Monday, April 30, 2007

Standout Stocks

My Stock of the Day is BE Aerospace (BEAV)

The stock gapped higher this morning after reporting better-than-expected earnings. The company has topped expectations for several quarters, so this wasn't a big surprise.

The aerospace cycle is in full force, with Boeing and several others reporting strong earnings as well. BEAV didn't just beat estimates, they raised forward guidance as well. Margins were strong, and the backlog increased once again. This makes for very good visibility at the company.

I have been bullish on BEAV for quite a while now, but I am not selling yet. I think the stock could pullback from overbought levels, but will ultimately continue higher as earnings growth continues at above-average rates.

Other stocks making notable moves on above-average volume include:

  • Rising Stocks


  • Falling Stocks



ISE Gets A Bid

I was debating with a colleague last week whether ISE would get a buyout bid or not. So this morning when I came in and saw my position up +40% on the news, I was elated. There is no better feeling.

Asian markets were lower overnight, and our major indexes are down also. I would think we would see some consolidation after the recent gains. The S&P and Nasdaq are up +5.2% and +5.6%, respectively this month. It's nice to see that our bullish stance following the late Feb. correction paid off.

This morning's inflation report was good. The core PCE was flat, bringing the year/year rate down to 2.1%, withing the Fed's preferred range. Bonds rallied on the news, and the yield on the 10-year is down 5 basis points to 4.65%. Nice.

The poll I ran on the site showed an overwhelming response for more stock ideas. Actually, market updates were the lowest tally. So I will make changes going forward to the daily format to include more stock ideas and technical analysis. This will include more charts with comments, more stock screens, and more trade updates.

I still have my small AMZN short on, but the stock isn't pulling back yet. I am still on the fence between adding to it, or just closing it out.

long ISE; short AMZN

Saturday, April 28, 2007

Second Feedback Request

What would you like to see more of on this site?

Market Updates

Technical Analysis

Stock Ideas

Personal Finance

Economic Commentary

Other free polls

Friday, April 27, 2007

Standout Stocks

My Stock of the Day today is Cognizant Tech (CTSH)

This is a business process outsourcing company doing big business in India. The stock has been under pressure since breaking down in late March. But the correction looks to have run its course, as the stock is breaking back above its 50-day today on rising volume.

I think the move can continue, and the stock could go on to new highs. Of course, the company reports earnings May 2nd, which could either provide a roadblock or a catalyst to get there.

The market is once again proving incredibly resilient. This mornings weakness, on the heels of the weak economic data, is being shaken off and the major indexes have moved back into positive territory. This despite a rise in oil prices (near $66.50), and slightly higher bond yields (4.70%).

Investor sentiment is again very bearish, with the ARMS Index at 1.20, the CBOE put/call at 1.02, and the ISEE Index at 137. We have yet to see any big bullish flashes in sentiment during this rally. Classic example of the market climbing a 'wall of worry'.

Bond Market More Worried About Growth Than Inflation

The economic data this morning was weaker than expected, and there was an inflation reading that showed a big jump. But bond investors don't seem too worried.

Q1 GDP game in at +1.3% (vs. +1.8% consensus), showing pretty slow growth. The inflation component of the report showed a big jump. But the bond market took it in stride. The yield on the 10-year Note remained steady at 4.68%. Inflation is normally a lagging indicator, so if the economy is slowing, you might expect inflation pressures to ease going forward.

MSFT reported very strong earnings last night, and the stock gapped +5% higher this morning. This is helping lift the Nasdaq, even while the S&P is lower.

Asian markets were lower overnight. The Dow has been up for 18 out of 20 sessions. This is quite a run. The Nasdaq has been up for 4 weeks in a row, a feat I haven't seen in quite a while. I expect the market to pause soon, and consolidate some of its recent gains.

Thursday, April 26, 2007

Taking A Small Short In Amazon

I finally decided to dip my toe in the water and fade a little AMZN. The short squeeze could take this think higher still, so I just put on a small position, and may add to it tomorrow if the momentum starts to fade. I don't want to step in the way of a speeding train and ruin my P&L.

But the 2-day spike looks like a blowoff to me. You can see how overbought the RSI indicator above it.

Another setup I like is that of Las Vegas Sands (LVS). The stock has been consolidating nicely since its correction in early February. It is now hovering back above its 50-day, and looks poised to break above its recent resistance.

The parade of strong earnings reports continues, and helps put a bid under stocks. The firm demand is likely a result of underinvested managers trying to build up their long exposure, while shorts are trying to reduce their short exposure, both of which exert upward pressure on this market.

long LVS; short AMZN

Charts of Interest

I often like to make notes of stocks that are gapping higher (or lower) on good volume. Many times, although these moves look overdone in the short-term, they are often precusors to a new trend at hand.

Here are 10 candleglance charts that I think look interesting right now.


Strong Earnings Reports Continue To Roll In, Drive Market

The market got a small bounce at the open, on the heels of several more better-than-expected earnings reports. So far, much like I expected, earnings growth has come in above analyst expectations for Q1. And guidance has been solid as well.

Last night, Apple (AAPL) reported truly blowout earnings. I couldn't believe my eyes, as they beat the estimates by 23 cents, or 35%. Gross margins were much higher, and the company sold a ton of Macs also, which really boosts the bottom line.

Qualcomm (QCOM) also had a solid earnings report last night, although they didn't raise guidance as much as some had hoped. And F5 (FFIV) reported solid results, but expectations were so low that the stock gapped 20% higher this morning.

Other solid reports this morning came from XOM, MMM, AET, BMY, and CAH to name a few.

Asian markets were up nicely overnight. The dollar is up vs. the Yen and Euro. Oil and gold are both trading lower, and the 10-year is stable at 4.65%.


Wednesday, April 25, 2007

Are The Bears Crying 'No Mercy' Yet?

I have three Stocks of the Day today:

AMZN is up huge on a giant short squeeze. Short interest in this stock had grown to 16% of float, a high number. Those who came into today short this stock are having a nightmare of a day. I bet they are having flashbacks of 1999.

AMZN is up +25% on giant volume. The quarter simply was not that great to justify this big of a move. I would like to short some, but do not want to step in front of this freight train. Maybe in the next day or two.

