Tuesday, February 28, 2006

Standout Stocks

Here are some stocks making notable moves today:
  • GOOG - CFO comments cause big plunge, even though they reveal no new info
  • HSP - 20% drop, below 50-day (earnings related)
  • APOL - 15% drop; company suspends its outlook
  • GVHR - 15% drop, below 50-day (earnings related)
  • AFFX - hits new lows on general biotech weakness
  • BOOM - high volume move back above 50-day
  • MORN - nearing new highs
  • CRDN - volume move to new highs (earnings)
  • ASEI - new highs on speculation about port screening
  • CWTR - bucks today's weakness; near new highs



GOOG is plunging on big volume as the CFO, speaking at a Merrill Lynch conference, is saying that growth is slowing in search and that the company will have to find other ways to boost revenue. He also says that local and mobile products offer "a lot of opportunity".

The fact that Google is slowing from its torrid pace is obvious. Even the CFO went on to say that the slowing is due to the "law of large numbers" and the the slowing growth won't be "precipitous".

I think the 10% drop is an overreaction, unless the company is in danger of not making its earnings estimates. So we'll have to see what the trend is going forward for next year's earnings projections. But if the continue to be in the neighborhood of $12, then the stock is not expensive at 30x EPS.

long GOOG

Month-End Weakness

Morning News of Note:
  • INTC: Intel to Build Vietnam Chip Assembly Plant Intel Corp., the world's largest chipmaker, announced plans Tuesday to build a $300 million chip assembly and testing factory in southern Vietnam, giving a huge boost to the country's efforts to raise its high tech profile. The facility, which will be built in Ho Chi Minh City's Saigon Hi-Tech Park, marks the single largest U.S. investment so far in its former wartime adversary. (Full Story) Washington Post
  • NOK: Nokia market share back at 35 percent The world's biggest mobile phone maker Nokia is back at 35 percent global market share after a sharp dip in 2004, according to survey said released Tuesday. It took the cell phone behemoth from Finland almost two years to recover the ground it lost in 2004 after it failed to introduce popular folding models, and it can take its 40 percent target seriously again, market research group Gartner said. (Full Story) CNET
  • TWX YHOO: Plan for Fees on Some E-Mail Spurs Protest A group of nonprofit and public interest groups is beginning a campaign today to protest plans by America Online and Yahoo, which each offer e-mail services, to charge high-volume senders of e-mail fees to guarantee preferred delivery of their messages. AOL and Yahoo are working with Goodmail, a Silicon Valley company, which plans to charge between a quarter-cent and a cent for each message (Full Story) NY Times
  • TIVO: TiVo Inc. Chief Executive Thomas Rogers said the company that pioneered digital video recorders will explore giving away its set-top boxes to boost subscribers. TiVo will soon offer pricing that includes an option for the free equipment, spokesman Elliot Sloane said in an interview. The free boxes may be offered with subscriptions to higher-priced and longer-term plans, Rogers said, according to Sloane. Shares of TiVo fell 1 cent to $5.56 in Nasdaq Stock Market trading. They have gained 8.6 percent this year. - NY Post
  • Mad Money Summary: Jim Cramer opened his show talking about Sherwin-Williams (SHW), which he says investors should buy on a discount thanks to a "bogus" lawsuit. He said Sherwin-Williams was a great company and added that they just raised their dividend. Then Cramer discussed Washington Group International (WGII), which he says people have been excited about for the wrong reasons. He said the company's defense segnment was not the biggest reason to own the stock, its power and infrastructure business is the biggest reason. He also said he liked both Washington Group and URS (URS) in coal-to-disel technology. Cramer then commented on The Wall Street Journal's list of the worst performing stocks in the last 10 years. He believes best/worst stock lists are stupid. He feels you should own the worst WSJ 10-year performer, Foster-Wheeler (FWLT). In the Lightning Round, Cramer was bullish on EDO Corp (EDO), Bookham (BKHM), Century Aluminum (CENX), Manitowoc (MTW), Black & Decker (BDK), Memc Electronic (WFR), Peabody Energy (BTU), Blue Nile (NILE) and Google (GOOG), and was bearish on Valero (VLO) Syntroleum (SYNM), LeapFrog (LF), Intrado (TRDO), Alcoa (AA), Johnson & Johnson (JNJ), Snap-on (SNA), Whole Foods (WFMI) and Juniper Networks (JNPR).

Market Comments: The market has opened under pressure this morning, likely on profit taking. Existing home sales and consumer confidence both came in lower than expected. The energy complex is also under more selling pressure. I still believe that these stocks are very oversold, especially given that crude is still above $60.

The market fared well yesterday, with the Hi/Lo indexes expanding, in addition to an accumulatin day for the Nasdaq. I think that both major indexes are headed for new highs in the near-term.

long INTC, TWX

Quote of the Day

"It is difficult to begin without borrowing, but perhaps it is the most generous course thus to permit your fellowmen to have an interest in your enterprise." - Henry David Thoreau

Monday, February 27, 2006

Standout Stocks

Here are some stocks making notable moves today:
  • ATLS - 10% gain; gaps above 50-day
  • GILD - more new highs (biotech)
  • NTES - continuation rally from Friday's gap up
  • SNDK - Citi upgrade gains serious traction
  • ADP - breaks above recent downtrend on high volume
  • PLLL - falls after company denies merger rumor
  • GI - hit by analyst downgrade
  • GMXR - hurt by fallout in energy sector
  • VSEA - down on acquisition announcement
  • BMHC - continues to churn under 50-day

Market Comments
: The market has held on to its early rally. Energy stocks are the only group that is down across the board. Retailers are bouncing nicely, as is tech and healthcare. I hear people coming on CNBC complaining about the narrowness of the rally, but from my perch it looks like participation is fairly broad. Go figure.

