Wednesday, November 30, 2005

Not A Pretty Close

The market tried to recover around mid-day, but could not find its sea legs. The SPX trailed off in the last 2 hours and pretty much closed at its lows for the day. Volume rose again, marking another distribution day. Breadth was more benign, and was actually positive on the Nasdaq, which closed flat on the day.

I think this is part of the near-term weakness I mentioned earlier. I do expect it to run its course eventually. If you needed to lighten up, you had a chance during the first hour pop.

There were some very strong retail sales reports after the close (CTRN, ZUMZ, ARO). If that is an indication of tomorrow morning's reports, then retail stocks should have a good day. And don't forget that October payrolls comes out Friday morning.

Have a great night--

Morning Look

Morning News of Note:
  • INTC TIVO: Intel to Partner With TiVo on PC Platform Looking to boost the number of computers whirring away in living rooms, Intel Corp. on Wednesday unveiled its first list of companies whose products are expected to work with the chip maker's upcoming Viiv entertainment PC platform. So far, about 40 companies that develop TV, movie, music, gaming and photo-editing products are testing and verifying services, programs and gadgets that will interact with the Intel technology, said Kevin Corbett, an Intel vice president in charge of content services (Full Story) Washington Post
  • TWX: Icahn Finds Ally in Bid to Change Time Warner Carl C. Icahn has a new, perhaps unlikely ally: Bruce Wasserstein. Mr. Icahn, who is leading a group of dissident investors in a campaign against Time Warner and its board, said yesterday that he had hired Mr. Wasserstein and his firm, Lazard, to help advance the fight. (Full Story) NY Times
  • MOT NOK SNE: Cellphones Move From Stylish to Smart CELLPHONE MAKERS LOVE MAKING FASHION STATEMENTS. Just ask Motorola, which sold 12 million of its sleek, stylish RAZR phones in less than a year, for as much as $499. Even after it hit the mass market in the third quarter and prices fell under $200, the RAZR helped Motorola's profit triple in the quarter from a year earlier on a 26% rise in sales. (Full Story) BARRONS
  • Eye Drops: The Food and Drug Administration warned consumers to dispose of eye drops and certain pain drugs made by Molecular Biologics Inc., a private California company. The FDA said the firm hasn't adhered to proper manufacturing regulations and that some of the company's pain medications lacked instructions for safe use. The agency said consumers should dispose of Oxydrops, Bright Eyes, Bright Eyes II, Clarity Vision for Life, Visitein and Can-C brands of eye drops and the Biogesic, Bio-Ice and Bio-Heat pain-relieving drugs. The FDA said the products are distributed nationwide.
  • Mad Money Summary: Cramer believes money can be made off of California Republican Randy Cunningham's acceptance of $2.4M in bribes. Cramer said that the private defense contractor MZM has been indicted in the bribery scandal and that Congress may cancel some contracts. Cramer sees this as a positive for CACI International (CAI) and that the stock would be worth owning if there was a windfall for MZM. Cramer is also bullish on Becton Dickinson (BDX) as people are getting fatter, which is a positive for the company as hospitals will have to buy longer needles so they are able to reach muscle. Responding to a question, Cramer said that he would sell shares of Boston Scientific (BSX) and that Spectranetics was not one of the best to go along with Becton Dickinson. Cramer said that Harrah's Entertainments (HET) plan to build a casino in Slovenia made the country investable. Cramer said that "Slovenia is now officially a place that will make you money. You want to make out like a bandit? You buy Central European Media (CETV)." Crown Castles (CCI) CEO John Kelly joined Cramer last night by telephone and Cramer is hoping that shares will pullback so he can buy some.

Market Comments: The market is bouncing around after the open, briefly dipping into the red and then bouncing back. GDP growth came in stronger than expected (+4.3% vs. +4.0% consensus) . Stronger growth? Sounds great, right? Not so fast. First of all, if we want to get the Fed to stop raising rates, we need to see weaker numbers, not stronger. Second, this report is for Q3, so it ended in September. I suspect that the Q405 and Q106 reports will not be as strong.

Yesterday was a pretty big reversal day, on rising volume. That usually means that the market has a little more correcting to do. Today is month-end, so a bounce would not be surprising. The real test is how the market behaves during the first week or so of December. I have raised some cash in anticipation of more of a pullback, and will look to redeploy that money into any upcoming weakness.

long INTC, TWX

Tuesday, November 29, 2005

Bouncing at the open

Morning News of Note:
  • Housing: Cracks in the Foundation The question is no longer whether housing is slowing, but how severe the slowdown is going to be. Virtually every major report on the U.S. housing market that has come out in the past month, including yesterday's tally of October existing-home sales from the National Association of Realtors, has come in below economists' expectations. (Full Story) WSJ
  • FDC: Heard on the Street... First Data Changes CEOs -- Will It Be Enough? Western Union sends billions of dollars around the world each year, but investors in its corporate parent, First Data Corp., haven't been seeing much wealth transferred to their own wallets lately. Yesterday, however, after months of frustration with the company's stock price, First Data shareholders got a boost. (Full Story) WSJ
  • LVS: Las Vegas Sands Seeks $2.5 Bln Loan for China Casino Las Vegas Sands Corp., owner of the Venetian casino in Las Vegas, is seeking $2.5 billion of loans to expand in the Chinese city of Macau, which may become the world's largest gambling center by revenue this year. The financing, the largest for the region's gaming industry, will help pay for a Venetian hotel, casino resort and other projects in the Cotai Strip in Macau, the company said in a statement on PRNewswire today. The financing is scheduled to be completed in the first quarter of next year. (Full Story) Bloomberg
  • FPDs: AUO est global demand for LCDs may double next yr to 40m-44m units; EVP Hsiung Hui said holiday sales in US indicate prev projections have been too conservative
  • Mad Money Summary: Cramer was positive on shares of Websense (WBSN) last night on his show. He said that several analysts had downgraded the stock due to valuation but he is not concerned. Cramer said that Websense has had 26 quarters of sequential revenue growth and he would buy the stock and sell Symantec (SYMC). Cramer was also bullish on South Korea and sees Shinhan Financial Group (SHG) and FormFactor (FORM) as the best ways to play it. Responding to a question, Cramer said that Mitsubishi UFJ Financial Group (MTU) and Toyota Motor (TM) are other investments plays in Asia. Cramer said that he would buy shares of OraSure Technologies (OSUR), before "the buzz" starts. He said that shares of the company should have been up yesterday due to a positive article in the New York Times on Sunday, if it were not for the article being in the Style section. Airgas's (ARG) CEO Peter McCausland joined Cramer via telephone last night to talk about the company's buyback and outlook. Cramer ended the interview by saying "I don't want to trade it...I want to own it" and says that shares are inexpensive

Market Comments: The market is nicely higher at the open, after the durable goods report came out much stronger than expected (+3.4% vs. +1.5% consensus). Nearly all sectors are trading higher, though several retailers are not participating in the early strength.

Speaking of early strength, you know I always worry that too much early strength that fades later in the day is a sign of a weak market. So it will be interesting to see how the market closes today.

long FDC

Quote of the Day

"A good way to judge people is by observing how they treat those who can do them absolutely no good." - Anonymous

Monday, November 28, 2005

Start of a new decline?

The market finished near its lows today, on slightly higher volume. Even if you adjust Friday's holiday volume levels, today still looks like a distribution day. But that doesn't mean the current uptrend is over. I think that the market needs a breather. And even if the market holds up this week due to month-end, it could experience more of a correction in early December.

But strong stocks could continue to do well, even if the major indexes languish. Today you can look at OXPS, SNDK, AAPL, and HANS as examples of strong, standout stocks. I would look at recent leading stocks to watch how they consolidate, and also look for new potential breakouts. It's still early to call, but a near-term correction could set the market up for another push higher into year-end-- a true Santa Claus rally.

Have a great night-

Mid-day Movers

Here is a partial list of stocks moving on above-average volume:
  • High-volume advancers: CMED, OXPS, NWRE, CPSI, NETL, CUTR, HANS, LMS, SNDK, CTHR

  • High-volume decliners: APPX, ALXN, SNDA, DRIV, VTIV, GHL, NDAQ, OVTI, JEF, SVC

Market Comments: The market has been under pressure all day. Energy stocks are leading the decline, followed by housing stocks and brokers. Oil is down below $57, which is pressuring oil & gas stocks. Other interest-rate sensitive financials are bucking the weakness as bond yeilds have falled below 4.40%.

The market was way overbought, so some consolidation is not suprising. I have raised a little cash, and will look for opportunities to add on pullbacks.