PMTI is breaking out of its long correction. The stock has fallen considerably from the mid-50s in early Feb. Today, it is gapping higher on a spike in volume. The stock looks like it could run. I would have taken a long position, but the company reports earnings tomorrow, and I don't want to take the event risk.

RVBD reported earnings last night that were much better than expected. Growth is on fire, and profitability is on the rise to boot. This stock is also gapping 20% higher today on enormous volume. I was long coming into today, thankfully, but took profits this afternoon. I still like the stock, but feel that this move is a bit overdone, and the stock will likely pull back a little.

The market is absolutely on fire today, on a day that no one was expecting a big rally. So many investors were caught off guard. Volume is very strong today also.

Looking For Low Priced Stocks

A client called me asking what low-priced stocks I liked? She wants to buy a bunch of shares and give them to her granddaughter as a long-term gift. She asked if I liked Ford (F), but I said no. I told her I would have to think about it.

What is your favorite low-priced stock right now? Please send me your responses and let's see what we can come up with together.

My top 2 right now are: Six Flags (SIX) and Level 3 (LVLT)

Amazon Crushes The Bears, Dow Hits 13k

I'm not sure why I mentioned Dow 13k in my headline. I think it was really to draw attention to how silly it is that this number will be flashed in the headlines all day long, while it really means very little. It is just a round number, and the Dow will likely continue to head higher. A much more meaningful number, imo, is S&P 1550 (it's all-time high). I expect this number to be taken out in the near future as well.

The market opened with a big pop this morning on the heels of some strong earnings reports and a strong economic report. But as often happens with strong opens, the enthusiasm was quickly sold into, and the market faded.

The durable goods report came in at a solid +3.4% this morning, getting a big boosts from aircraft orders. This also helped Boeing (BA) top estimates today, although the stock is lagging after management offered conservative guidance.

Amazon (AMZN) was the real surprise. The company trounced estimates, albeit aided by a lower tax rate, and raised guidance for Q2 and the full year. AMZN has pretty big short interest in it, so that caused a short squeeze from the get go. This morning, the stock gapped +20% higher. Ouch.

Asian markets were lower overnight. The 10-year yield is flat at 4.62%, and oil is higher at $65. I think oil looks vulnerable here as every trader is already long oil, due to the foregone conclusion that it is going to $70 in a heartbeat.

Tuesday, April 24, 2007

Market Shakes Off Weak Housing Numbers, Retail

Today was an interesting day. When I left for a meeting this morning, the market was weakening, and it looked like the bears were finally going to enjoy a good day, with the markets closing lower.

But I was shocked that when I got back a few hours later, the Nasdaq had shaken off all of the mornings early weakness. One of the things I noticed was that oil had reversed lower, and moved from above $66 to below $64. This probably helped improve sentiment.

Also, the semi index was on fire, gaining +3.1% on the day. This led all groups by a wide margin. Brokers pulled back the most, falling -1.4% on the day. While the S&P 500 Index was flat for the day, big-cap tech pulled the Nasdaq 100 Index up +0.47% for the day, a nice outperformance for this growth index.

I have to go jump on some earnings conference calls, but today had to be another incredibly frustrating day for the bears.

Weak Homes Sales Overshadow Strong Earnings Reports

There were some very good earnings reports this morning, and the market looked like it could get a boost. But once the weak home sales report came out, a wave of selling swept over the market. Nothing big, but it's still early.

Existing home sales fell -8.4% last month, the biggest decline since January 1989. Some of this decline was expected, as the sales figure was slightly below consensus (6.12 million vs. 6.45 million). Median home prices fell by a much smaller -0.3%. Looks like the bottom in the housing sector hasn't been made yet.

Before this report came out, there were some very nice earnings reports. AT&T (T) and DuPont (DD) both topped expectations, and Texas Instruments (TXN) not only beat estimates but raised Q2 guidance. This is really helping the semis this morning. Also, Express Scripts (ESRX) raised its full-year outlook.

On the downside, Target (TGT) said April sales will be "much weaker" than expected. I was surprised by this, as retail sales have looked strong lately. I am still trying to get a sense if this is just a company specific issue.

Asian markets were flat overnight. Oil is up a bit to $66.18, which is a negative. The market won't like it if oil keeps creeping toward $70. And bond yields are lower again, with the 10-year falling to 4.62%.

If the market doesn't sell off more on the home sales and TGT news, we could see another quick short-covering rally. My best case scenario would be for more sideways consolidation before the stairstep higher action resumes.

Monday, April 23, 2007

Standout Stocks

My Stock of the Day is Flamel Tech (FLML).

This is a nanotech stock that had a fabulous run last fall. The stock peaked in early February, and has been undergoing a correction.

The stock hasn't broken back above its overhead 50-day resistance yet, but its getting very close. Volume is strong today, and the stock looks like it has completed its correction. I would not be surprised to see this stock penetrate its resistance and enjoy a nice little run.

Other stocks making notable, high-volume moves include:
  • Rising Stocks


  • Falling Stocks


The market is trying to hang in from a bout of profit taking, and a fairly big spke in oil today. Volume is running pretty light, which is a plus. And bond yields are lower, with the 10-year at 4.65%. Investor sentiment guages are roughly in neutral territory.

Monday Morning Musings

Not a lot of fanfare at the open. There was some big M&A news over the weekend, but the market still seems to be more focused on earnings.

Barclays (BCS) announced it will acquire ABN Amro (ABN) for $91 billion, and sell its LaSalle Bank unit to Bank of America (BAC) for $21 billion. Also, AstraZeneca (AZN) said it will buy Medimune (MEDI) for $15.6 billion.

There we no economic reports this morning. The big report this week will be GDP on Friday. Asian markets were mostly flat overnight. The 10-year yield is up a touch to 4.68%. Oil is also up a bit to $64.20, which is helping the energy sector.

Biotechs are the strongest group so far, while semis are lower. I have raised a bit of cash, and will be looking for some sort of pullback before redeploying assets.

Saturday, April 21, 2007

Weekly Recap

Here is a look at's weekly wrap up--

Earnings propelled the stock market higher this week. The Dow posted the largest gain of the indices on the back of a number of good reports from key components. The market showed good resilience and momentum all week.

There was a heavy flood of earnings reports this week. About 25% of the S&P 500 companies have now reported. Individual stocks reacted favorably to better than expected reports, and companies with earnings at forecast were not punished. This reflects a good underlying tone for the market.