Tips To Avoid An Audit

CNNMoney.com ran an article last week about 5 Audit Red Flags.

Think you know how the IRS picks its audit victims? You may want to reconsider that notion.

Even most accountants say they don't know how to crack the IRS' audit formula.

But with the tax agency auditing 1.2 million individuals last year and the IRS ramping up its enforcement spending in recent years, experts say it might be worth taking a look at your return to make sure you aren't making yourself a target for the tax man.

Overkill on charitable contributions
While giving to your favorite non-profit can be rewarding both personally and for the tax break, giving to charity could attract the attention of the IRS, especially if the donation is disproportionate to your annual income.

And you might even want to think long and hard before you start inflating the value of that 1982 Dodge Diplomat you donated this summer or the Paul Cezanne painting you gave to charity, says Jeffrey Kelson, a partner at the New York offices of accounting firm BDO Seidman.

Many individuals, says Kelson, will overvalue those items and think that the IRS won't notice.
"You have to be careful if you take large, non-cash contributions," says Kelson. "You have to back them up with receipts."

Too many deductions for the self-employed
For those Americans that are self-employed or run a small business, the IRS is really watching you. "That's part of the territory," says Kathy Burlison, the director of tax implementation at H&R Block.

While filing a Schedule C alone may not be a red flag, the IRS is wary of these taxpayers since they contributed about $68 billion to the $345 billion tax gap as of 2001.

The tax man knows there is a temptation by self-employed taxpayers to blur the distinction between personal and business expenses, such as a mileage deduction on your car or calling that room in the basement of your home your office.

But don't think you're fooling anyone with that trick, says Burlison. In fact, the IRS will probably size up your expenses relative to your business to make sure your return is honest. "Those are areas that the IRS tends to be more concerned about being abused so they are more likely to be audited," she says.

Above-average deductions
Martin Kaplan, a certified public accountant and the author of "What the IRS Doesn't Want You To Know," says that the IRS is also closely looking at unusually high deductions.

If you earned $100,000 from your day job, but gambled in the real estate market this year and claimed a $40,000 loss, you might become audit material. "The [IRS] computer definitely generates a much greater amount of audits based on categories where incomes and losses are offsetting each other," says Kaplan.

At the same time, the tax man will weigh the deductions and expenses on your return against other taxpayers in your income bracket (see chart). While you might not be able to do anything about that $20,000 medical bill or the inheritance you received from a departed relative last year, if your deductions or expenses tend to be higher than normal that could raise a red flag.

Making six figures
It may not be promising news for those individuals on the higher end of the tax strata, but believe it or not, if you make over $100,000 a year, that could draw some attention to your tax return.

During the fiscal year 2005, audits of taxpayers taking home over $100,000 annually reached 221,000, double the number in 2001.

And if that's not enough to convince you, in November, IRS Commissioner Mark Everson said in a statement that the coverage of this category "still too low".

According to tax experts, those individuals are lucrative targets for the IRS. "They are focusing on taxpayers making $100,000," says Kelson. "They want to get a return on those returns."

Careless omissions
Kaplan, who has served as a certified public accountant in New York City for the past 35 years, also stressed the importance of keeping your return as neat and slim as possible.

That means filing electronically instead of handwriting your return and avoid attaching out any unnecessary forms to your tax return. "If there is a need for additional info they'll ask for it," says Kaplan. "You're trying to avoid someone putting hands on your return."

But maybe the best advice, says H&R Block's Burlison, is to provide as transparent a return as possible. "The number one thing to avoid contact from the IRS is to make sure you report everything."

Monday Morning Musings

Morning News of Note:
  • AAPL DIS: Could Apple Make a Bid for Disney? COULD WALT DISNEY BE the apple of Steve Jobs' eye? Not that long ago, Apple Computer shares were treading water -- and downloading digital music over the Internet was largely an illicit activity confined to college dormitories. But a lot has happened since company co-founder Steve Jobs returned to Cupertino and launched the iPod craze. (Full Story) BARRONS
  • GRMN: Finding True North THINK BACK TO WHEN CELLPHONES, DVD players and big-screen plasma TVs became popular. In each case, when prices fell just far enough, the products moved from being the play things of wealthy early-adopters to hot-selling mass-market items. This year, there's a very good chance it will be the turn of portable satellite-based navigation devices for cars, boats and hiking trails. (Full Story) BARRONS
  • GOOG: Google-GOOG finance site may be coming soon-Search Engine Journal. The website Search Engine Journal is reporting that it has noticed some "interesting referrals from Google.com/finance" over the past 3-4 hours. The site drops five hints to why they believe Google will be launching a much anticipated financial site soon: There have been referrals from Google.com/finance, referrals from URL search strings, referrals are Google News related, the referrals were tracked back to computers with Google IPs and Google's upcoming analyst day on March 2nd would be a perfect time to announce a Google Financial website.
  • US Economy: NABE 1Q survey est 1Q GDP 4.5% vs pev est 3.4%, CPI up 2.5%; sees 2H GDP +3%; sees FOMC cont to raise interest rates to 5%, due to higher energy prices // Fed Gov Bernanke said low inflation an end and a means of policy; low inflation leads to virtuous circle; low national savings rate is a problem, savings to rise from current levles as housing mkt slows down; important to bring down budget deficit (Friday)
  • WMT: Wal-Mart Stores-WMT sees February SSS up approximately 3.2%

Market Comments: The market (SPX) has broken into new high ground for the year. The recent consolidation of the SPX above the 1280 level served as good support, and now the market looks like it wants to make a move on the 1300 level.