Monday Morning Malaise

Morning News of Note:
  • GOOG: Google-GOOG to enter phone link advertising market-FT: Google (GOOG) is entering a new market which has already drawn Ebay's Skype (EBAY), Time Warner's AOL (TWX) and Yahoo (YHOO). The market is search advertising for small businesses which relies on the "telephone to connect advertisers with potential customers." Google's service will be called "Click to Call," and is only in trials. Research firm Kelsey Group says the market of linking web users to advertisers through voice calling could be a $1.4B to $4B market by 2009.
  • WMT: Wal-Mart Stores-WMT sees November comps up approximately 4.3%
  • SNDK: Stars Misalign for SanDisk I NEVER SUSPECTED that SanDisk shares were at their year's peak of 65 bucks when I reviewed some of the downside risks facing the maker of flash- memory chips ("A Threat to SanDisk," Nov. 7). Rival memory technologies and additions to industry manufacturing capacity were two worries for the Sunnyvale, Calif., firm (ticker: SNDK). (Full Story) BARRONS
  • Short Interest: Nasdaq rptd Nov short interest dn (0.5%) m/m to 5,913,634,842, SIR 3.23 vs 3.31 in Oct -- WSJ (Friday)

Market Comments: The market is trading lower this morning. Retailers are down in early trading, likely on profit taking and the fact that early reports on Black Friday were less robust than some had hoped for. Existing home sales also came out weaker-than-expected this morning.

But a selloff should not come as a suprise, given the unrelenting strength we have seen in the market this month. Profit taking is normal, and healthy, as long as the current uptrend remains intact. FDC is up on news that the CEO is leaving, which could spur the company to spin out its Western Union division. EMR also raised guidance this morning on strong order trends.

long EMR, FDC, WMT

Quote of the Day

"It is the mark of a truly intelligent person to be moved by statistics." - George Bernard Shaw

Friday, November 25, 2005

Slow moving Friday

Morning News of Note:
  • MSFT: Microsoft loses money on each Xbox The cost of building a Microsoft Xbox 360 video game console is nearly 40 percent higher than the retail price, technology and microchip research company iSuppli said on Wednesday. The firm estimated the total cost to manufacture and test a premium Xbox 360, the software giant's sleek and powerful new gaming machine, which debuted on Tuesday, was $552.27, compared with its retail price of $399. (Full Story) CNET
  • Canadian Stocks: reports that Canadian stocks rose to the highest in five years, led by dividend-paying companies such as Toronto- Dominion Bank and BCE Inc., after the government lowered taxes on the payouts and decided against taxing income trusts. Banks, telephone companies and utilities, which have some of the biggest dividend yields among the Standard & Poor's TSX/Composite Index's 10 industry groups, led the advance. Canadian Finance Minister Ralph Goodale said yesterday that he would raise the dividend-tax credit to 19 percent from 13 percent. He also said he had no plans to tax income trusts, which some investors had feared.
  • TASR: Taser Int'l-TASR gets notice from the NASDAQ due to late filing of its Form 10-Q The notice says that Taser's stock is subject to delisting. Taser plans to appeal the request through a hearing in front of the NASDAQ's staff.
  • Mad Money Summary: Jim Cramer was positive on shares of Best Buy (BBY) Wednesday night on his show. Cramer said that "it's going to be a Best Buy Christmas" and that kids and adults are after electronics this year. Cramer said that he would look out for competition from Wal-Mart (WMT) but would do a "'mon back" if shares of Best Buy are weak after the company's earnings. Cramer sees the weakness in shares of GameStop (GME) as a buying opportunity and that once supply of the XBox 360 and its games catches up with demand, gamers are going to be buying. Cramer is also positive on shares of ITT Educational Services (ESI) as Congress may repeal a rule that requires for-profit colleges to teach 50% of their classes in buildings. Cramer likes the shares as they do not have as much risk as its peers Apollo Group (APOL), Corinthian Colleges (COCO) and Career Education (CECO). Herb Greenberg appeared on Cramer’s show and was negative on shares of J2 Global Communications (JCOM) and Bankrate (RATE). Cramer said that shares of Krispy Kreme Doughnuts (KKD) deserve to be in a "sell block" as the company has more problems than they know what to do with.

Market Comments: Not a lot of action on this post-holiday session. Most people are probably still recovering from their turkey-induced comas. Except for those people on that Wal-Mart video that were trampling each other at 5am. What were those people thinking?!? Maybe they should think about shopping online.

The oil market is closed today, while bond yields are down slightly to 4.44%. The market is roughly flat. Chip stocks are up, and BBY is the standout retailer so far today. Look for Canadian royalty trusts to trade higher on the positive news that they wont' be subject to higher taxes. Nice.

long MSFT, WMT

Quote of the Day

"I have a sixth sense, but not the other five. If I wasn't making money, they'd put me away." - Red Skelton

Wednesday, November 23, 2005

Pre-Turkey Day

Morning News of Note:
  • RIMM: Research In Motion Cuts Subscriber Forecast on Delays Research In Motion Ltd., maker of the BlackBerry e-mail pager, cut its forecast for signing up new clients because of delays in introducing products. New subscriber additions will be 8 percent lower than a previous range of 680,000 to 710,000 in the third quarter, which ends Nov. 26. (Full Story) Bloomberg
  • GOOG: Common Sense... Despite Its Long-Term Potential, Now Isn't the Time to Buy Google It hardly seems possible that less than a month ago I reissued my "buy" recommendation on Google, and said I'd revisit the issue when the stock hit $400. I figured that would give me plenty of time for further analysis as well as more information from additional Google earnings reports. Yet just last week Google's shares broke through the $400 barrier with none of the resistance that was evident at $300. (Full Story) WSJ
  • APOL: On Capitol Hill, For-Profit Schools Raise New Debates For-profit career colleges could soon earn some extra credit: favorable federal legislation valued at billions of dollars. The reauthorization of the Higher Education Act, now before Congress, could create a windfall for the $18 billion for-profit education industry by making it easier for schools to tap into federal financial aid programs. (Full Story) WSJ
  • Energy: IEA President Mandil said oil mkts may fall in 2006 on weaker global demand; sees no real reasons for price rise // SLB ancnd co liquidates 8.5m shr stake in HC
  • US Economy: Fed Gov Jeffrey Lacker sid Fed not done raising rates nor ready to signal end to increases (Tuesday) // Fed Gov Bernanke sees economic growth risks from energy and housing; Fed has limited price impact on inflation; GSE portfolio cap would reduce systemic risk (Tuesday)
  • Mad Money Summary: Cramer was positive on shares of Cadbury Schweppes (CSG) as he believes that the sale of its European Beverage business is a positive and that candy is growing faster than soft drinks. He says that Cadbury's valuation has been held down due to its beverage and shares are trading at only 16 times earnings versus its peers Hershey (HSY) and Wrigley (WWY), which trade at 23 and 28 times earnings respectively. Cramer does not believe that PepsiCo (PEP) will buy Cadbury's beverage business. Cramer said that he would not be surprised if an analyst downgraded shares of Coldwater Creek (CWTR) today and if they did, he would buy shares. Cramer said that his favorite women's apparel retailers are Coldwater Creek, Chico's FAS (CHS) and Talbot’s (TLB). Cramer said that he would not jump into shares of Calpine (CPN) or Charter Communications (CHTR) as they are "drowning in debt." Cramer believes that Calpine will eventually declare bankruptcy and that Charter is also a candidate. Cramer said that if investors want to play small-dollar stocks, he would recommend JDS Uniphase (JDSU) and Conexant (CNXT) as they are in good sectors and not on the road to bankruptcy. Pacific Sunwear's (PSUN) CEO Seth Johnson was on Cramer's show via telephone, Cramer said he is bullish on retail and gives Pacific Sunwear "one thumb up."

Market Comments: The market logged another solid day yesterday, on rising volume. A late day boost came after the release of the FOMC minutes, that hinted that the pace of rate hikes could slow.

Tech and financials are strongest this morning. The brokerage stocks have really been on a tear recently. Bond yields are hovering around 4.44%. And how 'bout the GOOGster? I wonder if that stock can reach $500 by year-end? Nuttier things have happened.

long CHS, GOOG

Quote of the Day

" Work along does not suffice-- the effort must be intelligent." - Charles B. Rogers

Tuesday, November 22, 2005

Fed mintues spark rally

The FOMC meeting minutes came out, and were certainly less hawkish than they have been. This got things going in the stock market, and pushed the indexes to break out again into new high territory. Bonds also rallied, pushing yields on the 10-year down to 4.43%.

The Fed said that it would need to be increasingly sensitive to incoming economic data. Some members cautioned about the risks of going too far with the tightening process (as the Fed usually does).

The problem is that the Fed doesn't really know where "neutral" is. That is why they often overshoot. I suspect that by the time they get to 4.25%, housing will have slowed, inflation will have peaked, and they should start to get a sense that the best course of action would be to pause.

