Saturday, December 31, 2005

Weekly Recap

Here is a link to's weekly recap:

Click here

Friday, December 30, 2005

Syneron gets smacked

Shares of Syneron (ELOS) have gotten smoked in the last 2 days. Last night, CIBC downgraded the stock saying they thought it would be difficult for the company to match consensus estimates.

The analyst lowered his estimates for the quarter, acknowledging new competitors that have entered the field. But he also stated a number of new growth drivers for 2006.
This morning, Merriman defended the stock, saying that their checks show that most quotas have been met, and that the quarters are historically back-end loaded.

Management raised guidance in November, so a miss now would mark a big turn down. Regardless, the stock seems to be oversold even factoring in a slight miss. It is trading at less than 15x 2006 estimates, a large discount to its peers. This despite the fact that ELOS has the highest margins, best balance sheet, and probably the safest patent portfolio of the group.

Given that short interest has been running at 20%+ of the float, could this be an example of a very successful 'bear raid' on the stock at a time when no one is around to defend it? Just askin'

long ELOS

"Tapping Home Equity"

I have to say that everytime I hear those words, "tapping equity", I have to laugh. The lending industry has come up with a clever way of making it sound like you are simply taking profits on an appreciated asset, as if it were akin to taking profits in a stock account.

In reality, nothing could be further from the truth. You are simply taking out a LOAN against the equity you have built up in your house. You could take a loan against your stock account if you wanted, but not many people due (I know the terms are less attractive, but I am just making a point).

My point is that it doesn't really matter how much your house has appreciated. If you take a loan against your "equity", you have to pay back that loan with interest. And while you might feel richer because your house has doubled in the last several years, unless your income has doubled also, it isn't going to be any easier for you to make those loan payments.

I think it is a poor decision in nearly all instances. Unless you though you could put the money into something wherein the investment returns would far surpass your cost of the loan. But these days, there aren't many options available.

At least...that's how I see it.

(* If you have one of these loans, I would love to hear from you)

Stocks Open Under Pressure

Morning News of Note:
  • C: Citigroup Raises Bid for Guangdong Bank to $3 Bln Citigroup Inc., the world's biggest bank, raised its bid for Guangdong Development Bank to 24.1 billion yuan ($3 billion), beating two rival offers for the state-owned Chinese lender, people involved in the talks said. The U.S. bank and local partners added more than 1 billion yuan to their bid for an 85 percent stake, the people said, asking not to be identified before a buyer is chosen. (Full Story) Bloomberg
  • ELOS: Syneron Medical-ELOS downgraded to Sec Performer from Outperformer@CIBC CIBC's channel checks indicate that ELOS will have a difficult time meeting Q4 Street revenue estimates of $29M. The broker has reduced Q4 forecasts to 50c/$26M from 58c/$31.5M and 2006 estimates to $2.04/$116M from $2.39/$137M
  • INTC: Intel to Overhaul Marketing in Bid To Go Beyond PCs Intel Corp. is set to announce a major overhaul of its corporate and product branding, a move designed to symbolize the chip maker's transformation into a supplier for products beyond personal computers. The changes include a new version of the company's blue logo -- without the lowered "e" that has long been a part of Intel's branding -- along with a new tagline, "Leap ahead," emulating such campaigns as "Think different" from Apple Computer Inc. (Full Story) WSJ
  • RIMM: NTP Wins Time To File Defense In RIM Dispute Patent-holding company NTP Inc. won a 30-day extension from the U.S. Patent and Trademark Office, giving it more time to file a defense of patents at the center of its long-running battle with BlackBerry-maker Research In Motion Ltd. The delay gives NTP lawyers more time to respond to the patent office's rejection of some of its patent claims, which are key to a court dispute that could lead to the shutdown of BlackBerry wireless email service in the U.S. (Full Story) WSJ
  • CHK: Chesapeake Insiders' Energized Buying IN A SEASON when insider buying activity is meager, to say the least, Chesapeake Energy has stood out with its heavy volume of insider purchases. After taking a brief pause this fall, two top executives resumed their buying binge of Chesapeake stock, snapping up another $72 million worth so far this month in the open market. (Full Story) BARRONS
  • GOOG: GOOGLE WARNED OVER VOIP PATENT BY SERIAL SUIT-ER A little known patent-holding company has threatened "to bring Google to its knees," unless the Web giant agrees to settle allegations of patent infringement. New York-based Rates Technology Inc. has slapped Google with a lawsuit claiming that Google Talk, the company's voice-over-Internet-protocal service, infringes on patents covering technology that facilitates cheap 'Net-based telephone service. (Full Story) NY Post

Market Comments: The market opened down this morning, with the bears getting the upper hand. We have seen several strong openings that led to late day weakness. Maybe today will see the reverse of this, with a weak open leading to a bounce later in the day.

Oil is down a bit, to just under $60. The yield on the 10-year is lower also to 4.34%.

I mentioned that the recent weakness of leading stocks could mean a correction is ahead. But I just noticed that the Nasdaq has been down for 4 straight weeks. Usually when this happens, there is a sharp snapback higher, to keep the bears on their toes. The question is, does this occur next week?

long C, ELOS, INTC

Quote of the Day

"Most good resolutions start too late and end too soon." - Arnold Glasow

Thursday, December 29, 2005

Another Low Volume Selloff

The market was hovering in positive territory most of the day, but a late day selloff cause the SPX and Nazz to finish in the red. Volume was again extremely low, with barely more than a billion shares trading on the NYSE.

Aggressive names got sold the hardest (AAPL, GOOG, SNDK, etc), with FFIV being a standout on the upside. All of the major sectors were down, except for the homebuilders. Go figure.

The talk about the inverted yield curve signaling recession has now been beat to death by the media. I do not foresee a recession in 2006. More likely, growth will slow, along with housing, causing the Fed to stop raising rates and thus achieving the desired 'soft landing'.

More on this next week.

Have a great night--

Have you checked your credit report?

There is still time left to get your free copy of your credit report. I just did it. It was a bit tedious, but not too bad. You can obtain your report from all three agencies by visiting

You can also obtain your FICO score, although this will cost you an extra $6.

I found some of the data from TransUnion was very outdated. They showed my current address as one that I haven't lived at for over 6 years, from Chicago! (those were the days)

Morning Look

Morning News of Note:
  • Holiday Shopping: A Solid but Not Spectacular Finish for Holiday Spending Visa USA said yesterday that purchases using its credit cards rose 21 percent in the week before Christmas, a sharp increase that suggested a solid - though by no means extraordinary - end to the holiday shopping season. Visa cardholders spent $13.1 billion during the week that ended Sunday, largely at electronics and home furnishing retailers, the credit and debit card company said. Online spending, a separate category, rose 48.4 percent, to $2.7 billion. (Full Story) NY Times
  • FPDs: Wave of Price Cutting Hits Flat-Panel TV Sets Sales Are Seen Doubling, But Aggressive Marketing Could Shrink Profit Cycle Even as flat-panel television sets come into their own, manufacturers and retailers are cutting prices, leaving some to wonder if they are giving away the store. In Japan this year, flat-panel TV sets surpassed ordinary tube TVs in unit sales for the first time. In the past two months, they have become a dominant holiday sales item in North America and Europe. (Full Story) WSJ
  • LIN: Linens 'N Things-LIN clears hurdles for leveraged Linens 'N Things (LIN) said yesterday that it has cleared two "crucial" hurdles for the proposed $1.3B leveraged buyout by private equity firm Apollo Management LP. The company will have a shareholder vote on January 30, 2006 for shareholders of record on December 15, 2005.
  • Clinical Trials: Medical Journal: Drug Studies Hide Key Data Several major pharmaceutical companies are withholding important details about clinical drug trials, despite urging from federal regulators and medical-journal editors to be more forthcoming, according to a study published in this week's New England Journal of Medicine. The study says that companies including Merck & Co., Pfizer Inc., and GlaxoSmithKline PLC are obscuring basic information -- including the names of some drugs under study -- in reporting on trials of drugs to treat serious or life-threatening diseases. (Full Story) WSJ
  • JNJ GDT: JNJ & GDT say proposed merger statement now effective. JNJ & GDT announced that the Securities and Exchange Commission has declared effective the S-4 Registration Statement concerning the amended and restated agreement and plan of merger between them. The merger is subject to the approval of Guidant shareholders, who will vote at a special meeting in Indianapolis, Indiana, on January 31, 2006

Market Comments: Quite open for the market. Existing home sales came in slightly below estimates, while the Chicago PMI came in above (61.5 vs. 60.0 consensus).

Not a ton of newsflow otherwise. The insider buying continues at CHK, as the CEO is acquiring a nice size position. ELOS continues to pull back, offering an attractive entry point (imo).

I would not be surprised to see the market rally a bit here, just as most have given up on the idea of any end of year rally. I know that most people did not like to hear me make mention of a possible correction in the near future, but I have to call it like I see it. With leadership in the market waning, and bearish sentiment dwindling, the odds of said correction are simply higher than they were before. Remember, it's about staying flexible.

long ELOS, JNJ

Quote of the Day

"In life, hope nothing from the way cards may be dealt to you. Play the cards, whatever they be, to the best of your skill." - Edward Bulwer-Lytton

Wednesday, December 28, 2005

Dull Day

Not much of a bounce today. The SPX gave back most of its small gains in the last half hour of trading. Volume was again very light. And the Hi/Lo index for the NYSE was negative, so there is scant leadership in the market.

