Wednesday, March 29, 2006

Early Bounce

Morning News of Note:
  • PEP: PepsiCo Is Producing Plenty of Pop WHILE HEALTH-CONSCIOUS AMERICANS drink less soda, shares of beverage and snack food giant PepsiCo still have lots of pop and fizz. Up nearly 40% over the last five years, the stock price has climbed twice as fast as the Standard & Poor's 500 index and rivals such as Coca-Cola during that period, fueled by stronger profit growth than many of its peers. (Full Story) BARRONS
  • JDSU: JDSU's Makeover in Progress The Street remains wary of a turnaround that is far from complete, but a beefed-up product line stands a good chance of changing investors' minds (Full Story) Business Week
  • Desktop PCs: Digitimes reports desktop PC sales in Taiwan for the first two quarters of the year are expected to stay flat compared to the same periods of last year due to seasonal effects, according to vendors. According to International Data Corporation, desktop sales in Taiwan in the first and second quarters of last year amounted to 389,000 and 418,000 units, respectively, and the vendors said sales for the first two quarters this year should be similar to the respective ones of last year
  • Bulls/Bears: bulls 46.7 vs 46.3, bears 28.3 vs 30.5, correction 25 vs 23.2
  • US Economy: ABC/Washington Post consumer confidence (7) vs (8) wk ago // MNST Local Employment Index indicated rise in online job demand in all 28 top US metro markets; Western and Southern regions see particularly large spike in online recruitment activity
  • Mad Money Summary: If you are looking to make money on the coming bird flu pandemic, said Jim Cramer on Tuesday night, don't look to drugs like Tamiflu, look to pigs. Pork with be the only meat left without a "horrible disease that renders them inedible," so buy into the best of breed in the pork industry, Smithfield Foods (SFD). Cramer then discussed Oakley (OO), the sunglasses maker. He believes the company is a smart buy for this summer, because they are cleaning up their accounting problems. The stock will jump after the accounting restatement, so it could be a good idea to buy ahead of that. Then Cramer brought Herb Greenberg onto the show and they discussed Multi-Fineline Electronix (MFLX), which they both agreed to avoid. Greenberg said too much of the company's sales came solely from Motorola's (MOT) Razr phone. Then Cramer discussed natural gas stocks, including Houston Exploration (THX), Arena Resources (ARD), Carrizo Oil & Gas (CRZO), Energy Partners (EPL) and Cimarex Energy (XEC), saying there should be a rally after the sector's steep contango. In the Lightning Round, Cramer was bullish on Broadwing (BWNG), Level 3 (LVLT), TD Ameritrade (AMTD), Insteel (IIIN), Gamestop (GME), Leucadia (LUK), Yahoo! (YHOO), OSI Systems (OSIS), Flir Systems (FLIR), UnitedHealth (UNH), Altria (MO), Apple (AAPL), Palm (PALM), Goldcorp (GG) and Tata Motors (TTM) and was bearish on (REDF), Under Armour (UARM), Alkermos (ALKS), General Maritime (GMR) and Novagold (NG).

Market Comments: The market is bouncing in early trading. Of course, you know that I like a market that opens weak and finishes strong, not the other way around. But it's still early, so let's give the market the benefit of the doubt.

AMTD raised guidance last night, and that is helping the brokerage stocks bounce today. Semis are also up nicely, with the SMH up +1%. The only group that is down this morning is the banking index, likely due to interest rates fears as yesterday's FOMC meeting did not give any dovish hints about future rate hikes.

Friday is quarter-end, so I wouldn't be surprised to see big fund managers support their positions in some good old fashioned window dressing.

long JDSU, PEP


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