get back to the highs of Monday which appear certain to be a “hard top” of resistance unless the environment becomes a lot more supportive of equities.
Wachovia: Top offshore drillers will realize most of their backlogs
After analyzing data, Wachovia believes that their top picks among offshore drillers - Diamond Offshore (DO), Transocean (RIG), and Atwood Oceanics (ATW) - will realize most of their balance sheets in spite of the credit crisis. Wachovia maintained their Outperform rating on all three stocks.
Wells Fargo-WFC target raised to $40 from $35 at Ladenburg
Ladenburg’s Richard Bove increased his target after Wells Fargo reported higher than expected Q3 EPS. Bove believes that the bank did “reasonably well” in Q3, and adds that he thinks the company is coping with the economic downturn better than its peers. Ladenburg maintained their Buy rating on the stock.
Sunpower-SPWRA reports Q3 EPS 60c ex items vs. consensus of 56c
Reports Q3 revenue $377.5M vs. consensus of $350.43M.
Sunpower-SPWRA sees FY08 EPS $2.34-$2.41 vs. consensus of $2.32
Sees FY08 revenue $1.44B-$1.46B vs. consensus of $1.42B. Sees Q4 EPS 73c-80c vs. consensus of 76c, sees Q4 revenue $405M-$435M vs. consensus of $414.9M. Sees FY09 EPS at least $3.50 vs. consensus of $3.67 and revenue $2.05B-$2.15 vs. consensus of $2.06B.
Amazon.com-AMZN target lowered to $80 from $109 at Banc of America
Banc of America lowered their estimates for Amazon.com following eBay’s results to reflect macroeconomic concerns. However, the firm maintains a Buy rating on the stock.
Google’s G1 ready to take on Apple’s iPhone-WSJ
On October 22 Google (GOOG) will release its answer to Apple’s (AAPL) iPhone with its GI. Walter S. Mossberg, writing in his Wall Street Journal Personal Technology column, says he likes it and it’s a “worthy competitor” to the iPhone, and a “very good first effort, and a godsend for people who prefer physical keyboards or T-Mobile but want to be part of the new world of powerful pocket computers.”
3-Month Libor 4.55% down 0.09
The Libor was at 2.90% in June. Libor, the London Interbank Offered Rate, is what banks charge one another for short-term loans. It is the basis for many financial contracts- including home mortgages and student loans, and it is a sign of whether banks trust each other. High rates mean banks are less willing to lend money to one another. Sources; The New York Times, Bloomberg, Federal Reserve.
Jim Cramer’s “Mad Money”
Cramer told viewers that the markets are “ever-so-slightly” better off now than they were just a week ago. He said Wednesday’s re-testing of last week’s lows is a little less scary, now that the Treasury’s rescue plan is in place. Cramer told viewers to forget about earnings estimates, which he said can no longer be trusted, and stick with high dividend-paying stocks. Cramer also advised viewers not to purchase their stocks all at once. Instead he said they should follow the strategies in his book Real Money and scale into positions over time, buying on weakness. In tough economic times, Cramer said the smart money is on the “trade-down” plays, companies people turn to in order to save money. But he noted in the battle of the dollar-store chains, only one can emerge victorious, and that is Dollar Tree (DLTR). However, Dollar Tree is just to loves by Wall Street, that is why Cramer is recommending Family Dollar (FDO) as the dollar store chain to own. Cramer believes Family Dollar, while not the better company, is the better value and the better stock. He said Family Dollar outperformed rival Dollar Tree handsomely in the last recession between 2000 and 2002. And since the company is not trumpeted on Wall Street, Cramer said there’s a lot of room for analyst upgrades as the economy worsens. Family Dollar is improving its product mix , now accepting food stamps and accepting credit cards. Most notably, the company is its stock repurchase program to preserve cash and reducing its inventory. LIGHTNING ROUND: (Bullish) CLR; LMT; DUK; KMP; EPD. (Bearish) CSC; NLY; NOC; AYE; MMM; NS; WYE.
Fast Money position recap- First Moves: Joe likes long UUP, Pete likes ABT.
Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (AAPL), (MER), (MSFT); Seygem Asset Management Owns (RIO); Seygem Asset Management Is Short (PBR); Najarian Owns (AAPL) And (AAPL) Puts; Najarian Owns (C) Put Spread; Najarian Owns (GS), Is Short (GS) Calls, Owns (GS) Put Spread; Najarian Owns (MS) And (MS) Puts And Is Short (MS) Calls; Najarian Owns (NOK), Is Short (NOK) Calls, Owns (NOK) Puts; Najarian Owns (RIMM) Call Spread; Terranova Owns (AAPL), (EXM), (FCX), (FTO), (MA), (NOV), (POT), (X), (VLO); Terranova Owns December Dollar Index Futures.
So the market sold off sharplu into the close yesterday and looks to retest the recent low range. Can the market find a bounce here to move higher for the day and is it only for one day? We have had one pathetic up day for the month. I am very weary of the market and will be looking at these support levels to see if they hold. I am staying nimble and doing good staying mostly in cash and taking short term trades. I have also been focusing on biotech catalyst events going forward which are less influenced by market moves but not completely. AMAG is my darling this weekend and I am situating myself for a volatile move with expectations of approval and will profit from forward volatility. See you in the trading room to share ideas, market thoughts and analyzation with hundreds of traders.
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