Premarket Analysis for 9/2 - Upgrades/Downgrades, Gappers, Actionable Calls

Submitted By Andy Wang

Posted By Optiondragon, a site made by traders and investors for traders and investors!

From Briefing.com

Periodicals Wrap-Up for Tuesday, September 2nd
WALL STREET JOURNAL: The battle lines between Boeing (BA) and its 26,800 machinists are drawn, and unless there’s a settlement very soon a vote tomorrow could send the company’s largest union out on strike, according to the Wall Street Journal, shutting the airplane manufacturer’s factories…Google’s (GOOG) web browser software called Chrome will today be available for download. It’s meant to directly take on Microsoft’s (MSFT) highly popular Internet Explorer, the Wall Street Journal reported…TELEGRAPH: Lehman Brothers (LEH) was said to be “locked in talks” this weekend with a group of foreign government-backed investment firms in an effort to secure billions of dollars in new equity capital. The Telegraph learned that Lehman has been in talks with Korea Development Bank about a capital injection of as much as $6B…GLOBES: Amdocs (DOX) is set to win a billing deal from MetroPCS (PCS), as the U.S. wireless company is looking to replace its current billing services provider, VeriSign (VRSN), according to Globes…

Asian Markets Wrap-Up for Tuesday, September 2
Stocks retreated, due to political uncertainty following the resignation of the Japanese prime minister and the decline of energy companies as oil prices fell. JAPAN: Prime Minister Yasuo Fukuda resigned, creating uncertainty over the country’s economic policies. The Nikkei 225 sank 1.75% to 12,609.47. Oil exploration company Inpex lost 6.7%, while Japan Petroleum Exploration retreated 5.1%. Mitsui & Co. (MITSY), which obtains over 50% of its profits from commodity trading, droppedl 5.4%. Copper producer Nippon Mining (NMHDF) sank 5.1% and shipping company Nippon Yusen K.K. (NPNYY) lost 2.3%. CHINA: Stocks retreated, led by financial companies, as investors were concerned that the government will continue its anti-inflation policies. The CSI 300 Index fell 1.03% to 2,285.41. China Merchants Bank dropped 3.2% and Industrial & Commercial Bank of China declined 2.1%, while China Construction Bank Corp. lost 1.7%. Jiangxi Copper dropped 0.9% and Datong Coal also slipped 0.9%. AROUND ASIA: Indonesia’s Jakarta Composite Index lost 0.26%, while Taiwan’s Taiex fell 1.66% and South Korea’s KRX 100 inched up 0.10%….Australia reduced its benchmark interest rate for the first time since 2001.

Sony Ericsson says its Microsoft phone will be ready for the holidays-Reuters
Sony Ericsson, a joint venture of Sony (SNE) and Ericsson (ERIC), reiterated that its first cellular phone with a Microsoft (MSFT) operating system will be ready in time for the holiday shopping season this year. Several technology blogs and a Swedish newspaper have reported in recent days that Sony Ericsson has experienced delays in the development of the new phone model.

Gustav’s bite appears to have not hurt energy producing facilities-WSJ
The results are not complete but the initial reports are that Hurricane Gustav appears to have not inflicted much damage to energy producing facilities in the Gulf of Mexico, reports the Wall Street Journal. The industry had closed 98% of the oil and natural gas production in the Gulf in anticipation of the storm. Says Bill Day, with Valero Energy (VLO), “Our indications are that the storm surge will not be as high as initially feared, so damage from water might be less than we had expected.”

U.S. equity futures continue to point to a strong open
U.S. equity futures have further strengthened as oil prices continue to fall. Also, gold is down more than -3.0%, gasoline is down more than -6.5%, and natural gas, corn and other commodities continue to drop as well. There was positive news in the financial sector as Korea Development Bank confirmed that they are in talks regarding an investment in Lehman Brothers (LEH), as the company attempts to shore up its balance sheet. Shares of Lehman are up more than +6.5% in pre-market trading.

AMAG Pharmaceuticals-AMAG initiated with a Buy, target $80@NEED
Needham initiated the company with a Buy rating because they think the FDA’s review of the company’s ferumoxytol drug for anemia associated with chronic kidney disease will lead to significant market adoption of the drug. The firm set a $80 target.