In addition to the low readings we have been seeing in the put/call ratios, this should be view as a caution sign. I have stated that I felt the market would hold up into year end. As for a correction in January, it is looking likely, even though that is the consensus among investment managers I speak with.

But that might be what is needed to shake some of the recent bulls' confidence and bring more bearish sentiment back to the market. Then we might be in a position to resume climbing the wall of worry.

Have a great night--

Consumer Confidence Up

Morning News of Note:
  • TWX: TIME LOOKS TO TRIM $100M TIME Inc. CEO Ann Moore is under pressure to come up with $100 million in cost savings next year, when more than one company insider expects a new bloodbath. One source said the new cuts could translate into 400 more job cuts early in 2006 — a number that accounts for 3 percent of the unit's 13,200-person workforce. (Full Story) NY Post
  • MSFT YHOO: M'SOFT EYES YAHOO! TIES Fresh from losing the AOL sweepstakes to Google, Microsoft is wasting little time seeking another ticket to battle the search giant — and industry analysts believe the most likely candidate is Yahoo! Speculation about an alliance between the two companies has been mounting since Ian McAllister, a program manager at Microsoft's MSN division, wrote on his blog last week that he had recently met with "senior players at another Tier 1 Internet company" about "ways in which our companies might work together." (Full Story) NY Post
  • AAPL: Sources: Intel developing next-generation Power Mac for Apple In a move that may surprise some Apple watchers, reliable sources tell AppleInsider the Mac maker has contracted the design duties for its next-generation Power Mac motherboard over to industry heavyweight Intel Corp. Specifically, sources said Intel's facilities in Oregon picked up the project in late-October after Apple sought the chip maker's help in meeting deadlines associated with its accelerated transition from PowerPC processors to Intel chips. (Full Story) Apple Insider
  • MOT: Digitimes reports the four leading Taiwan makers of handset-use PCBs -- Compeq Manufacturing, Unimicron Technology, Wus Printed Circuit, and Unitech Printed Circuit Board -- all indicated that backlogs of orders received so far will enable them to operate at full capacity until the first quarter of 2006. Motorola has been pinpointed as the main source for the surge in demand, with some sources at the makers indicating that orders placed by Motorola for the fourth quarter of this year and the first quarter of 2006 were 50% or even 100% higher than the usual peak season orders placed by the US vendor.
  • TGT: Target-TGT sees S S S up 4%-5% for the month of December-CNBC

Market Comments: The market opened slighlty higher this morning, but as we saw yesterday, its how it closes that is important. Consumer confidence came in above expectations at 103.6 vs. 102.5 consensus.

Target said that is sales remain on forcast , which is a good sign considering all of the handwringing over holiday sales. Target is a pretty good barometer for the averge consumer (I love my local Target).

The debate in the media continues to focus on the inversion of the yield curve between the 2-10 year yields. It should be no suprise that this could be indicating an economic slowdown, but I do not think it is correct to assume it is forecasting recession.

long MSFT, TWX

Quote of the Day

"Life begets life. Energy creates energy. It is only by spending oneself that one becomes rich." - Sarah Bernhardt

Tuesday, December 27, 2005

No Sign of Santa

The market basically closed at its lows today, amid constant selling pressure for most of the session. I think it was mostly profit taking, while the media continues to harp on the inversion of the yield curve (10-year yields higher than 2-year notes).

Regardless, it remains to be seen if this is the start of a more meaningful decline. All corrections start out this way, but for now there has not been too much damage. The S&P took out last week's low, but it is still above levels at the beginning of the month (1249).

Sentiment indicators are, for the most part, mixed in terms of too much bullish or bearish sentiment. The market is not overbought short-term, but this rally is getting a little long in the tooth. Make sure you are managing your risk.

And have a great night--

Notable Stocks

Here is a partial list of stocks moving on above-average volume:


Market Comments: The market has fallen of a cliff. After a solid open, the selling started to accelerate a bit, and the market has been in a steady slide since. I think it could be a case of portfolio managers worried about what gains they have, and moving to lock them in.

The CBOE put/call ratio is running near 1.0, and the VIX is up quite a bit, so there is certainly some fear entering the market. Let's see if the market can cut its losses any into the close, or if the selling persists.

What's In Store for the Week?

Morning News of Note:
  • GE: Jack's Magic JACK WELCH, GENERAL ELECTRIC'S DEMANDING former chief executive, delighted in setting the bar high. When he stepped down a few days before Sept. 11, 2001, he left his successor, Jeffrey Immelt, the challenge of matching a remarkable string of years of strong profit growth. What was most remarkable about those years, however, wasn't apparent to anyone outside the company until recently. The bar might have been set artificially high. (Full Story) BARRONS
  • Holiday Retail: U.S. Retailers May Have `Good, Not Great' Holiday Sales Season U.S. retailers probably posted modest sales gains this holiday season as discounters including Wal-Mart Stores Inc. benefited from price cuts. Department stores struggled. Retailers are set to report comparable sales gains of 3 percent to 3.5 percent, based on the International Council of Shopping Centers forecast. That's in line with its previous estimate. Stores are continuing discounts this week in a final push to win sales during a period that accounts for almost a quarter of annual revenue. (Full Story) Bloomberg
  • GLD: Golden Opportunity? CAN ANYTHING BE as mesmerizing as gold? the yellow metal has been squarely in the spotlight for the last couple of months, thanks to a dizzying run-up and an equally swift reversal. Swings like that -- the price zoomed from $459 an ounce in early November to $528 on Dec. 12, then plunged to $492 in just a week -- aren't uncommon in the wild world of gold. (Full Story) BARRONS
  • GOOG: Reuters reports the co will be able to sell its pending 5% stake in Time Warner (TWX) AOL Internet unit as early as July 2008 according to Google's recent filing with the SEC. Under the agreement for the purchase of the $1 bln stake, Google has the right as of July 1, 2008, to require a public offering of its stake, according to Google's filing on Friday with the SEC.
  • WMT: Wal-Mart-WMT maintains Dec Same-Store Sales forecast of up 2%-4% (monday)

Market Comments: The market opened slightly higher this morning. Early reports on holiday sales show that retail sales were solid, but not spectacular.

Energy prices are lower, which is weighing on oil and gas stocks. Housing stocks are getting a bounce, after last week's selling, and financials are doing well as chatter escalates that the Fed may be close to done raising rates.

It remains to be seen whether the normally positive seasonality will show up in the market this year. I still think that this week will be mildly positive.

long GE, WMT

Quote of the Day

"Life is like a grindstone: Whether it grinds you down or polishes you up depends on what you're made of." - Anonymous

Friday, December 23, 2005

Lackluster Close

Not much in the way of fireworks today. Big surprise, right? Volume ran well below average levels. The action was all in bonds, as yields continued to drop, closing at 4.38%.

Homebuilding stocks were the big losers on the day, as new home sales plummeted in November. Retail stocks fared the best, probably since they have underperformed most recently.

That's about it, from my perch. Now I need to focus on my fantasy football championship game this weekend.

Happy Holidays to all!!

Expect Great Things

That's the tag line of Kohl's (KSS) current ad campaign. CSFB must agree, as they have made the stock their top pick for 2006. They cite increased buzz around the company's new brands rollout, as well as the potential for margin expansion from current levels.

The stock has been mired in a downtrend since July. But today it looks like it is finally breaking out of that downtrend, and on solid volume. I think KSS can trade back to the mid-50s over the intermediate-term.