Retailers are higher this morning, on the heels of strong earnings from LOW, and same-store sales forecast from WMT. Utilities are also higher due to increased M&A activity in the sector. NGG confirmed its $42 bid for KSE. Homebuilders are lower due to the larger than expected drop in new home sales (-5%). And the energy sector is down across the board, despite oil holding above $60 and Al Qaida threatening more attacks on Saudi oil properties.

I think a lot of this is money flows and sector rotation. Profits are being taken in energy and redistributed to financials, tech, healthcare, etc. But if the energy sector is in a secular bull market, then these types of pullbacks should offer attractive buying opportunities. I am particularly attracted to the services stocks and Canadian energy trusts.


Saturday, February 25, 2006

Weekly Recap

The market hung in this past week, with the S&P and Nasdaq tacking on +0.2% to their gains for the year.

Oil prices surged this week, and there was an attempted attack on a Saudi oil facility. Al-Qaida has threatened more attacks as well. That may serve to keep this "terror premium" in oil and gas prices.

To read more, here is the weekly recap

Friday, February 24, 2006

Notable Stocks

Stocks have hung in there for the most part today. I think the bears were hoping that with oil spiking and the poor durable goods headline number, that they would be able to pressure stocks lower. That doesn't seem to be working very well, and I would expect stocks to stay firm into the close.

Here are some stocks making notable moves on my screens:
  • NTES - gaps higher on big volume; strong earnings
  • VAS - high volume gap to new highs
  • MFLX - getting ready to breakout?
  • ICE - high volume rally; strong earnings
  • FFIV - breakout to new highs
  • MRGE - gaps lower on delay of earnings report
  • SLXP - breaks below support; weak earnings
  • HRB - breaks under 50-day; tax error
  • MRVL - falling below 50-day support; earnings related
  • JWN - also breaking below 50-day; tepid earnings outlook


Mancuso Wins Gold

Congrats to Julia Mancuso, who won a gold medal in the giant slalom on Friday. Mancuso become the first woman to medal in alpine since Picabo Street in 1988 at Nagano.

Nice work--

More Tax Tips

Here is the second installment in the SmartMoney series on tax savings tips:

MANY PEOPLE REFINANCED their mortgages in 2005. And some cash-strapped refinancers decided to borrow even more money, in the form of a home-equity loan. If you fall into this category, be sure to claim all your rightful deductions on your 2005 return.

For the complete story, click here


Morning News of Note:
  • NGG KSE: U.K.'s National Grid Offers $7.3 Billion for KeySpan British utility National Grid PLC emerged as the leading bidder in the $7 billion auction for New York utility and natural-gas distributor KeySpan Corp., people familiar with the matter said. It is still possible a rival bidder could emerge with a sweetened offer, these people said, but for now National Grid appeared in the best position to clinch a deal (Full Story) WSJ
  • Fund Flows: equity funds rptd inflows $9.9bln, ex ETF inflows $3.2bln; ETF flows: XLE $2bln, SPY $1.1bln, IVV $1.1bln, IWM $806m, XLF $461m, DIA ($468m), KBE ($113m); taxable bond funds rptd net outflows ($581m), ex ETFs $217m, inv grade funds rptd inflows $239m, HY funds rptd outflows ($31m); money mkt funds rptd inflows $25.284bln, lgst inflows since 12/7/05 -- AMG Data
  • GOOG: Google-GOOG auction system pushes revenue higher-BusinessWeek Google accounts for 99% of its revenue from advertising. Using innovations in online advertising help the company earn about 30% more revenue per advertising impression than rival Yahoo. Yahoo (YHOO) and Microsoft (MSFT) are both now trying to emulate Google's approach for auctioning advertising space. Google has put out three versions of its Adwords Select program, and while even the third try is flawed, it is still "a grand slam." Salar Kamangar, VP of product management for Google, said, "Third time's a charm."
  • Blood Substitute: FDA, Northfield Face Inquiry Over Study of Blood Substitute Chairman of Senate Panel Opens Probe Questioning Methods and Disclosures The chairman of the U.S. Senate Finance Committee has begun an inquiry into how federal health regulators and Northfield Laboratories Inc. handled a clinical study of a blood substitute used in hundreds of hemorrhaging trauma patients around the U.S. Sen. Charles E. Grassley (R., Iowa), who has actively challenged the Food and Drug Administration's performance in recent years, raised questions about the conduct of the 720-patient trauma study in a draft of a letter being sent to acting FDA Commissioner Andrew C. von Eschenbach (Full Story) WSJ
  • BIIB ELN: Tricky FDA Debate: Should a Risky Drug Be Approved Again? Next month, Food and Drug Administration advisers will take up one of the most difficult questions the agency ever faces: Should a promising drug that carries a known and deadly side effect still be allowed on the market? Tysabri was seen as a life-changing drug for the nation's 400,000 multiple-sclerosis patients and a potential blockbuster for its makers, Biogen Idec Inc. and Elan Corp. (Full Story) WSJ

Market Comments: The headline durable goods report looked terrible (-10.2%), but it was due to a large dropoff in aircraft orders. Excluding the volatile transportation industry, durable goods actually rose.

There was some news of an explosion in Saudi Arabia near an oil facility, which has spooked the commodities market. Crude prices are up over $1 ($61.75), and the energy stocks are getting a bounce.

