Thursday, May 11, 2006

Retail Sales Weaker Than Expected

Morning News of Note:
  • SBUX: Stirring Insider Sales at Starbucks INVESTORS CAN'T HELP but be addicted to Starbucks, whose startling growth has pushed the stock to heart-fluttering heights. Amid questions about the stock's pricey valuation, the coffee giant's two top executives are taking their biggest profits in two years. Starbucks shares have nearly quadrupled in price since the beginning of 2003. The stock slightly waned this week, slipping 4% from the May 5 record intraday high of $39.88 (on a split-adjusted basis), after a Tuesday article in The Wall Street Journal noted its hefty valuation. (Full Story) BARRONS
  • INTC CSCO SNE SHCAY CMCSA: Putting the Wire Back Into Networking Back in the Stone Age of home networking, anyone who wanted to play on a computer not hooked directly into an Internet connection had to snake phone lines or Ethernet wires across floors and up staircases. People talked about a promising idea: using the electrical wiring already in the house to move data from room to room. One early application, the X10 system for controlling lights and appliances, didn't always work well. (Full Story) NY Times
  • SIRI XMSR: Heard on the Street... Tuning In Institutional Holders Gary Parsons, chairman of XM Satellite Radio Holdings Inc., was gratified in 2004 when blue-chip mutual funds began taking or increasing their stakes in his company. The bets made by investors like TCW Asset Management, Fidelity Investments and Wellington Management were a sign that long-term investors were taking XM seriously. XM's smaller rival, Sirius Satellite Radio Inc., is still in the takeoff position with institutional holders. Although it has attracted some white-shoe investors like Fidelity, the bulk of its holders -- around 72% -- are individual investors. (Full Story) WSJ
  • AZR: Aztar-AZR gets increased offer of $53 per share from Columbia Entertainment: Aztar Corporation announced that it has received an offer from Wimar Tahoe Corporation d/b/a Columbia Entertainment, the gaming affiliate of Columbia Sussex Corporation, to acquire Aztar in a merger transaction in which the holders of Aztar common stock would receive $53.00 per share in cash and the holders of Aztar's Series B preferred stock would receive a commensurate payment dictated by the terms of their securities
  • Mad Money Summary: Cramer opened his show discussing Mexican airport operator Grupo Aeroportuario del Sureste (ASR), which translates to Southeastern Airport Group. The stock is a turnaround story, and more than that, the company now has "monopolistic pricing power." Cramer then discussed a stock which just reported a bad quarter and closed under $3, EuroZinc Mining (EZM). EuroZinc is a supplier to RTI International Metals (RTI), which just won a major $800M contract wiht Airbus. Cramer believees this is a good entry point for the stock. Cramer then spoke to Administaff (ASF) CEO Paul Sarvadi over the phone. Cramer said he cannot be bullish on the stock until he sees the company buyback shares, but he believes the story is interesting and the stock may deserve a second chance. In the "Lightning Round," Cramer was bullish on Allegheny Technologies (ATI), Abercrombie & Fitch (ANF), America Movil (AMX), TXU (TXU), FPL Group (FPL), Agilent (A), Flagstar Bancorp (FBC), Citigroup (C), Crystallex International (KRY), Toyota (TM), General Motors (GM), Cadbury Schweppes (CSG), Hansen Natural (HANS), Network Appliance (NTAP), Companhia Vale do Rio Doce (RIO), Consol Energy (CNX), Peabody Energy (BTU) and Yum! Brands (YUM), and was bearish on Titanium Metals (TIE), Telmex (TMX), Southern Co. (SO), Lucent (LU), Pepsi (PEP), Gateway (GTW), JDSU (JDSU) and Covanta Holding (CVA).

Market Comments: April retail sales came in at +0.5% vs. consensus of +0.8%, though some of this weakness was related to autos. Bond yields are higher again this morning, with the 10-year trading up to 5.15%.

And the rest of the market is trading lower, with the exception of energy and commodity stocks, some of which have made parabolic moves recently.

Tech is under pressure, and the Nasdaq is pulling back below its 50-day average today. I know that every time this year I have mentioned that a correction could be in the works, the market has immediately turned back up. But with the market currently overbought, it seems worth noting again.

The ISE Sentiment Index closed over 200 twice so far this week. That is a sign that investors are more bullish right now, and that won't help the market if it continues to pull back. We need to see investor pessimism rise in order to halt a potential slide.

long INTC


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