long KSS

Consumer Sentiment Up, Energy and Yields Down

Morning News of Note:
  • Holiday Retail: U.S. Retailers May Meet Holiday Sales Forecasts After Discounts U.S. retailers may meet sales forecasts for the holidays as they offer discounts and extend hours in the final shopping days before Christmas. Saks Inc.'s Saks Fifth Avenue is reducing prices on some items by as much as 60 percent. Federated Department Stores Inc.'s Lord & Taylor is selling cashmere-lined leather gloves for $39.99 and $46.99, marked down from $58 and $68 and discounting sale merchandise as much as 40 percent more. (Full Story) Bloomberg
  • BBY: BBY acquires Pacific Sales Kitchen and Bath Centers for $410M: BBY sees the deal adding nominally to 2H:FY07 earnings
  • VZ: Verizon plans to offer mobile music downloads Verizon Wireless is expected to introduce a music download service next month that will let subscribers purchase music wirelessly over their mobile phones and transfer songs between their phones and Windows PCs, CNET has learned. The new service, called V Cast Music, is scheduled to become available on Jan. 16 at Circuit City, Verizon Wireless stores and Verizon's Web site, according to documents seen by CNET It would allow customers to browse, preview, download and play music from a mobile handset and a computer. (Full Story) CNET
  • ABS CVS: Albertson's Ends Sale Talks, May Divest Outlets Albertson's Inc., the second-largest U.S. grocery chain, ended talks to sell the company and may shed underperforming stores to stem market-share losses to Wal-Mart Stores Inc. Negotiations with a group of investors including Supervalu Inc. and CVS Corp. concluded because ``we did not get a bid we could accept,'' Albertson's spokeswoman Shannon Bennett said yesterday. Albertson's is in discussions about selling some assets, the Boise, Idaho-based company said in a statement (Full Story) Bloomberg
  • Fund Flows: equity funds rptd outflows ($5.8bln), ex ETFs inflows $1.3bln; ETF flows: EFA inflows $289m, EZU inflows $157m, IWF inflows $150m, EEM inflows $146m, IWD inflows $144m, QQQQ inflows $140m, SPY outflows ($5.02bln, IWM outlfows ($1.64bln); ex ETFs real estate funds rpted outflows ($12m) for 13th consecutive week; tech funds rptd lgst net outflows ($200m) since 3/9/05; bond funds rptd inflows $90m, MBS fund outflows ($301m), HY outflows ($161m), money market funds rptd inflows $18.23bln -- AMG Data
  • Mad Money Summary: Cramer was positive on pulp last night as he believes that a paper rally is coming. Cramer said that International Paper (IP) was not the way to play pulp and he would go with Brazil instead of America. Cramer sees Votorantim Celulose (VCP) as the stock to play for pulp. Cramer said that shares were down for the year due to bad earnings and that Votorantim was a broken stock, not a broken company. Cramer was positive on shares of ENGlobal (ENG) and sees the stock as a way to make money off of oil refining. Cramer said that ENGlobals engineering division maintains and constructs refineries and makes machinery for oil refineries as well. Cramer sees ENGlobal as a pure play for refinery infrastructure in America. Responding to a question on Halliburton (HAL), Cramer said the company will likely split into two parts and he would buy the engineering division and sell the oil services unit. Herb Greenberg was on Cramer's show last night to talk about ev3 (EVVV). Greenberg said that the only thing wrong with the company was its 30% purchase of Micro Therapeutics (MITX). Cramer commented on insider buying and said that Domino's Pizza's CFO David Mounts has purchased 10,000 shares in two days and that ITT Industries (ITT) CFO George Minnich has purchased 2,000 shares. Cramer believes that both of the companies’ shares will likely go up. Cramer summed his show up by discussing potential buying opportunities in Bausch & Lomb (BOL) and Wal-Mart (WMT). Cramer said that Bausch & Lomb announced it will have to restate earnings and that Wal-Mart announced it lost a labor case in California, Cramer does not believe that this will have an impact on numbers

Market Comments: The Michigan Sentiment index was revised to 91.5 vs. 89.0 consensus. Energy prices continue to drop, and this is pressuring oil and gas stocks. Bond yields are also notably lower, with the 10-year now at 4.40%. Both of these should be viewed as positives for the stock market.

Credit Suisse named KSS its top pick for 2006. The upgrade has the stock breaking above its recent downtrend. Yesterday, JMP Securities upped their target on GOOG to $575. This morning, the firm ups its target on MNST to $62. I'm long MNST, but that's wishful thinking.

Most of the financial markets (except stocks) close early today, so look for things to slow down to a crawl as we head into the holiday weekend.

long KSS, MNST

Quote of the Day

"If you can't run with the big dogs, stay up on the porch." - Anonymous

Thursday, December 22, 2005

Solid rally, Light volume

Today's rally was nice to see, as the market firmed into the close. Volume was nothing to write home about, but that is not surprising given the NY transit strike (which is now over) couple with the upcoming holiday weekend.

Breadth was solid, and the Hi/Lo index expanded a bit. Leadership is fairly narrow, but there are stocks breaking out (see below) if you dig a little.

I think another positive close might just get investors excited about next week.

Have a great night--

Notable Stocks

Here are some stocks that stand out to me today:
  • GRMN - look at that huge move. short covering?
  • MSTR - adding to its recent breakout
  • ANSS - breaking out
  • ISRG - the energizer bunny
  • BBBY - c'mon, was the quarter/outlook really that bad?
  • RACK - if you're involved, congrats

Be back after the close--

Transit Strike Not Over Yet

Morning News of Note:
  • EBAY AMZN OSTK: Senators propose taxing Internet shopping This may be the last holiday season to enjoy tax-free Internet shopping, thanks to new legislation in the U.S. Congress. Two bills introduced Wednesday propose sweeping changes to how Americans are taxed for online and mail order purchases. Businesses initially would be required to collect sales taxes on purchases shipped to roughly half of the country, and that percentage is expected to rapidly increase. (Full Story) CNET
  • PCs: PC Industry Braces For Weaker Sales Next Year Personal-computer sales this year are headed for their weakest gain since 2001, according to the latest shipments data, and some industry executives worry that PC sales next year could be worse. This year's estimated 6% increase in home-PC unit sales, down from a 10% gain last year, reflects increasing competition for consumer dollars from flat-panel televisions, experts say. TVs are pinching sales of midpriced PCs, and expected price cuts in the flat-panel offerings could make the PC business even tougher in 2006, they say. (Full Story) WSJ
  • Alaska Oil: Senate Approves Cuts, but Not Drilling Cheney Breaks Tie on Budget Measure; Democrats Block Arctic Oil Provision Senate Republicans, by the narrowest margin yesterday, pushed through a major budget measure that would trim federal spending by nearly $40 billion over five years, but they were stymied by Democrats in their effort to open Alaska's wilderness to oil drilling. Vice President Cheney took his seat as president of the Senate just past 10:30 a.m. to cast the tie-breaking vote on a hard-fought budget bill that would allow states to impose new fees on Medicaid recipients, cut federal child-support enforcement funds, impose new work requirements on state welfare programs and squeeze student lenders -- all for the purpose of slowing the growth of federal entitlement programs. (Full Story) Washington Post
  • EBAY: Co announces that Matt Carey will join the co as Chief Technology Officer and Senior Vice President for eBay Marketplaces, effective Feb 1, 2006. Carey, who brings more than 20 years of experience to the role, will report to John Donahoe, President of eBay Marketplaces. Carey comes to eBay from Wal-Mart Stores (WMT) where he was Senior Vice President and Chief Technology Officer and was with Wal-Mart for more than 20 years.
  • GILD: Bird Flu Sends Investors to Gilead: Taking Stock U.S. stock investors who foresee an outbreak of avian influenza are buying vaccine makers including Gilead Sciences Inc. and preparing to sell travel- related businesses and companies dependent on Asian suppliers. ``It doesn't take a full-fledged pandemic to affect the markets,'' said Joseph Besecker, who oversees $2 billion as president of Emerald Asset Management Inc. in Lancaster, Pennsylvania. ``This disease merits our consideration.'' (Full Story) Bloomberg

Market Comments: Rumors that the New York transit strike would end this morning proved unfounded. The news had the market trading higher near the open. Yesterday, the market trailed off a bit into the close, even though it still finished up for the day. Can we get two in a row?

Anecdotal data out of retailing is that promotional activity is running at fairly high levels, and the accompanying markdowns is not good for the stocks. JMP Securities upped their target on GOOG to $575 this morning.

Oil is trading up a little, but still below $59. 10-year yield is lower at 4.44%.

Quote of the Day

"Be temperate in your work, but don't carry the patience over into your leisure hours." - Monty Woolley

Wednesday, December 21, 2005

The Streak is Broken

The market halted is losing streak at 4 days, but there wasn't much excitement in today's trading. Volume rose slightly on the NYSE, while breadth was mixed. The A/D line was positive, but the Hi/Lo Index was -4. With more stocks making new lows than new highs, it certainly speaks volumes about the lack of leadership in the market.

The Nasdaq fared better. New highs outnumber new lows by +22. GOOG reversed lower today, but MSTR was up, as was AAPL, GRMN, and INFY. Healthcare stocks fared well today also.

The market is now short-term oversold. And just about the time everyone seems to have given up on a Santa Claus rally, it just might surface. That would fit with the market keeping the herd on its toes.

