Posted by Optiondragon for myhappytrading.com
From Briefing.com
Periodicals Wrap-Up for Thursday, October 30th
WALL STREET JOURNAL: German securities regulator Bafin is investigating possible market manipulation in Volkswagen’s (VLKAY) recent share price movements, the Wall Street Journal reported. Hedge funds have lost billions betting that the car maker’s shares would fall while Porsche has reaped the benefits of Volkswagen’s recent stock surge and has moved closer to controlling the company…Tax experts said that PNC Financial Services Group’s (PNC) purchase of National City (NCC) will yield the company billions in federal tax savings which ultimately will increase the cost of federal assistance. The Wall Street Journal reported that the estimated tax savings to PNC could top $5B… IBD: As Express Scripts (ESRX) and other pharmacy benefits managers mover to lower priced generic drugs that means greater markups on less expensive drugs. The move to generics is paying off, according to Investor’s Business Daily’s “The New America”. In the second quarter earnings increased 36% to 76c a share and sales were up 3% to $4.7B. Analysts expect full year earnings to rise 31% to $3.07 a share, and then another 18% to $3.63 a share in 2009…NEW YORK TIMES: The New York Times reported that analysts are skeptical about past reports from American International Group (AIG) and are raising questions about “how a company claiming to be solvent in September” developed such a big hole by the following month. Analysts believe that, hidden by irregular accounting, AIG must have already accumulated “tens of billions of dollars worth of losses” by mid-September…
Asian Markets Wrap-up for Thursday, October 30
Stocks in a majority of Asian countries rallied following interest rate cuts in the U.S. and China. JAPAN: The Nikkei 225 surged 9.96% to 9,029.76. Mazda (MZDAF) soared 25%, Honda (HMC) jumped 13% and Toyota (TM) surged 11%. Mitsubishi Corp., a trading company with extensive commodities investments, jumped 18% after oil prices increased. Komatsu (KMTUY), which makes construction equipment, advanced 12% after announcing a large share buyback program. HONG KONG: Stocks climbed sharply, as the Hang Seng Index soared 12.82% to 14,329.85. China Mobile (CHL) rallied 13% and Aluminum Corp. (ACH) rallied 22%. Cnooc (CEO), an oil company, also gained 22% and PetroChina (PTC), another energy company, climbed 20%. AROUND ASIA: China’s CSI 300 advanced 2.38%, while Taiwan’s Taiex jumped 6.29% and South Korea’s KRX 100 rallied 12.17%… China’s central bank yesterday lowered its one-year interest rate to 6.66% from 6.93%.
China helps its stock market but risks pushing investors too far-WSJ
China is clearly trying to help its stock market. Just yesterday it cut interest rates. But, according to the Wall Street Journal’s “Heard on the Street”, the government wants insurance companies to buy stocks and not sell, a tactic that is unlikely to work. While the Shanghai stock market has fallen 70% over the past year, Chinese insures are suffering significant losses. So insurers and other investors will first need to see the governments steps start working before they start buying.
U.S. equity futures still point to a higher open
U.S. equity futures continue to point to a higher open. Investors received GDP data showing the economy contracted at a -0.3% pace. Analysts had expected a reading of -0.5%. The GDP report is a measure of growth of the country’s national income and output. The initial jobless claims report was also released and that showed there were 479,000 jobless claims versus an expected 475,000 claims. The futures barely reacted to these news reports.
Tokyo traders warn that $90B of PRDCs may soon fail-UK Times
About $90B of power reverse dual currency notes, or PRDC, that were mostly sold to individual investors and institutions in Japan, may soon fail, traders in Tokyo say. A rescue effort may involve hedging that will adversely affect currency markets. The notes were sold as simple products with high yields but in fact they were very complex structures. And they mostly hid that they were foreign exchange risks with exposure to the volatility of global interest rates.
