Posted by Optiondragon for myhappytrading.com
From Briefing.com
Periodicals Wrap-Up for Friday, October 31st
WALL STREET JOURNAL: According to the Wall Street Journal’s “Heard on the Street,” analysts are questioning whether CBS (CBS) can maintain its generous dividend with radio and TV ad revenues declining sharply. While chairman Sumner Redstone has dismissed concerns, some analysts believe CBS hasn’t conserved its cash resources as well as it should have…BUSINESS WEEK: Bristol-Myers Squibb (BMY) stock has been spiraling down, but yet fundamentals are improving, Business Week reported. Jason Napolitano of Zacks Investment Research said that with the company’s huge sales, its array of products under development, and with the shares’ tumble to $19.78 on Oct. 29, down from $30 a year ago, Bristol is an “attractive takeover candidate” for drug giants like Pfizer (PFE) or Sanofi-Aventis (SNY)…Business Week reported that PetMed Express (PETS) is riding the growing spending wave on health products for dogs and cats. Nancy Hall of Ladenburg Thalmann notes that PetMed has “successfully navigated a difficult ad market and delivered three quarters of solid financial results.”…FURRIER.ORG: Google (GOOG) sent a letter to its AdSense publishers, which makes Furrier.org think the company must be worried. The memo reads, in part, “During these difficult times, we’re continuing to invest in innovations that improve publisher monetization and advertiser value in the content network,” and concludes by saying, “The strength of AdSense lies in the value of the content you bring to users and the quality of the sites you bring to advertisers. Our success is tied to yours…NIKKEI: American International Group (AIG) will likely postpone the merger of its two Japanese life insurers to April or later, according to the Nikkei…
Asian Markets Wrap-Up for Friday, October 31
Stocks in Asia retreated after companies cut their profit forecasts and metal prices declined. Most markets were up…JAPAN: The Nikkei 225 dropped 452.78, or 5%, to 8,576.98, while the broader Topix index lost 32.25, or 3.6%, to 867.12. Nikon (NINOY) slid 18% to Y1,355. Mazda slumped 14% to Y213. Olympus (OCPNY) was down 7.7% to Y1,844. Canon (CAJ) jumped 9.9% to Y3,340. Komatsu (KMTUY) rose 10% to Y1,054 yen..CHINA: The CSI 300 Index was down 34, or 2%, to 1,663.66. Bank of Communications lost 4.2% to 4.33 yuan. Shanghai Air fell 6.2% to 3.48 yuan. Hainan Airlines Co. dropped 5% to 2.67 yuan. Jiangxi Copper slumped 3.9% to 8.73 yuan…AUSTRALIA: The S&P/ASX 200 Index advanced 16.90, or 0.4%, to 4,018. Westfield added 10% to A$16.40. CSL was up 2.7% to A$36.40. BHP Billiton (BHP) fell 2.1% to A$27.99. Woodside (WOPEY) lost 3% to A$41.88. OZ Minerals sank 8.7% to 94.5 Australian cents. Santos (STOSY) slipped 3.3% to A$13.49…AROUND ASIA: In Hong Kong, the Hang Seng Index retreated 361.18, or 2.52%, to 13,968.67… In Indonesia, the Jakarta Composite Index gained 6%…In India, the Sensitive Index was up 5.4%.
Japan’s central bank cuts its interest rate-AP
The central bank of Japan decided to reduce its benchmark interest rate for the first time in seven years. The bank’s overnight rate now stands at 0.3%.
U.S. equity futures continue to point to a lower open
Stock futures continue to point to a lower open. The European markets remain lower as well and the overnight Libor rate continues to fall, and now is at 0.41% versus 0.73% yesterday. The drop in Libor is a ongoing sign that there could be some unclogging of the credit markets. Investors received data today on consumer income and spending. The income report showed it rose 0.2% versus an expected increase of 0.1%. The report also showed consumer spending dropped -0.3% versus an expected decline of -0.2%. Both reports had little effect on the futures.
Google and Yahoo may give up on a Web ad deal-WSJ
Yesterday Google (GOOG) and Yahoo (YHOO) met with the Justice Department but neither appear willing to compromise with Justice’s objections, reports the Wall Street Journal, threatening the prospects for their Web ad partnership. If that happens both companies will be hurt but Yahoo more so,especially after turning down Microsoft’s (MSFT) takeover bid.
Emerging economies remain unstable-WSJ
Emerging markets are still adjusting to tight credit and lower foreign investment, and their instability may slow a rebound in Western credit markets and the efforts to avoid a deeper recession, according to the Wall Street Journal’s “Heard on the Street”. Their solution? The ECB need to provide funds to Central and Eastern Europe, and with the Bank of England, loosen monetary policy.