Financial stocks are also higher across the board. The BKX index looks good after its recent breakout. WFC is quietly making a new, all-time high, but no one is talking about it. The other sectors are mostly mixed, but its still early.


Friday Quote

"I have an existential map. It has 'You are here' written all over it." - Steven Wright

Thursday, February 23, 2006

Wrapping Up

The market trailed off towards the close, and finished near its lows of the day (on the SPX). Volume ran lighter than yesterday's session, which is what you like to see on pullback days, especially after yesterday's accumulation day.

A couple of other positives I can say about today's market is that the Nasdaq declined less than the SPX, so maybe its outperformance will continue. Also, although breadth was negative today, the Hi/Lo indexes pulled back very little. The number of net new highs on the Nazz actually expanded.

And many high growth stocks finished up, such as HANS, GOOG, AAPL, ENER, etc. With the Nasdaq holding above its 50-day and the SPX near new highs, I am maintaining a bullish bias.


Notable Stocks

The market has done a good job recovering from this mornings lows. Also, the Nazz is leading for the 2nd day. Retailing stocks are also beginning to attract some interest.

Here are some stocks moving on above-average volume:
  • EPIQ - solid earnings spikes stock near new highs
  • CTRP - high volume breakout to new highs (earnings)
  • PLXS - Citi upgrade helps stock break to new highs
  • ASEI - high short-interest stock near new high breakout
  • URBN - strong move above recent downtrend
  • HANS - high short-interest stock bouncing off of 50-day levels
  • AMED - painful -23% drop on earnings miss
  • SHW - day 2 of lawsuit related selloff
  • HURC - 21% drop, below 50-day (earnings)
  • KOSP - another earnings related gap down
  • ESRX - mgt. guidance not good enough to keep high-flyer going


Early Weakness

Morning News of Note:
  • TWX: AOL TO GOOSE DIAL-UP PRICE America Online, the largest U.S. Internet access provider, will encourage users to switch to higher-speed connections by raising its dial-up pricing to match that of the company's high-speed plans. AOL's dial-up price will rise $2 a month to $25.90 beginning March 9, said Anne Bentley, a spokeswoman for AOL, which is a unit of Time Warner Inc. That equals the price of its lowest-cost broadband service. (Full Story) NY Post
  • HPQ EK: Hewlett-Packard Decides Store Photo Printing Is Its Turf You can shoot a digital picture — one of 140 billion snapped last year — with a Hewlett-Packard camera. You can print that photo on a Hewlett PhotoSmart printer at home. Or you can upload the shot to Snapfish.com, which is owned by Hewlett-Packard, and have it send you prints. But if you took the digital file to your neighborhood drugstore, it would be printed by Kodak, Fujifilm, or any number of lesser-known photo processors — not by Hewlett-Packard, the world's largest maker of printers. (Full Story) NY Times
  • EYE ACL: Some Vision Stocks May Get a Closer Look AS BABY BOOMERS AGE and innovative technologies allow image-conscious Americans to discard their eyeglasses, companies that find new ways to repair various vision problems have become big business. How big? Worldwide sales of contact lenses, drugs, lens-care solutions and devices that treat different eye diseases exceed $20 billion, growing at nearly 10% a year (Full Story) BARRONS
  • LEH: Lehman Moves to End Bundled Fees Research and Trading Costs Are Separated in Makeover Of Commission Structure Lehman Brothers Holdings Inc. is talking to several mutual-fund firms about striking deals to separate its stock-research and trading fees, in arrangements that would resemble the new one it has with Fidelity Investments. Research fees used to be "bundled" with stock-trading commissions, which are paid by shareholders in mutual funds such as Fidelity's. (Full Story) WSJ
  • Mad Money Summary: Jim Cramer opened his show discussing restaurant chains, saying they are becoming less cyclical because the cost of their supplies is going down. These companies are also sitting on solid real estate and have low labor costs. He specifically said to look for good concepts with room for growth, such as Cheesecake Factory (CAKE) and Panera Bread (PNRA). He was also bullish on Darden (DRI), which owns Red Lobster and Olive Garden, and Domino's Pizza (DPZ). On the high end, Cramer said to look at Ruth's Chris Steakhouse (RUTH), which he likes better than Morton's (MRT). He then discussed Starbuck's (SBUX), which he feels still has plenty of room to grow globally. He warns that the stock is currently expensive and suggests buying it after "it gets hit." Cramer also said that Chipotle Mexican Grill (CMG) had room to grow with only 500 stores, and believed the chain could take market share from YUM! Brands' (YUM) Taco Bell and traditional chains McDonald's (MCD) and Wendy's (WEN). Cramer's final pick was Luby's (LUB), which could be a winner because of solid cash flow and real estate value. However, he said of the actual story that it was "not a great concept or a great restaurant."

Market Comments: The market has opened under quite a bit of selling pressure this morning. Weekly jobless claims fell below 300K (278K) for the sixth straight week. Oil is down, and so are energy stocks. And the 10-year yield is up at 4.56%.

Nonetheless, some market leaders like HANS, AAPL, and GOOG are all trading higher. I would probably be more worried if the market opened strong, and then sold off into the close. But today's weak open sets us up for a rebound into the close, which is much more bullish action. Also, the put/call ratio opened at 1.25, which is indicative of a panic open.


Quote of the Day

"Money is like sea-water: The more we drink, the thirstier we become; and the same is true of fame." - Arthur Schopenhauer

Wednesday, February 22, 2006

Preparing for Tax Day

I like to read all of these articles on tax tips, just to see if there is anything I am missing that might help me.