IRS considers plan to tighten rules to bring back overseas profits-NY Times
The New York Times reports that the Internal Revenue Service is considering a plan to tighten rules to help bring back potentially billions of dollars in taxable profits held overseas. While multinational corporations are legally able to keep profits offshore and cut their U.S. taxes, the IRS is looking to curtail this, a move which may force corporation to pay large amounts in penalties and back taxes. Two government officials briefed on the plan say the plan, which would create a council devoted to scrutinizing the loophole, would be a new step by the Treasury Department to look to ease the credit crunch.
Steve Wynn: “The hell with Wall Street”-WSJ
The falloff in consumer spending is directly affecting casino companies who have been forced to retrench. Except Steve Wynn of Wynn Resorts (WYNN) whose new $2.3B Encore casino resort is slated to open in December. Investors appear to be buying in. The company now is the largest publicly traded casino with a market cap of $4.26B. That despite a 76% drop in the stock price since a year ago. Says Wynn about his company’s current good fortunes: “Are we all supposed to go buca buca buca and fall dead on the floor? Or are we supposed to have the ability to survive and do well? The hell with Wall Street. I’ll be here after this is over.”
Analysts Initiation Summary for Thursday, October 30th
MOST NOTEWORTHY: Vertex Pharmaceuticals (VRTX), Pharmasset (VRUS) and Markel (MKL) were today’s noteworthy initiations: Merriman believes the Vertex’s lead compound, telaprevir, is the most advanced therapeutic for the treatment of hepatitis C in clinical development. The firm thinks shares are undervalued at current levels and initiated shares with a Buy rating. Merriman believes Pharmasset has a strong pipeline with drugs targeting major indications in the infectious disease space. The firm, which started shares with a Buy rating, thinks shares could trade closer to a range of $22 to $26 in the next 12 months. Markel was initiated at Keefe Bruyette with a Market Perform and $360 target. The firm believes shares are fairly valued at current levels…OTHER INITIATIONS: Cemex (CX) was assumed with an Underperform rating and $7 target at Credit Suisse.
Analysts Downgrade Summary for Thursday, October 30th
MOST NOTEWORTHY: Hartford Financial (HIG), Polypore International (PPO) and Commerzbank (CRZBY) were today’s noteworthy downgrades: Merrill downgraded Hartford Financial to Neutral from Buy citing greater than expected capital volatility and the potential for another $2B capital raise or more in order to maintain ratings. Baird downgraded Polypore International to Neutral from Outperform and lowered its target to $16 from $28 due to the company’s announcement that its battery separator pact with Johnson Controls (JCI) will end in December. Citigroup finds it likely Commerzbank will need to raise capital if large investors are not found. Shares were lowered to Hold from Buy…OTHER DOWNGRADES: Ashland (ASH) and Pan American Silver (PAAS) were cut to Neutral from Overweight at JP Morgan. Achillion (ACHN) was downgraded at Oppenheimer to Perform from Outperform.
Analysts Upgrade Summary for Thursday, October 30th
MOST NOTEWORTHY: Legg Mason (LM), First Solar (FSLR) and Silicon Laboratories (SLAB) were today’s noteworthy upgrades: Jefferies upgraded Legg Mason to Buy from Hold on valuation following the recent sell-off, as they find the risk/reward attractive at current levels. However, the firm lowered their target to $23 from $44. Merriman raised First Solar to Buy from Neutral after the company showed “industry leading growth” in Q3. The firm has a 12-month price target range of $185 to $195 per share. Citigroup upgraded shares of Silicon Laboratories to Buy from Hold on valuation and expects the company to post above average industry growth in 2009…OTHER UPGRADES: Janus Capital (JNS) was upgraded to Neutral from Underweight at JP Morgan. Associated Estates Realty (AEC) was upgraded to Outperform from Neutral at Baird. Ladenburg upgraded KeyCorp (KEY) to Buy from Neutral.
GS & MS estimates lowered at Merrill Lynch
Merrill lowered GS’s FY09 EPS estimate to $11.83 from $11.94 and MS’s FY09 EPS estimate to $3.37 from $3.53. The firm cites weaker banking and dilution to earnings from treasury borrowing. Note the firm raised C & JPM estimates, see separate note.
