Friday, December 29, 2006

Happy New Year

The market is moving like molasses today, so I think I am going to sign off early. To me, the market feels thin, and short-sellers are likely keeping it from lifting.

I will try to update my Monthly Mutual Fund performance soon and post it. I will also have an update to who won my annual market forecast poll for 2006, fwiw.

Last, but not least, I want to wish everyone a very happy and healthy (and prosperous) New Year!!

Last Trading Day of the Year

With the last day of the year upon us, it will be interesting to see if there is any noticeable window dressing in the market. AAPL is up nicely after filing its 10Q, and I wouldn't mind seeing that as a candidate.

The Nasdaq and NYSE announced they will remained closed on Tuesday, in honor of President Ford's funeral. That will make for a nice four day weekend. Four days, can you believe it?

I would recommend taking some time during the long weekend to review your trades from 2006, make notes on what went wrong and what went write, and come up with some trading resolutions for the New Year.

Overall, the markets put in a solid year, and I think we will see a repeat next year. I take an annual poll of portfolio manager's forecasts each year, and I will post my update to the winner over the weekend.

In other news and notes:
  • Is GMKT being affected by the Internet outage in Asia?
  • Driehaus very bullish on GMCR (BusinessWeek)
  • The Federal Reserve will also close on Tuesday
  • CELG profiled in IBD's New America
  • Lehman raises target on MDT to $65
  • NIHD is the Top Pick for 2007 at Wachovia

long AAPL

Thursday, December 28, 2006

Standout Stocks

My Stock of the Day is GFI Group (GFIG)

The stock first started to breakout yesterday, and today it is taking on another +5% on a huge spike in volume.

I don't have a position in this stock, but I like to group in general. This one might be worth a closer look.

The stock still needs to break above $66 to surpass its May highs, which could open up the field for more gains.

Other stocks making notable, high-volume moves include:

  • FCFS

  • WBD

  • ININ

  • IAAC

  • HDB

  • GROW

  • CN

  • GIII

  • LNN

  • MEND

  • FDG

More Solid Economic Data

The market is under a little pressure this morning, which could just be profit taking after yesterday's nice run.

There were more good economic data this morning, which should ease the fears of those who think the economy is headed for recession. It also likely delays any Fed rate cuts, and should push bond yields higher.

To wit, the 10-year yield just ticked higher to 4.69%. Here were the 3 pieces of data that came out:
  1. Consumer confidence 109 vs. 102 consensus
  2. Chicago Purchasing Mgr. Index 52.4 vs. 50.2 consensus
  3. Existing Home Sales 6.28 mln vs. 6.15 mln

That is the second day in a row we have got solid housing data. This is important, as this is the key area that the bears are focusing on to take the economy down in 2007. If you take that off the table, well, you get the picture.

In other news and notes:

  • SIRF looks like it might have bottomed
  • More neg. options news for AAPL
  • Asian stocks rise again overnight
  • Goldman raises $6.5 infrastructure fund
  • BofA trims estimates for FORM
  • Soleil starts MIDD with a Buy ($134 tgt)
  • John Edwards to run for President
  • Amtech says RIMM a top pick for 2007


Wednesday, December 27, 2006

Slight Accumulation Day

The market put in a pretty solid day. Volume ran well below average, but was up noticeably from yesterday's levels. That qualifies as an accumulation day, though I would put an asterisk by it.

Breadth was also very solid, with advancers trouncing decliners, and net new highs expanding.

The leading indexes were homebuilding and energy, which is a bit strange. But all the sectors performed well, nonetheless.

GOOG was able to add back 10 points, which was nice to see. And AAPL shook off all of its early weakness to finish in positive territory. I would like to see tech extend these gains into week's end.


Standout Stocks

My Stock of the Day is Apple Computer (AAPL)

The stock gapped lower this morning on a rumor that some executives had falsified documents relating to the options program. The rumor also said that Steve Jobs had knowledge of the incident.

But two firms came out to defend the stock intraday, and reiterated that is was unlikely Jobs was involved.

The stock bottomed quickly and climbed all the way back to even on the day. Volume rose substantially, indicating that sellers should have been sufficiently washed out.

Other stocks making notable, high-volume moves include:
  • CVO
  • PWEI
  • TX
  • VOL
  • APKT
  • GES
  • NCTY
  • EQIX
  • LFC
  • IHG
  • PNSN
  • SVVS

long AAPL

Strong Bounce in Early Trading

The market is opening on a positive note. The housing data came in a little better than expected, causing for another call that the worst of the housing slump is behind us.

Oil prices have fallen further, breaking below $61. This is weighing on the energy complex. For its part, the 10-year yield is up a bit to 4.61%.

The dollar is down today on news that the United Arab Emirates is looking to diversify some of its holdings away from the dollar.

The NYSE opened 2 minutes later this morning to observe the passing of Gerald Ford. I met him once when I was young, skiing in Beaver Creek, and he was very friendly. I know this doesn't speak to his political accomplishments, but it is a memory that sticks with me.

In other news and notes:
  • AAPL gaps lower on faked documents rumor
  • SEC starts formal options probe on UNH
  • Asian markets strong again overnight
  • STP featured in IBD
  • ICE target raised to $125 at BofA
  • NEW falls after declaring dividend

long AAPL

Tuesday, December 26, 2006

Is There Anyone Out There?

To say that volume is running light today is an understatement. It is crawling.

Oil reversed sharply from its earlier gains. It is now down more than $1.25 to around $61. Bond yields remain steady at 4.60%.

Breadth is positive, and the put/call ratios are right around average levels. All in all, it is making for an extremely lackluster day.

I can't even find a good candidate for my Stock of the Day. Seriously.

Here are some of the handful of stocks that are making somewhat notable moves:
  • LFC
  • PNSN
  • CHL
  • IHG
  • APKT
  • IAAC
  • TNL
  • DIVX
  • AXR

Back In The Saddle

Hope everyone enjoyed the long holiday weekend. Too bad it wasn't long enough to forget the fact that last week was the worst week for the Nasdaq since the summer.