In reality, although earnings are beating Wall Street forecasts, this quarter is about in line with normal trends. That is, approximately 67% of companies are beating expectations. That is about the level of most quarters, but down from the near 70% levels of recent years when earnings growth was double digit.

The overall earnings beat is also tracking historical trends. Expectations as the quarter started were for first quarter operating earnings for the S&P in aggregate to be up about 3.5%. With one quarter having reported, that is now at about 5% (including forecasts for the ones not yet reported). Normally, the ultimate gain will exceed expectations by about 3%, sometimes more. The number of companies beating estimates and the total gain for earnings above expectations are therefore nothing out of the norm. And, the overall earnings growth this quarter will be an average 6% to 7%.

The reaction to the earnings says as much about market conditions as the actual earnings reports. The market has reacted very favorably to what could be considered a very average earnings season so far.

Good earnings this week included reports from: Citigroup, Eli Lilly, Wachovia, Coca-Cola, Johnson & Johnson, Wells Fargo, JP Morgan Chase, United Technologies, eBay, Harley-Davidson, Merrill Lynch, Caterpillar, American Express, Honeywell, and Pfizer, among others. IBM and Intel had only decent reports, but the stocks reacted relatively well. Yahoo was a notable disappointment.

The economic reports this week were also supportive to the stock market. March retail sales rose a larger than expected 0.7% with sales excluding the volatile auto component up 0.8%. March housing starts were up 0.8% to a 1.518 million seasonal rate and have now stabilized for five months. Housing permits were, coincidentally, also up 0.8%.

March industrial production was down 0.2%, but that was due to a large aberrant drop in utility output. The core manufacturing component was up 0.7%. The only slightly bearish economic release was a relatively high level of 339,000 in new claims for unemployment for the week ended April 14. That was down from 343,000 the week before but the trend before that was in the 310,000 to 325,000 range.

The best release of the week, however, was the March CPI data. The core rate was up just 0.1%. That was down from 0.2% in February and 0.3% in January. Total CPI was up 0.6%, but the low core rate helped ease inflation fears considerably.

Oil ended the week little changed at $63.38 a barrel, and the yield on the 10-year note dipped to 4.67% on the low inflation number.

The market enters another heavy earnings week with good momentum.

Friday, April 20, 2007

SBUX Finally Looks Like Its Breaking Out

My Stock of the Day is Starbucks (SBUX)

This stock has been mired in a serious downtrend since hitting $40 in November 2006. But now the stock finally looks like it has put in a solid bottom and is ready to move higher.

The stock is breaking above its downtrend and 50-day average on very strong volume today. The fundamentals at the company have continued to be strong, and they still have a ton on international growth ahead of them.

I am long the stock, and think investors will rush to get back into this beloved growth story once a new uptrend resumes.

Other stocks making notable, high-volume moves include:
  • Rising Stocks


  • Falling Stocks


Corporate Earnings Come Through In Shining Fashion

The market is getting a huge boost this morning on the heels of several stronger than expected earnings reports, and a lack of any economic data to worry about.

Asia was nicely higher overnight, and Europe was also higher this morning. The Yen is lower vs. the dollar, and the 10-year yield is stable at 4.67%.

But it was strong earnings reports from Google (GOOG), which crushed estimates, Catepillar (CAT), Honeywell (HON), Pfizer (PFE), Intuitive Surgical (ISRG), and American Express (AXP) that really got things going. Check out their charts to see how strong the reactions were. With so many pundits nervous about this upcoming earnings season, this is a welcome development.

So far, earnings growth this quarter is shaping up to be better than expected. All of the major indices are making new highs. And although I think the market is overbought short-term, this bodes well for continued gains later on.

Oil is slightly higher this morning, which is causing the energy sector to outperform so far. But it does not seem to be coming at the expense of the rest of the market. I am still skeptical of strong opens, so lets hope that this whole rally doesn't fade into a Friday close. Today is also options expiration day, which could be skewing the open.

Thursday, April 19, 2007

More Benign Consolidation

My Stock of the Day is Zumiez (ZUMZ)

This stock has been doing well this year, making new highs in early April. Since then it has pulled back and is now testing support at its 50-day average. This is often a low risk entry point. The stock is also reaching oversold territory.

I think the fundies are still on fire at ZUMZ, despite the negative sentiment for the retail industry. I want to start a position here and ride the growth.

Overall, the market is doing fine today. Given the news out of China and the selloff in Asia, this could have easily been a big down day. I'm sure the bears were salivating at the news before the open this morning. But they have to be extremely frustrated with the inability of this market to stay down.

The 10-year yield is stable at 4.67%, and oil is falling further, now down over a buck to $61.80.

Other stocks making notable, high-volume moves include:
  • Rising Stocks


  • Falling Stocks


Cavs Nab #2 Seed Heading Into Playoffs

I have to give a shout-out to my beloved Cavs, who finished the season with great momentum and nabbed the #2 spot in the Eastern conference. The Cavs won their last 4 games, and needed Chicago to lost to New Jersey last night to nab the #2 spot.

They had been the #5 seed, which would have made them the underdog playing Miami in the first round. Now, they get home court vs. Washington in round 1, and the Wizards are without their star player Gilbert Arenas, who single handedly gave the Cavs a run for their money last year in the playoffs.

If they make it far enough to play Detroit, they will certainly have their work cut out for them. But I couldnt' be more excited about the upcoming playoffs.

(the logo above is actually the Cavs logo from the 1970s. Remember World B. Free?)

Fears About China Wash Up On U.S Shores This Morning

The market opened under some selling pressure after Asian markets got killed overnight. Higher than expected GDP and CPI reports out of China sparked fears that the central govt. will hike rates and take other measures to slow the economy. I don't think this one ends pretty.

The Yen is up again versus the dollar, and that is making investors nervous that another Yen carry trade unwinding could occur like it did back in late February. But I think these fears are premature at the moment.

Earnings reports are still pouring in. GILD and EBAY both had strong reports last night, and their stocks are higher this morning.

Oil is trading down again, around $62.20. And the 10-year yield is steady at 4.66%.

