Premarket Analysis for 10/24 - Upgrades/Downgrades, Gappers, Actionable Calls

Posted by optiondragon for myhappytrading.com

Periodicals Wrap-Up for Friday, October 24th
WALL STREET JOURNAL: In a sign that its need for cash continues to expand, the Wall Street Journal reported that American International Group (AIG) borrowed $90.3B from the federal government as of Wednesday… The Wall Street Journal also reported the economy has begun to take its toll on transportation and shipping companies such as United Parcel Service (UPS), which are generally considered to be a barometer of economic health, as they are reporting sharply lower freight volumes…BUSINESSWEEK: Shares of Watson Pharmaceuticals (WPI) recently received a boost in share price when the FDA approved Rapaflo, the company’s alpha blocker for the treatment of benign prostatic hyperplasia, BusinessWeek reported. Tim Chiang of FTN Midwest Securities says, “Rapaflo’s fast onset of action of six to eight hours and its clean side-effect profile could make it competitive.”…When the economy strengthens, solid rail stocks deliver real gains. BusinessWeek said one stock to look at is CSX (CSX), which operates a transcontinental rail network across the U.S., Canada, and Mexico. Shares of CSX have been beaten down to $43 a share on Oct. 10, from $59 in May. The signs looks promising as Q3 profits exceeded forecasts…Yum! Brands (YUM) appears to be one of the very few appetizing restaurant stocks, in these times of economic stress, according to BusinessWeek, because not only is it seeing higher sales and earnings but it’s also reinvigorating U.S. sales with healthier food. Rick Carucci, Yum’s CFO, says the drivers of Yum’s growth and profitability, are China and other foreign markets, which account for 50% of sales…BLOOMBERG: Bloomberg reported that General Electric (GE) and its General Electric Capital finance arm are planning to use the Federal Reserve’s Commercial Paper Funding Facility, a new short-term funding facility, when it starts next week. Under the facility, the Fed, looking to revive demand for commercial paper, will provide up to $540B in loans to money-market funds and will buy 90-day debt of top-rated companies

Asian Markets Wrap-Up for Friday, October 24
Asian stocks retreated as profits of several major companies declined and as earnings forecasts were lowered…JAPAN: The Nikkei 225 Stock Average dropped 811.90, or 9.6%, to 7,649.08, while the broader Topix index lost 65.59, or 7.5%, to 806.11. Sony (SNE) fell 14% to Y1,972. Panasonic (PC) dived 12% to Y1,346. Canon (CAJ) was down 13% to Y2,665. Ricoh (RICOY) slumped 14% to Y876. Sharp (SHCAY) was also down 14% to 1,972. Nippon Sheet Glass Co. plunged 19% to Y291. Toyota (TM) lost 6.4% to Y3,200…CHINA: The CSI 300 Index retreated 53.18, or 2.9%, to 1,781.60, losing lost 2.8% for the week. Shenzhen Bank lost 4.1% to 12.03 yuan. Merchants Bank fell 10% to 12.14 yuan. Industrial & Commercial Bank of China was down 2.6% to 3.70 yuan. Shanghai Pudong Development Bank Co., partially owned by Citigroup (C), dived 6% to 12.14 yuan. China Southern Airlines Co. (ZNH) slumped 4.7% to 3.28 yuan. Henan Yuguang Gold & Lead Co. was down 0.17 yuan, or 2.5%, to 6.72. Jiangxi Copper Co. slipped 0.30 yuan, or 2.9%, to 10.01…AUSTRALIA: The S&P/ASX 200 Index tumbled -105.00, or -2.64%, to 3,869.40…AROUND ASIA: In Hong Kong, the Hang Seng Index dropped -1,142.11, or -8.30%, to 12,618.38…In South Korea, the Kospi sank 110.96, or 11%, to 938.75, and was down 20.5% for the week…In India, the Sensitive Index lost 9%, and the State Bank of India tumbled 12% to 1,168 rupees. :

Stock futures at limit down until the markets open
Stock futures remain limit down until the market open at 9:30 am. Markets around the world slumped overnight on concerns of a global economic slowdown. OPEC announced a production cut of 1.5M barrels but oil prices are still down more than $5 to $62.90 a barrel. The flight to quality has the dollar at a two year high against the euro at $1.2590, and 30 year U.S. treasury yields are at their lowest levels in their history

Analysts Initiation Summary for Friday, October 24th
MOST NOTEWORTHY: Repligen (RGEN), Gap (GPS) and NBTY (NTY) were today’s noteworthy initiations: Repligen was initiated with a Buy rating at Merriman. The firm thinks shares warrant a higher valuation given the company’s “late stage pipeline, strong partners, premier science and strong management.” Jefferies initiated Gap with a Hold rating and $13 target, citing upcoming difficult margin comps and the challenging macro environment. NBTY was assumed with a Neutral rating and $30 target at B. Riley, as the firm believes the acquisition of Leiner is risky…OTHER INITIATIONS: Rodman & Renshaw initiated China Direct (CDS) with an Outperform rating and $6 target. Zenith National (ZNT) was assumed with a Perform rating at Oppenheimer. Liberty Capital (LCAPA) was re-initiated at Barclays with an Equal Weight rating

Analysts Downgrade Summary for Friday, October 24th
MOST NOTEWORTHY: Barclays (BCS), Discovery Holdings (DISCA) and Janus Capital (JNS) were today’s noteworthy downgrades: UBS cut Barclays to Neutral from Buy as they believe capital raises could negatively impact earnings and that the dividend is likely to be cut. JP Morgan downgraded Discovery Holdings to Underweight from Neutral based on valuation and the deteriorating economic outlook. Friedman Billings downgraded shares of Janus Capital to Underperform from Market Perform and lowered its target to $7 from $23 as they see further risk to the downside following the company’s weaker-than-expected results…OTHER DOWNGRADES: LKQ Corp (LKQX) was cut to Sector Perform from Outperform at RBC Capital. Affymetric (AFFX) was lowered to Sell from Hold at Deutsche Bank. RightNow Tech (RNOW) was downgraded at Baird to Neutral from Outperform

Analysts Upgrade Summary for Friday, October 24th
MOST NOTEWORTHY: Colonial Bancgroup (CBN), Ericsson (ERIC), ASML Holdings (ASML) and Trimble Navigation (TRMB) were today’s noteworthy upgrades: Keefe Bruyette upgraded shares of Colonial Bancgroup to Outperform from Market Perform on valuation following the recent weakness and believes the company will be eligible to receive TARP funds. Morgan Stanley believes the company’s valuation adequately reflects risk to the loan portfolio; the firm raised shares to Equal Weight from Underweight. Merrill upgraded Ericsson and ASML Holdings to Buy from Underperform and believes their valuation reflects the worst-case for bad news. Oppenheimer upgraded Trimble Navigation to Outperform from Perform on valuation as they believe the company’s long-term growth story is intact…OTHER UPGRADES: Celestica (CLS) was upgraded to Sector Outperformer from Sector Performer at CIBC. KeyCorp (KEY) was added to Goldman’s Conviction Buy List. Wachovia raised EastGroup Properties (EGP) to Outperform from Market Perform

Look for protection and brace yourself for more downside action. Once you see the bounce you’ll know it. The market looks to sell off for the next week possibly, BE DEFENSIVE! see you in the trading room..