But the market is getting a lift in early trading today, so maybe we can have a strong finish for the year. Oil is trading up a little, which is lifting the energy complex. Bond yields are lower again, with the 10-year trading at 4.60%.

The 10-year yield saw a big spike last Friday, which pushed it above its 50-day average. We'll have to see if this continues to provide resistance, or if the 10-year is going to make another run higher.

Semis and energy stocks are strongest this morning, so far, while retailers are weak. Seems no one is really that positive on the holiday retail season. Maybe a lot of people are waiting for those post-Christmas sales.

In other news and notes:
  • Asian markets rise overnight
  • Wachovia makes COST Top Pick for 2007
  • Magniture 6.7 earthquake hits off Taiwan
  • Kaufman says holiday retail traffic was light
  • Britain's largets supermarket offering Apple products
  • Iraq upholds Saddam Hussein death sentence
  • TELK stock crushed on drug trial results

long AAPL

Friday, December 22, 2006

Standout Stocks

My Stock of the Day is Jones Soda (JSDA)

I have been watching this stock for a while, waiting for a good buying opportunity. So I was pissed last night when I saw Cramer hype the stock on Mad Money. That's the 2nd time this week this has happened to me!

Cramer talked about all of the growth ahead for this beverage maker. He even compared the potential to Hansen (HANS), which had been a monster stock.

So the stock gapped higher this morning, and is up +12% today. I can't bring myself to chase it, so I will just have to wait and hope for a big pullback. Such is life.

Volume is very light today, so there is not a ton of action to hang out hats on. But here are some stocks that are making notable moves on above-average volume:
  • LFC
  • IHG
  • HEI
  • GEO
  • MMS
  • NNI
  • RIMM
  • AXE
  • GMCR
  • NRPH
  • NDAQ

Attention All Gamers!

Pacific Crest is very bullish on The9 Limited (NCTY), the Chinese online gaming operator. While I have taken notice of the strong action of this stock, I also think that it remains undervalued. But I admit to knowing little about the Chinese online gaming industry.

I would love to hear from anyone out there who may be more familiar with this area.
  • Do you play online games?
  • Do you play World of Warcraft?
  • How popular are they?
  • What are the pros/cons versus gaming consoles?
  • Do you know anyone in Asia who plays them?

Thanks in advance for any feedback you can provide.

Attention All Gamers!

Pacific Crest is very bullish on The9 Limited (NCTY), the Chinese online gaming operator. While I have taken notice of the strong action of this stock, I also think that it remains undervalued. But I admit to knowing little about the Chinese online gaming industry.

I would love to hear from anyone out there who may be more familiar with this area.
  • Do you play online games?
  • Do you play World of Warcraft?
  • How popular are they?
  • What are the pros/cons versus gaming consoles?
  • Do you know anyone in Asia who plays them?

Thanks in advance for any feedback you can provide.

Investor Sentiment Check

The market is still under heavy selling pressure. Investor sentiment measures are flashing elevated bearishness intra-day.

  • The CBOE put/call ratio is very high at 1.18
  • The ARMS Index is above-average at 1.29
  • The ISEE is plunging to 73 (or the put/call equivalent of 1.37)

Those are very high put/call readings, which could help the market bottom soon and reverse higher next week. It seems that investors are already buying puts ahead of an expected January correction.

Go Buffs

To all my friends in the Denver/Boulder area (I'm a CU alum), good luck digging out of the dump. And if you're lucky enough to be up in the mountains this weekend, go make some fresh powder tracks for me!

If you're curious what our weather forecast is for X-mas in LA, it's supposed to be 70' degrees and sunny. I think Santa said he might lay out and catch a few rays after he's done delivering toys.

It's weird not seeing any snow on X-mas, considering I grew up in Cleveland, but I have to admit I don't miss the frigid weather.

Where's Santa?

The market is opening under pressure this morning. Given the afternoon weakness that has been showing up recently, I sort of prefer this action. Hopefully, the market can gain strength into the close. Of course, few people have big conviction ahead of a long holiday weekend.

It has not been a good week for growth stocks. The SPX has held up better than the Nasdaq, although I have been looking for the latter to regain leadership. The Nazz is now oversold, and I still think Santa could show up for a late year appearance. Better late than never.

Durable goods came in stronger than expected (+1.9% vs. +1.5%). This has bond yields rising a bit (4.58%), but they are still pretty low. This report lends itself more to the soft landing thesis, while yesterday's Philly Fed might have been an aberration.

In other news and notes:
  • Cramer hypes JSDA (+10%)
  • Asian markets up overnight
  • Cantor starts GOOG with $650 tgt
  • RIMM reports strong earnings, guidance
  • WAG beats estimates; stock higher
  • ThinkEquity ups RIMM tgt to $165
  • Wachovia bullish on ISRG


Thursday, December 21, 2006

Another Lackluster Day

The market was weak again in the afternoon session, though it did bounce a little from its lows.

Breadth was slightly negative. Sentiment was mixed, with the ISEE low, but the CBOE put/call only at average levels.

The weak Philly Fed report weighed on the market. It also pushed bond yields lower again, with the 10-year finishing at 4.55%.

Volume was light again, running roughly at the same levels as yesterday's session. RIMM reported solid earnings after the close, and its stock is up.

Semis were hit hardest (-1.4%), followed by materials (-1.3%). The only sector that was even flat was the staples.

The Nasdaq has been down for 4 straight days, and is now oversold. I would expect to see a bounce soon, possible tomorrow. Although I never expect too much ahead of a long holiday weekend.

More Debate on Investor Sentiment

There is a debate brewing today on Street Insight about the rising level of margin debt, and if this is an indicator of rising bullishness.

I would argue that the buildup in margin debt likely has more to do the huge number of newly minted hedge funds that have been created. Since these guys all like to run balanced books, the use of margin debt has risen. But I don't think it is similar to 2000 when there were tons of daytraders that were leveraged long to the market.