S&P 500-SPX: Pivot Points
The following are the pivot points for the SPX. Pivot High: 950.030, Pivot Low: 902.320. These were calculated using the DeMark method. It is generally believed to be bullish when price breaks out above the pivot high or bearish when price breaks down below the pivot low. :
Apple-AAPL: Support and Resistance Levels to Watch
There is no particular news event in Apple (AAPL) but nonetheless it has become something of a barometer and a favorite once again of the Beta crowd. In a giddy futures environment just about anything could happen to the name. For that reason we are supplying more levels that may be valid for the day than is usual. Directionally all bets are off and it would not be a shock to see the levels “walked” on both sides. Ever wonder what the action was like in the 1930s? This is it folks. Support levels to watch as potential downside objectives are at $103.42, $97.80, $93.16, $90.81. Resistance levels to watch as potential upside objectives are at $111.62, $115.44, $118.00, $120.30.
Biogen Idec-BIIB notifies agencyies of PML case in MS patient
On October 29, 2008, relevant regulatory agencies were notified of a confirmed case of progressive multifocal leukoencephalopathy in a multiple sclerosis patient treated with TYSABRI in the commercial setting in the United States. Additional information about this case is set forth below. The diagnosis was made based upon the detection of JC Virus DNA in the cerebrospinal fluid in the setting of clinical signs, symptoms and magnetic resonance imaging findings consistent with the diagnosis of PML. Background: Patient has a history of MS and prior disease modifying therapies, including beta-interferons and glatiramer acetate. Patient had also received prior therapy with methotrexate for a rheumatological condition. Patient received 14 infusions of TYSABRI monotherapy. Clinical vigilance led to early identification of signs and symptoms of possible PML andto clinical evaluation which included MRI scanning and CSF testing. Patient is under the care of patient’s treating physician.
First Solar-FSLR solid quarter but maintain Sell, says Goldman
Goldman continues to have concerns regarding potential oversupply, subsidy reductions, and higher financing costs
Jim Cramer’s “Mad Money”
Cramer says, “interest rates do matter.” and they are exactly what the markets need. He said the Fed’s statement that it’s no longer worried about inflation should give the Chinese and European central banks the fuel they need to follow suit and further juice up the U.S. economy. Cramer said the rally in stocks will be sustainable if the rest of the world cuts rates. If they don’t, all bets are off. Cramer said it would also be huge news for the housing market and the economy if the federal government were to buy 3M residential mortgages. Cramer is still a fan of high-yielding dividend socks sauch as: NUE; VZ; BBT and WSO. Next, Cramer welcomed Timothy Wallace, chairman, president and CEO of Trinity Industries (TRN). Wallace said that business at Trinity is still going strong. He said the decision to suspend guidance was made because the company could not reliably forecast its long-term earnings and not because of any immediate earnings shortfall. Wallace said the demand for Trinity’s railcar and construction products are seeing some gaps, but the company’s barge and wind tower businesses are solid. Wallace said the company has not seen order cancellations in the wind power, but has seen some delays in orders due to credit and financing concerns. Cramer reserved judgement on Trinity, as he expressed concerns that the company may suffer from both financing issues and lower oil prices. LIGHTNING ROUND: (Bullish) CBST; DUK; TEF. (Bearish) The Bank of Ireland; MDU and ALD.
Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Macke Owns (MSFT), (WMT), (MCD), (SDS), (UUP); Najarian Owns (BNI) Put Spread; Najarian Owns (INTC) And Is Short (INTC) Calls; Najarian Owns (MS) And Is Short (MS) Calls; Najarian Owns (PBR); Najarian Owns (MSFT) And Is Short (MSFT) Calls; Seymour Owns (AAPL), (BAC), (F), (MER).
Well the rate cut came in and the market liked it but then dropped almost 400 points form the high due to a misunderstanding of GE CEO Immelt’s comments. The market is rallying back up again and we will be watching pivot and support levels to see how the market holds up…..the novice doomsayers are still around and it will be interesting if they can come up with more excuses as the market rallies and rips short positions. It is really simple to me. Demand has overtaken supply in the short term and we are entering a seasonally favorable time period for gains from oversold areas in the intermediate.
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