Climbing the Wall of Worry

Morning News of Note:
  • Short Interest: Short Interest Hits a Record As Stocks Rise Bears Betting on Brief Rally Push Short-Selling Up 1.8% Despite Increase in Market Stocks have been rallying, but the professional bears remain unconvinced: Short interest hit a record on the New York Stock Exchange in the latest measuring period. For the month ended Nov. 15, the number of short-selling positions not yet closed out at the Big Board, including all issues, rose 1.8% to 8,805,471,445 from 8,646,881,921 in mid-October. (Full Story) WSJ
  • TWX: AOL Hopes to Steer Message-System Fans To Its Web-Site Ads Time Warner Inc.'s America Online unit has struggled for years to figure out how to make money from its most popular feature: instant messaging. AOL pioneered the "buddy list" and its accompanying pop-up messages from correspondents, and the service is wildly popular among both teens and office workers. But AOL has long provided the service free, and it has had trouble selling ads on the tiny buddy-list screen. (Full Story) WSJ
  • GOOG: Google's Shopping Service to List User's Local Stores Google executives said last night that the company planned to move quickly to capitalize on its new Google Base database service, adding a feature that lets merchants provide local shopping information. Many publishers had become concerned about the potential of Google Base, which could allow the company to dominate the classified advertising business. (Full Story) NY Times
  • S APCS: Sprint to Acquire Affiliate Alamosa For $3.4 Billion Sprint Nextel Corp. agreed to acquire an affiliate carrier, Alamosa Holdings Inc., for about $3.4 billion in cash and will assume $900 million in debt to sell services to more customers directly and to end a lawsuit. Sprint said it will pay $18.75 for each of Alamosa's shares outstanding. That represents a 15% premium over Alamosa's closing price of $16.26 on the Nasdaq Stock Market on Friday. (Full Story) WSJ
  • MSFT SNE AAPL: Microsoft's Xbox Reflects New Focus on Hardware Software Giant Broadens Business Model as It Seeks Ways to Take On Apple, Sony Today's launch of Microsoft Corp.'s Xbox 360 videogame console underscores the growing strategic importance to the software giant of getting easy-to-use hardware into the hands of consumers. Inspired by Apple Computer Inc.'s iPod music player and its own experience with the Xbox, Microsoft has waded deeper into the tricky business of hardware manufacturing as it struggles to compete in the increasingly important home-entertainment market with Apple, Google Inc., Sony Corp. and others. (Full Story) WSJ
  • Mad Money Summary: Jim Cramer wants investors to buy shares of UPS for a trade ahead of the Holiday season. He believes that the company will be the biggest beneficiary from the growth of online shopping. Cramer also likes FDX, but is giving a slight edge to UPS. Cramer favors the trucking companies YELL, SWFT and WERN but they do not have the upside that UPS does for the Holiday season. Cramer was positive on shares of MTXX and says that it is his favorite play for the cold and flu season. He also believes that MTXX's Zicam will gain market share this cold and flu season. Cramer said that there are risks to buying shares of MTXX, such as the 40 or so pending lawsuits against the company but Cramer said he would buy some now and more on weakness in the shares. Cramer said that USNA was "not a high quality stock" and he would sell shares. Cramer likes shares of GB as well and believes that prices are going down for medical devices, which means more sales. ECO's CEO Daniel Jones joined Cramer on his show by telephone, Cramer said that shares are too high for him to buy, but he would do so on a pullback. Cramer said that it was time to "ring the register" on shares of ATYT as the shares were a play on the Xbox 360 launch. Cramer said that he would also take some money off the table in shares of MU as the joint venture deal with INTC was anticipated

Market Comments: The market is down slightly this morning, after another strong close yesterday. Volume was fairly light, but the market was able to close at new highs again, and the Dow joined that list also.

Energy stocks are up again this morning on a slight uptick in oil prices. Bond yields are still down at 4.46%. And semi stocks are in the green so far also.

The NYSE reported that short interest is at record highs, indicating that many bears are pressing their bets. If the market can continue to climb its wall of worry, it could spark some additional waves of short covering. Many short-only funds have very good years going, and I doubt they want to see their gains erode.

Two of my recent picks are SIRF and MCRS. Both of these have breakout potential, and strong fundamentals to boot.


Quote of the Day

"It takes a clever man to turn cynic, and a wise man to be clever enough not to." - Fannie Hurst

Monday, November 21, 2005

'Deferred Success'

A blurb in IBD today said that 'deferred success' is the new preferred synonym for 'failure'. The Professional Association of Teachers had proposed using it to make students feel better about their "deferred successes".

Hmm...maybe instead of showing client's any losses in their portfolios, I should instead just refer to them as 'deferred profits'?

Active Stocks

Here is a partial list of stocks moving on above-average volume:
  • High-volume advancers: CMED, HLEX, OXPS, STMP, MTD, JLG, UFPI, ASVI, PTC, CLDN

  • High-volume decliners: CSC, SNDK, MNT, SFCC, FLSH, GSK, POT, PDX, FMC, BN

Market Comments: The market is hanging in nicely, with the SPX holding the 1250 level. Energy stocks are still strong, followed by financials and housing stocks. UBS just raised their price target on GOOG from $430 to $500. EBAY is also up nicely. Where is the so-called options expiration hangover?

Turkey Week Begins

Morning News of Note:
  • GM: GM Weighs Closing Three Plants Under Plan to Reduce Capacity General Motors Corp. could close at least three North American assembly plants and additional support facilities such as metal-stamping plants when it announces a plan to cut excess capacity in its home market, people who have studied the company's operations say. GM Chairman and Chief Executive Rick Wagoner has promised to unveil a plan before year's end to bring GM's capacity in line with North American sales by 2008, and an announcement could come as early as today. (Full Story) WSJ
  • TIVO AAPL: TiVo Plans to Allow Unlimited TV-Show Downloads to iPods Since Apple introduced a new iPod that plays video last month, users of the device have been able to buy episodes from only five television series produced by just one media company, Walt Disney Co. Soon, virtually any show that airs on TV will be available for watching on an iPod, courtesy of TiVo Inc. (Full Story) WSJ
  • Skype RSH: Skype to make U.S. retail debut Net telephone service Skype Technologies is set to make its first appearance in a U.S. retail store. The Luxembourg-based Net telephony company, founded by the people behind the Kazaa peer-to-peer service, is expected to announce on Monday that it has struck a partnership with consumer electronics chain RadioShack. (Full Story) CNET
  • WMT: Wal-Mart Stores-WMT sees November SSS up 3%-5%
  • Mad Money Summary: Jim Cramer was positive on shares of RADS on his show Friday night, saying the stock is being held down by investors. Cramer said that the investors holding down the shares just "don't understand where it fits in the scheme of things" and that RADS is a play on increased productivity. Cramer was also bullish on HLEX and prefers the company over CMX and MHS. He believes that HLEX is "in the sweet spot" to be acquired and that shares are headed to $30. SBUX's CEO Howard Schultz joined Cramer by satellite, Cramer said that he wished he owned shares as SBUX is a "'mon back" and the ultimate play for China. LEND's CEO James Konrath also joined Cramer on his show via telephone, Cramer believes the company has an excellent track record and is giving the stock a "'mon back."

Market Comments: The market is fairly flat to slightly down in early trading. Bond yields are lower also (4.48%). GM announced 30,000 job cuts-- not pretty for Detroit. How would you like to be a homebuilder there?

Energy stocks are bucking the trend so far (trading higher), followed by a few select retailers. Semis are under the most pressure, led by SNDK.