Considering how many up days in a row we have had and how overbought the market is, the effect of these reports out of China should not be surprising if they spur some profit taking here. We need to see the market consolidate its recent gains for the stairstep higher pattern to continue. And don't forget all the 'Sell in May, and go away' calls that we are about to start hearing about on CNBC.

Wednesday, April 18, 2007

Strong Intraday Turnaround for F5 Networks

My Stock of the Day is F5 Networks (FFIV)

The stock has been mired in a downtrend since peaking at $80 back in January. Today, the stock is putting in a big reversal, bottoming this morning, and then rallying on a big increase in volume.

If you look at the chart above, you will see the making of a big, outside day. This is a positive sign, confirmed by volume, and should help the stock get above its overhead 50-day in the near future.

The stock also got a couple of analyst upgrades this morning, which are helping improve sentiment.

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


  • Falling Stocks


Tech Earnings Weighing On An Overbought Market

We are getting into the thick of earnings season, and company results can color the tape on any given day. This morning, a handful of reports in the tech sector are causing some selling pressure.

IBM is lower after matching expectations and citing a weaker spending environment. YHOO gapped down by more than -10% after slightly missing both top and bottom line expectations. And Motorola (MOT) gave flat Q2 sales guidance, but it looks like the stock has bottomed. Also, RIMM reported an outage in its BlackBerry handsets last night, but it doesn't seem to be weighing on the stock as of now.

Away from the tech sector, things get better. JP Morgan (JPM) reported much better than expected results and announced a $10 billion buyback. The stock gapped to a new high this morning, and is helping the broker group bounce back as well. UTX also reported solid results, beating consensus estimates.

In other markets, the dollar is lower again today vs. the Yen and Euro. Oil is trading slightly higher, around $63.30. And the 10-year yield is lower at 4.65%.

Given that the Dow has been up for 13 of the last 14 sessions, this morning's profit taking could have been a lot more severe. It's still early, but the selling pressure doesn't feel very intense. I would like to see the market chop around for a few days while working off its overbought condition.

Tuesday, April 17, 2007

Standout Stocks

My Stock of the Day is East West Bancorp (EWBC)

The stock gapped higher this morning on a much better than expected earnings report. The company beat estimates by 8 cents, and also raised several of its operating guidance metrics.

The stock gapped higher back in January, the last time it reported strong earnings. But since then the stock retraced its gains, and had fallen back into oversold territory.

Today's move comes on even higher volume, and while the stock is off its intraday highs from earlier, I still think it can go higher in the near-term.

Other stocks making notable, high-volume moves today include:
  • AAV
  • GSOL
  • TZOO
  • SMSI
  • HCR
  • PRXL
  • CBG
  • GROW
  • WFR
  • SHLD
  • FIC
  • JSDA
  • KEY
  • JASO
  • URBN
  • DGX
  • AQNT
  • CLWR


Benign Inflation Data Pushes Bond Yields Lower

The market got some encouraging news this morning, both on the economic front as well as the continued 1Q earnings picture. Asian markets were mixed overnight, and our futures this morning were pointing to a weak open for stocks.

Coca-Cola (KO) and Johnson & Johnson (JNJ) both reported better than expected results before the open, which helped the market open a little stronger than the early futures were pointing to.

On the economic front, core CPI came in below expectations (+0.1% vs. +0.2%), which brought the year/year rate down to 2.5%. Also, capacity utilization fell to 81.4% (81.9% consensus). These helped ease inflation fears, and the 10-year yield is down 4 basis points to 4.69% as a result.

The market is shrugging off some of its early weakness. A strong housing starts figure is boosting that sector (+1.22%), followed by healthcare. Brokers and semis are lagging so far.

Looks like a pretty good setup. I don't think profit taking will be too severe. But there are lots more earnings reports after the bell tonight, so we need to stay on our toes.

Monday, April 16, 2007

Strong Start To The New Week

The market closed at its highs for the session, putting in a strong showing. Breadth was very strong, and volume rose on the NYSE, making for an accumulation day.

The S&P 500 closed at a new yearly high today, as did the Midcap 400 Index, and the Russell 2000 Index. The Nasdaq was one of the long indexes that did not make a new yearly high.

Small caps outperformed today, with the RUT +1.5% vs. the RLG +1.0%. Brokers were the standout group, +3.30%, followed by banks (+1.9%) and homebuilders (+1.60%). Consumer staples lagged for the day (+0.41%).

The Hi/Lo Index exploded today, with 405 new highs on the NYSE. That is quite impressive. But looking back at past peaks in this area, I find some anecdotal evidence that when the new highs index spikes like this, at the same time the market is reaching overbought levels, it has paid to be cautious and not chase market strength.

The NYSE showed 421 new highs on February 7th, which was a few weeks before it peaked. So it doesn't mean run out and sell everything, but I thing it does warrant monitoring.

Standout Stocks

My Stock of the Day is Schlumberger (SLB)

This stock has had a very nice run, but it looks like it is getting overdone. The stock has been making somewhat of a parabolic move over the last few days, and is now very overbought. (see RSI above)

SLB reports earnings on Friday, and I think that regardless of the results, it will be viewed as a good opportunity to take profits. As such, I am taking a trading short position in the name.

Other stocks making notable, high-volume moves today include:
  • MTOX
  • JASO
  • JSDA
  • BNI
  • TSL
  • SPWR
  • INFY
  • VCLK
  • STP
  • FMD
  • VRTX
  • DGX
  • DNDN
  • TSO
  • VLO
  • BG
  • KNOT
  • SWN

short SLB

Monday Morning Musings

Wow, what a nice start to the morning. Of course, I prefer weak opens that build strength into the close, but I still didn't expect this.

Citigroup (C) got things going with a better-than-expected earnings report before the bell. Also, there was some big M&A news with SLM Corp. (SLM) being taken private for $25 billion and Google (GOOG) buying DoubleClick for $3.1 billion.

We also got some nice economic data, in the form of a stronger retail sales report. March retail sales rose +0.7% (vs. +0.4% consensus), which isn't all that surprising after we saw the same-store sales figures from retailers last week.

Financials are strongest so far, with the broker index up +2.3%. Semis are lagging, currently lower by -0.4%.

Asian market were up strongly overnight, while the Yen is lower vs. the dollar. Oil is trading down, near $63 this morning, while the 10-year yield is also lower at 4.74%. All of this should make for a nice backdrop to keep equities strong.