SmartMoney is running a series. Here is part one of it:

IF YOU'RE a high-income type, you're probably painfully aware that many tax breaks are phased out (either dramatically reduced or eliminated) as your adjusted gross income, or AGI, increases. That's the price of success, right? Well, not necessarily. Believe it or not, some tax breaks are available to just about anybody — regardless of income. Here are six of them.

On A Lighter Note

This won't help you make money, but it sure is entertaining. I can't help but read everything this guy (Kevin Federline) says. I know that his album is going to be terrible. He can't even get a label to put it out for him. He might as well just say that Brittany is producing it. Anyway, I will probably buy one of his singles for download just to see for myself how bad it is.

K-Fed strikes again

Notable Stocks

The market has continued to rally. The SPX came within a point of a new high, while the Nasdaq has broken back above its 50-day average. Also, the Nazz is leading the day, with the NDX +1.3% so far. Energy stocks continue to be weak as oil prices now down $2.

Here are some stocks making high-volume moves today:
  • GRMN - stock up on good EPS, but well off earlier intraday highs
  • NTRI - gaps higher on BTE earnings report
  • ASEI - nears new highs; bullish conference presentation
  • LFC - China play gaps to new highs; looks extended
  • RJF - announces 3-2 split
  • NFLD - gaps down on negative WSJ story, but coming back
  • LCAV - gaps lower on disappointing EPS
  • CEC - see above
  • SHW - found guilty in nuisance lawsuit
  • HLF - gaps down -14% on earnings
  • RACK - recent highflyer pulls back to 20-day

Early Strength for Stocks

Morning News of Note:
  • SNE: Waiting for PlayStation 3 Talk of a delayed launch for the next-generation console is growing. If the rumors are true, Microsoft and its Xbox could win big. When SNE head Ken Kutaragi unveiled the first details of the PS3 in May, 2005, calling it a "supercomputer for computer entertainment," game enthusiasts rejoiced... (Full Story) Business Week
  • CSCO FFIV: Networking Lit Up Tech Earnings Season The results are in, and the rebound in telecommunications may have been the biggest bright spot for technology companies in the earnings season that's just ending. This year more technology companies are beating Wall Street's profit forecasts than usual. Two-thirds of the companies in the Standard & Poor's 500 have reported positive earnings surprises, more than the 59% average, according to Thomson Financial/First Call. And Thomson says tech companies were in line with that (Full Story) BARRONS
  • WMT: Wal-Mart Tries to Find Its Customer For all its success in the United States — and there is plenty of it — Wal-Mart Stores is still struggling to figure out its home turf, where sales growth at individual stores has sagged, its customers routinely flirt with rivals like Target for clothing and its advertising has often failed to inspire. The retailer's plans to fix the problems became clearer yesterday, when Wal-Mart executives pledged to remodel nearly half of its United States stores over the next 18 months, beef up its marketing division and expand a bold line of clothing across much of the chain (Full Story) NY Times
  • Bulls/Bears: Bulls 45.3 vs 48.9 wk ago, Bears 29.5 vs 27.2 wk ago, Correction 25.2 vs 23.4 wk ago
  • Mad Money Summary: Cramer opened his show discussing companies that "pillage the earth." He gave six picks for making money off the bull market of mineral extraction. His first pick was the Australian-based BHP Billiton (BHP), which he calls the "Mad Max of mineral stocks." His second pick was Freeport-McMoRan (FCX), the world's lowest-cost copper producer. His third pick was Rio Tonto (RTP), which he called the "metal supermarket to the world." Moving on to companies involved in mineral-extraction, Cramer's fourth pick was Manitowoc (MTW), which benefits from mineral extraction and should also benefit from the highway bill and the rebuilding of the Gulf Coast. His fifth pick was Terex (TEX), which he believes is underappreciated. The company makes heavy trucks and construction equipment. Cramer suggested buying the company on any weakness. His last pick was Caterpillar (CAT), which is a best of breed in mining equipment. Cramer said Caterpillar "quite frankly is the best, and you never need to apologize for buying the best."

Market Comments: The headline CPI figure was higher than expected, but the Core CPI was in-line with estimates (+0.2%). The market is trading higher in the first hour. I prefer markets that end strong, as opposed to open strong, but let's see if we can build on this early strength.

The Investor's Intelligence survey showed a decrease in bulls and an increase in bearish sentiment, which is a good sign from a contrarian perspective.

Oil prices are down this morning, and all of the energy stocks that led yesterday are down today. Very volatile. Financials are mostly higher, which is always a good sign. The Nasdaq continues to lag the SPX, which is a trend I would like to see change.

long WMT

Quote of the Day

"Money is a stupid measure of achievement, but unfortunately it is the only universal measure we have." - Charles P. Steinmetz

Tuesday, February 21, 2006

Modest Pullback

The markets did indeed finish lower. Breath was negative, but volume ran lower than Friday's pre-holiday levels. So it was not a distribution day, as selling pressure was relatively light.

I am hearing a lot of calls for a market top. Market tops are difficult to call, and usually happen when few people are looking for them. Some of the technicians cite narrowing breadth as one signal, while others cite the relative underperformance of the Nasdaq compared to the Dow. I think the Nazz is just lagging, but will soon play catch-up.

Energy stocks were the standouts today. The FOMC minutes came out, but there was little surprise. The 10-year finished at 4.56%, and oil closed a little over $61.

Have a great night--

Notable Stocks

The market has been hovering in negative territory most of the day, following a bounce at the open. Barring a late rally, it looks like the market could close at its lows. Most stocks are in the red, with the exception of the energy complex which is higher across the board.