Thanksgiving week is often a positive one for the market, but the strength last week might have taken some of the thunder out of a potential rally this week. We shall see. The fact that the SPX closed at a new yearly high on Friday does bode well for further strength, it's just a question of if the market needs to pause first.

long WMT

Quote of the Day

"The brilliant moves we occasionally make would not have been possible without the prior dumb ones." - Stanley Goldstein

Friday, November 18, 2005

Today's Movers

Here is a partial list of stocks moving on above-average volume:
  • High-volume advancers: MRVL, BRG, MSCC, CMED, ANST, BRC, NNDS, BLK, MIDD, QSII

  • High-volume decliners: OEH, PDCO, ADSK, FORD, CCRT, SFCC, HCC, JLG, MORN, CUTR

Market Comments: The market hit new highs early on, but has given back most of those gains. Chips stocks are still strong (can you believe MRVL?!?), followed by biotechs. Everything else is pretty much a mixed bag, although the GE news is helping that stock push higher and pull the Dow Jones Index along with it.

long GE, and crying that I sold MRVL

New high for the market

Morning News of Note:
  • CSCO SFA: Cisco Agrees to Buy Scientific-Atlanta for $6.9 Billion in Cash Cisco Systems Inc. agreed to buy Scientific-Atlanta Inc. for $6.9 billion, adding the second-largest U.S. maker of set-top boxes for cable television and tapping into the growing market for Internet TV. Cisco, based in San Jose, California, will pay $43 a share, the companies said today in a Business Wire statement. The offer is 3.7 percent higher than Lawrenceville, Georgia-based Scientific- Atlanta's closing price yesterday. (Full Story) Bloomberg
  • LIZ JILL: Liz Claiborne Seeks to Add J. Jill To Growing Closet Capping a two-year pursuit, apparel giant Liz Claiborne Inc. last night made a play for women's clothing retailer J. Jill Group Inc., offering $18 per share for the company, or a total of $366 million. That represents a 41% premium to J. Jill's shares at yesterday's trading close, and is 8% below the company's trading high over the last year. In an informal proposal, or "bear hug" letter, Claiborne Chief Executive Paul R. Charron extolled a combination of the two firms, arguing that Claiborne could help J. Jill "rejuvenate" its brand targeted to women older than 35. New York-based Claiborne has been a serial acquirer of small fashion labels in recent years and now sports a market capitalization of $3.8 billion on $4.85 billion of sales over the last twelve months. (Full Story) WSJ
  • AT: Alltel to Acquire Midwest Wireless For $1.08 Billion Alltel Corp. is expected to announce today that it is purchasing rural cellular operator Midwest Wireless for $1.08 billion, according to a person familiar with the deal. The transaction would be the latest in a series of small cellular carriers being snapped up by larger wireless operators. For example, Sprint Nextel Corp. has acquired several of affiliates in the past few months and is expected to buy more (Full Story) WSJ
  • TWX: Carl Icahn pressing Time Warner-TWX for an "overhaul"-Business Week: The article is from an interview by Business Week with Carl Icahn on November 14th. Icahn believes that TWX should break up the company and spin off its cable division to shareholders. He said that they are forming a "slate of proposed directors" to replace some members that are currently on TWX's board. Icahn believes that shares of TWX are worth $27 a share, based on the breakup value of the company.
  • Mad Money Summary: Jim Cramer said that he continues to be bullish on shares of WMT last night. Cramer says that WMT is currently fighting a bill in Maryland that would require the company to spend 8% of its payroll on health benefits; WMT has hired the wife of a state senator who previously voted for the bill the first time around. Cramer says that whether WMT wins this case or not, he would buy shares as shares have "a lot more upside to it." Cramer was also bullish on shares of ALVR last night as a play on WiMax growth. Cramer believes that shares are cheap at $7.67 and have bottomed. Herb Greenberg joined Cramer last night to talk about CPST, TEX, MVL and LF. Greenberg said that he has called WMT and they do not know what Cramer was talking concerning CPST's micro turbine product being used at one of WMT's stores. Greenberg said that CPST supplies UTX, which "ended up selling that (micro turbine) to WMT." Greenberg was negative on TEX as he is still waiting for the company to restate its financials, does not see now as a good time to get back into shares of MVL and still does not like LF's FLY Pen. Commenting on a Wall Street Journal article, Cramer said "there's money to be made in heavily shorted stocks, but only the good ones." Cramer sees shares of LEND going lower as he does not like the companys loan business. He does not like shares of OVTI as he believes estimates are too high. Cramer sees RRGB & MSO's valuations as an issue and that CPN will "keep going lower and lower." He believes that shorts expect WGO to cut its numbers and that he would be short BZH and other homebuilders. Cramer did say that the shorts could be wrong in shares of EXP and he would do a "'mon back."

Market Comments: The market spiked to new yearly highs this morning. That type of strength is hard to sustain, especially on a Friday. Often the first time a market spikes to a new high, it then trails off as profit taking sets in and shorts press their bets to defend their levels. I suspect that is what is going on right now around SPX 1250. If and when this level gets pierced convincingly, I think that it will spark additional short covering.

Lots of mergers this morning (see above), which is always a plus. Also, strong earnings from SBUX and MRVL. The latter has chips stocks trading higher this morning. I will try to be back later with some stock picks for the week that look to be breaking out.

long TWX

Quote of the Day

"A moment's insight is sometimes worth a life's experience." - Oliver Wendell Holmes

Thursday, November 17, 2005

Surprising strength

I am pleasantly surprised by today's market strength. I thought the market would likely pause a bit more, and possibly sell off a bit further as this is an options expiration week. But the market has rallied all day, and is gaining strength into the close.

Volume looks like it should come in a little higher than yesterday, which would qualify as an accumulation day. Housing stocks are doing well today, despite the negative housing data that came out. Brokerage stocks are also doing great. Energy stocks are lagging a bit, as oil is down again today ($56.35).

The yield on the 10-year has fallen to 4.46%, and the combination of lower yields and lower energy prices is proving to be a mouth-watering combo for the equity markets. The SPX and COMP are thisclose to making new yearly highs. I expect them to reach new highs imminently, which should serve as a nice backdrop for stocks to continue higher.

I'll be on the SBUX conf. call after the close. Have a great night--

Morning Look

Morning News of Note:
  • Year End Strategy: Heard on the Street... Now Showing, Again: 'Get Shorty' Year-End Tactic Involves Buying Shorted Stocks, Squeezing Holders, Thus Spurring Even More Gains IT MAY BE TIME for another installment of "Get Shorty" on Wall Street. As the market enters the year's final weeks, some traders are focused on a short-term strategy: snapping up shares of companies that are big targets of short-sellers. At first glance, the strategy may not make such sense. Short sellers bet against stocks by borrowing shares and selling them. (Full Story) WSJ
  • EBAY: Getting an Oil Change Off eBay Auction Site's Push Into Auto Services Is Early Step In Battle for Local Listings EBay is aiming to take over the phone book's customary role as the first place people turn to find local services from housecleaners to accountants. While eBay Inc.'s focus for now is on auto services like oil changes and brake jobs, its goal may be to connect consumers with local businesses of all kinds. (Full Story) WSJ
  • AAPL: reports Apple is planning to release its first entry-level iBook laptops with Intel processors next January at Macworld Expo in San Francisco.
  • GILD: Gilead Sciences-GILD Tamiflu royalties should average 20-22%-Outperform@TWPT The firm's analysis points to an $11.5B opportunity for the drug. TWPT has raised GILD's estimates on higher royalty assumptions.
  • MDT: Medtronic-MDT shares will be weak today on slowing ICD market growth-SP@CIBC The firm thinks many investors got in the stock before the quarter in anticipation for an upside.

Market Comments: The market is trading higher in early trading. Of course, I don't like it when markets rally too early in the day, as too often it results in late day weakness. MDT reported okay earnings last night, but not good enough to top lofty expectations. SBUX reports after the close. I tend to think the stock will get a similar reaction.

Retailers and energy are bouncing for a second day, while chip stocks are under pressure. Utilities are also getting a boost from the big drop in bond yields yesterday.

I took profits on my recent GILD and GOOG positions, just to lock in some nice short-term gains. I expect to get back into both stocks at some point in the future.

long MDT

Quote of the Day

"Unintelligent people always look for a scapegoat." - Ernest Bevin

Wednesday, November 16, 2005

Mild bounce

The market bounced back a little bit today, but volume eased a bit, so there wasn't too much conviction behind it. The big story of the day was the fact that bond yields turned decisively down, with the yield on the 10-year falling to 4.48%. I would have thought this would generate more excitement among stock investors, but such was not the case.

Energy stocks got a bit more of a bounce than most other sectors, and retails stocks did okay also. Financials, especially brokers, were the laggards today. Breadth was negative, and the Hi/Lo index is also negative for both the NYSE and Nazz. As such, leadership is becoming more narrow, meaning it is more of a stock by stock market. This means more work, but the rewards should be worth it.