The S&P 500 is making a new yearly high right now, and the COMP is not far off.

Sunday, April 15, 2007

Wall St. Week Ahead (Reuters)

NEW YORK, April 15 (Reuters) - This week could be make-or-break time for Wall Street's push to recover from the market's slide in late February, with earnings due from bellwethers such as Citigroup Inc. (C.N: Quote, Profile , Research) and the release of the Consumer Price Index.

Outlooks accompanying this week's results will be crucial because investors are eager to determine the extent of the fallout from the housing slowdown and the wave of delinquencies and foreclosures in the subprime mortgage market.
Reuters Pictures

Editors Choice: Best picturesfrom the last 24 hours.View Slideshow
if(!CMSB_ID){var CMSB_ID=""} CMSB_ID+="032507_MIDART_editorschoice,";document.write('');
On Tuesday, the Street will get three economic reports for March that will merit close scrutiny for clues on inflation and the economy's health: the U.S. Consumer Price Index, housing starts and industrial production. March retail sales come out on Monday.

To read the rest of the article, click here

Friday, April 13, 2007

Standout Stocks

My Stock of the Day is again Jones Soda (JSDA).

The stock gapped higher again this morning, and is up roughly +9% on the day to a new all-time high. The company has been getting good press, which has helped spark interest in the name. But it's more than that.

I belive much of this latest move has been a big short squeeze. How do I know? Well, I covered my trading short 2 days ago on the brief decline in the stock. Good timing. Now the stock is more than 20% higher, so I tried to short another slug of stock. But guess what? I couldn't!

Ameritrade informed me that there was no stock available to borrow. That means that this is a very crowded short. Every share that was available to short has already been borrowed. Now I'm sure there are still brokers out there that can locate some shares, but I would be very careful about shorting a stock that is on the 'hard to borrow' list.

As for the rest of the market, another solid day where the market grinded its way higher. Breadth is strong, and measures of investor anxiety remain at elevated levels.

Here are some other stocks making notable. high-volume moves:
  • JSDA
  • JASO
  • INFY
  • POT
  • WFT
  • BW
  • SGP
  • DLLR
  • VAR
  • VRTX
  • FELE
  • SIMO
  • MSTR
  • ACH
  • PLCE
  • CETV
  • KSU

long VAR


The market got a little bounce at the open, but it soon faded. There were a couple of encouraging economic reports before the open, and also some positive news on the earnings front.

The core PPI came in below expectations, easing inflation fears. PPI was unchanged in February, pushing the year/year rate down to +1.7%. Also, the Trade Defecit unexpectedly narrowed last month. But despite these two reports, bond yields are drifting slightly higher, with the 10-year T-Note at 4.75%.

Merck raised its earnings guidance this morning, and the stock is gapping +7% higher. McDonald's also raised its Q1 guidance, and GE matched estimates when it reported this morning. So earnings season seems to be off to a solid start, and I would not be surprised to see overall profit growth come in ahead of estimates.

Asian markets were lower again in overnight trading, and the dollar is lower today vs. both the Yen and the Euro. Oil is steady at $63.75, after yesterday's big spike. With everyone already forecasting higher oil and gas prices for the summer, you have to ask yourself, is it priced in?

Thursday, April 12, 2007

Standout Stocks

With just 20 mintus to go, the markets are sitting at their highs for the day. The strength is notable given that oil is surging today. Biotechs are leading the way, followed by energy. Banks are the weakest group on the day.
My Stock of the Day is Research In Motion (RIMM) - see graph above
The stock gapped lower this morning on the heels of last nights earnings report. I think that given the run in the stock, there would have been profit taking either way. But given that they reported lackluster revenues and gave soft guidance, the move was exaggerated.
Investors often overreact to earnings announcements. Many times the selloffs prove to be good buying opportunities a couple of months out. I will be looking at RIMM in this light, watching for signs of stabilization.
Other stocks making notable, high-volume moves include:
  • HCR
  • JASO
  • WOOF
  • BNI
  • VIP
  • JSDA
  • TIF
  • KSU
  • GROW
  • HZO
  • USNA
  • JOSB
  • MSTR
  • MBT
  • CRM
  • MW

Retail Sales Roundup

I think that every company I follow posted better same-store sales in March than the forecast. Here is a list of some of the companies I follow, and how they did in March (vs. consensus):
  • ANF: +7.0% (vs. +1.4%)
  • ARO: +15.9% (9.3%)
  • AEO: +20.0% (+10.9%)
  • CHS: +5.2% (-0.1%)
  • COST: +6.0% (+5.0%)
  • GPS: +6.0% (-1.1%)
  • GYMB: +9.0% (+5.6%)
  • KSS: +16.8% (+9.9%)
  • JWN: +15.0% (+8.5%)
  • ZUMZ: +17.0% (+9.6%)
  • CVS: +7.0% (+7.3%)

These are impressive numbers. The retail index put in a bottom this morning, and has staged a strong upside reversal. The index is now back above its 50-day. This is all the more notable given the strong rise in the price of oil today.

Investors Still Sour Over Fed Statements

The market is still feeling a bit of a hangover after the release of the FOMC minutes, where the Fed hinted that "further policy firming" might be needed. I think this is just talk, and that the Fed is likely to remain on the sidelines for quite a while. That should suit investors just fine.

Asain markets were lower in overnight trading, after a nice rally. The dollar is also lower this morning vs. both the euro and the yen. Bond yields are a touch lower, with the 10-year yield at 4.72%. But oil is trading higher, reaching $63. The USO (oil ETF) bounced off its 50-day, but still bears watching.

Research In Motion (RIMM) announced lackluster sales last night, as well as conservative guidance. This, coupled with good old fashioned profit taking, is causing the stock to gap lower by -8%. If it gets back in the $120s, I think it will be a good trading buy again.

The big news this morning was the retail sales reports. These reports were stronger-than-expected almost across the board. Many retailers posted double-digit sales growth. But the retail index as a whole is still trading down. Buy the rumor, sell the news?

I will be back with a retail sales roundup later--

Note: I covered my QQQ trading short this morning, but still have cash to deploy for new buys.

Wednesday, April 11, 2007

Bears Leverage FOMC Statement

The FOMC released the minutes from their last meeting, and the bears used it as a good opportunity to step up the selling pressure on the market. Remember, the market was overdue for a pullback anyway, so this is just the news that is breaking with the cycle.

Here is a summary of the FOMC comments:
  • Fed minutes still project economic pickup later this year
  • Fed says the increase in subprime mortgage delinquencies could slow recovery in housing sector
  • FOMC says housing demand 'leveling out'; no subprime spillover
  • Fed minutes say persistence of inflation at recent rates could eventually have adverse effect on economy
  • Fed says labors markets remain 'relatively tight'
  • Fed minutes say all FOMC members agreed predominant policy concern remains inflation
  • FOMC says data have cast doubt whether inflation on downward path
  • Fed says due to growth, inflation uncertainties, their statement no longer solely cites chance of more firming
  • FOMC says downside economic risks increased between Jan and March
  • FOMC dropped the words "additional firming" from statement amid 'increased uncertainty'
  • Fed minutes say FOMC agreed 'further policy firming' might be needed to foster lower U.S. inflation

The market sold off further on the comments about inflation, which I fully expected. The selling has caused many of the sentiment indicators to spike higher on the day. To wit, the VIX is spiking +9%; the ARMS Index is above-average at 1.17; and the CBOE put/call is elevated at 0.97.

Will The Streak End At 8?

I don't know why the media is making such a fuss over the streak of up days in the Dow. Sure it is up for 8 straight days, but the gains haven't been that big. I guess that's why we always make fun of the media. Anything to boost ratings, even if it is essentially meaningless.

Asian markets were up overnight, while the Yen is falling more vs. the dollar. The IMF made comments on the Yen carry trade saying that they weren't worried about it getting out of hand.

Bond yields are trading a little lower to 4.71%. Bernanke makes a speech today, and the FOMC minutes will also be released this afternoon. I expect to hear more of the same, that the Fed still needs to be vigilant on inflation. This will likely make investors think that any Fed rate cuts are even further out in time.

Oil is also trading a bit lower, hovering around $61.60. But the inventory data is due out any minute, so that could change things in a hurry.

In other news, Citigroup (C) is cutting 17,000 jobs in an effort to save billions of dollars. Alcoa (AA) reported record earnings last night, to kick off earnings season, but it isn't enough to help the market so far in early trading.

Tuesday, April 10, 2007

Standout Stocks

My Stock of the Day is Jones Soda (JSDA)

This stock broke out in a big way in March, and went on a huge run. The stock made nearly a parabolic move before reaching what looks like a peak.

In the process, the stock became highly overbought (see RSI above). Today, the stock is beginning to look like it is reversing and moving lower.

I shorted this stock into that peak. Today, I took off half of my short, and will look to take off my remaining position if and when the stock approaches its 20-day average.

Other stocks making notable, high-volume moves include:
  • CLB
  • LHCG
  • FSLR
  • NICE
  • ROCM
  • SHLD
  • VCLK
  • BLL
  • ACH
  • KLAC
  • STX
  • IMCL
  • JTX
  • WDFC
  • TNH
  • USNA
  • HMC
  • VARI
  • JSDA
  • SIMO

short JSDA

Midday Check

With the Nasdaq up for 8 of the last 9 trading sessions, many are wondering if we will see a pullback? The answer is that we will most likely see some sort of pullback, but with so many investors trying to position for it ahead of time, it could prove short-lived.

Looking at the sentiment indicators midday, here is what I see:
  • The CBOE put/call is elevated at 1.13
  • The ISEE is depressed at 99
  • The ARMS Index is above-average at 1.24

So it seems that traders are already bracing for a correction, just like they have done time and time again. I have taken some money off the table, but I am not looking to get aggressive or put on a bunch of short positions.

Earnings season often brings with it increased volatility. I plan to have a little cash on the sidelines to take advantage of those overreactions we often see that happen to good companies' stocks, which often quicly recover once the dust settles.

Small Bounce At The Open

The market put in another day of benign consolidation yesterday. Those are the types of quiet days that frustrate the bears by slowly relieving the overbought condition of the market, and setting up for another stairstep higher.

This morning, the market is getting a small bounce, despite a revenue warning from Seagate Tech (STX) that caused worries in the tech sector. But analyst upgrades elsewhere in the sector have boosted it overall.

There are no economic reports today, so investors will turn their attention to earnings season. There was a report out from Equifax/Moody's that showed mortgage delinquencies hit an all-time high of 2.87% in Q1. I think this speaks more to the credit cycle, and how easy it was for anyone to get any loan they wanted. But I think there are plenty of buyers on the sidelines that will look to buy homes at reduced prices.

Alcoa (AA) kicks off Q1 earnings season tonight. Expectations are for earnings growth this quarter to come in around +3-4%. That would mark the lowest level of growth in five years. So expectations are pretty low, and I wouldn't be surprised to see them exceeded again this quarter.

Asian markets were mixed overnight. The 10-year yield is giving back some of yesterday's spike, falling to 4.72%. And oil is up 50 cents to $62. Biotechs and brokers are the strongest groups so far.

Monday, April 09, 2007

Monday Morning Musings

Back in the saddle after the long weekend. Friday's jobs report was stronger than expected (180k vs. 130k), which is causing a big spike in bond yields today. The yield on the 10-year is 7 basis points higher to 4.74%, but still below January's highs.

The flip side is that for many investors who were worried about a big dropoff in economic activity, the stronger jobs report speaks to the resiliency of this economy. This is likely why the markets aren't selling off very much, and opened to the upside.

BNI is up +7% on the news that Warren Buffet acquired a big stake in the company. And this is spurring buying interest in the whole group, and pushing the transport index back above its 50-day average.

There is also chatter about an offer for Dow Chemical (DOW) for $50 billion, which would be the biggest LBO ever. The stock is up +6% on the rumors.

Asian markets were up strongly overnight, while the Yen is slightly lower again. And oil is also falling, hitting $63.65 this morning. These two factors are slight positives for investor sentiment.

Sunday, April 08, 2007

Sneak Peak Ahead Of The Open

Here is what's Bloomberg had for its equity preview on Sunday night:

April 8 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.S. exchanges tomorrow. The market was closed for Good Friday. This preview includes news that broke after exchanges closed on April 5. Stock symbols are in parentheses after company names.

Allianz SE (AZ US): Shares of Europe's largest insurer may reach 195 euros ($260.89) each as it consolidates operations and focuses on emerging markets, Barron's reported, citing Bear Stearns analyst Paul Goodhind. Allianz American depositary receipts, which each represent 1/10th of an ordinary share, rose 14 cents to $21.31 on April 5.

Burlington Northern Santa Fe Corp. (BNI US): Warren Buffett's Berkshire Hathaway Inc. has acquired a 10.9 percent stake in the second-largest U.S. railroad, according to Securities and Exchange Commission filings, making the billionaire's company the largest holder. The stock rose $1.03 to $82.72.

Citigroup Inc. (C US): Damian Kozlowski, the top private- banking executive of the world's biggest financial services group by market value, left the company following a shakeup by new wealth-management head Sallie Krawcheck. Shares of Citigroup gained 21 cents to $51.57.

Daktronics Inc. (DAKT US) fell $5.30, or 19 percent, to $22.61 in trading after the official close of U.S. exchanges. The maker of electronic scoreboards and displays forecast earnings of 6 cents to 10 cents a share for the fiscal fourth quarter, missing the company's earlier prediction of as much as 19 cents.

Gannett Co. (GCI US): Shares of the largest U.S. newspaper publisher may reach $65 if it uses its free cash to boost its dividend, Barron's reported, citing Credit Suisse analyst Debra Schwartz. Gannett stock fell 22 cents to $55.97 on April 5.

Hologic Inc. (HOLX US) fell $1.56, or 2.6 percent, to $58.40 in extended trading. The maker of medical-imaging equipment for diagnosing women's diseases was placed ``on the block'' by Jim Cramer of CNBC's ``Mad Money.'' He said the company has grown fast and is now overpriced.

Jackson Hewitt Tax Service Inc. (JTX US): The second-largest U.S. tax preparer said it started an internal review of allegations against a franchise after the Justice Department said it would sue over the submission of fraudulent tax returns. Shares of Jackson Hewitt declined 41 cents to $28.70.

PetSmart Inc. (PETM US): Shares of the largest U.S. pet supply retailer may reach $40 in the next year as it opens more pet hotels, Barron's reported, citing Ken Stuzin, manager at shareholder Brown Investment Advisory & Trust Co. PetSmart stock rose 49 cents to $33.62 on April 5.

Spartan Motors Inc. (SPAR US) increased $1.36, or 5.3 percent, to $26.86 in trading after the official close of U.S. exchanges. The maker of vehicle chassis was recommended by Cramer on his television program because its emergency, military and recreational vehicle divisions are poised for growth.

VaxGen Inc. (VXGN US): The company, which cut half its workers after losing a contract to make anthrax vaccine, said it's receiving $11 million in a settlement with the U.S. government over the lost revenue. The stock rose 5 cents to $1.80.

WCI Communities Inc. (WCI US) fell $1.60, or 7.4 percent, to $20 in extended trading. The company's directors recommended shareholders reject billionaire Carl Icahn's $955.9 million tender offer for the Florida single-family and condominium homebuilder, saying the bid was ``inadequate.''

WD-40 Co. (WDFC US) gained $2.89, or 9 percent, to $34.78 in extended trading. The maker of lubricants and hand soap said it earned 52 cents a share for the fiscal second quarter. Analyst Jeffrey J. Zekauskas at J.P. Morgan Securities had estimated profit of 48 cents.

The Week Ahead

Here are Reuters comments for the week ahead:

Stocks should complete the last leg of their recovery from February's big sell-off next week as Friday's surprisingly strong job growth data calms investor concerns about the outlook for the economy and consumer spending.

The next question is whether U.S. equities can then take the step and recapture the record levels from two months ago. That will hinge on the corporate profits picture, which begins taking shape next week as the first of the market's bellwethers deliver first-quarter earnings reports.

"Unless we see a more significant drop in profit margins than the market might be expecting, the trend will probably be higher," said Brandon Thomas, chief investment officer at Envestnet Asset Management in Chicago.

Click here to read the rest of the article.

Thursday, April 05, 2007

Standout Stocks

My Stock of the Day is Crocs (CROX)

This stock started its correction back in late February, with a high volume reversal. It eventually traded below its 50-day, but soon started forming a rounded base.

Today, its is spiking back above its 50-day, on very strong volume. I think demand for the shoes, as well as the increased distribution I've been hearing about bode well for the company. And the high short interest in the stock should help as well.

The market is continuing to plug along. It looks like another frustrating day for the bears. Biotechs are really heating up, with the BTK making a new high for the year.

Here are some other stocks making notable, high-volume moves today:
  • VOCS
  • MTRX
  • MFW
  • BLUD
  • CLB
  • SMSC
  • TNH
  • SPAR
  • CBEY
  • GROW
  • CUTR
  • ROK
  • CYNO
  • MNST
  • LHCG
  • HWAY
  • HOLX
  • WBD

A Mostly Flat Open

The markets are opening mostly flat this morning. The major indexes are flat, the 10-year yield is flat at 4.65%, oil is roughly flat around $64.50, and the Yen is flat versus the dollar (although the euro is higher).

After 5 consecutive up days for the Nasdaq, investors may decide to take some profits ahead of the long weekend. The stock market is closed tomorrow, the same day that the March payrolls report gets released. That should make for an interesting open on Monday.

Micron (MU) reported a wider than expected loss last night, but it doesn't seem to be spilling over to the semi group at large. Norfolk Southern (NSC) also guided down, but the transport index has shaken off its early weakness.

Lots of stocks continue to break out, so don't be lulled into a sense of complacency by the indexes.

Wednesday, April 04, 2007

Midday Check

As of midday, there has not been a ton of excitement. The energy inventory data provided a bit, but oil is still a touch lower on the day, hovering around $64.50. The 10-year is also lower, bouncing off of its overhead 50-day to 4.64%.

Sentiment is still flashing signs of investor angst. The ARMS Index is above average at 1.0, the CBOE put/call ratio is high at 1.0, and the ISEE Index is also high at the put/call equivalent of 0.85.

Tech is hanging in well today, with large-cap tech leading the major indexes. Semis are strong, up roughly +1.0%. Brokers and biotechs are also positive.