Here are some stocks showing up on my high-volume screens:
  • RDY - another gap higher, as Bombay index rises
  • CTRN - strong bounce higher; bucks retail weakness
  • AAV - Canadian oil trusts bouncing with oil prices
  • ADM - bouncing off of rising 20-day average
  • TS - nearing new highs
  • WFT - participating in strength of drilling stocks
  • FSH - bucking today's weakness; support at 20-day
  • UTHR - gaps down on disappointing earnings
  • ORCT - gaps below 50-day
  • ISRG - breaks below recent consolidation
  • MTLG - gaps below 50-day ahead of earnings tonight
  • ZRAN - stock hammered by analyst downgrade

long AAV, FSH

Back In The Saddle

Morning News of Note:
  • TOL: Raising the Roof WITH WALL STREET FEARFUL ABOUT A BURSTING of the housing bubble, home-building stocks have been crunched -- and none as hard as Toll Brothers, the country's top producer of luxury homes. In just seven months, Toll has gone from being the Street's favorite major builder to the least-liked. Toll shares (ticker: TOL), at around 30, are down nearly 50% from their peak of 58 last July. The backdrop for builders has worsened in recent months as Toll has warned of weakening orders, rising cancellation rates and greater discounting. (Full Story) BARRONS
  • WEBX TWX: AOL, WebEx team up for new AIM services AOL is expected on Tuesday to launch two new versions of the company's instant message service that are designed specifically for businesses. In a partnership with Web-conferencing leader WebEx Communications, AOL is launching the tentatively named AIM Pro. One AIM Pro package will target small businesses and the self-employed, while another is intended to appeal to larger companies. Both will differ from the free AIM service by offering a customized interface, additional security, voice, video and Web collaboration capabilities, the companies said in a statement. (Full Story) CNET
  • Oil: Violence in Nigeria Sends Oil Higher Oil prices rose sharply yesterday after a series of attacks in the Niger Delta that shut down nearly a fifth of Nigeria's oil production. Brent crude oil for April delivery jumped $1.57 a barrel, to $61.46, on London's ICE Futures exchange. The market in the United States was closed because of Washington's Birthday. (Full Story) NY Times
  • PG: P&G sells deodorant brands to Germany’s Henkel KGaA for $420M-The Deal.com. Proctor & Gamble (PG) solds deodorant brands, including Right Guard, Dry Idea and Soft & Dri, to Germany’s Henkel KGaA for $420 million, a low end of the expected range. The brands were expected to go for 1.5 to 2 times annual revenues, which totaled $275 million in 2005. The deal puts to end an auction that P&G started as part of an agreement with the FTC to win approval for its $57 billion acquisition of Gillette Co
  • Mad Money Summary: On Friday's show, Cramer advised his viewers to look at Newell Rubbermaid (NWL), a "fabulous brand" which ousted a bad CEO. The company's replacement, Mark Ketchum, announced he will stay on as the company's permanent CEO. Cramer then discussed DRS Technologies (DRS), which was recommended to him by TheStreet.com's Michael Comeau and Will Gabrielski. The $2B company was recently awarded $87M in new contracts from the Pentagon, which is a substantial number for a company of that size. Cramer then said Gap (GPS), a stock he has hated, could make investors a lot of money. He believes the key to the company's turnaround is their Old Navy unit, which he said has cut down lead times on its fashions. This will mean they will have the right clothes this spring. Cramer then welcomed Remi Barbier, the CEO of Pain Therapeutics (PTIE), to the show. Mr. Barbier said the stock may be stagnant because the company is not getting any analyst coverage or because it takes time for stories to catch investor's attention. Cramer was bullish on Blackboard (BBBB), KeySpan (KSE), FPL (FPL), Cummins (CMI), Genzyme (GENZ), @Road (ARDI), Powerwave Technologies (PWAV), Peabody Energy (BTU), Akamai Technologies (AKAM), Crystallex International (KRY), JDS Uniphase (JDSU), DTE Energy (DTE), Texas Roadhouse (TXRH) and Pepsi (PEP), and was bearish on Krispy Kreme (KKD), Under Armour (UARM), Sulphco (SUF), Elan (ELN), Sonus Networks (SONS), International Coal (ICO) and Coca-Cola (KO).

Market Comments: The market had a solid week last week. I was out Friday, but it looked like just a mild pullback. The strong open this morning has been faded, and the markets are now in the red.

Some of this is likely related to the spike in oil prices. Energy stocks have been trashed lately, so they should get a bit of a bounce. The Canadian oil trusts have come back nicely from last week's panic selling.

The SPX came within 3 points of a new high this morning, so it remains in good shape. The Nazz is trying to hang on to its 50-day here. It has been unable to break above the downtrend that has been in place since the Jan. 11 highs. But I would not be surprised to see this downtrend broken soon.

long PG, TWX

Thursday, February 16, 2006

Heading to the Slopes

I am leaving for Park City in a bit, to work on my Jeremy Bloom impression. Not!

Anyway, this will likely be my last post, as I don't think I'll get to a PC tomorrow. But we shall see.

As for today, another solid day is in the works, barring a last hour selloff. Here are some stocks that look interesting (sorry for the shortened list):
  • HANS is breaking back above its 50-day
  • GOOG is getting its mojo back
  • BRCM held its 20-day
  • PARL is at new highs

long GOOG

Metropolitan Real Estate Report

The NAR put out its 4Q release of median sales prices for single-family homes in 200 U.S. cities. There were some signs of a slowdown, but still many areas that continue to look overheated.