Also, the AAII figures came out today, and guess what? Once again, bears (42.5%) outnumber bulls (39.1%). The percentage of bears has now been equal or greater than that of the bulls for 4 of the last 5 weeks. This is a surprising show of bearishness considering the DJIA has been making all-time highs, and the SPX has been hitting yearly highs.

Additionally, the Blogger Sentiment poll conducted by Birinyi Associates has had bears equal to outnumbering bulls for 9 consecutive weeks. This is another surprising sentiment datapoint. Sentiment is less bearish than it was back in July, but it is still not at levels that I would deem outright bullish.

I continue to believe that the market will continue to stairstep higher until more of this bearish sentiment is unwound. I believe it is more likely that we will see a large short-covering rally in 2007 as opposed to a big swoon as a result of too much complacency.

Soft GDP Report: A Trend or Anomoly?

The market is trading slightly higher in early trading. Q3 GDP was revised slightly lower, to 2.0% from 2.2%, but it doesn't seem to be too worrisome. The question is whether this marks the low for economic growth, and whether we see a pickup from here.

Oil is also trading lower ($63.30), while the yield on the 10-year is steady at 4.59%.

The bears in the AAII sentiment survey outnumbered bulls again this week, making it 4 out of 5 weeks we have seen that. This is a remarkable showing of bearishness considering the DJIA is making all-time highs and the SPX is making new yearly highs each week as well.

In other news and notes:
  • MNST says no significant shift in online job demand
  • NKE reports solid earnings
  • BBBY offer conservative guidance; stock lower
  • VPRT profiled in IBD's New America
  • GIS reports earnings, raises guidance
  • TWP expects another strong quarter from RACK
  • RBC raises estimates on MSFT
  • PMCS lowers guidance; stock lower
  • GILD estimates raised at RBC
  • IAAC gets crushed after reporting soft quarter
  • Iran seeks oil payments in currencies other than the dollar


Wednesday, December 20, 2006

Weak Close Not All That Bad

The market faded in the afternoon and basically closed at its lows for the day. But the declines were only -0.1%, so it was more of a consolidation day. Volume ran below average on both exchanges, so no distribution.

Breadth wasn't as bad. Advancers beat out decliners on both exchanges, and the Hi/Lo indexes were solid.

Semis led the way (+0.7%), followed by brokers (+0.4%). Energy was by far the weakest sector (-1.4%) along with retail (-0.6%).

Many growth stocks traded fairly heavy today, but they did not break down entirely. The market has bent on several occasions, only to quickly regain its footing. As such, I still believe its more likely that the market continues higher in this stair-step fashion.

Standout Stocks

My Stock of the Day is Redback Networks (RBAK).

Actually, this was my SotD on Dec. 8th, when the stock was trading below $18. Last night, Ericcson (ERIC) said it would buy RBAK for $25, a nice premium.

The stock gapped higher today, and is now more than 40% above the levels it was trading at when I highlighted it a few weeks ago.

I have taking profits and moved on to the next trade. Merry X-mas to me.

Other stocks making notable, high-volume moves today include:

  • GMKT

  • KMX

  • NHWK

  • LFC

  • GLYT

  • IAAC

  • LNN

  • PCLN

  • TRMP

  • GBX

  • ISLE

  • FOXH

  • GMXR

  • PKE

  • CTAS

  • BCR

  • ACLI

  • BKE

took profits on GMKT, RBAK

Can Market Build On Yesterday's Solid Action

Yesterday was a solid day, a Turnaround Tuesday if you will. The market was very weak at the open, but shook off the selling pressure to finish strong.

The market is up a bit at the open today, and we will have to see if it can build on yesterday's reversal. I would especially like to see the Nasdaq lead the way, since it lagged yesterday.

There isn't much in the way of economic news today. Bond yields are steady with the 10-year at 4.60%. Oil is roughly flat at $63.70. But if you look at the chart for oil and view it like a stock, you would conclude that it is basing and poised to move higher. I hope I'm wrong.

ERIC announced last night that it was buying Redback Networks (RBAK) for $25, a nice 18% premium. You know I have been long RBAK, so this is good news. I just wish I had bought more when it was lower.

In other news and notes:
  • Has anyone out there used Google Checkout? (lemme know)
  • Asian markets strong overnight
  • FOXH reduces Q4 revenue guidance
  • Pres. Bush speaking right now
  • Thomas Weisel makes bullish comments on RVBD
  • Stifel Nic starts HANS with Buy ($42 tgt)
  • NMX profiled in IBD New America
  • FDX beats estimates, lowers guidance; stock down
  • CLZR files patent lawsuit against PMTI
  • VOL announces 3-2 stock split (remember when people used to trade off this?)
  • RBC lowers estimates for YHOO
  • New iPod Shuffle sales approx. double from last year


Tuesday, December 19, 2006

Fed's Fisher Comments on Economy

Fed governor Fisher is out making comments on the US economy today. Here is a summary of those comments:
  • Inflation pressures have reached a "stasis", but at too high a level
  • Cannot say with conviciton that inflation has turned the corner
  • Sharp correction in housing may not yet be over
  • Will not be surprised to see 2H07 GDP growth above 2%

I continue to believe that the hawkish Fed comments on inflation are just jawboning, and that inflation has likely already peaked for this cycle. Commodity price increases were exacerbated by record fund flows, and likely skewed inflation expectations.

Snapback in Inflation Not Very Worrisome

The market is getting whacked at the open. The two main culprits this morning were a mini crisis in the Thai baht, and a bigger than expected jump in the producer price index.

The core PPI rose +1.8% (vs. +0.9% consensus). Some of this was likely due to a bounceback after last month's record drop in the PPI. Regardless, the inflation aspect is not worrying the bond market too much, as the 10-year yield is down slightly to 4.58%.

A former colleague of mine used to be fond of saying that fast moves come from false breakouts. This is what we could be seeing with the Nasdaq. After making a false breakout, the NDX has had a quick 2% drop.

You know that I prefer a market that opens weak. It is possible that this could be setting us up for a turnaround Tuesday. But its still early, so this could be wishful thinking. I do like it that GOOG is up so far today though. Ditto AKAM and SNDK.

After the Thai govt. tried to impose currency restrictions, the blow to the market made them immediately reverse their decision. Strong conviction, huh?

In other news and notes:
  • Cramer hypes GMKT. Does he read my blog?
  • Asian markets plunge overnight
  • UNH issues in-line guidance for 2007
  • BIDU target raised to $128 at Goldman
  • Hambrecht raises RVBD target to $40
  • APSG misses EPS; stock gaps lower
  • CC misses EPS, guides revs lower; stock -18%
  • UBS updgrades CWTR to Buy from Neutral


Monday, December 18, 2006

Standout Stocks

My Stock of the Day is Sandisk (SNDK)

Last week, I added to my position as I felt the stock was simply trading at to cheap of a valuation.

Today, management announces that they agree, and initiates a $300M stock buyback.

The stock has been up all day, on solid volume, despite a weak and sloppy tape.

Other stocks making notable, high-volume moves include:
  • TEX
  • LFC
  • RBAK
  • IAAC
  • NYX
  • GROW
  • RIMM
  • POWI
  • NAV
  • LLL
  • DWSN
  • SMSC
  • SJT
  • MATR
  • ECA


Nasty Action

Sometimes you hear about a "post options-expiration hangover". If that's what today is, I sure am feeling it. Now you know why I don't like markets that open strong. When they fade, it can turn ugly.

Small caps are taking it on the chin (-1.5%), but nearly all sectors are lower. Energy and commodities are down the most (-2.5%), followed by biotechs (-1.0%). The only sector that is higher are financials.

Investor Sentiment Check

There is a differing picture in the options market today.

The CBOE put/call ratio has been elevated all day, and is currently 1.02.

The ISEE has been flashing very bullish readings, and has been above 200 all day.

I am not sure what to make of the disparity. It is likely that the CBOE ratio is being skewed by index put buying, as funds reload on puts that expired last week.

Monday Morning Musings

The market is getting another nice bounce at the open. It seems like that has been the pattern lately. Of course, I prefer a market that opens weak and builds strength into the close. But I still think last week's breakout of the COMP should have some legs.

More M&A activity is helping, like this morning's $26 billion offer for Caremark (CMX) by Express Scripts (ESRX).

Oil and gas are lower again, weighing on the energy complex. Bond yields are flat, hovering just below 4.60%.

Semis are the strongest group so far, while energy and commodities are the weakest.

In other news and notes:
  • Barron's mentions insider selling at ZUMZ
  • H gets acquired by Apollo Management for $9B
  • BMET now in focus of private-equity firms
  • Asian stocks rise overnight
  • UA, formerly UARM, moves to NYSE
  • SNE to enter video download market
  • JOYG beats earnings, stock gaps higher
  • WSJ questions GOOG's earnings power
  • AKAM downgraded to Hold at Kaufman
  • JNJ added to BofA's Fresh Money Focus List
  • GOOG estimates raised at JP Morgan
  • SNDK announces $300M stock buyback


Friday, December 15, 2006

Standout Stocks

My Stock of the Day is General Electric (GE)

The stock has had its best 2-day spurt in roughly three years. There is no real news today either.

This week the CEO talked about achieving +10-13% earnings growth. GE also boosted its dividend a little. But most of this action is simply portfolio managers adding to their holdings, moving into large-caps, and jumping on the positive technical action.

Other stocks making notable, high-volume moves today include:
  • HXM
  • NITE
  • AXR
  • GMKT
  • LFC
  • RIMM
  • FMCN
  • PCP
  • PRAI
  • ZOLT
  • BDK
  • TECD
  • OMRI
  • FWRD
  • SHFL
  • BBW

long GE, GMKT

Investor Sentiment Check

Sentiment indicators are mixed today, and likely being skewed by options expiration.

The ARMS index is above-aveage at 0.96.

But the CBOE put/call is low at 0.69. The ISEE is about average at 142.

I think the market will chop around into the close. But I think yesterday's breakout was meaningful, especially on the Nasdaq, and we should see more strength next week.

CPI Offers Another Benign Inflation Datapoint

The markets are again bouncing at the open. The Nasdaq hit a new high this morning. Better late than never. I expect it to resume its leadership role in the near future.

The CPI data came in below expectations (+0.0% vs. +0.2% consensus), a bullish sign. This should again help ease the inflation fears. To wit, the 10-year yield is falling 8 basis points this morning to 4.51%.

Oil and gold are also down slightly, while the dollar is firming. The dollar has actually been strong all week.

The AMG fund data show more outflows from equity mutual funds, though ETFs showed inflows. But again, money markets saw the biggest inflows ($17 billion). I think if the Fed cuts rates next year, this mountain of money could begin to look for a home in riskier assets.

In other news and notes:
  • AMGN CERA trial pushed out 3 more months
  • AAPL delays filing 10-K; will need restatements
  • Asian and European markets strong overnight
  • ThinkEquity starts CTXS with Buy, $40 tgt
  • TW defends SIRF; mkt remains barely tapped
  • ITW cuts Q4 EPS guidance
  • USAK lowers EPS guidance
  • BSC target upped to $190 at BofA


Thursday, December 14, 2006

My Stock of the Day is Research In Motion (RIMM)

Yesterday I took a trading long in RIMM as the stock bounced off support at its 50-day moving average. The stock picked up strength yesterday into the close.

Today, it is getting a nice pop on bullish comments from Amtech and RBC. Amtech upped its target to $175, and said it expects RIMM to "blow-out" guidance next week, and that it would be an aggressive buyer ahead of the quarter. RBC said it expects the company to raise guidance due to strong Pearl sell-through.

This is just a trade for me, so I can't say that I will still be around for next week's earnings report. The last earnings report was obviously a huge catalyst for the recent run, so it's reasonable to expect another strong quarter. But the risks have increased also, due to the lofty valuation.
Other stocks making notable, high-volume moves include:
  • LNET
  • DWSN
  • RBAK
  • AXR
  • CRVL
  • RIMM
  • DAKT
  • ININ
  • ASFI
  • STST
  • GMXR
  • SIRF
  • NTRI
  • IPS


Midday Check

The market continues to hover in new high ground territory, at least for the Dow and SPX. The COMP still has some work to do before it gets to new highs. But as it appears to be breaking out of its three-week consolidation, I expect it to reach new highs soon.