Investors cautious about Deutsche Bank-WSJ
Deutsche Bank’s (DB) third quarter results were better than expected. But it trades at a discount to some troubled U.S. banks when key valuations are taken into account, according to the Wall Street Journal’s “Heard on the Street”, giving investors pause. For one, its assets exceeded tangible equity by more than 55 times, compared to J.P. Morgan (JPM) whose leverage was 32 times. Also, the bank had to reclassify assets due to a European accounting rule adjustment, allowing it to keep over $1B of mark-to-market losses out of income, avoiding a major hit to equity.
Cisco-CSCO checks indicate in-line October quarter, says SMH Capital
SMH Capital’s checks on Cisco�s October quarter indicate that business is in-line with their $10.3M/39c estimates. However, the firm lowered their forward estimates to reflect the impact of macro weakness. Shares remain Buy rated.
Intercontinental Exchange-ICE: Post-Earnings Reaction
The company reported results yesterday that were inline wit consensus. After a large pop in price yesterday, the stock is settling back down below major resistance at the $90 area. On a weekly basis the shares have been trading in a bearish price channel that has been increasing in range and volatility as price has dropped from the peak in January of this year. The bearish trend appears to be continuing to have a dominant impact on price. Support levels to watch as potential downside objectives are at $80.20, $77.92, $76.76, $73.59, $72.20, $70.50. A breakout above the $90 area would be needed to start the process of reversing the downtrend.
Google-GOOG: Support and Resistance Levels to Watch
The $358 area as support is an important level for the week. If the stock breaks down through this level it would potentially enter the lower half of its trading range for the period. Given the greater market advances this would suggest the stock is losing relative strength against its peers. A break of $358 would increase the probability of a move down to the prior week close at $352.32. Next support below that area is at $339.29. Should the stock make it down to that area it would be in the low band of trading for the week. That might set up for a stronger sell in the following week. Resistance is at $368.75.
Fed Chairman Bernnake speaks on Mortgage Finance at 2:00pm on 10/31
Bernanke is a keynote speaker at the Symposium on the Mortgage Meltdown, the Economy and Public Policy at the University of Berkley, CA
Warren Buffett’s Berkshire buys 825k shares of Burlington Northern-BNI
This raises Buffett’s stake in Burlington Northern to 64.6M shares.
Genco-GNK shares have significant upside potential, says Jefferies
Jefferies sees significant upside potential on expectations the dry bulk shipping charter rate environment will improve in the coming months. The firm maintains a Buy rating and $63 target following Genco’s Q3 upside.
Diamond Offshore-DO downgraded to Hold from Buy at Jefferies
Jefferies downgraded shares to reflect their forecast that oil will go to $60 due to further demand erosion from weakening global economies. The firm lowered their target to $90 from $112.
Analysts Initiation Summary for Friday, October 31st
MOST NOTEWORTHY: Limited Brands (LTD), Range Resources (RRC) and Kinder Morgan (KMP) were today’s noteworthy initiations: Jefferies views Limited Brands as a mature retailer with brands that are under pressure from a difficult economic environment. Shares were initiated with a Hold rating and $11 target. Morgan Keegan assumed Range Resources with an Outperform rating and $35 target and sees upside reserve potential in the Marcellus and Barnett ranges. Banc of America believes Kinder Morgan’s diversified mix of assets, strong backlog and solid balance sheet should continue to drive distribution growth. The firm started shares with a Buy rating and $59 target…OTHER INITIATIONS: Sterling Construction (STRL) was initiated with a Hold rating at BB&T. EchoStar Holding (SATS) was initiated at Citigroup with a Sell rating and $18 target.
Analysts Downgrade Summary for Friday, October 31st
MOST NOTEWORTHY: Powerwave (PWAV), INX Inc (INXI) and Expedia (EXPE) were today’s noteworthy downgrades: Jefferies downgraded shares of Powerwave to Hold from Buy and lowered its target to $2 from $6 following the company’s Q3 results, as they believe Powerwave has seen a significant deterioration in demand over the past two weeks and visibility remains uncertain. Merriman downgraded INX Inc to Neutral from Buy on concerns that basic routing and switching gear will not likely gain top priority in IT budgets over the next several quarters. Citigroup cut Expedia to Hold from Buy following management commentary on the Q3 call and lowered their target to $12 from $29…OTHER DOWNGRADES: Akzo Nobel (AKZOY) was lowered to Underperform from Neutral at Credit Suisse. T. Rowe Price (TROW) and Morningstar (MORN) were downgraded at Keefe Bruyette to Market Perform from Outperform. Loopnet (LOOP) was downgraded to Market Perform from Outperform at JMP Securities.