The areas that look like they are cooling include:
  • Las Vegas: +12.3%; it had been running in the 20s
  • Los Angeles: down slightly to +20.7%, but moving in the right direction
  • New York: +16%; condo report might be a better read
  • San Diego: +6.6%; this area had been red hot, so this is a good sign

Here are the areas that still look overheated, and worrisome:

  • Ft. Myers: +48%; I would be a seller in this market
  • Miami: +24%; getting a little better, but this does not include condos
  • Orlando: +42%; South Florida is on fire
  • Phoenix: +48.9%; supply seems to be rising as fast as prices though
  • Tucson: +32.3%; spillover effect from Phoenix/Scottsdale

Hopefully, the trends in San Diego and Las Vegas are foreshadowing a soft landing. I am worried about all of the new supply in AZ, having driven through there, and would be worried about S. Florida but I don't know the local markets there very well.

long 1 LA home in the city

US Mogul Skiers Unimpressive

I used to race on the mogul circuit when I attended the University of Colorado. Back then, it was not an olympic sport, and wasn't even a varsity sport at the school. But now it is big time, and the US had some very good skiiers competing last night.

Unfortunately, they didn't live up to the hype. Jeremy Bloom, who also went to CU and played football, was the favorite. He finished a disappointing sixth. Travis Mayer finished even further down the list. But Toby Dawson did get the bronze metal, so congrats to him.

The highlight for CU alums last night was not watching Jeremy Bloom at the Olympics, but seeing the men's basketball team beat #19 ranked Oklahoma on EPSN2. Go Buffs!

Dow Leads Indexes to New Highs

Morning News of Note:
  • GOOG MSFT YHOO CSCO: Web Firms Are Grilled on Dealings in China Google, Yahoo, Microsoft and Cisco Systems came under fire at a House human rights hearing on Wednesday for what a subcommittee chairman called a "sickening collaboration" with the Chinese government that was "decapitating the voice of the dissidents" there. The statements by the chairman, Representative Christopher Smith, Republican of New Jersey, opened a much-anticipated session aimed at getting an accounting of the companies' dealings in China, and to air criticism that they do business there at the peril of human rights. (Full Story) NY Times
  • XOM: Exxon's Reliance On Qatar Field Raises Concerns Exxon Mobil Corp. replaced more fossil fuel than it pumped from the ground in 2005, but for the second consecutive year almost all of the additions came from a single natural-gas field in the Persian Gulf country of Qatar, raising questions about the diversification of the company's reserves. The disclosure from the world's biggest publicly traded oil company marked the latest sign that the energy industry, despite recently announced blockbuster profits, faces a long-term challenge. (Full Story) WSJ
  • DELL: Lowering the Bar The good news today is that everybody expects Dell Inc. to top analysts' estimates when it reports results. The bad news? Everybody expects Dell to top the estimates when it reports results. Back in the 1990s, when Dell was growing like gangbusters, investors took it as a given that it would beat estimates, because the fast-growing computer company's results tended to be better than investors' already-elevated expectations. (Full Story) WSJ
  • AMZN AAPL: Amazon Plans Music Service To Rival iPod In recent years, Amazon.com Inc. Chief Executive Jeff Bezos has explained his company's deliberately paced approach to the digital-music business by saying he wants to avoid simply imitating the dominant player in the field, Apple Computer Inc.'s iTunes Music Store. Now Amazon, the world's No. 1 online retailer, is in advanced talks with the four global music companies about a digital-music service with a range of features designed to set it apart. (Full Story) WSJ
  • Mad Money Summary: Jim Cramer discussed Crocs (CROX), a shoe company that went public last week, on his show last night. He believes the stock should be trading at $35, which means seven points of upside from its close last night, because the company sells "a stylish product that's in demand and doesn't have a lot of competition." Cramer also suggested Viisage (VISG), which makes facial-feature identification equipment. He feels the company made two smart moves, acquiring Identix (IDNX), which is "by far the best" maker of fingerprint-identification products and SecurtiMetrix, which makes a product for identifying irises. In the Lightning Round, Cramer was bullish on Nabors (NBR), GlaxoSmithKline (GSK), Schering-Plough (SGP), Alcan (AL), Valueclick (VCLK), Tom Online (TOMO), Autozone (AZO), FTI Consulting (FCN), Optionsxpress (OXPS), Chesapeake Energy (CHK) preferred shares only, Goldcorp (GG), Graco (GGG), Martek (MATK), Grey Wolf (GW) and Sirius (SIRI), and was bearish on Answerthink (ANSR), Southwest Air (LUV), Alberto-Culver (ACV) and Mannatech (MTEX).

Market Comments: The market didn't wait for Bernanke. It rallied in the day leading up to his testimony, and then added to its gains yesterday. I found his comments to be mixed, rather than definitively hawkish or dovish.

Energy stocks are getting a bit of a bounce this morning. There has been a lot of damage to that group, at least from a technical standpoint. I want to let these stocks build some bases, but then I want to revisit the oil services names and infrastructure plays.


Quote of the Day

"I believe that the power to make money is a gift from God." - John D. Rockefeller

Wednesday, February 15, 2006

Positive Hump Day

The markets finished higher for the 2nd straight day. With energy prices falling, and bond yields steady, you would think the backdrop for equities is getting brighter.

Biotechs and brokers led the day, which is a positive sign. Biotechs often signal that momentum is returning to the market. AMGN and DNA have been in long declines, so hopefully they can participated. Brokers are breaking higher, which is a good sign that this complex doesn't think rate hikes will kill the economy.