Have a great night--

Mid-day Movers

I know it's past midday, but here is a list of stocks moving on above-average volume today:
  • High-volume advancers: TOO, GILD, SRLS, GMRK, AGN, USAK, CPSI, KWK, DNR, STFC

  • High volume decliners: BCSI, SFCC, DIGE, EEP, BPL, ADVS, AXP, RAVN, MORN, ASGRE

Market Comments: The market is still flat on the day. While this is better than a continuation of yesterday's decline, I would not be suprised to see more weakness this week. In that sense, today could just be a day of pause before the continuation of yesterday's decline. I am still bullish into year-end, I just think a pullback is in order to work off the overbought condition.

long GILD

Bond yields lower on CPI data

Morning News of Note:
  • GILD RHHBY: Roche, Gilead End Tamiflu Dispute Agreement Is Part of Effort To Build Up Stocks of Flu Drug Swiss drug maker Roche Holding AG said Wednesday that it has ended a dispute with U.S.-based Gilead Sciences Inc. over the manufacture of Tamiflu, in what they said was a joint effort to build up stocks of the drug in the face of a threatened flu pandemic. Roche will pay Gilead $62.5 million in retroactive royalty adjustments, and the two companies said they will establish a joint committee to oversee coordination of global manufacturing of Tamiflu, or oseltamivir, and a coordination panel for the commercialization of the drug for seasonal sales in the most important markets, including the U.S. (Full Story) WSJ
  • GOOG: Google Expands Search Options Google Inc. today plans to begin offering a service called Google Base that will accept a wide range of content from businesses and consumers that others will be able to search. The Base service aims to make it easy for people to distribute content, from recipes to job listings, whether or not they have their own Web sites. (Full Story) WSJ
  • MWD: Morgan Stanley to Fire Two Dozen Bankers, Person Says Morgan Stanley, the only major U.S. securities firm to report lower third-quarter earnings, will fire about two dozen senior investment bankers, said a person with direct knowledge of the plans. As many as 25 managing directors will be told this week they're no longer needed, said the person, who declined to be identified. (Full Story) Bloomberg
  • Online Advertising: Top Web Sites Build Up Ad Backlog, Raise Rates Prime Spots Are Sold Out Months Ahead as Marketers Shift Dollars From TV, Print As marketers shift dollars from TV and print media to the Internet, more Web sites are hanging "sold out" signs on their most coveted pages and dramatically raising ad rates. The front pages of Yahoo Inc., Time Warner Inc.'s AOL and Microsoft Corp.'s MSN are sold out on big display ads for months in advance, ad buyers say. Web sites offering car-buying tips are booked so far in advance -- up to 18 months in some cases -- that they are selling ads for next year in a process similar to the way network TV spots are sold. (Full Story) WSJ
  • Mad Money Summary: Cramer was positive on Latin America once again on his show and sees Chile as attractive. Cramer says that one way to invest in Chile would be through "The Chile Fund" but Cramer recommends buying that funds best stocks, ENI, VCO and SQM. He also sees CL as the best way to play Chile through an American company. Off of the GP buyout, Cramer believes that CCK and AIN could be the next takeover targets as their asbestos issues are behind them. Cramer said that USG, RPM and OI still have asbestos issues and are not likely to be the next GP. Cramer is also bullish on shares of CX as the current 55% tariff on Mexican cement will be suspended soon. Cramer was also negative on shares of BLDP and SLXP in his "Stump Cramer" segment.

Market Comments: The market is pretty much flat in early trading. Bond yields are down to 4.52% on the benign CPI data. Inflation hawks contend that the data understates inflation, but I would argue that the worst of the inflation spike is behind us, and the rate of change should moderate going forward.

Retailers are bouncing back just a little from yesterday, but mostly its a mixed bag in terms of a handful of stocks up and a handful that are down.

The market put in a downside reversal yesterday on higher volume. This is a negative event, and likely indicates that the market has more consolidating to do to work off its short-term overbought condition. I think the market takes a breather for a little. That could allow it to come on again next week in a traditional Thanksgiving rally.

long GILD

Quote of the Day

"Man is much more sensitive to the contempt of others than to self-contempt." - Friedrich Wilhelm Nietzche

Tuesday, November 15, 2005

Inflation going lower?

Morning News of Note:
  • JNJ GDT: J&J Lowers Guidant Takeover Price to $21.5 Billion Johnson & Johnson lowered its purchase price of its proposed acquisition of Guidant Corp. to about $21.5 billion, a decrease of about 15 percent. The new price represents $63.08 a share for Guidant stock, down from the $76 a share in cash and stock that J&J agreed to pay in December, J&J said in a statement distributed by PR News Wire. (Full Story) Bloomberg
  • SBC BLS: SBC Comm-SBC talk of merger with With VZ's acquisition of MCIP and SBC's acquisition of T nearing completion, talk is increasing that SBC will next acquire BLS, due to the companies joint ownership of Cingular. Blair Levin, an analyst with Legg Mason, recently predicted, "The announcement that SBC is acquiring BLS will come within 24 hours after they [SBC] close the deal with T." An SBC spokesman did not comment except to say, "As far as Cingular goes, the partnership is working really well... If you were to look at a merger between SBC and BLS, there would certainly be a pretty good amount of regulatory scrutiny there."
  • Natural Gas: Natural Gas: Big Worry This Winter Unexpectedly warm weather has bathed much of the United States in recent weeks, but fears persist that a classic energy shock may be unfolding as the nation heads into winter. This time, though, the coming squeeze is in natural gas rather than oil. (Full Story) NY Times
  • BA: Boeing to Build Bigger 747 to Challenge Airbus A380 Boeing Co., the world's second-largest commercial planemaker, committed to building a bigger and more efficient version of the 747 to challenge Airbus SAS's A380 in the market for planes seating more than 400 passengers. Boeing announced the decision after Japan's Nippon Cargo Airlines Co. ordered eight of the cargo versions and Luxembourg's Cargolux Airlines International SA firmed up a commitment for 10 planes. (Full Story) Bloomberg
  • Mad Money Summary: Cramer said that the Federal Reserve raising interest rates is a positive for the banks and purchase shares of WFC for his "ActionAlert Plus" charitable trust. Cramer also favors the health-care sector, his favorite is UNH. He believes there is a major tech rally ongoing in cell phones and electronic gadgets, his favorite in the sector is MOT. Cramer said that he would do a "'mon back" in shares of PG below $54 as a general consumer play. Cramer has switched to AMD from INTC as it is not always "buy Intel" anymore; AMD has been outperforming INTC and should continue to do so. Cramer also said that AMD, GOOG, NWS and RHAT will develop a $100 laptop computer. Cramer continues to be bullish on shares of CPST and said that WMT is using the company's micro turbines in one of their experimental stores in Colorado. ISRG's vice president, Aleks Cukic, joined Cramer by telephone last night on his show. He said that ISRG's business continues to be strong and Cramer still thinks that shares go higher saying that he is "still two thumbs up for ISRG."

Market Comments: The market is under a little pressure in early trading, but nothing major. Retailers are selling off on the reduced comps guidance from TGT. I am using the weakness in the group to add to a couple of names. Retail sales came in higher than expected (+0.9% vs. +0.3%, ex-autos). Healthcare stocks are mostly higher, as are many chip stocks and energy issues.

This mornings PPI report showed that prices rose +0.7%, but that core prices (ex-food & energy) actually fell -0.3%. Since it looks like energy prices have peaked short-term, I wonder what the next PPI and CPI readings will look like? If inflation readings start to trend lower, this would act as an additional boost for the market.

long JNJ, UNH, WFC

Quote of the Day

"The way to wealth is as plain as the way to market. It depends chiefly on two words: industry and frugality; that is, waste neither time nor money, but make the best use of both." - Benjamin Franklin

Monday, November 14, 2005

More Consolidation

Not a bad day. Investors keep watching to see if the market is going to give back some of its recent gains, but it hangs in again. Breadth was not great, and volume rose slightly on the NYSE, but overall the price action has to be construed as benign.

Some stocks continue to break out. Check out the breakout in CTHR, TRID, and QSII. Other stocks continue to extend their recent breakouts: HANS, ISRG, GOOG, MNST, ADP, and C. So there is lots of action away from the major indexes. Bears will complain that the leadership in the market is narrowing, but don't listen. Just focus on making money.