Handsets: Checks show August demand is lackluster overall@PACS
PacCrest believes more pricing pressure will be seen in the handset marketplace. Based on checks, PacCrest sees the following trends: Qualcomm (QCOM) has potential for 2-3% risk to December chipset volumes; Research-in-Motion (RIMM) August sell-thru appears in-line; Palm (PALM) August sell-thru appears better; Ericsson (ERIC) they are seeing share gains in Western Europe; Motorola (MOT) could have given back recent market share gains; Nokia (NOK) is losing share gains in Western Europe.

Suntech Power-STP signs second polysilicon agreement with DC Chemical
Suntech Power Holdings has signed a definitive seven-year polysilicon supply agreement with DC Chemical Co. Ltd., a leading multinational chemicals producer headquartered in Seoul, South Korea. Under the terms of the agreement, DC Chemical will supply Suntech specified annual volumes of polysilicon with a total value of approximately $750 million from 2010 to 2016. The agreement follows Suntech’s March 2008 announcement of an eight-year polysilicon supply agreement with DC Chemical, which provided for the delivery of polysilicon to Suntech with a total value of approximately $631 million from 2009 to 2016.

UAL Corp-UAUA volatility Flat at 139; oil below $109
UAUA is recently up $1.89 to $13 in pre-open trading. WTI Crude futures are recently up 6.82% to $107.59 a barrel according to Bloomberg. UAUA over all option implied volatility of 139 is near its 26-week average of 128 according to Track Data, suggesting non-directional price movement.

Priceline.com-PCLN upgraded to Outperform from Neutral@FBCO
Credit Suisse upgraded PCLN citing valuation and growth. The firm raised 2008 EPS estimate to $5.65 and 2009 EPS estimate to $7.00. Price target $145.

Amylin Pharma-AMLN upgraded to Buy from Hold@LAZA
Lazard said its proprietary survey indicates minimal impact in Byetta prescribing patterns due to pancreatitis.

Dollar Index-$DXY: US Dollar Breaking Out at Resistance
The US Dollar is making a breakout attempt at the 78 area. The 78 to 74.50 area was an important support/congestion area back in December of last year from which the dollar broke down. The 78.90 area is the next potential upside objective. On a longer time frame, the dollar is still in a downtrend and could rally as high as the 200-week moving average at 82.82 without breaking that downtrend. This moving average is the primary downtrend resistance line proxy.

Research in Motion-RIMM: Expect company to have a strong quarter@OPCO
After conducting checks, Oppenheimer believes that the company’s Curve is selling well, while they think the company’s Bold is also ramping well. Oppenheimer maintained their Outperform rating.

Crude Oil-$CL: Bearish Flag Has Completed
The popular media is trumpeting a weaker Gustav as the reason for Crude’s tumble. To be sure some of the premium built in before the storm did come off. But there is something entirely different going on here. The real story is what has happened to the US Dollar which has appreciated as the basket of currencies it is indexed against has collapsed overnight. The Australian Dollar is getting crushed, down over 2% in a single session. The Austrialian Dollar was the hedge fund favorite in carry and we may be seeing a rather vicious unwind in progress. At peak the US Dollar appreciated nearly a percentage point. Commodities will not climb in a strong dollar environment. On top of that, there was unusually heavy holiday trading yesterday and this morning in the Crude contract which saw a Bearish Flag pattern develop as the lower limit of the prior bullish price channel for Crude was broken at the $114 area. This pattern had a downside to the $105 area which was a level touched earlier. The pattern appears to now be complete and a weak rebound is in progress. The $110 area and then the $114 area will be new resistance zones. The potential large downside area is at $100 as long as traders and the trend remain bearish.

Oil Services Holders-OIH volatility flat; oil trades below $109
OIH closed at $184. Crude oil futures are recently down 6.15% to $108.36 according to Track Data. OIH holdings include BHI, BJS, DO, ESV, GRP, GSF, HAL, SLB, HC, NBR, NE, NOV, RDC, RIG, SII, SLB, TDW & WFT. OIH over all option implied volatility of 37 is near its 26-week average according to Track Data, suggesting non-directional price movement.