The ARMS Index is very low today, but that is offset by higher levels of bearishness showing up in the put/call ratios. The CBOE put/call hit 0.95 a little while ago, and the ISEE has dropped to an extremely low level of 93.

I am not sure if some of these figures are being skewed by expiration, but they are worth mentioning nonetheless.

Ready For Another Leg Higher?

The market is getting a pop at the open. The SPX just made a new high, while the COMP looks poised to breakout from its three week tight consolidation. I sense another short squeeze in the works.

Oil is trading up, above $62, boosting the energy complex. The 10-year yield is also a bit higher at 4.59%.

Semis, biotechs, and retail are strongest out of the gate so far. Materials are lagging.

In other news and notes:
  • Big SIRF customer finds second source for chips
  • ZMH offers conservative guidance
  • PPDI mentioned in Barron's Online
  • GE wins $1B Saudi gas turbine contract
  • Asian markets strong overnight
  • LEH beats EPS by 4 cents
  • Jeffries starts STP with Buy ($38 target)
  • DRIV downgraded to Neutral at Credit Suisse
  • GERN down on stock offering
  • HLT target upped to $45 at BofA
  • RTSX target upped to $40 at Needham
  • Amtech raises RIMM target to $175 ahead of qtr
  • STEC profiled in IBD

long GE, SIRF

Wednesday, December 13, 2006

Standout Stocks

My Stock of the Day is Ansoft Corp. (ANST)

This is a software company that makes electronic design automation software. The stock has been holding up very well of late, improving its relative strength. It also has been forming a bullish looking chart pattern known as a cup-and-handle.

This formation has been in the works for roughly 8 weeks, a good amount of time for a consolidation. The stock appears poised to break out from these levels soon. It's 52-week high is 28.60. I think any near-term breakout will lead to new highs.

Price/volume activity and money flow has also been very positive.

Other stocks making notable, high-volume moves include:

  • GSOL

  • TS

  • CPA

  • MIKR

  • GIFI

  • CRVL

  • UAUA

  • ININ

  • COO

  • OXPS

  • ACLI

  • ALO

  • NCTY

  • DIOD

  • CSX

long ANST

Bearish Sentiment Picking Up

This week, the Ticker Sense blogger sentiment poll reached a new low since its inception. The spread on the AAII bull/bear survey is also back in negative territory (more bears than bulls).

Today, we are seeing an uptick in the options indicators. The CBOE put/call ratio opened above 1.0, and the ISEE just fell to 114, showing increasing pessimism.

These datapoints should continue to limit the extent of any pullback. I continue to expect another rally into year-end.

Retail Sales Stronger Than Expected

The market is getting a nice bounce at the open, on the heels of a stronger than expected retail sales report. There was also a big pop in the mortgage applications data. The news of economic strength has bond yields up also, with the 10-year hitting 4.55%.

Retail sales rose +1.0% vs. +0.2% consensus. That's a pretty strong showing, and should ease some of the fears about an imminent collapse in consumer spending due to the housing weakness.

Oil is trading a bit lower, around $61, and the energy stocks are mixed.

In other news and notes:
  • Qantas rejects $8.6 billion bid
  • HLT reaffirms 2007 guidance
  • RTSX reaffirms 2007 EPS guidance, raises revenue range
  • OPEC ministers may hold off on more oil cuts
  • MIKR profiled in IBD (big breakout on Monday)
  • MBA mortgage apps +11.4% for last week
  • Digitimes says Mio Tech grabbed top PND mkt share
  • TIBX raises Q4 rev and EPS guidance; stock higher
  • Morgan raises tgt on AAPL to $110 from $90
  • Herb Greenberg cautious on NTRI (CNBC)
  • Mkt not impressed with OXPS November DARTs
  • UBS raises GE target to $40

long AAPL, GE

Tuesday, December 12, 2006

Standout Stocks

I debated even posting a Stock of the Day today. But if I had to, I would pinpoint General Electric (GE).

The stock is up nicely, in a down market, after reaffirming EPS guidance and raising its dividend. Management expects EPS growth in 2007 of +10-13%, and believes they are ideally positioned.

The stock is spiking above its 50-day average, on a big surge in volume.

Other stocks making notable, high-volume moves include:

  • PAY

  • DAKT

  • HANS

  • CRM

  • MICC

  • COO

  • BBY

  • SEH

  • NAV

  • RS

  • ACLI

  • NUE

long GE

Fed Holds Rates Steady, Sees Lower Inflation

The FOMC held rates steady at 5.25%. The stock market is rallying a bit on the news, though there is still a lot of time left today. Bond yields are moving slightly lower, now at 4.50%.

The Fed's comments seemed slightly more dovish to me, as they related to inflation. Here is a quick summary of their comments:
  • Additional firming depends on outlook, data
  • Inflation pressures seem likely to moderate over time
  • Economy likely to expand at moderate pace
  • Fed sees reduced impetus from energy prices
  • Economy reflects 'substantial cooling' in housing

The bond market is still signaling pressure for the Fed to cut rates sooner rather than later. But it sounds like the Fed would prefer to stay on hold awhile longer. As such, we will truly be in a data dependant environment.

Mid-morning Update

The market is seeing increased selling pressure so far this morning. I don't think it is due to anything more than pre-Fed jitters.

The ARMS index is above average at 1.50. The CBOE put/call ratio is also slightly elevated at 0.93. The ISEE is also showing slightly elevated levels of bearishness at 138.

I am staying a bit cautious here, as anything can happen on Fed days. But I will look to add to my long exposure if weakness lasts a couple of days.