Have a great night--


Monday Morning News

Morning News of Note:
  • GP: Koch Agrees to Buy Georgia-Pacific for $13.2 Billion Koch Industries Inc. agreed to buy Georgia-Pacific Corp. for $13.2 billion, adding Dixie paper cups, cardboard boxes and lumber to fuel and chemical businesses to become the largest privately held company in the U.S. Koch will pay $48 for each Georgia-Pacific share, or 39 percent more than the stock's $34.65 closing price on Nov. 11, the companies said yesterday in a joint statement. The transaction would be the biggest ever for Wichita, Kansas-based Koch. (Full Story) Bloomberg
  • YHOO: Can Yahoo Sign On to Hollywood? The difference between Hollywood's glitzy sensibilities and the smarty-pants culture of Silicon Valley was distilled in a 20-word e-mail to workers in Yahoo Inc.'s Santa Monica office. Sent this year on behalf of a Yahoo executive recently recruited from Fox Broadcasting Co., the e-mail noted that "SOMEONE" had parked in his space. For some who received it, the all-capitals dispatch read like a scream: "PLEASE MOVE OR YOU WILL BE TOWED." (Full Story) LA Times
  • NOK: Nokia Strikes Back NOKIA IS THE WORLD'S leading seller of mobile phones, and operates in an industry that is still growing about 20% a year. It has the sixth most recognizable brand, keeping company with worldwide icons such as Coca-Cola and Microsoft. It enjoys the highest gross margins in the business, generates tons of cash and is virtually debt-free. So, how come the stock has gone nowhere for the past two years? (Full Story) BARRONS
  • US Economy: Fed Gov Fischer said Fed has further to go in raising rates; sees 4Q GDP 3-3.5%; said US should consider alternative to 30yr bond incl interest only bonds; speaking at conf in HK
  • WMT: sees November comps up 3%-5%

Market Comments: The market is fairly flat in early trading. Last week was another positive week, with Thursday's big LROD day. As such, I expect further upside this week, but Friday's options expiration could add some volatility. There are also some notable retailers reporting earnings this week. LOW reported strong earnings this morning, and the stock is up nicely.

long WMT

Friday, November 11, 2005

Morning News of Note:
  • DELL: Dell's Rollins Backs Away From Goal of $80 Bln in Sales by 2009 Dell Inc. Chief Executive Officer Kevin Rollins backed away from a goal of reaching $80 billion in sales within four years and said the company now has no time frame for reaching the target. ``We still believe the $80 billion target is achievable,'' Rollins said on a conference call yesterday after Round Rock, Texas-based Dell posted its slowest sales gains in more than three years. ``No timeline for you on that.'' (Full Story) Bloomberg
  • Energy: Energy's Correction May Be Temporary ENERGY STOCKS HAVE BEEN THE FATTED CALF in portfolios this year. Yet their selloff in October may create some buying opportunities. Oil prices have tumbled 17% from their peak during Hurricane Katrina, and energy stocks in the Standard & Poor's 500 index have followed suit. They've dropped roughly 10% from their mid-September high, seriously underperforming the broader index's flat returns, according to Thomson Financial/Baseline. (Full Story) BARRONS
  • COF: Wachovia-WB may buy COF-BusinessWeek: COF is the target of new takeover speculation; this time the acquirer is WB. WB is rumored to be interested in getting into the credit card business and the fastest way in is not to build the operation from scratch, but to buy the largest independent credit card provider. Analysts believe that the buyout price for COF would be in the $103 per share neighborhood.
  • PTEN: Patterson-UTI Energy-PTEN announces an internal investigation into former officer: The investigation is into whether $70M may have been embezzled by a former officer.
  • SYY: Sysco-SYY announces a 20M share buyback program
  • Fund flows: equity funds rptd net inflows $3.717bln, ex ETFs $2.108bln; domestic equity funds rptd inflows $1.061bln, first in eight weeks; ETF flows: EWJ inflows $552m, SPY inflows $409m, IYR inflows $292m, EEM inflows EFA inflows $204m, QQQQ outflows $738m, XLE outflows $201m; taxable bond funds rptd inflows $24m, HY bond funds rptd outflows ($138m); money mkt funds rptd inflows $14.207bln -- AMG Data

Market Comments: The market is fairly flat in early trading. DELL's earnings were a bit of a mixed bag, so they are neither helping nor hurting tech this morning. KSS reported a solid quarter, and the stock is moving higher. There have been a lot of stock buyback announcements lately as well. Energy stocks may be getting sold out in the short-term, and it would not surprise me to see a little bounce.

Financials are also starting to move, from banks to brokers to asset managers. I have started to add a little there. But my biggest weightings going into year-end are technology related, with a healthy dose of retail and select healthcare.

long KSS, SYY

Quote of the Day

"Every individual has a place to fill in the world, and is important in some respect, whether he chooses to be so or not." - Nathaniel Hawthorne

Thursday, November 10, 2005

Bears in the house of pain

Man, the bears must be feeling it today. They nearly had some momentum going when the market turned down after the first hour of trading. That took the SPX to a new low for the week (1215), but then the market found its footing and slowly started to climb.

When the SPX finally topped 1225 (last week's high), I think that a lot of stops went off, and the market quickly rallied past 1230. That's great action. The only think I still want to see is the SPX take out 1233, since that was the high from early October. That would leave a higher high in the charts, and bolster a rally to new highs.

The action today of a lower low and then a higher high versus yesterday qualifies as an LROD (large-range outside day). This is very positive technically, and it also came on higher volume vs. the previous trading session. As such, I remain bullish and heavily net long. I would trim stocks if they look too extended, but I would also look to buy any pullbacks.

Have a great night--

Morning Look

Morning News of Note:
  • YHOO TWX GOOG MSFT: Yahoo Quits Race For AOL Stake Talks With Time Warner Did Not Bear Fruit; Google, Microsoft Remain Yahoo Inc. says it has dropped out of the running to buy a stake in Time Warner Inc.'s America Online Web portal and content activities. Yahoo Chief Executive Terry Semel met with Time Warner chairman Richard Parsons in New York to discuss a possible deal in late October, according to people familiar with the matter. (Full Story) WSJ
  • Homebuilders: Home Builders Sweeten Incentives As Demand Slows, Developers Offer Free Heat, Golf Passes, Extra Help With Closing Costs As the housing market's red-hot sales pace shifts to a slow burn, some home builders and developers are beginning to offer buyers a richer array of incentives. Faced with rising inventories of unsold homes and reluctant buyers in many markets, a number of builders and developers are ratcheting up their promotional efforts (Full Story) WSJ
  • Hedge Funds: Hedge Funds Avoid SEC Registration Rule Some Big Firms Change Lockups, Stop Accepting New Investments To Take Advantage of Loopholes A large number of major hedge-fund firms won't be registering with the Securities and Exchange Commission despite new rules aimed at forcing most hedge-fund advisers to sign up by early next year. These firms have adopted measures to take advantage of a loophole provided by the agency -- potentially undercutting the SEC's efforts to uncover fraud and get a better understanding of the growing business. (Full Story) WSJ
  • Energy: IEA lowered 2006 global oil demand est by 140k bbl/day to 85.01m bbls/day; fourth consecutive month IEA loewred 2006 demand ests // CEO GM Chen Weijie said co sees global crude prices $60-$65 through winter and next spring // REP studying posisble €10bln acquisition of a specific US co; REP also looking at potential tgts in EU and Asia -- Bolsacinco

Market Comments: The market is under some pressure in the first hour of trading, even though bond yields are lower and so is oil. WFMI reported earnings that were a little light, and the stocks is being sold hard. Energy stocks are also selling off again, with many stocks now looking like their recent uptrends are in jeopardy. I am underweight this group.

TGT and URBN reported solid results this morning, but the stocks are both down. KSS reports after the close today.


Quote of the Day

"Improvement of one's economic position is helped more by cool persistence than by hot enthusiasm." - William Feather

Wednesday, November 09, 2005

Bombings hurt the rally

The market put in an early low today and began to trade higher. The SPX broke above its recent trading range, poking above the 1225 level. But before things could get cooking, news of the bombings in Jordan (no relation) put a damper on things.

Still, the market finished in positive territory, with okay breadth. Not bad considering bond yields were pushing higher. I still think it feels like the market wants to break out and run higher. And if the bears can't gain any traction soon, then I think the bulls are going to run free.

I also think that next week's options expiration could put some upward pressure on the market, but that's a discussion for another post.

Have a great night--

Is the market ready for another push higher?

Morning News of Note:
  • MSFT: Microsoft Revamp For Online Push Gains Urgency Microsoft Corp. Chairman Bill Gates has endorsed a radical reshaping of how his company develops software and services, citing an internal memo that says much about the challenges Microsoft faces, and underscores the rise of an emerging technical leader at the company. In an email dated Oct. 30 sent to top Microsoft executives and engineers, Mr. Gates said the software giant needs to better address technologies and trends that are fueling a new wave of money-making on the Internet. (Full Story) WSJ
  • FSH: Fisher Scientific-FSH raising est on lower tax rate, reit Buy@MLCO The firm is raising 05E by 05c to $3.55. 2006 guidance is "at least $4.05" vs. expectations of $4.00. Firm expects shares to react positively.
  • L: Liberty Media Picks as Next CEO A Departing Officer From Oracle Liberty Media Corp. has chosen Gregory Maffei, Oracle Corp.'s departing co-president, as its next chief executive. Liberty announced today that Mr. Maffei, 45 years old, will join the Englewood, Colo., media company as CEO-elect. (Full Story) WSJ
  • US Economy: ABC/Washington Post consumer confidence wk end Nov 6 (19) vs (21) wk ago (Tuesday)

Market Comments: The market is relatively flat at the open. Oil prices are down near $59 on a report that inventories are higher than expected. This has the energy stocks selling off again. Bond yields are higher at 4.61%, which may be keeping a lid on stocks so far. The SPX is consolidating above its 50-day average, and looks like it is getting ready to break out of this range. If so, that could trigger a run towards the years highs (1245).