ImClone-IMCL: Data supports broad label for Erbitux in lung cancer@STFG
After Erbitux showed a positive trend in survival in a second lung cancer study, Stanford believes the data supports a broad label for Eribitux in lung cancer. The firm reiterated their Buy rating and raised their target to $72 from $60.

Google-GOOG upgraded to Buy from Hold@STFG
Stanford upgraded shares after channel checks indicated U.S. search market trends have stabilized as they believe GOOG’s market share gains are broadening, Q3 expectations are modest and the valuation is near lows. The firm has a $550 target on the stock.

Canadian Solar-CSIQ: Believe shares are cheap@OPCO
After meeting with Canadian Solar’s management, Oppenheimer reports that the company does not see any sign of a slowdown in the solar energy sector. The firm believes Street EPS estimates for the company are conservative, and they maintained their Outperform rating.

Celgene-CELG: Revlimid’s future as lymphoma treatment is overlooked@WCHV
Wachovia believes that Medicare and Medicaid may reimburse patients for use of Celgene’s Revlimid as a lymphoma treatment sooner than investors currently believe. Wachovia maintained their Outperform rating on Celgene.

Google-GOOG target cut to $600 from $675; maintain Buy@STFL
Stifel lowered GOOG’s price target to reflect current market valuations.

Research in Motion-RIMM: Checks indicated continued steady sell-through@PIPR
Piper’s August checks indicated continued steady sell-through trends for BlackBerry products at the four largest U.S. carriers. The firm believes RIMM’s August quarter tracked to expectations and raised their November quarter estimates on ramping Bold sales and the anticipated launch of the Thunder. Piper maintains a Neutral rating on valuation.

Apple-AAPL: Incrementally more cautious on Q4@TWPT
Thomas Weisel is incrementally more cautious on AAPL’s FQ4 following checks that indicate slowing retail sales growth, gross margin headwinds from back-to-school promotions, and slowing iPhone unit sales over the past two weeks. The firm slightly lowered its above-Street Q4 EPS estimate but maintain their above-Street FY09 EPS estimate. Shares are Overweight rated.

(Important note on how to use this upgrade/downgrade list with analyst comments and news….you must parse out the factual data (Factual data is the most important) from the opinionated data and always take all analyst comments with a grain of salt. Do not follow blindly with their recommendations. Remember that technicals are the most powerful force in short term direction for stock prices due to the law of supply and demand.)

Fast Money Position Recap- First Moves: Joe likes long EXM, Zach likes long GLD, Karen likes long GLNG, Pete thinks WFC is a buy. Karabell Owns (AAPL), (BHP), (CHL), (GLD), (GOOG), (JPM), (NOK), (SLB); Najarian Owns (LEH) Puts Spread; Najarian Owns (RIMM) Call Spread; Najarian Owns (WFC) Call Spread
Najarian Owns (MS) And Is Short (MS) Call; Najarian Owns (NOK) And Is Short (NOK) Call; Finerman Owns (GS); Finerman’s Firm Owns (MSFT), (NOK), (SUN), (TSO), (VLO); Finerman’s Firm And Finerman Own (C) Leaps; Finerman’s Firm And Finerman Own (GLNG); Finerman’s Firm Is Short (IYR), (IWM), (MDY), (SPY), (IJR), (BBT), (COF); Terranova Owns (NOV), (KOL), (X), (GS), (SA), (VLO), (RIMM), (AAPL), (EOG); Terranova Owns (POT); Terranova Owns (FCX)
Terranova Owns (AIG) Puts; Terranova Is Long Dec. 2008 Reformulated Gasoline Crack Futures.

Start of a new week and month. Financials are hot, energy related shares selling off, Ag’s selling off, airliners moving up on the drop in oil. The dollar is breaking out from its recent resistance so expect the unwinding to continue and possibly more strength in the dollar. Energy is going to be under pressure with the dollar strengthening. Oil prices are in a lose-lose situation and with bears piling in on that trade it looks to stay low. If there is an oil disruption due to a hurricane, the US gov’t will release oil from the SPR that should put a cap on oil prices going forward during the rest of hurricane season. Pick plays with a high probabiliy of success, have focus and patience, run technicals through supply and demand. Great luck and Happytrading!

Think Fractally, nature and the markets are both run on formulas: