Monday, November 15, 2010

Merger Monday

I don't know of a better feeling for an investor than waking up on a Monday morning and seeing that one of your stocks got a buyout offer over the weekend. That's how I felt this morning when I saw that Isilon (ISLN) was being bought for a 30% premium by EMC. Bucyrus (BUCY) is also being bought for a 30% premium by CAT, but I don't own any of that one.

In economic news, advance retail sales for October rose 1.2%, much stronger than the 0.7% expected increase.

The dollar is up slightly, mostly due to the drop in the Euro amid continued sovereign debt concerns. The Portugal finance minister made comments that they are at high risk of needing a bailout. Asian markets were mostly higher overnight.

Among the sector ETFs, financials are strongest (+1.20%), followed by industrials (+0.65%). Materials are the weakest, along with energy. Both are roughly flat to slightly down in early trading.

The 10-year yield is higher again to 2.85%; and the VIX is down -3.9% to 19.80.

Trading comment: The market is slightly higher this morning, but Internet stocks are standing out as laggards. Moreover, leading stocks like Akamai (AKAM) are breaking down below their 50-day averages. This would be a change in character for the market if more stocks followed AKAM's lead and began to break down. So how these stocks hold up should be a key "tell" for the market.

Overall, the major indexes showed a couple of distribution days last week, but are still above their 20-day moving averages. If we break below these levels, then I would look for support to come in at the 50-day averages. That means overall, we could be looking at a 3-5% pullback from the highs, which would not be a big deal and could be construed as healthy longer-term.

long ISLN


At 12:40 PM, Blogger Shae Hale said...

YES!!! I own over 7,000 shares thanks to my Daddy leaving me this stock.


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