Two stocks that I have mentioned before (HANS and FSH) both reported very strong earnings, and the stocks are gapping higher this morning.

long MSFT

Quote of the Day

"A man who truly wants to make the world better should start by improving himself and his attitudes." - Fred DeArmond

Tuesday, November 08, 2005

Mid-day Movers

Here is a partial list of stocks moving on above-average volume:
  • High-volume advancers: ABIX, HLF, VTIV, ARS, GMRK, GENZ, ABV, CTHR, EPEX, HURC

  • High-volume decliners: CMCO, NTES, JRCC, SNHY, CG, NP, BOOM, CLHB, PHTN, ALO

Market Comments: The market is hanging in at midday, with small losses on the SPX and small gains in the NDX. The 10-year is down at 4.56%, and oil is hovering around $59.50.

Oil stocks are still up the most, followed by biotechs and select tech. Housing stocks are still down quite a bit. I think the selloff in NTES is overdone, and this is one I will be looking to revisit after some consolidation.

Markets pulling back

Morning News of Note:
  • GDT JNJ: Guidant Sues J&J in Bid to Keep Pact Quarterly Earnings Sink As Heart-Device Failures Remain at Center of Dispute Medical-device maker Guidant Corp. dug in its heels by filing a lawsuit against its would-be merger partner, Johnson & Johnson, as Guidant reported third-quarter earnings that were more dismal than expected. Guidant's lawsuit against Johnson & Johnson, filed in federal district court in Manhattan, seeks to force medical giant Johnson & Johnson to go through with its contract to buy Guidant (Full Story) WSJ
  • GE VIA: CBS, NBC to Offer TV Shows for 99 Cents CBS and NBC have announced deals to offer replays of prime-time programs for 99 cents per episode, shifting television toward a sales model that gained popularity with downloaded music. CBS is teaming up with Comcast Corp. and NBC with satellite operator DirecTV to offer the on-demand replays (Full Story) Washington Post
  • AMD INTC: AMD Tops Intel in Supplying PCs Advanced Micro Devices Inc. last month surpassed Intel Corp. in supplying chips for personal computers sold in U.S. retail stores, a market-research company is slated to report today. The company, Current Analysis, says it expects Intel may take back the lead in November. Retail stores, moreover, represent a narrow slice of the PC market, excluding major manufacturers such as Dell Inc., which use only Intel chips. (Full Story) WSJ
  • AAPL: APPLE'S IPOD ATTACK: 1M PC USERS GET MACS PC users are converting to Macintosh computers in growing numbers, thanks in part to the stunning success of the Apple iPod. "The 'halo effect' is clearly alive and well," said Charles Wolf, an analyst at Needham & Co. (Full Story) NY Post

Market Comments: The market is pulling back this morning, although its still early. I would not be surprised to see another modest consolidation day. Oil is up a bit, so the energy stocks are getting a bounce. Biotech stocks also have a good bid, while retailers are a bit weak, and housing stocks are getting killed on the lowered guidance from TOL.

The yield on the 10-year is down a bit to 4.56%, although the recent uptrend there does not appear to be broken yet.

long GE, INTC, JNJ

Quote of the Day

"Man can believe the impossible, but man can never believe the improbable." - Oscar Wilde

Monday, November 07, 2005

Bears get no love

Very solid consolidation day. Given how much the markets were up last week, and over the last 2 weeks, it would not have suprised me to see some give back today. But such was not the case. The bears tried to get the market moving lower in the morning, but by early afternoon the market had stabilized, and finished the day in positive territory.

Money appears to continue to flow out of the energy complex, and looks to be finding a home in tech and financials. This trend could continue for a while, but should help lift the market as those sectors make up a larger part of the indexes than energy.

I had moved down to 50% long at the end of last week, but I am already starting to add more exposure. A few positions that look good to me, and which I added to today were: JNPR, MCRS, SIRF

Mid-day Movers

Here is a partial list of stocks moving on above-average volume:
  • High-volume advancers: CPSI, CMED, VPHM, IRIS, CONN, EXPD, RBC, VAS, EPAX, CUTR

  • High-volume decliners: RYAAY, KEYW, LAF, NNDS, FARO, GENZ, BKH, PLXS, KMR, NP

Market Comments: The market is just meandering around the flat line at mid-day. Oil prices have continued to fall, pushing down energy stocks. Housing stocks are catching a small bid. If the market can hang in there like this, without much of a pullback, I think that suggest that another move higher is coming soon.

Monday Morning Mullings

Morning News of Note:
  • TIVO YHOO: TIVO and YHOO to collaborate to offer online scheduling through Yahoo! TV-Reuters: TIVO says the offering enables Yahoo TV users to request recordings of TV shows on their Tivo Series2 devices.
  • Tech Repurchase Programs: Recent Buybacks Fail to Boost Stocks Of Tech Companies Share buybacks by technology companies are all the rage. But the programs don't appear to be working in one respect: The stocks aren't jumping. Tech companies in the Standard & Poor's 500-stock index, which includes Microsoft Corp., Intel Corp. and Cisco Systems Inc., already have bought back nearly $50 billion of their own shares during the first half of this year -- the most recent data available -- nearly equaling the record $52 billion of stock repurchased by the tech sector in all of 2004, according to S&P. (Full Story) WSJ
  • WMT: sees November sales up 3%-5%
  • YHOO GOOG: Yahoo, Google to Launch Services For Advanced Cellphone Networks Internet powerhouses Yahoo Inc. and Google Inc. are set to roll out new wireless services, taking advantage of advanced networks and cellphones to provide features similar to those available on computers. Yahoo, Sunnyvale, Calif., soon will introduce a cellphone that it will sell through a partnership with SBC Communications Inc., according to SBC executives. (Full Story) WSJ

Market Comments: The market opens slightly higher this morning, with no big events before the open. Energy stocks are under early pressure again, while transportation stocks are higher. Tech and retail are mixed, as are healthcare and financials.

The yield on the 10-year is down slightly to 4.62%, and oil is also trading just below $60. The market is nearing short-term overbought levels, so this week is a bit of a toss-up. I would not be surprised to see further gains, nor some consolidation. But I am still looking to add to recent breakouts as I expect leading stocks to add to their gains in the near future.

long GOOG

Quote of the Day

"Imagination is not a talent of some men, but is the health of every man." - Ralph Waldo Emerson

Friday, November 04, 2005

Payrolls rise less than expected

Morning News of Note:
  • MSFT: XBOX'S SHORTAGE FRENZY Microsoft Corp.'s Xbox 360 video-game machine is already sold out on some Web sites including Wal-Mart Stores Inc., a sign the company may have shortages when the console goes on sale this month. Wal-Mart's site tells people to go to a store at midnight on Nov. 22, the day Xbox is released in the U.S. Inc. says the system is unavailable in the U.S. and warned U.K. buyers they may not get it by the holidays. (Full Story) NY Post
  • MRK: Merck Prevails in Second Vioxx Case on Heart Attack The drug giant Merck won decisively Thursday in the second Vioxx-related personal injury case to go to trial, an outcome that legal experts say could slow the flood of lawsuits against the company A nine-member jury in a state court here found by an 8-to-1 vote that the painkiller Vioxx had not caused Frederick Humeston, a 60-year-old Idaho postal worker, to have a heart attack in September 2001. Mr. Humeston, who survived, testified in the case. (Full Story) NY Times
  • GDT: With one day left to seal the deal on Johnson & Johnson's $25.4 billion acquisition of Guidant Corp., New York Attorney General Eliot Spitzer said on Thursday he was suing the Indianapolis-based medical device maker for concealing information about a design flaw in a heart defibrillator. Shares of Indianapolis-based Guidant fell 4.7 percent, or $2.83, to close at $57.57 in trading on the New York Stock Exchange. J&J stock dropped 10 cents to $61.20. (Full Story) Boston Globe
  • HANS: Hansen Natural-HANS removes proposal to boost authorized shares: HANS had proposed to hike authorized shares to 100M and plans to reintroduce the proposal at a later date

Market Comments: The US economy added 56,000 jobs last month, fewer than the 100,000 economists were looking for, but still showing job growth after the hurricanes. Energy stocks are taking a hit this morning, while biotechs are adding to recent gains.

I am not expecting a lot of fireworks today. Traders will likely take some profits ahead of the weekend, given the nice rally we have had this week. I still expect dips to be bought in the near future, and think recent breakouts will continue to work as you now have a stronger market backdrop.

long MSFT

Thursday, November 03, 2005

Market hangs in

The market gave back most of its gains during the last hour of trading, but a late day spurt into the close made for a respectable day. The SPX and Nazz both logged solid gains on rising volume. Breadth was positive, and the new highs list expanded on both exchanges.