Given yesterday's nice accumulation day, a couple of days of quiet consolidation would be just what the bulls ordered. As for the bears? Stay on the floor, I guess.

More Data On Investor Sentiment

Speaking of sentiment surveys, a subscriber e-mailed me an anecdote from a very prominent sentiment-related Web site that is know for doing very good work.

It cited the survey, which shows how investors feel about the Dow Jones Industrials over the next 30 days. The recent survey shows the most consistently low expectations for the DJIA in more than four years.

The respondents have expected the Dow to drop more than 3% on average for the past several weeks, which marks a level of skepticism that hasn't been seen from this group since late March 2003.

To me, this is just another brick in the wall of worry that the market continues to scale. I think the burden of proof is on the bears, as they continue to tell us that the market is perched on shaky ground. But for most investors, if you have been net short over the last several years, you have been wiped out.

Opening Look: Oil prices drop further

The market opened on a slightly down note but has now moved back into positive territory.

Oil is dropping again on the news that Iran will release the British soldiers, as a "gift." This has pushed crude down below $64, which should bolster sentiment.

Asian markets were up strongly overnight, with Japan up +1.7%. For its part, the yen is slightly lower vs. the dollar, after yesterday's big drop. This has quieted talk about the yen carry trade unwind.

The 10-year yield is stable, and breakouts are beginning to surface in numbers. This is a great trading environment. Some of the trading names I have initiated recently include: Akamai Technologies (AKAM), Las Vegas Sands (LVS), NYSE Group (NYX), Celgene (CELG), Netgear (NTGR), and Cohen & Steers (CNS).


Tuesday, April 03, 2007

Standout Stocks

Here is a partial list of stocks that are making notable, high-volume moves today:
  • CBI
  • JSDA
  • VDSI
  • GROW
  • ICI
  • NCTY
  • CDI
  • ARO
  • KSS
  • UA
  • THRX
  • JTS
  • BG
  • WNR
  • AFFY
  • TAP
  • USNA
  • WFR

net long WFR

Morning News Roundup

Here are some news and notes from this morning's tape:
  • Google furthers TV push with Dish deal - WSJ
  • EU launches antitrust probe into iTunes - AP
  • Layne Christensen beats on revs
  • Symantec estimates cut at Jefferies
  • United Tech added to Focus List at Credit Suisse
  • Bunge reaffirms Y07 guidance, sees Q1 below consensus
  • Walgreen announces March comparable store sales rose 8%
  • Stein Mart initiated with a Buy at Morgan Joseph
  • F5 Networks upgraded to Buy at Kaufman- tgt $76
  • IntercontinentalExchange announces 'record' qtr for ICE futures
  • Forecasters predict busy Atlantic hurricane season-


Strong Housing Data Helps Boost Stocks

The market opened on an up note this morning, on the heels of rallying stock markets around the globe. But it got an additional boost on a stronger than expected housing report.

Asian and European markets rallied overnight, with many up by more than +1.0%. The Yen is also lower vs. the dollar, aiding sentiment.

This morning, the pending home sales index came out much stronger than expcted (+0.7% vs. -0.3% consensus). This is good news, as the housing industry needs to have a strong spring selling season to avoid another downleg, imo.

Oil is also trading lower this morning, now down by more than $1.50 to below $64.50. This comes as tensions with Iran seem to be easing. Lower oil and improved geopolitical signs should further bolster investor sentiment.

The Nasdaq 100 is already up more than +1.0%, as are some of the major industry groups such as the brokers, biotechs, and retailers. I don't really like strong opens, as you know, so we will have to see if the strength can persist until the close.

Monday, April 02, 2007

Mutual Fund Monthly

I am pleased with the performance of most of our stable of mutual funds. Here are how some of the top and bottom funds in our universe are faring ytd. For reference, the S&P 500 Index was up +0.18% as of March 31st.

Top 5
  • +9.4% - CGM Focus (CGMFX)
  • +6.8% - Rainier Small/Mid Cap (RAISX)
  • +5.6% - Meridian Growth (MERDX)
  • +4.7% - Artisan International (ARTIX)
  • +4.0% - Hodges Fund (HDPMX)

Bottom 5

  • -0.2%: Sound Shore (SSHFX)
  • -0.1%: Calamos Growth & Inc (CVTRX)
  • +0.4%: Selected American (SLASX)
  • +0.8%: Schwab Hedged Equity (SWHIX)
  • +1.1%: Marsico 21st Century (MXXIX)

I am very impressed with the CGM fund. Ken Heebner continues to do an outstanding job. Interestingly, his largest industry weighting as of the last report was in the brokerage group (MER, LEH, etc.).

Midday Check

The market is still hovering around the flat line with 2+ hours to go. Oil seems to be weighing on the market, as it is now higher on the day ($66.25).

This is helping the energy complex, but hurting financials and tech.

Investor sentiment is mixed so far, with the CBOE put/call running a little low at 0.79 and the ISEE still flashing fear at 116.

Fed Govenor Poole made comments today, that hinted that the economy is stable. Here is a summary of his comments:
  • Poole says 'rule based' policy would aid Fed's communication
  • Price stability has boosted U.S. productivity growth and helped moderate business cycles
  • Poole says inflation 'is retreating' as energy costs stabilize
  • Challenge facing policy-makers is to ensure recent behavior of inflation persists
  • Poole says U.S. economy is on sound footing, inflation retreating as energy prices stabilize

Back In The Saddle

So much for any posts last week! Kids kept me very busy. The only positive I can say about the market last week was that the fact that it didn't rally means I probably didn't miss any significant breakouts, and there are still good buys setting up.

The market is getting a boost this morning on a flurry of M&A activity over the weekend. The biggest was KKR's offer to acquire First Data (FDC) for $29 billion, which has the stock up +22%. GISX also received a bid from XRX for a +47% premium. And Sam Zell won the bidding war for Tribune (TRB), boost that stock a bit.

Asian markets were mixed overnight, with Japan down. Oil is slightly lower, hovering around $65.65. And the 10-year yield is just a bit lower at 4.64%.

The ISM report just hit the tape, and was a little lower than expected (50.9 vs. 51.0). There was talk that the ISM would be stronger than expected, so this is hitting the market right now.

According to the Stock Trader's Almanac, this month is the best month for the Dow, averaging +1.8% since 1950.