Have a great night--

Strong Out of the Gate

Morning News of Note:
  • LEND,CFC,WM,WFC,NEW: Risky Mortgages Might Receive Tighter RegulationFederal financial regulators proposed new controls to limit mass marketing of mortgage loans that let borrowers minimize initial monthly payments. Regulators, in guidance issued yesterday, urged mortgage lenders to tighten requirements for borrowers to qualify for so-called payment option adjustable-rate mortgages. The mortgages come with teaser rates as low as 1% and give borrowers several choices each month, including the possibility of paying less than the interest due. Regulators raised concerns about the default risks of these complex loans to financial institutions and whether borrowers truly understand them. Borrowers risk having monthly mortgage payments suddenly double. (Full Story) WSJ
  • ERTS,ATVI: Game Maker Cuts Forecast as Industry Seems in Slide...Electronic Arts, a bellwether company among video game makers, reported on Tuesday that its holiday sales would be "well below" earlier projections, the latest sign of a sharp slide in performance for the industry. .. (Full Story) NY Times
  • GM: GM Shares Sink To 23-Year Low As Woes Mount Company May Be Dethroned As Biggest Maker of Autos; Bidders Emerge for GMAC...Pressure grew on General Motors Corp., with its shares falling to a 23-year low yesterday as rival Toyota Motor Corp. said it would boost production, potentially surpassing GM as the world's biggest auto maker. Separately, Las Vegas investor Kirk Kerkorian's Tracinda Corp. disclosed it had sold some of its GM holdings for tax purposes, but the move left open the possibility that Mr. Kerkorian could rebuild his GM stake in the future. (Full Story) WSJ
  • KBH,TOL,RYL,HOV: New-Home Building Increases, But Doubts Emerge on Outlook...New-home construction rose more than expected in November, but some economists say the gains were largely tied to orders placed during the summer. The Commerce Department said housing starts increased 5.3% to a seasonally adjusted annual rate of 2.123 million units last month, the largest increase since April. October starts, originally reported at 2.014 million, declined 6.6% to 2.017 million from September's 2.160 million rate. Yesterday's report also showed that permits for future building rose 2.5% last month to a 2.155 million annual rate. (Full Story) WSJ
  • BAC,MWD,LEH,BSC,JEF: Fidelity, Deutsche Bank reach commissions deal...Fidelity Investments has struck a deal with Deutsche Bank AG's securities arm on Wall Street to pay separately for the firm's stock research and trading. The move -- a change from the practice of paying for both services together -- could put pressure on other Wall Street firms to do the same. The Fidelity move is meant to battle the practice of paying for research with inflated stock-trading commissions that can reduce investor returns. The two firms confirmed they have struck a deal, the second of its kind since October. Financial details weren't released. A Fidelity spokesman said the mutual-fund company is holding talks with a number of other brokers "to discuss the potential for such an arrangement." (Full Story) WSJ

Market Comments: The market opened very strong this morning. 3Q GDP was revised down to a still strong +4.1%. You know I prefer to see market strength come at the end of the day, but after 4 consecutive down days, lets see if the market can hang on to these gains.

ERTS warned last night that its earnings would be below guidance. The stock took a hit after-hours, but is trading higher this morning. Go figure. Most sectors look higher, with the exception of the homebuilders.

long WFC

Quote of the Day

"Our task as we grow older in a rapidly advancing science, is to retain the capacity of joy in discoveries which correct older ideas, and to learn from our pupils as we teach them." - Hans Zinsser

Tuesday, December 20, 2005

Notable Stocks

Here are some stocks that stand out today:
  • FFIV - looks ready to breakout again soon
  • COF - breaking out to new highs
  • ISRG - does this stock ever decline?
  • GLD - has gold peaked?
  • RHS - what happened to the all-electronics Christmas?

Market Comments: The market is struggling to hang on to its midday recovery. The SPX is actually only 1.2% off its recent high, but it feels worse. The CBOE put/call ratio is running above 1.0. We need some bearish sentiment to re-enter the market.

Personal Finance Update

My colleague at highlighted an article today in the Boston Globe that has some useful tips and warnings for the average joe in managing his or her personal finances.

It gives the info. for you to request a copy of your free annual credit report, and also mentions the new law that will require higher minimum credit card payments.

It's a quick read. Click here for the complete article.

Can the S&P Halt Streak at 3?

Morning News of Note:
  • WMT: Wal-Mart Under Criminal Probe in Handling of Waste Wal-Mart Stores Inc., the world's largest retailer, said the U.S. attorney is investigating the company's handling of merchandise considered hazardous waste. The criminal investigation involves whether the company is properly transporting and disposing of returned merchandise from its California stores, Wal-Mart said in a U.S. Securities and Exchange Commission filing. (Full Story) Bloomberg
  • GOOG TWX: AOL Coaxes Google to Try Busier Ads Users of Google's search engine will soon see something they are not used to on the notoriously spare site: advertising with logos and graphics. And the advertisers will not be limited to America Online, whose talks with Google prompted the change in policy, according to two executives close to the companies' negotiations. (Full Story) NY Times
  • BP XOM: BP, Exxon Hit With Antitrust Suit Alaska Authority Charges Two Conspire to Withhold Natural Gas From the U.S An Alaska state authority charged that BP PLC and Exxon Mobil Corp., the world's largest publicly traded oil companies, are conspiring to withhold natural gas from U.S. markets and reinforce their market power over North Slope supplies. In an antitrust suit filed late yesterday in federal court in Fairbanks, the Alaska Gasline Port Authority alleged that a series of illegal agreements and acquisitions by the companies has choked the flow of the state's vast gas reserves (Full Story) WSJ
  • Biotech: Biotechnology: US 2006 top picks, expect Mid-/Sm-caps to outperform lg caps@MLCO Merrill prefers mid-/small-cap biotechs over large-caps due to relative valuation. The firm's US biotech picks are: AMGN in large-cap; PDLI & CBST in mid-cap's; THRX, NRPH, and KERX in small-caps; and ALKS in specialty biopharma. The brokers top Sells are IMCL, MATK, and ELN
  • Mad Money Summary: Cramer highlighted Titanium on his show last night and says that investors have yet to realize that it has exposure to most of the things the market loves. Cramer believes that the key to Titanium is through the airline industry. Cramer said that the best way to play the industry is through Allegheny Technologies (ATI) and he would avoid Titanium Metals Corp (TIE) as the stock is expensive. Cramer said that the last time Titanium peaked, Allegheny was at $60, shares closed Monday at $33.01. Responding to a question, Cramer said that the best way to play the tightening supply of raw carbon fibers is through Cabot (CBT) and Cytec Industries (CYT) but would avoid shares of Zoltec (ZOLT). Cramer said that privatization was another way to make money and ManTech International (MANT) is the way to play it. Cramer said the government will privatize at any cost and the FBI is the next program the government will try to outsource. Cramer said that Symbol Technologies (SBL) is a good way to play radio identification tags as the company is focused on the technology. Cramer said that investors have not been giving Trump Entertainment (TRMP) "the credit it deserves." Cramer said that Morgan Stanley (MWD) made an insider buy and called shares cheap; he also said that if you are betting on Trump, you are also betting on job creation and Pat Croce, who is currently working with Trump on a casino venture in the Pennsylvania area. Cramer believes that Kirin Brewery (KNBWY) could get a boost from their small, unknown biotech unit that is working on a project to treat Avian Flu. Cramer summed up his show be saying he believes shares of Under Armour (UARM) will jump in 9 days when dealers are allowed to come out and recommend it

Market Comments: The market closed down yesterday, for the third consecutive day. Will today be the day that the streak ends? So far, the markets are under more pressure in early trading. Biotechs are down the most, while financials and energy are higher.

The PPI came in below expectations this morning, which should ease inflation fears. But bond yields are still a bit higher (4.47%), as is oil (57.45). Boone Pickens was on CNBC this morning, predicting oil will dip into the low 50s early next year, but then head higher again (55-65).

If the market can shake off this early weakness, and build into the close, it would be a positive change of character versus the past few days. C'mon Santa!

long XOM, WMT

Monday, December 19, 2005

High Volume Movers

Here is a partial list of stocks moving on above-average volume:


Market Comments: The market has been trading lethargically today. Maybe it has (options) expiration hangover. MSTR broke out on high volume on Friday, and has been able to stay in positive territory today. SNDK also is powering higher, maybe trapping some shorts there.

But I see little else to get excited about. GOOG was making a big move, but looks like it might give most of it back.

Mixed Monday Open

Morning News of Note:
  • MSFT AAPL: Will Microsoft Take on the iPod? THE "SOFT" WILL NO DOUBT REMAIN the most important part of Microsoft. In fact, the company announced Friday that it is buying the software and Internet assets of UMT, a small New York firm, for an undisclosed price. But such purchases won't stop Microsoft from also pursuing a hard line. There is chatter on Wall Street that Microsoft (ticker: (MSFT) may be readying a new hardware initiative by producing its own digital media player to garner a piece of the market that Apple's (AAPL) iPod has defined. (Full Story) BARRONS
  • PFE: Pfizer-PFE prevails in challenges to Lipitor patents in the United States. Pfizer said Friday that a federal court in Delaware has upheld the exclusivity of two U.S. patents covering atorvastatin, the active ingredient in Lipitor, prohibiting generic competition until June 2011. "Today marks a major victory for medical innovators and the patients who depend on them for important new therapies," said Pfizer Chairman and Chief Executive Officer Hank McKinnell.
  • SIRI: SIRIUS ISSUES Addressing a mass of misfits gathered outside his K-ROCK studio Friday, Howard Stern said of his impending transition to Sirius Satellite Radio, "I am leaving terrestrial FM radio so we can do this show the way it was meant to be done." Which begs the question: Will anyone hear it? (Full Story) NY Post
  • BRCM: Broadcom-BRCM may buyout Sandburst Corp. for $ Broadcom (BRCM) is interested in bolstering its presence in the Ethernet network processing market. Sanburst may be a nice fit considering Broadcom has already invested in the company according to sources. For more complete coverage check out this link:
  • Mad Money Summary: Cramer has changed his mind on the homebuilders and believes now is the time to buy Pulte Homes (PHM), as the Federal Reserve is almost finished raising interest rates. Cramer said that shares of Pulte are cheap and have exposure to all of the price levels of homebuilding. Cramer had a quick comment on St. Joe saying the company has the "easiest comparisons of all." Cramer believes that Albertson's (ABS) is going to go private and he believes the new owners will shut down the worst performing stores, which he sees as a positive for Safeway (SWY). Cramer sees a 2 in 3 chance that the customers from the shut down Albertson stores will become Safeway customers. Cramer said he had a hard time recommending Costco (COST) and believes that Wal-Mart (WMT) is a better play at this point in the cycle. Cramer had a quick comment on Whole Foods Market (WFMI), he believes that it is the best run company next to Starbucks (SBUX) and deserves to trade at a premium. Cramer is calling the bottom in shares of Shanda Interactive Entertainment (SNDA) as shares are down to about $15 from $45.50. Cramer said that while Shanda is not a value stock or a "great company" he believes that now is the time to buy. Commenting on Eli Lilly (LLY), Cramer said he did not like shares as much at $56 than when it was at $50. Cramer said he was not a fan of RealNetworks (RNWK) and believes that Sirius Satellite Radio (SIRI) still has "one more move back up" but he would sell shares after Christmas. Responding to a question, Cramer said that Alcan (AL) and Alcoa (AA) are "awful companies" and he does not believe it is time for a "'mon back."