Housing stocks gave up their early gains, but chip stocks and energy fared well. The market looks a little overbought short-term, but I expect investors to buy the dip fairly quickly. Nonetheless, I have taken my net long exposure down to 50% in the interim. I will look to add to some of the market's new leaders on weakness.

Have a good night--

Strong retail sales

Morning News of Note:
  • GOOG EBAY: GOOGLE NEARS PAYPAL MODEL A week after it moved to establish a new database listing service that could compete with eBay, Internet darling Google looks like it's getting closer to building an online payment system that would make it a Web commerce juggernaut. While the company says Google Base represents an effort to test "a new way for content owners to submit their content," whispers of a Google commerce plan has analysts and Web watchers buzzing (Full Story) NY Post
  • CHS: Chicos FAS Inc-CHS reports Oct SSS up 17.9% vs consensus for up 9.7%: CHS says that Q3 sales were $359M vs consensus estimates of $353.66M.
  • WMT: Wal-Mart Stores-WMT reports October SSS up 4.3% vs consensus for up 3.8%: Sees Novemeber SSS up 3%-5%.
  • US Economy: MNST Oct online employment index 143 vs 140 in Sept, new all time high, first increase since Apr

Market Comments: Most of the retail sales reports came in much stronger than expected. I see lots of stocks popping on the news (CHS, URBN, KSS, CTRN, etc.). ELOS reported a great quarter, and that stock is up nicely also. Chip stocks are up the most, as a group, followed by housing stocks. Banks and brokers are down in early trading.

Interest rates are up a bit, and that's pressuring the yield plays (REITs, utilities).


Wednesday, November 02, 2005

Another strong rally

Powerful rally. The difference here is that for the last months, rallies have only lasted a day or so before the sellers came out of the woodwork. Today, the markets rallied strongly on big volume. That qualifies as accumulation days for both the S&P 500 and Nasdaq, the second in the last three sessions. The SPX is now above its 50-day, and the bears are nervous.

Housing and chips stocks led, with drug stocks lagging, but most other groups participated nicely. Breadth was solid, with the hi/lo index for the S&P and Nasdaq expanding.

Tomorrow brings most of the retail sales reports. While I don't expect most of them to be very strong, I think much of the downside is already priced in. So I would look to accumulate my favorite retailers on any short-term weakness. I think the 4th quarter rally is now underway.

Mid-day Movers

Here is a partial list of stocks moving on above-average volume:
  • High-volume advancers: CUTR, NNDX, OXPS, CBG, ASPM, HANS, WOOF, PRA, AGN, NDAQ

  • High-volume decliners: MERQE, WMS, RNR, SYMC, GBX, SFCC, CI, UNA, KND, DRCT

Market Comments: The market has rallied nicely since the open, and the SPX is now trading above its key 50-day moving average. More stocks are starting to breakout and work higher. Hopefully this will start to show up on the breadth statistics (hi/lo index), and new leadership will become clearer. Right now, I see it as a mix of retailers, tech, and select healthcare plays.


p.s.- I missed LeBron on CNBC this morning. Did anyone see it? Ping me and let me know the jist of his comments.

SPX back above its 200-day average

Morning News of Note:
  • CMCSK S TWX: Cable Systems Plan Advanced Cellular Service Cable-TV companies are preparing to launch cellular-phone service with features they hope will top those offered by traditional wireless carriers -- a move that could further roil the telecommunications industry. A consortium of the country's largest cable operators -- including Comcast Corp., Time Warner Inc.'s cable division and Cox Communications Inc. -- announced it will sell cellphone service that runs over the wireless network of Sprint Nextel Corp. (Full Story) WSJ
  • MSFT GOOG: New Microsoft Services Will Rely on Online Ads Windows, Office to Go 'Live' With Enhancements Aimed To Tap a Swelling Market Microsoft is creating online services coupled with its two major software lines, Windows and Office, which are designed to help the software maker tap into the swelling market for Internet advertising. The new offerings are an attempt by Microsoft to tie its biggest software franchises to the rich pool of online advertising that has fueled the growth of companies like Google, the Web-search giant. Microsoft has built its fortunes on licensing its software to corporate customers and selling it preinstalled on personal computers. (Full Story) WSJ
  • RIMM NOK PALM MOT: A New Crop of Gadgets Challenge the BlackBerry Motorola, Nokia, Palm Plan Sleek, Speedy Devices; Progress on Attachments It's war on the BlackBerry. For years, competitors have tried to crack the dominance of that little wireless email gadget that seems to be lurking in pockets, brief cases and handbags of busy professionals everywhere. So far, its maker, Research In Motion Ltd., or RIM, has managed to fend off most rivals by focusing on security, reliability, good battery life and other basic functions. But competitors are redoubling their efforts to challenge the Blackberry, introducing an array of devices with beefed-up features. (Full Story) WSJ
  • TWX: TW WILL INCREASE ITS SHARE BUYBACK Look for Time Warner to make news today beyond its quarterly earnings, as investors expect the media giant to announce an increase in its share buyback plan — a measure aimed squarely at shareholder critic Carl Icahn. Icahn, the corporate raider-turned-shareholder-activist who has teamed with a group of hedge funds and demanded changes from Time Warner management, has suggested the company buy back $20 billion of stock in a bid to boost shareholder value. (Full Story) NY Post

Market Comments: The market held this morning's test of the 200-day average, and now we need to see it make a run above its overhead 50-day. I think that could spark some additional short covering.

SYMC is getting taken apart on lackluster earnings, weak guidance, and the departure of its CFO. Ouch. Former short-squeeze candidante HANS got a big upgrade from Citi and a $72 price target. That has the stock up 10% to a new high. And ELOS continues to run on the huge upside reported from competitor CUTR last night. Retailers also holding thier own.


Quote of the Day

"Someday, everything is going to be different-- when I paint my masterpiece." - Bob Dylan

Tuesday, November 01, 2005

Fed Hikes Rates Again

Not a bad close, given that yesterday was a big up day, and with today's FOMC announcement we could have seen more profit taking. The Fed raised rates another 25 basis points, with no change to the ensuing language. Maybe they will hint at the end being nearer when they meet in December.

The market pulled back today, but volume ran lighter, which is good. Internet stocks had a big day, with MNST and GOOG making new highs. Energy stocks led the way, with chip stocks lagging the most. After the close, CUTR reported great earnings. I hope this strength carries over to ELOS later this week.


Morning Look

Morning News of Note:
  • DELL: Dell Issues Sales, Profit Warning PC Maker Cites Weakness In U.S. Consumer Market And Swollen Inventories Dell Inc. warned it would miss its fiscal third-quarter earnings and sales forecasts, blaming continued weakness in its U.S. consumer business, excess inventories and slack sales in its United Kingdom business. Dell also said it would take a $450 million charge in the quarter. Dell's troubles come at a time when the world-wide personal-computer market is showing strong gains. (Full Story) WSJ
  • WMT: Wal-Mart StoresWal-Mart Stores-WMT will sell HPQ laptop and desktop for $398-CNET: WMT has taken the laptop and the desktop to a new price low for this years holiday season. The company hopes the low price point will spark consumers to come and shop its imputer hardware and software offerings.
  • GDT JNJ: U.S. Approval Is Expected Soon for Sale of Guidant Johnson & Johnson's proposed acquisition of the Guidant Corporation is expected to be approved by the Federal Trade Commission as early as today, executives involved in the deal said yesterday. Approval of the transaction may force the companies to end a standoff over renegotiating the price of the $25.4 billion deal. (Full Story) NY Times
  • Oil M+A: Heard on the Street... Windfall Oil Profits May Lead to Merger Blitz With oil profits surging, and worries increasing about where future supply will come from, some predict a gusher of big deals in the oil and natural-gas patch. Mergers and acquisitions within the energy sector have been on the upswing, often at hefty prices. (Full Story) WSJ
  • US Economy: CIO Magazine Oct tech survey future growth index 1.8 vs 3.8 in Sept; IT budget increases up 6.7% in past 12 mo's, up 5.2% in next 12mo's vs Sept expectations up 9.3%

Market Comments: The market is opening on a weak note, pressured by the warning from DELL. Of course, the Fed meets today, so most of the action won't come until this afternoon. Everyone knows that they will raise rates another 25 basis points today, but the key will be if there are any subtle changes in their language that follows.

I find it laughable that the FOMC can tell us with a straight face that monetary policy was accomodative when the fed funds rate was at 1%, and that it is still accomodative with the rate up at 4%. I continue to believe that they are close to being done, which should relieve significant pressure from the market, allowing it to rise further.

long JNJ, WMT