Hurry Up And Wait (for the Fed)

The market is fairly flat at the open, which is to be expected ahead of today's FOMC meeting. It is almost assured that the Fed will not change rates. I am also fairly certain that the language will offer little change. Nonetheless, traders will scour the language for any little nuance that hints about a more hawkish or dovish stance.

Oil is up slightly this morning ($61.75), while bond yields are lower (4.51%).

Goldman Sachs (GS) trounced the earnings and revenue estimates on the Street. It was an impressive quarter, and while there is some profit taking int the stock as I write, I don't expect it to last long. Estimates for 2007 should begin to be revised higher.

In other news and notes:
  • TXN lowers Q4 revenue guidance range
  • JMP downgrades WFR based on valuation
  • BBY misses EPS estimates; stock lower
  • NVEC granted MRAM patent
  • Trade Balance below expectations (-$58.9B vs. -$63B)
  • Goldman raises estimates on RIO
  • EPIX +50% on pact with GSK
  • CBS may lose $100M NYC transit contact
  • JPM starts HANS with $44 target (Focus List)
  • NUE misses EPS estimates; stock gaps lower
  • Cowen bullish on RTSX
  • TSG gets bought out by private equity group

long GS

Monday, December 11, 2006

Standout Stocks

My Stock of the Day is Energy Conversion Devices (ENER).

The stock is getting a nice bounce on the news that IBM and friends are working on a new phase change memory flash chip that could result in royalty revenues for ENER.

Merriman noted today that they believe there is little if no value being given in the market for this division, as reflected in the current price of ENER.

Today, the stock is spiking higher on a big surge in volume. It is also brushing up against its overhead 200-day. But clearing this resistance level would pave the way for more gains in the near future.

Other stocks making notable moves today include:

  • PMTI
  • MIKR
  • LINE
  • CAL
  • AXR
  • ZOLL
  • TCK
  • HUBB
  • MDCO
  • CUTR
  • VRTX
  • NTRI
  • SSD
  • DIOD
  • TNB

long ENER

Monday Morning Musings

The market opened under a bit of pressure, but has quickly moved back into positive territory. This week is options expiration week, which could bring some additional volatility.

Oil is trading lower this morning, and bond yields are also moving lower. The yield on the 10-year is down to 4.52%, after the big spike higher on Friday.

Financials are strong out of the gate, as is tech. Energy and biotech are lower so far today.

The bond market is still pricing in rate cuts for 2007, and the 10-year yield seems mired in a downtrend. So the question becomes, how far does one extend maturities in their fixed income portfolio? I am employing a dumbell approach.

In other news and notes:
  • Asian markets rise overnight
  • NUVO crushed (-80%) after Phase 3 failure
  • BofA names CTXS its top mid-cap pick for 2007
  • GSOL spikes higher after Cramer hypes it
  • PMTI gaps +15% on FDA approval of consumer laser
  • Goldman expects TXN to lower guidance tonight
  • Merrill cuts oil forecast for 2007 to $60 (from $65)
  • Bear ups WYNN target to $108
  • Goldman raises NYX target to $120
  • Piper says channel checks point to strong Mac sales
  • FBR economist cuts 10-yr forecast to 3.90%
  • GRMN upped to Buy at Soleil ($58 target)
  • PAY profiled in IBD today
  • SNN close to $11B bid for BMET

long AAPL, GS

Friday, December 08, 2006

My Stock of the Day is Redback Networks (RBAK).

The stock gapped higher yesterday on a huge spike in volume, and is adding to its gains today with another +6% move.

The company recently won a big network contract in China, and this could lead to more business in the region, where telecom companies are spending to upgrade their networks and add broadband, IPTV, and VPN services.

The stock is bumping in to its overhead 200-day moving average, which will likely present some resistance. Beyond that, the stock still has room to run before it gets back above the $24 level, where it reached back in June.

Other stocks making notable, high-volume moves include:
  • BCS
  • MDCO
  • PAY
  • NHWK
  • BWLD
  • FFIV
  • FFH
  • OII
  • BIDU
  • CENT
  • CBST
  • SHOO
  • LQDT
  • XLNX
  • BCG
  • ECOL
  • NDE

long RBAK

Payrolls Come In Above Expectations

The market got a small bounce at the open, but has since slipped into negative territory. Nonfarm payrolls came in at +132,000 (vs. +105,000), providing more data for the soft landing thesis to hold.

Oil and gold are moving higher, while the dollar is falling again. Bond yields are also up a bit, with the 10-year at 4.50%.

There were a couple of earnings warnings from chip companies last night, and that is weighing on the tech sector. The brokers are up, and so is the energy complex.

In other news and notes:
  • Asian stocks fall overnight
  • DJ reports BofA "very interested" in BCS
  • WSJ says OPEC likely to stand pat on oil production
  • CIBC still bullish on ENER
  • MCD reports strong Nov. sales
  • XLNX lowers Q3 revenue guidance
  • CSCO CEO says more acquisitions to come
  • TW sees strong sales trends in LCD TVs
  • CMOS raises JanQ revenue guidance
  • CHK prices 30M share offering
  • Heelys IPO prices at $21, above range
  • Mich Sentiment 90.2 vs. 92.0 consensus

Thursday, December 07, 2006

Nasty Reversal Day

The market was up for most in the early part of the day, but reversed into negative territory by the close. This made for a negative, outside day. Moreover, volume rose on the Nasdaq, making for a distribution day.

Of course, we should expect a day of distribution here and there, especially after the run the market has enjoyed. We just don't want to see several distribution days pile up in a short period.

The market was a bit extended also, so this is just more of the stair-step pattern we have seen. The Nasdaq was slightly oversold coming into today's session (oscillator), so that should help mitigate any decline as well.

Investor sentiment was around average. The ARMS Index was above-average at 1.17. The CBOE put/call ratio was about average at 0.86, and the ISEE fell slightly to 152. It will be interesting to see if bearish sentiment quickly grows again, and if the bears start calling it another "market top".

Standout Stocks

My Stock of the Day is Akamai Tech (AKAM).

The stock was added to Amtech's Focus List this morning, which caused the initial spike.