Market Comments: The market opened mixed this morning, with the S&P up slightly and the Nazz down a bit. PFE won a patent suit, and that has the stock as well as the drug group trading higher.

Retail shares are finally getting a small bounce. Some of these stocks have really pulled back in the last couple of weeks. Energy stocks are also mostly higher, while tech is a mixed bag.

GOOG announced on Friday that it would take a stake in AOL, and this is helping both stocks.

long MSFT

Quote of the Day

"One of the reasons mature people stop learning is that they become less and less willing to risk failure." - John W. Gardner

Friday, December 16, 2005

Market Avoids Big Selloff This Week (so far)

Morning News of Note:
  • MO: Heard on the Street... Altria Soars, Doubters Say: 'D'oh!' Litigation Scared Some Investors But Shares Are Up 32% This Year; Not a Stock for the Fainthearted Woulda, shoulda, coulda. On the heels of yesterday's rise of almost 4% in the share price of Altria Group Inc., after the Illinois Supreme Court threw out an earlier $10 billion class-action lawsuit against the company's Philip Morris USA division, the sound heard on many of Wall Street's most successful trading floors was that of gnashing teeth. With yesterday's gains, shares of Altria, one of the 30 stocks in the Dow Jones Industrial Average, have soared 32% in the past year even as the market has stagnated. (Full Story) WSJ
  • WMT TGT: Wal-Mart Throws an Undercut at Target Chain-Store Strategy Changes for the Christmas Blitz Sales tags touting deep price cuts were flying like battle flags this week in the electronics department of Wal-Mart in Manassas. Twice each week, about a dozen employees sneak into enemy territory -- Target is just two miles away -- to scope out prices. When they return, the store starts discounting, undercutting the competition by 5 percent or more, manager Beth Melson said. "We can stay the lowest price in the market to draw shoppers into our store," she said. "They know they can come here and get the lowest price." (Full Story) Washington Post
  • YHOO: Yahoo to Track Impact of Internet Ads As the Internet increasingly draws away advertising dollars from television and print outlets, Web portals are facing a challenge which has long bedeviled traditional media: how to show that ads on their sites work. To help answer that question, Yahoo will soon offer advertisers on its Web sites the opportunity to get detailed research indicating whether their ads are affecting sales. (Full Story) WSJ
  • ELSR SPWR: Public Utilities Com. gets serious about solar power with 11-year $3.2B program. The PUC program, if approved in mid-January, would be the first of its kind designed to make solar power mainstream and affordable without the aid of subsides within a decade. The program calls for the installation of 3000 mega watts of solar on a million homes, businesses, farms, schools, and municipal buildings. For the full story read
  • Mad Money Summary: Cramer was positive on shares of Sara Lee (SLE) last night on his show as he believes shares have bottomed and that now is the time to buy. Responding to a question, Cramer said that he is not a fan of Dillard's (DDS) as it is "not a high quality situation." Cramer added Cummins (CMI) to his "Dirty Dozen" and believes shares could go to $100 once the Fed stops tightening but it could take 6 months. Cramer has heard plenty of chatter over the strength in Holiday sales and that is why he is bullish on shares of Blue Nile (NILE). Cramer said that Blue Nile has averaged 50% annual earnings growth which is "better than Google (GOOG) for heaven's sake!" Joe Nocera, a columnist from the New York Times (NYT) joined Cramer on his show last night by telephone to talk about Comcast (CMCSA). Nocera favors Comcast and believes the company can survive the phone companies' push if it can figure out what consumers want and when they want it. Cramer said he would buy shares of SunPower (SPWR) and Evergreen Solar (ESLR) after the California Public Utility Commission approved a measure to give 10-year incentives for the home installation of solar panels. Cramer said "those stocks are gonna fly further. Buy Evergreen Solar. Buy SunPower."

Market Comments: It looks like the usual pattern of a big down day during expiration week may not have surfaced this week. Unless I just jinxed the market and it sells off today. Retail stocks have pulled back quite a bit (I added URBN yesterday), but most of the market has held onto gains this week.

Bond yields are lower again, with the 10-year around 4.43%. Oil is back below $60, on a wave of mild weather in the northeast. This is pressuring energy stocks, which have bounced back nicely recently, especially the drillers and oil service stocks.

The Nazz has lagged the SPX and Dow this week, but I think it could just be resting before another push higher into year-end.

long WMT

Thursday, December 15, 2005

Big mo for Big MO

Morning News of Note:
  • TWX: Time Warner Seeks to Sell Braves For the second time in three years, Time Warner Inc. is looking for a buyer for its Atlanta Braves baseball team. The media concern confirmed it had put up for sale both the team and Turner South cable channel, which carries Braves games. Sports bankers estimate the team could sell for about $400 million, the channel for about $200 million, according to cable-industry consulting firm Kagan Research LLC. (Full Story) WSJ
  • GOOG: Google-GOOG new enterprise search product aimed and small & large businesses-CNET: Google (GOOG) is positioning the company to be a major part of the burgeoning enterprise search market for corporations. Workers spend on average 25% of their day looking for information. Google's new corporate search tool is aimed at drastically reducing that time spent searching and increasing productivity. Solutions range from $3000 for a small business to index its documents to over $30k for larger companies
  • AMGN ABGX: Abgenix Inc. shares soared in Germany after the U.S. drugmaker accepted a $2.2 billion cash offer from Amgen Inc., the world's biggest biotechnology company. Abgenix shares rose 50 percent to 18.03 euros ($21.67) in Frankfurt after closing at $14.65 in Nasdaq Stock Market trading yesterday. Amgen offered $22.50 a share for Abgenix, 54 percent more than Freemont, California-based Abgenix's closing price yesterday. The announcement came after U.S. markets closed. (Full Story) Bloomberg
  • SIRI: Will Enough People 'Give' Howard Stern To Boost Sirius Sales? When Howard Stern announced last year that he was moving from traditional broadcast radio to satellite, he promised to crush the old medium and bring hordes of fans with him to subscription-based Sirius Satellite Radio Inc. Now, just weeks before he begins his new show on Sirius, Mr. Stern must prove he can deliver on his promise and justify the $500 million Sirius is paying him over the next five years (Full Story) WSJ
  • SRCL: Stericycle-SRCL downgraded to Neutral from Buy, target $61@BOFA The firm has downgraded shares on valuation

Market Comments: The market opened slightly lower this morning, most likely on profit taking from the last two days. The Illinois supreme court reversed the $10B verdict against Phillip Morris, and the news has MO trading up more than 5% to new highs.

Tech is a mixed bag, with several recent leaders pulling back. I suspect this group could be ready to run again into year-end.

Either this will be the first day in a while that early weakness persists throughout the day, or it will be another day where the bears fail to gain traction and the market rebounds into the close. Remember, this is quadruple expiration week, so there is usually at least one big down day on those weeks. Maybe that will be today. But one day won't change the fact that the market keeps pushing to new highs.


