Monday Morning Musings

Morning News of Note:

• Gapping Up
  SMSC +18% (reports MayQ, guides higher), GMXR +6.5% (First Albany upgrade, $61 tgt), BIOS +6.6% (extends recent move, +30% in 3 weeks), CSH +5% (guides above consensus), MOBE +4% (expands trial program with Best Buy), LGF +3.7% (mentioned positively in Barron's), ANDE +3.3% (to build more ethanol plants), MIKR +3% (added to IBD 100), BBC +2.8% (positive guidance), HTG +2.7% (to be acquired by Centro Properties), CNXT +2.3%, TZOO +2.3% (bounces after 7.3% drop on Friday), XING +2.1% (recovers after 2 days of weakness), DIS +1.7% (strong Pirates debut)... Mining stocks are strong: MDG +3.2%, SSRI +2.8%.
• Gapping Down
  CNCT -25% (lowers Q2 guidance; withdraws full yr guidance), LTON -22% (comments on new mobile operator policies), SGR -10.7% (reports MayQ, to restate FebQ), KRON -10% (guides lower), GRRF -8.8% (profit taking after 28% move on Friday), CNET -7.8% (expects restatement based on option accounting), CHTT -7% (reports MayQ, lowers guidance), KGC -5.2%, NXG -4.6% (UBS downgrade), IDCC -4.5% (Piper downgrade), EMC -2.5% (guides lower), HMY -1.4% (UBS downgrade).
• DOW Dow Chemical: Reliance Industries eyes tie-up with DowChem - Financial Express of India (37.86 )
  Financial Express of India reports Reliance Industries has begun talks with the co for a major strategic alliance in the petrochemicals and polymers businesses. While talks were still at an early stage, sources said the strategic alliance could include Reliance taking over and running some of the co's units in Asia and eastern Europe, apart from the two majors working together on research and development and technology.
• EMC EMC Corp announces preliminary Q2 results (11.18 )
  Co issues downside gudiance for Q2 (Jun), sees Q2 (Jun) revs of $2.58 bln vs. prior guidance of $2.66 bln and the $2.67 bln Reuters Estimates consensus. Co sees GAAP EPS of $0.12 vs prior guidance of $0.13. Co notes: "We received more customer orders than we anticipated very late in June for our new EMC Symmetrix DMX-3 systems, and fewer than anticipated customer orders for our prior-generation Symmetrix DMX-2 systems, and we therefore did not have the right inventory mix to fulfill demand as we closed the quarter... If we had been able to fulfill the strong Symmetrix DMX-3 demand and some of the other customer orders had come in a bit earlier, we certainly would have been able to meet our financial targets."
• GILD Gilead Sciences: Raising Q2 EPS estimates in anticipation of strong Truvada sales - Rodman & Renshaw (60.76 )
  Rodman & Renshaw notes that GILD will report 2Q06 results on Thursday, July 20th, after the markets close. Based on firm's analysis of sales trends for the quarter, as well as GILD's large amount of ex-US rev combining with the weakening U.S. dollar since April, they believe 2Q06 EPS is likely to be above the $0.53 Street consensus.

Market Comments: The market is trading higher in the first hour. Bond yields are up slightly (5.14%), as is the dollar, while oil is trading a bit lower.

Tech is lagging, with semis under pressure. Energy stocks are mostly up, as are defensive consumer staples stocks. Retailers are also getting a bit of a bounce.

Today kicks off earnings season with Alcoa (AA) reporting after the close. This week we will also hear from Genentech (DNA), Pepsi (PEP), and GE. After last week's down week, I am looking for some stabilization this week.

I didn't get to post the weekly sentiment data yesterday, so I will be back with that in a bit.

long DOW, GE, PEP