This stock had been consolidating, making today's breakout more noticeable. Volume is surging higher, as the stock breaks to new highs. With no more resistance ahead of it, the stock could see some running room.

This stock is not cheap, but investors like its fast growth and dominant industry position.

Other stocks making notable, high-volume moves include:
  • ZUMZ
  • GLDN
  • BCS
  • COG
  • NUE
  • NTRI
  • ATLS
  • CS
  • KEYS
  • CREE
  • GIL
  • CRVL
  • BIDU
  • PPP
  • AMLN
  • HSY

long AKAM

ECB Says Don't Expect More Rate Hikes

The market got another boost at the open, sending the DOW to a new high. Oil is trading down below $63, and bond yields are steady at 4.48%.

ECB President Trichet said, after raising rates to 3.50%, that it would be "wrong" to conclude that it will raise rates further. The market had been pricing in a move to around 4.0%.

Financials are getting a nice bounce, while housing stocks are giving back a little of their recent gains. Industrials are mostly higher also, while other sectors look mixed.

In other news and notes:
  • Monster Employment Index hits 175 in Nov.; new high
  • JOSB beats earnings by a penny
  • GOL lowers EPS guidance
  • FBR thinks likelihood of Epo price cuts for AMGN is low
  • BofA initiates ZUMZ at Buy ($41 tgt)
  • LQDT reports earnings, stock down
  • RIMM downgraded at Morgan Keegan
  • Pru raises target on GS to $215
  • Morgan says price competition hurting GRMN
  • CREE lowes guidance for Q2
  • ADI increases buyback by $1 billion
  • Amtech adds QCOM to Focus List
  • IR being mentioned in LBO chatter


Wednesday, December 06, 2006

My Stock of the Day is Intuitive Surgical (ISRG).
I have highlighted this one recently, but on a day where the averages are struggling, I wanted to highlight it again.
The stock is breaking above its 50-day average day today, which should clear the way for more gains. The overhead 200-day is still looming, but I expect the stock to work its way through both of these resistance layers in the near future.
Investor sentiment measures are running about average. The ARMS index is at 1.0, and the CBOE put/call has risen from 0.77 at the open to 0.90 currently.
Other stocks making notable, high-volume moves include:
  • LQDT
  • BIDU
  • OMRI
  • UARM
  • DIVX
  • WFR
  • GROW
  • CPTS
  • BTH
  • PNRA
  • IDCC
  • DIGE
  • TXT

long ISRG; short TXT

Expecting A Modest Pullback

The market is opening under a bit of selling pressure, which isn't surprising after the last 2 days. I expect to see a mild pullback, and hopefully the put/call ratios won't drop too low.

The big news this am is the management shake-up at Yahoo (YHOO). Three key executives have resigned, as the company faces increasing pressure to monetize its search better to compete with GOOG, as well as get its stock price going again.

I don't think CFO Sue Decker has near enough vision to take over the CEO position. Actually, I think the company should sell itself. It would be awesome if GOOG would just buy them, but I don't think it will happen.

Oil and commodities are trading lower so far. For its part, the 10-year yield is up a couple bps to 4.46%. The low yields are giving another window to mortgage borrowers who took out floating rate loans and now have a nice opportunity to lock in those low rates and not risk ballooning payments. I suspect that window may stay open for awhile now also.

In other news and notes:
  • NTLI drops bid for ITV
  • RBAK announces deal with China
  • Asian stocks rise overnight
  • MRK reiterates guidance
  • TSCM started with BUY at First Albany
  • CROX tgt raised to $53 at Piper Jaffray
  • QCOM talking about 4G tests
  • ADP sees 158k jobs added in November
  • MA tgt raised to $120 at KeyBanc
  • Bear Stears says GOOG intl. mkt share hit 73%
  • Bear says 1H07 risks built in SNDK; Buy
  • DOCC to be acquired by private firm
  • IDCC lowers Q4 guidance; stock down


Tuesday, December 05, 2006

Quiet Accumulation Day

After yesterday's strong rally, the market was able to add to its gains today. Volume levels rose a bit, making for a quiet accumulation day (on the NYSE).

Breadth was mixed, but the number of new highs on the NYSE rose again, reaching +547. I can't remember the last time I saw a figure that high. (Although I'm sure Real Money's Helene Meisler will remind me)

Housing stocks led the way, big time (+2.0%); followed by semis (+0.8%) and retail (+0.7%). All of the major economic sectors were positive on the day.

Oil closed flat, around $62.50, and the 10-year yield finished at 4.44%. In case you missed it, PIMCO's Bill Gross said on CNBC that he thinks the 10-year yield could move to the low 3's over the intermediate-term.

My Stock of the Day is Qualcomm (QCOM). I was going to highlight URBN, which is making a strong continuation breakout on rising volume. But QCOM looks like it is closer to emerging from a consolidation.
The stock got a boost this morning from chatter than China is close to issuing 3G licenses. Also, the company said that it is going to move into the laptop connectivity space, which is a large and growing market.
This has the stock rising nicely today, on a big increase in volume. There is some near-term resistance around $41.75, which is the area where the stock will run into its overhead 200-day. But money flow and relative strength are both turning upward, which should help.
Other stocks making notable, high-volume moves include:
  • NVO
  • FTEK
  • UARM
  • AXR
  • OMG
  • IAAC
  • GROW
  • NTSK
  • HSIC
  • GMRK
  • CNC
  • ROK
  • CHAP


More Data On Investor Sentiment

In the past, I have posted that I like to track the bull/bear spread in the investor sentiment surveys. Birinyi Associates has a relatively new (weekly) sentiment poll that it conducts from the "top investment bloggers".

I recently went back and added this data to my spreadsheet since the inception of the poll, which was July 2006. I was expecting to see that blogger sentiment was more bearish during the summer swoon, and has become less so more recently.

In fact, I found the opposite has occurred.
  • The bull/bear spread at inception in July was -2% (29% bulls, 31% bears).
  • It has now moved to -19% (24% bulls, 43% bears), the most bearish reading since the poll began.