Wednesday, December 14, 2005

Fed Removes 'Accomodation'

Morning News of Note:
  • PALM: Analysts See Palm Rebound at Hand Palm Inc., which has gotten little love from Wall Street this year, may be poised to get a better shake from investors in 2006. Shares of the Sunnyvale, Calif., company have taken a beating as its once-flagship personal-digital-assistant business deteriorates and its faster growing Treo smart-phone line faces pressure from new entrants. (Full Story) WSJ
  • WMT: Wal-Mart to Buy Sonae's Brazil Stores for $757 Mln Wal-Mart Stores Inc., the world's largest retailer, agreed to buy Sonae SGPS SA's retail business in Brazil for about $757 million, doubling the number of stores it operates in Latin America's largest economy. The acquisition will give Bentonville, Arkansas-based Wal-Mart an additional 140 outlets that generate annual revenue of 3.1 billion reais ($1.4 billion), according to a statement from Sonae, a Portuguese company. (Full Story) Bloomberg
  • CERN: Cerner's Growth Has Been Healthy, But Its Accounting Could Be Ailing Investors usually dismiss worries about aggressive accounting when they involve a fast-growing company in an exploding sector. Instead, they should wonder why such a company would resort to aggressive accounting in the first place. In a year of lackluster stock performance, Cerner has stood out. Shares of the health-care software maker are up a spectacular 81%. Fund managers want exposure to this growth sector, and if they are asking questions about Cerner, it is mostly to themselves in the dead of night. (Full Story) WSJ
  • Bulls/Bears: Bulls 58.8 vs 56.2, Bears 21.6 vs 21.9, Correction 19.6 vs 21
  • Mad Money Summary: Cramer was positive on shares of Corning (GLW) last night on his show for its diesel emission filtration business. Cramer believes that the products used to help reduce diesel emissions will be a billion dollar market by 2008 as new and tougher diesel emission standards go into effect in 2007. Responding to a question, Cramer said that he likes Cummins (CMI) as a play on this year’s diesel truck replacement cycle. Cramer was also positive on shares of SiRF Technology (SIRF) as the company makes the chips for Garmin's (GRMN) GPS systems. Responding to a question on NovAtel (NGPS), Cramer said that this Holiday looks like a "GPS Christmas" and he believes that NovAtel and Garmin will work but his favorite is SiRF Technology. Herb Greenberg joined Cramer on his show last night to talk about FoxHollow Technologies (FOXH), Eli Lilly (LLY) and Merge Technologies (MRGE). Greenberg has raised a red flag on FoxHollow Tech after the CEO announced his sudden retirement. Greenberg said that the CEO "loved the company" and he believes there is more to the story. Greenberg also commented on Eli Lilly and said the company's increased 2006 guidance was based on lower growth in R&D spending, a lower tax rate and a stock buyback. Greenberg said that Eli Lilly is counting on its Cymbalta drug, which he sees as a "stalled product." Greenberg was also cautious on Merge Technologies after the company reported a better than expected quarter and raised guidance, he is cautious as 39% of the company's sales came from one customer. Cramer agreed with Greenberg's caution on all three stocks. Cramer was also bullish on shares of Franklin Resources (BEN) as the company could repatriate $2B next year, which would allow the company to make acquisitions. Cramer did say that he would wait for a pullback before buying shares as they have had a nice run

Market Comments: The market is mixed in early trading, with the SPX up and the Nazz slightly lower. Oil is slightly lower at $61.25, and interest rates are significantly lower at 4.47%.

The Fed met yesterday and raised the funds rate to 4.25% as expected. But then they threw the market a little nugget by removing the reference to the word 'accomodative' in their statement.

That was all the market needed to preceive a slight change at the Fed, who has maintained the exact same language for so long. The perceived change could be the first clue that there is some light at the end of the rate hike tunnel. The market rallied on this event.

long WMT

Quote of the Day

"Seeing much, suffering much, and studying much, are the three pillars of learning." - Benjamin Disraeli

Tuesday, December 13, 2005

Hurry Up and Wait

Morning News of Note:
  • COP UPL EOG XTO SWN: Conoco Purchase May Start Spree Of Energy Deals Who's next? ConocoPhillips's $35.6 billion cash and stock deal to acquire Burlington Resources Inc. could jumpstart a wave of consolidation as cash-rich energy companies snap up smaller natural-gas producers, according to energy analysts and investors. Burlington is one of several midtier companies that have substantial gas holdings in North America. With natural gas trading near all-time highs in the U.S. and a tight market expected in the fuel for some time, these companies are all potential acquisition targets. (Full Story) WSJ
  • GM: General Motors-GM debt downgrades place turnaround in jeopardy-FT: GM is teetering dangerously close to defaulting on its bonds or declaring bankruptcy due to the weak performance of its North American business lines. S&P downgraded the company's debt again pushing their credit rating further into the junk level. S&P also raised concerns as to the viability of GM's turnaround effort and specifically cited the drastic 30,000-person work force reduction over the next three years
  • AAPL: Apple to tackle consumer electronics; iPod "boombox" planned Sources familiar with the company's plans describe the new products as "iPod companions" rather than "accessories," and say Apple appears ripe to announce the first of the gadgets as early as the second week of January at the annual Macworld Expo in San Francisco, Calif. Sources familiar with the company's plans describe the new products as "iPod companions" rather than "accessories," and say Apple appears ripe to announce the first of the gadgets as early as the second week of January at the annual Macworld Expo in San Francisco, Calif. (Full Story) Apple Insider
  • PEP: PepsiCo-PEP market value tops KO for the first time-FT: For the first time in 112 years of competition, PepsiCo (PEP) overtook Coca-Cola (KO) in market capitalization. This year, PepsiCo's stock rose 14%, while Coca-Cola's fell 1.2%. The success of PepsiCo has been its ability to diversify beyond sugary soft drinks. In addition to its "flagship" cola, the company also produces Gatorade sports drinks, Tropicana juices, Aquafina bottled water, Frito-Lay snacks and Quaker cereals
  • Mad Money Summary: Cramer said he is switching recommendations for the Cosmetic Laser Field and recommends taking profits in Syneron Medical (ELOS) and buy shares of Cynosure (CYNO). Cramer believes the newly issued Cynosure still has "five more days of goodness." Responding to a question, Cramer said that he is not comfortable recommending Ionatron (IOTN) as the company is not profitable and does not have good revenue growth. Commenting on an article in the Engineering News-Record, that said "clean coal" was the new black gold, Cramer said he wants to do a "'mon back" on shares of URS (URS). Responding to a question, Cramer said he was not sure about the time frame for International Coal Group (ICO) and would buy Peabody Energy (BTU). Cramer found another reason to be bullish on shares of VeriSign (VRSN), he sees the acquisition of Jamba as a positive after Electronic Arts (ERTS) acquired Jamdat Mobile (JMDT). Responding to an email, Cramer said that Sony (SNE) is "getting its butt kicked by everybody" and he would sell shares. Cramer said that V.F. Corp's North Face brand is "smoking," but would wait until after the company reports earnings to buy the stock. Commenting on Six Flags, Cramer said "I need you to sell that thing nine ways to Sunday...there is nothing there whatsoever." Cramer was also concerned over the raw costs affecting Core Molding Technologies (CMT) and he prefers Paccar (PCAR) as a truck replacement cycle play. Cramer said that he is not a fane of the gaming stocks International Game Technology (IGT) or Shuffle Master (SHFL). Cramer also recommended getting out of OraSure Technologies (OSUR) as the company's AIDS test has too many false positives

Market Comments: The market opened slightly lower but has bounced into positive territory so far in early trading. Oil is back above $61, and energy stocks are trading higher. Bond yields are hovering around 4.52%.

The big event today is obviously the FOMC meeting, and while it is a given that they will raise rates to 4.25%, the question is will they change their statement to alter the wording and the term "accomodative". How the market reacts in the short-term is a toss up. But don't expect any big moves in the market until after the announcement.

BBY reported disappointing earnings this morning, and the stock is under pressure. This is weighing on the retail group a bit as well. Last night, Cramer recommended swapping out of ELOS and into competitor CYNO. But I am sticking with ELOS, as I think they have higher profitability levels and a still compelling valuation.

long ELOS, PEP

Monday, December 12, 2005

A Funny Man

I just wanted to pay my respects to Richard Pryor, who passed away over the weekend at age 65. I have to admit that I think Pryor was one of the funniest comedians I have seen. I can remember sitting around in college watching 'Live in Concert', and rolling on the floor laughing so hard I thought I would never breath again. He was a legend.

Play It Again, Sam

Once again, the market dipped into the red midday, but was saved by the bell. This is yet more benign consolidation for the bulls, and frustrating action for the bears. Even with oil and interest rates both higher for the day, the market was able to rally into the close.

This sideways action has allowed the market to work off its short-term overbought condition. That makes it more likely that the market can rally again. The big wildcard this week will be tomorrow's FOMC meeting. I'm not sure if the market rallies or sells off tomorrow, but either way I expect it to trade higher by the end of the week.

Some standout stocks today included:
  • GRMN - breaking above overhead 50-day
  • ELOS - new highs
  • SNDK - looks to be recovering
  • BJS - new high
  • ISRG - ditto
  • INTC - reversing last week's selloff from mid-quarter update


Weekend Sentiment Review

This post should have gone up over the weekend, but for some reason didn't get posted. In any case, here is a look at where the sentiment indicators currently stand. Remember, back in October these indicators were pointing to extreme bearish readings and that was one of the reasons I was so bullish back then.
  • The bull/bear spread in the Investors' Intelligence survey is up to +34 (56% bulls, 22% bears); it was +43 at the start of the year
  • The spread in the AAII survey is up to +31 (50% bulls, 19% bears); this is still down from July's reading of +44
  • The bulls on Market Vane are up to 70%
  • The Rydex Ursa/Nova ratio is still low at 0.23
  • The Specialist Short ratio is still very low at 0.17

So the investor surveys are showing more bullishness, that much is certain, but the market based indicators still show a healthy dose of skepticism remains. I don't think most investors are "all in", as they say in poker. So I am still maintaining my bullish bias, even as we have rallied considerably from the October lows.