Analysts Upgrade Summary for Friday, October 31st
MOST NOTEWORTHY: Signature Bank (SBNY), Lubrizol (LZ) and Infinity Pharma (INFI) were today’s noteworthy upgrades: B. Riley upgraded shares of Signature Bank to Buy from Neutral following the Q3 results as they are more confident about its ability to generate superior balance sheet growth in a slowing economy. Jefferies upgraded Lubrizol to Buy from Hold and raised its target to $43 from $40 following the company’s “solid” Q3 results ex-hurricanes due to lower raw material costs and valuation. Roth Capital upgraded Infinity Pharma to Buy from Hold citing the company’s strong financial position and pipeline…OTHER UPGRADES: Best Buy (BBY) was upgraded to Equal Weight from Underweight at Morgan Stanley. Deutsche Bank (DB) was raised to Neutral from Underperform at Credit Suisse. Starlims Technologies (LIMS) was upgraded to Outperform from Market Perform at JMP Securities. :
Jim Cramer’s “Mad Money”
Cramer said said there is a literal tug of war in the markets, with investors loving stocks as an asset class, while at the same time hating individual stocks. Individual stocks are simply too risky, said Cramer. With most companies having reported what will likely be their last good quarter, Cramer predicted only pain ahead for most stocks. Cramer says, there’s only one way investors can invest in markets while not investing in individual stocks, and that’s with the S&P futures. Cramer confirmed that much of Tuesday’s rally was caused by a state run pension fund, which is obligated to invest the monies they receive, investing heavily in the S&P futures. Cramer called the disconnect between the fundamentals and the futures mind boggling. He predicted the trend would likely continue through the rest of the year, or until investors finally gain confidence in individual names. Next, Cramer talked with Sean Boyd, CEO of Agnico-Eagle Mines (AEM) to find out why gold hasn’t been the safe haven he had predicted. Cramer admitted that you got this one wrong, as Agnico shares have tumbled 58% to $28, since you recommended it. Boyd said Agnico is just beginning to ramp up production and is still on target to raise output by 23%. He said he company will open five new mines between 2008 and 2010, with the first of those them coming online this quarter. Boyd’s confident the investments will pay off because Agnico factored in much lower gold prices when it decided to invest in the new mines. Cramer said he likes Agnico’s story and the outlook for gold, but admits he may have been a full two quarters ahead of the ramp-up in gold stocks. SELL BLOCK: Cramer added Petsmart (PETM) to the list, saying the company could now be in sights of retail giant Wal-Mart (WMT). Wal-Mart could be expanding its pet supply and pet car offerings. Cramer said Wal-Mart has a long history of moving into product categories and decimating its competition. Whole FOODS, (WFMI), Best Buy (BBY) and Circuit City (CC) — all felt the pinch when Wal-Mart moved into those company’s categories. And drug stores are now feeling the pain as Wal-Mart rolls out phase three of its prescription drug plan. Bottom-line: Cramer predicted only harder and harder times for Petsmart ahead. MAD MAIL: Cramer told a viewer that younger investors should have a mix of growth stocks and some conservative stocks in their portfolios. Then, Cramer said he’s still behind Johnson & Johnson (JNJ), despite recent negative comments from analysts. LIGHTNING ROUND: (Bullish) NKE; STT; COH; SGP; ABT. (Bearish) MOS; UA; PHG.
Fast Money Position recap- First Moves: Tim likes long EEV, Guy likes CELG, Karen likes TIP, Pete likes YHOO on recent options action.
Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Pete Najarian Owns (MS) Calls; Pete Najarian Owns (MSFT) And Is Short (MSFT) Calls; Pete Najarian Owns (PBR); Pete Najarian Owns (TSO) Call Spread; Pete Najarian Owns (YHOO) And Is Short (YHOO) Calls; Pete Najarian Owns (BNI) Put Spread; Finerman’s Firm Owns (RIG), (MSFT), (SUN), (TSO), (VLO); Finerman’s Firm Is Short (IYR); Finerman’s Firm Owns (OIH) Puts; Finerman’s Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (COF), (BBT); Seymour Owns (AAPL), (BAC), (BX), (F), (MER), (TSO), (CHL); Seygem Asset Management Owns (PBR), (EEM).
The market has not put together back to back up days once in October and that is simply amazing. That tells you how bad of an October it has been for the markets but not for the traders here at myhappytrading. I’m glad October is over and look forward to the seasonally strong period between November and April. With the market down this much and the countless new novice doomsayer blogs out, I would have to say that we have marked a temporary bottom. How do I know? If you witnessed the drops in the insurance companies yesterday and the market just shrugged it off as if it was nothing that was a real good clue to how the market sentiment stands. Art Cashin of UBS Floor Operations on the NYSE also has called every step of the way of this massive market drop even the so far October bottom. He does say that he worries about a smooth election that is coming up which is a big event for the country, the world, as well as the markets. See you in the trading room.
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