Just one more anecdotal piece of sentiment data that points to the 'wall of worry' still firmly in place.

Signs of Economic Strength

The market is getting a nice bounce in early trading. Oil prices are back above $63, which is helping many of the energy stocks. But unit labor costs were revised lower, which is easing some inflation worries.

The ISM services index came in stronger than expected (58.9 vs. 57.1). This has bond yields rising a it from recent lows, sitting at 4.45%.

Tech stocks are leading the way so far, with the SOXX +1.1%. Housing stocks are also doing well after TOL reported earnings. Brokers are flat after yesterdays nice bounce.

In other news and notes:
  • Asian markets mixed in overnight trading
  • AZO beats EPS; stock higher
  • Wachovia upgrades health care REITs
  • SIRI lowers subscriber guidance
  • Oppenheimer upgrades AQNT to Buy
  • Hambrecht positive on NAND flash market in '07
  • TWP raises estimates for UARM
  • QCOM up on news it will enter laptop connectivity mkt
  • UBS checks show strong iPod sales into year-end
  • SBUX up on UBS upgrade
  • RSH up on LBO takeout chatter
  • DRCT +25% on news of sale

long QCOM

Monday, December 04, 2006

Just What The Bulls Ordered

Nice snapback rally. After last week's downside, I thought the markets would consolidate for awhile before attempting another stab at new highs. But today, the SPX broke to a new multi-year high.

Just goes to show you, in the market-- anything can happen at anytime. I think those sitting and hoping for a pullback are getting very nervous.

One of the bears' arguments is that the number of new highs in the market has been contracting. Scratch that one off the list today as well. There were 475 new highs on the NYSE! And only 6 new lows. That is some strong breadth.

Volume didn't surpass Friday's levels, but it was still a nice showing.

Standout Stocks

My Stock of the Day is Nucor (NUE).
Despite concerns over slipping steel prices, shares of NUE are spiking sharply higher. Volume is also rising noticeably.
I have been worried about the steel stocks, but they continue to exhibit surprising resiliency.
Other stocks making notable, high-volume moves include:
  • CHDX
  • ZOLL
  • MIKR
  • VIP
  • PNK
  • ATHR
  • LVS
  • PFE
  • LSTR
  • WNS
  • CRR
  • POWI

Mutual Fund Monthly

As part of our mutual fund program, I monitor a fairly broad list of funds with solid track records. Here are the top and bottom five funds from my short list. The returns are YTD, as of last Friday.

Top 5
DREGX (+35.7%)
TREMX (+27.9%)
BPTRX (+20.5%)
WASAX (+19.2%)
HDPMX (+17.5%)

Bottom 5
MFOCX (+5.4%)
QUAGX (+5.6%)
TMGFX (+6.9%)
PRNHX (+7.0%)
SWHEX (+7.7%)

The trends here haven't really changed. Foreign and emerging markets have added to their relative outperformance. And funds that hedge their positions (take long and short positions) have lagged. Growth funds have also started to improve on their lagging performance.

long several funds mentioned

Monday Morning Musings

The market is getting a nice bounce in early trading. Oil is trading lower, which is weighing on the energy stocks. But it seems to be helping the rest of the market. The 10-year yield is also bouncing, but still low at 4.45%.

PFE is taking a big hit this morning (-15%) after cancelling tests on its new, blockbuster cholesterol drug.

There is also a healthy dose of M&A activity this morning that is likely boosting stocks. Bank of New York (BK) and Mellon (MEL) announced a merger; Station Casinos (STN) is being taken out; and LSI will acquire Agere (AGR).

In other news and notes:

- BIDU to enter Japanese search mkt in 2007
- Goldman to sell Horizon Wind subsidiary
- WAG reports strong Q1 sales
- Samsung expects +10% rise in mobile shipments in 2007
- TWP bullish on SIRF due to handset opportunity
- Amtech raises AAPL tgt to $99
- Hambrecht expects banner year for RACK
- STEC raises guidance
- Bear raises GOOG tgt to $600


Friday, December 01, 2006

Standout Stocks

My Stock of the Day is Nymex Holdings (NXM).

This is the recent IPO of the Nymex exchange. Since going public, the stock has retreated in 7 of the last 8 sessions. Today, the stock is rising, and has been positive all day, despite the weakness in the broad market.

This is really a short-term trade for me. But I think the stock could bounce in the short-term, as it has pulled back from $150 to $115 quickly.

Other stocks making notable moves today on high-volume include:
  • WBD
  • GIFI
  • NVLS
  • VIP
  • LXK
  • CNS
  • GDP
  • NDAQ
  • CAKE
  • HSY
  • TRI

long NMX

Investor Sentiment Check

The selling in the market continues to be heavy. Tech and small caps are leading the way on the downside, while energy and materials are the few up sectors.

Oil is trading around $63, while the yield on the 10-year is down 3 basis points to 4.43%.

As for investor sentiment, it is not flashing as much pessimism as I would like to see.

The ARMS index is above average at 1.33. The ISEE is below average at 123. And the CBOE put/call is about average at 0.87.

On a bid down day like today, I would expect to see more concern.

More Weakness in Economic Data

The markets are selling off in early trading on the heels of another weak manufacturing report. The ISM Index came in at 49.5 vs. 52 consensus. This has the markets worried that the economy may be weakening.

Stocks are coming under selling pressure, but it is still early. Yesterday, we saw the markets shake off early weakness and finish flat. Today, December 1, historically has been a strong day for the market. So we shall see.

The 10-year yield, which has been signaling a greater worry about economic growth vs. inflation for some time, is down to 4.45%. More inversion, more pressure on the Fed to cut.

In other news and notes:
  • New alert on possible Internet attack on financial websites
  • Thomas Weisel says weak dollar could help large biotechs
  • Channel checks show aggressive pricing by GRMN (TW)
  • BofA makes VLO their top pick
  • UNH appoints new CEO (former COO)
  • Stanford raises GOOG target to $615
  • ISE reports ave. daily trading volume +22.2%

long GOOG, ISE