Monday Morning Musings

Morning News of Note:
  • TWX: It's Time to Take It Apart My Case for Dividing the Media Giant There has been a lot of speculation about what Time Warner should do to increase its lagging stock price, and the media giant appears to be nearing a decision on the future of one of the Washington area's most significant enterprises: AOL. Although I played a key role in bringing AOL and Time Warner together six years ago, it's now my view that it would be best to "undo" the merger by splitting Time Warner into several independent companies and allowing AOL to set off on its own path. Here's why. (Full Story) Washington Post
  • MSFT: Microsoft May Give Consumers A Share in Advertising Revenue Concept Is Aimed at Luring More Users to Search Site In New Challenge to Google Microsoft Corp. may up the ante in its competition with Google Inc. by sharing some of its online-advertising revenue with consumers who use its Internet search engine. The concept, described by Microsoft Chairman Bill Gates in a presentation last week in India, is being considered as a way to draw more users to Microsoft's search business. It would mark a significant change in how a major search engine operates. (Full Story) WSJ
  • BR COP: Burlington Resources Rises on Report of Conoco Bid Burlington Resources Inc. shares rose after the Wall Street Journal reported ConocoPhillips may buy the natural gas producer for more than $30 billion in the industry's biggest takeover in four years. Burlington jumped as much as 10 percent, or 6.55 euros, to 70.50 euros ($83.81) on trading of 375 shares in Germany. ConocoPhillips is in advanced talks to buy Burlington, the Wall Street Journal reported, citing unidentified people familiar with the matter. (Full Story) Bloomberg
  • AMGN: Co announces interim results from an open-label study showing that long-term administration of its investigational therapy AMG 531 was generally well-tolerated and stimulated platelet production in patients with immune thrombocytopenic purpura. Overall, 85% of patients in the study achieved a platelet response, defined as doubling of the baseline platelet count and at least 50,000 platelets per microliter of blood.
  • Mad Money Summary: Jim Cramer was positive on shares of Alon USA Energy (ALJ) Friday on his show. He believes the highway bill passed by Congress will help fuel construction, causing the asphalt market to be "en Fuego." Cramer believes shares of Alon could go to $26, where he would be a seller. Responding to a question, Cramer said that Florida Rock (FRK) and Vulcan Materials (VMC) are just OK for a pure play on asphalt. Responding to another question on Cemex (CX), Cramer said there are rules limiting the amount of cement that can be imported into the US but he believes they will eventually be relaxed. Cramer was also bullish on shares of Williams (WMB) and sees the company as the way to play the rise in natural gas prices. Cramer said that Williams has permission to drill up to four times as many wells on one of its prime natural gas properties and one analyst sees that adding between $1.25-$2.50 to Williams share price. Cramer also noted that Dynegy (DYN) is starting to pull things together. Cramer added Kubota (KUB) as the fifth stock in his "seven stock samurai." The four that are already in the "seven stock samurai" are Toyota Motor (TM), Honda Motor (HM), Mitsubishi UFJ Financial Group (MTU) and Kirin Brewery (KNBWY). Garmin's (GRMN) CFO Kevin Rauckman joined Cramer to talk about the company's product mix and outlook. Cramer believes that Garmin's Tomtom is the "single hottest gadget being sold for Christmas" and he believes that "Garmin is being kept down by short-sellers who disagree with me, and I think they're going to get their heads cut off."

Market Comments: The market opened on a positive note this morning, despite oil trading back above $60. COP is in talks to buy BR, which has the stock under pressure. Pretty much all sectors are higher so far, led by energy stocks and semis. Housing stocks are getting a bounce also, as bond yields are lower at 4.53%.

Speaking of bond yields, the Fed meets tomorrow and will once again bump the fed funds rate higher (4.25%). Even though the outcome of the meeting is pretty much a done deal, there is a lot of debate about what the FOMC will say in its accompanying statement. Due to that uncertainty, I doubt stocks will stage too big of a rally this morning.

WMT maintained its sales forecast at 2-4%. And a positive clinical report on ELOS has the stock moving to new highs.


Quote of the Day

"I find that a great part of the information I have was acquired by looking up something and finding something else on the way." - Franklin P. Adams

Friday, December 09, 2005

Up Friday, but Down for the Week

Not a bad close at all. The market did a nice job of rallying in the afternoon and hanging on to those gains into the close. A few stocks that stood out to me were:
  • MSTR - high short interest; getting ready to breakout?
  • MRVL - more new highs
  • WFMI - ditto
  • ISRG - 2.5 week consolidation; more new highs ahead
  • INTC - reversed early losses on high volume
  • CWT - look at that volume

That's all for now. Sorry about the lack of posts today, I got pulled away from the office. I'll try to check in over the weekend with a sentiment check and some non-market related stuff.

Have a great weekend--

No Fireworks from Intel

Morning News of Note:
  • GM: Heard on the Street... GMAC Auction Won't Be Simple Bank Bidders Face Reserve Issues, Private-Equity Firms Can't Pile Debt on GM's Finance Operation Price might be the least thorny issue as General Motors Corp. auctions off a controlling stake in its lucrative financing unit. Initial bids for a 51% stake in General Motors Acceptance Corp., one of the world's largest finance companies with about $314 billion in assets, are due next week, according to people familiar with the matter. (Full Story) WSJ
  • GOOG: Soul of a New Machine Enamored by Google, investors have been looking at Microsoft's attempts to fight back in the search business the way teenagers look at their parents' attempts to be hip: Dad just doesn't get it. Of course, once upon a time, Microsoft got it like nobody else. And in some respects, Google has latched on to the same disruptive trend that Microsoft itself rode to spectacular success. (Full Story) WSJ
  • SNE: Sony says PS3 still on track for spring launch Sony on Thursday said it remained on track to roll out its PlayStation 3 game console by spring 2006 despite industry speculation that the scheduled launch could face delays. The timing of the release of Sony's updated PlayStation console has become a matter of speculation in the $25 billion video game industry and among the studios, hardware makers and other companies looking to handicap the battle over next-generation DVD technology. (Full Story) CNET
  • Cable: Mobility Could Be Cable's Achilles' Heel ADD YET ANOTHER POTENTIAL PROBLEM to the cable guys' list of recent woes: They may be missing the boat on the biggest trend in technology – mobility. As early as next year, cellular voice providers such as Verizon Wireless will offer phones that transmit not only voice and Internet connections, but broadcast television programs (Full Story) BARRONS
  • TSCM: THESTREET'S SWEET SPOT SHARES of financial news service, have soared recently on takeover rumors. The company was founded by frantic hedge fund manager James Cramer, who turned over day-to-day control years ago and now stars as the host of the CNBC show "Mad Money." (Full Story) NY Post
  • Mad Money Summary: Cramer was positive on shares of Charles & Colvard (CTHR) last night on his show and sees the company as a way to play the low end diamond market. Cramer said that J.C. Penney (JCP) carries the synthetic Moissanite and it is being tested at Zale (ZLC) and Helzberg, which is owned by Berkshire Hathaway (BRK.A). Cramer does not see the company penetrating the high-end diamond market and recommends shares of Anglo American (AAUK), which owns 40% of De Beers. Responding to a question, Cramer said that the short position in Charles & Colvard, feels like a Hansen (HANS) to him as shorts "don't believe it can get better." Responding to a question, Cramer said that Tiffany (TIF) could be poised for a bounce back and he is "upgrading Tiffany right here, right now." Cramer said last night that an even more precious resource than diamonds is water and sees PowerShares Water Resources (PHO) as a "brilliant way to play the water shortage." Cramer said that PHO contains Suez (SZE) and Veolia Environment (VE) but he would not pay up for shares. Responding to questions, Cramer said that Suez is the way to play the water internationally and that Walter Industries' (WLT) plan to spin off its water business is a good idea. Cramer's "pick of the week" is (CRM). Cramer said that while shares are not cheap, they are worth the premium for its growth and that the company has never had an earnings miss. Nucor (NUE) CEO Daniel DiMicco joined Cramer last night by telephone to discuss steel imports impact on the company's pricing. Mr DiMicco said that he was "very, very confident in the future of his company." Cramer said that the recent downgrade by J.P. Morgan (JPM) was wrong and he believes shares will go higher. Cramer commented on news after the close, he said that Intel's (INTC) Mid-Quarter update was not impressive, he is not impressed with Electronic Arts (ERTS) acquisition of Jamdat Mobile (JMDT) and was positive on Chesapeake Energy (CHK) as the company finally "did their gigantic equity offering that I so feared."

Market Comments: The market hung in there yesterday, when it looked like it might start to rollover. This morning it has opened relatively flat. The Michigan consumer sentiment index came in better-than-expected. Oil is relatively unchanged around $60.40, and bond yields are hovering around 4.51%.

INTC is down a bit after the company didn't raise revenue guidance last night, as many investors thought they would. The stock traded below $25 after-hours, but is closer to $25.50 today, and was trading higher for a brief period.

Financials are mostly higher so far, while energy stocks are pulling back (despite the snow blanket that has fallen over the east). I don't expect any big moves on this Friday. More consolidation would be just fine. And recent leading stocks have held up very well.

long INTC

(Disclosure: Jordan Kahn has an outside contributor relationship with His market comments can be found on Street Insight)

Quote of the Day

"If you want to earn more-- learn more. If you want to get more out of the world you must put more into the world. For, after all, men will get no more out of life than they put into it." - William J. Boetcker

Thursday, December 08, 2005

Another Frustrating Day for the Bears

Man, if you're short the market, you have to hate those late day rallies. Each time the market looks like it is about to fail at support levels, it comes back. The SPX and COMP each declined by less than .25% today. So the fact that volume levels were a little higher than yesterday is not that troubling.

Breadth was actually positive on the NYSE. Oil finished flat on the day (below $61), and bond yields closed at 4.46%. No inflation worries there.

TXN and QCOM both fell today, despite bullish comments/guidance from the companies. That dragged INTC down also, but let's see if the company can say some bullish things during its mid-quarter update to turn the stock around.

Have a great night--

long INTC

Standout Stocks

This is not scientific, or a screen that I have run. Rather, this is just an anecdotal look at some stocks whose actions looks good today:
  • PLAY - Smith Barney raised estimates and price target to $36
  • SIRF - Looks like it is getting closer to a breakout to new highs
  • OSX - several of the oil service stocks are breaking out to new highs
  • CHS - strong day for this retailer
  • GOOG - small bounce back
  • TXN - this one is a standout to the downside, given that the company reiterated guidance
  • BCR - Cramer hyped it on Mad Money
  • LH - big breakout to new highs

As for the overall market, only another late-day rally will save the market from another day of consolidation.

long SIRF

Mixed Open

Morning News of Note:
  • AAPL: Apple laptop demand slows, iPod backlog rises Demand for Apple laptops has begun to slow this month, according to data shown to AppleInsider. Meanwhile, demand for nearly all versions of the company's iPod digital music player appears to be unprecedented. With a little more than two weeks left in the holiday shopping season, orders to Apple's manufacturing facilities for both consumer and professional laptops appear to be on the decline. (Full Story) Apple Insider
  • YHOO: Yahoo Phone Service Yahoo is entering a suddenly crowded field, offering telephone service through its instant-messaging system that will let users dial regular phone numbers using their computers or receive calls from conventional phones. The company has not set a firm date for the availability of the new paid features to the mostly free Yahoo Messenger service but indicated that the service would begin soon (Full Story) NY Times
  • CSCO: Cisco Girds to Handle Surge in Web Video Cisco Systems Inc. made its name supplying the gear that controls the movement of data over the Internet. Now that online video appears poised to boost Internet growth, Cisco is moving to supply gear that moves video off the Internet and into the home. Two recent acquisitions are the clearest sign yet that the company, which has $24.8 billion in annual revenue, sees bandwidth-hungry video as a significant future market. (Full Story) WSJ
  • FPDs: Samsung said co cant meet all orders for LCD TV panels, sees global LCD TV panel mkt shortage in 2006, over supply in 2007; co lowered LCD TV industry shipment est; sees 2006 global shipments 35m units, 2007 shipments 49m units, 2008 shipments 63m units
  • Mad Money Summary: Jim Cramer believes that "2006 will be a huge year for mergers" and that UST (UST) is a likely takeover target. Cramer believes that R.J. Reynolds, a subsidiary of Reynolds America (RAI) would be a likely acquirer and the takeover could be at a 25%-40% premium. Responding to a question, Cramer said that he would avoid Lloyds TSB Group (LYG) and stick with Prudential (PRU) and MetLife (MET). Cramer also believes that C.R. Bard (BCR) is also a likely takeover target, but he is interested in shares despite that. Cramer believes that a takeover would be around $100 a share and that the loser of the Johnson & Johnson (JNJ), Boston Scientific (BSX) battle over Guidant (GDT) will be the likely acquirer. Herb Greenberg joined Cramer on his show last night to talk about Harley-Davidson (HDI) and Sears Holdings (SHLD). Greenberg said that Harley-Davidson has been storing extra bikes in warehouses for dealers to store the bikes they cannot handle, the question is, and did Harley recognize sales of the bikes in the warehouses as revenue. Greenberg said he has called the company and is waiting on a response. Greenberg was cautious on Sears Holdings due to Eddie Lamperts letter to shareholders revealing that "there is no grand strategy." Cramer said "Harley, I don't like. Sears? Ignore that man." Cramer said he wants to back up the truck on trucking stocks due to new rules that are set to go into affect in 2007. He likes Paccar (PCAR) and Volvo (VOLVY).

Market Comments: The market opened down slightly, but most of the individual stocks on my screen are mixed. Oil service and drug stocks are up, as are a handful of techs. TXN reiterated guidance last night, and QCOM raised guidance this morning. Hopefully those two datapoints bode well for INTC's mid-quarter update tonight, although INTC is much more levered to personal computers as opposed to wireless.

GS and BSC were downgraded this morning, which is weighing on the financials. Today could very well be another day of consolidation.

long INTC

Quote of the Day

"The only people who achieve much are those who want knowledge so badly that they seek it while the conditions are still unfavorable." - C.S. Lewis

Wednesday, December 07, 2005

Could Have Been Worse

The market rallied a bit late in the day, enough to mitigate what could have been a pretty nasty selloff. Yet the SPX finished down -0.50% and the NDX was down -0.25%. Volume on both exchanges came in lower than yesterday's session. In terms of my characterizations yesterday, I would classify today's action as benign consolidation.

After the close, XLNX raised guidance. This should help support the semis tomorrow. Of course, tomorrow night INTC holds its mid-quarter updates. That is likely the big event of the week for chip stocks. I would consider adding to INTC in the $25-26 range. We'll see.

Have a great night--

Standout Stocks

The indexes are down today across the board. Nearly every sector is under pressure. On days like these, I like to make not of stocks that buck the trend. Today, these include:

  • ELOS - extends recent breakout
  • HANS - shorts must be really feeling it today (high short interest stock)
  • INFY - looks like it could be setting up for a breakout
  • SNDK - on the road to recovery?

long ELOS

Morning Look

Morning News of Note:
  • G PG: Gillette losing 40% of its top managers About 53 depart in P&G takeover About 40 percent of Gillette Co.'s top executives and managers are leaving or have left the Boston shaving giant as Procter & Gamble Co. completes its takeover, according to the company. Of Gillette's 135 high-level managers, about 53 have departed. Some retired, others turned down jobs, and some were not offered positions at the newly combined company. (Full Story) Boston Globe
  • KO PEP: Heard on the Street... Isdell Could Lose Coke's Cola Crown With the Stock Down 17% Since CEO Took Over, Market Valuation Is On Track to Fall Short of Pepsi's Unless things change in a hurry, Neville Isdell, Coca-Cola Co.'s chairman and chief executive officer, could be remembered for being in charge when the King of Pop lost its throne. Coke shares are down 17% since the 62-year-old Mr. Isdell came out of retirement 18 months ago to spur a long-overdue turnaround in profit growth at the Atlanta-based beverage giant. The stock price of rival PepsiCo Inc., of Purchase, N.Y., has climbed 12% during the same period (Full Story) WSJ
  • PNRA: Panera Bread Co-PNRA reports November same store sales up 7.7%. PNRA raises its 2005 EPS outlook to $1.63-$1.64 vs consensus estimates of $1.61
  • Consumer Spending: Poor House The housing market may be cooling down, but that doesn't mean consumer spending will take a hit -- at least not yet. For several years, many Americans have been using soaring real-estate values to spend beyond their paychecks. (Full Story) WSJ
  • Mad Money Summary: Jim Cramer said that billboards are making a comeback and recommends buying Lamar Advertising (LAMR). He believes that advertisers are moving away from TV advertising due to digital video recorders. Responding to a question, Cramer said that he would avoid shares of Clear Channel Outdoor (CCO) and would look to buy the shares around $16 or $17. Cramer also commented on Yahoo! (YHOO) and Google (GOOG) saying that both are seeing secular growth in advertising. Cramer was also bullish on shares of Marchex (MCHX) and sees it as a play on local internet search. He recommends buying half of a position now and more later if shares pull back. Responding to a question Cramer said that valuation is too high for aQuantive (AQNT) and that Marchex is a better play. Cramer said the California Public Utility Commission will vote on an initiative that would give consumers 10-year incentives for the installation of solar panels in their home. Cramer believes that if this passes, it would be a big positive for Evergreen Solar (ESLR) and SunPower (SPWR). PMC-Sierra's (PMCS) CEO Bob Baily joined Cramer last night on his show by telephone to discuss the acquisition of Agilent Technologies' storage semiconductor business. Cramer said that he would wait to jump into shares and would like to see a quarter with the Agilent acquisition before he recommends shares

Market Comments: The market is fairly flat in early trading. Energy stocks are mostly higher, with oil trading above $60. Bond yields are around 4.51%. Yesterday's action leads me to believe that the market needs to spend some time consolidating its recent gains.

We will have to see if any consolidation comes in the form of sideways action or more of a pullback. There is an outside chance that those who are underinvested will use any weakness to plow into the market, but I think this is a lesser probability scenario.

long PEP, PG