Breadth was positive, and the number of new highs is expanding slowly. The COMP broke above its 50-day, while the SPX put more distance between its 50-day. With the SPX closing at 1280, it would not be unreasonable to start looking for new highs in the near future.

I would like to see some more sideways consolidation, especially to give some of the former market leaders more time to recover. But alas, we have to accept the markets as they are, and not how we wish them to be.

Have a great night--

long AMGN

Notable Stocks

The markets have been bouncing around today, but are currently back in positive territory. Most stocks on my screen are up, with the execption of energy stocks, which continue to get sold hard. The capex cut from RIG yesterday didn't help, but this still feels more like hedge fund liquidation to me.

Here are some stocks making high-volume moves today:
  • BLK - gaps higher on deal with Merrill
  • FTI - high volume move back above 50-day (earnings)
  • SPSS - see above
  • RAVN - high volume breakout to new highs
  • HANS - rallies back to just under 50-day resistance
  • KSS - breaks back above 50-day
  • VLCM - gaps below 50-day on soft profit forecast
  • OSI - see above
  • BCSI - 2nd gap lower this month
  • IRBT - 20% plunge on lower profits
  • CSR - gaps below 50-day on disappointing results

Gillette Fusion

Have you tried the new Gillette Fusion? I admit I am a sucker for these new razors. But I don't see why anyone wouldn't updgrade. They basically give you the razor, and the new blades look like they cost about the same as the Mach 3 blades, at least at my local store.

Anyway, I have been getting a great shave with it. The only thing I am still having trouble getting used to is that single blade on the back that you use for sideburns, etc.

I would love to hear your comments--

Bernanke Speaks

Morning News of Note:
  • BLK MER: Merrill, BlackRock Unveil Deal BlackRock Inc. and Merrill Lynch announced that they have reached an agreement to merge Merrill Lynch's investment management business and BlackRock to create an asset-management firm with nearly $1 trillion in assets under management. Merrill Lynch's stake will go to 49.8%, and it will have a 45% voting interest in the combined company (Full Story) WSJ
  • ENER: Solar Power Gets Its Day in the Sun, But Still Carries Risks for Investors President Bush's State-of-the-Union teleprompter had barely dimmed when Wall Street geared up for a festival of sun worship. Investment bank First Albany hosts a conference today in New York on solar power. (Full Story) WSJ
  • INTC AMD: Digitimes reports with reports surfacing that Intel will lower prices for its 65nm Pentium D 9xx-series processors by 13-50% on April 23, Taiwan motherboard makers realize that although the price cuts may be a boon for the market, there will now be a temporary lull in the PC market, as players wait before making any unnecessary moves. Investors have predicted that with reduced working days and with relatively high inventory levels in the channel, motherboard shipments will drop 15-20% in February. In addition, with AMD launching its DDR2-supporting CPU line in the second quarter, March and April are likely to continue being low months. However, on the bright side, sources stated that motherboard makers expect the Intel price cuts to trigger a pickup in the market, and demand should increase dramatically through the second half of the year, with the launch of Microsoft's Vista operating system also expected to drive demand for new PCs.
  • TGT: Target-TGT sees February SSS up 2.5%-3.5%. The company's previous outlook for SSS was 2.5%-4.5%
  • Mad Money Summary: The first stock Jim Cramer discussed was Caliper Life (CALP), a drug development play. Another stock he suggested buying was Petroleo Brasileiro (PBR), a Brazilian state-owned oil company which Cramer believes is about to "conquer Bolivia." Seagate (STX) and Maxtor (MXO) were also suggested by Cramer, because he believes that investors still have a chance to capture some gains before the companies' merger closes. In the Lightning Round, Cramer was bullish on First Data (FDC), Vivendi (V), Marvell (MRVL), Knight Capital (NITE), Google (GOOG), Costco (COST), Peabody Energy (BTU), Ultra Petroleum (UPL), VCA Antech (WOOF), Parallel Petro (PLLL) and Lufkin (LUFK), and was bearish on Oakley (OO), Chesapeake Energy (CHK), Whole Foods (WFMI), Alliance Data Systems (ADS), Palomar Med Tech (PMTI), Escala (ESCL), Vector Group (VGR), Mindspeed Tech (MSPD), and Freightcar (RAIL).

Market Comments: While many feared that Bernanke's testimony would be hawkish, the market rallied in the day leading up to his testimony, and is rallying further this morning as the testimony begins.

Bernanke commented that the inverted yield curve is not signaling an economic slowdown this time. He also mentioned the global savings glut is keeping a lid on long-term yields. The 10-year yield has drifted back down to 4.59%, and crude oil is hovering below $60.

The market is up pretty much across the board, although it is still early. Brokers are getting a big lift, helped by the Blackrock/Merrill deal, followed by homebuilders and biotechs.

long INTC

Quote of the Day

"I finally know what distinguishes man from the beasts: financial worries." - Jules Renard

Tuesday, February 14, 2006

Notable Stocks

Here are some stocks making high-volume moves:
  • GWR - high volume gap to new highs (earnings)
  • KNDL - see above; ditto
  • MTXX - gapped back above 50-day, but is reversing
  • LTM - continuation rally to new highs
  • CHS - positive analyst day spurs breakout
  • FWRD - gaps lower on EPS announcement
  • RIG - lowers outlook for 1H06
  • HOC - continuation gap lower
  • STP - lower profits hurts China solar play
  • CUTR - disappointing earnings; gaps below 50-day

Market Comments: I said yesterday I thought the market could rally this week, but I don't want to see it all in one day. This is a pretty strong spike, especially ahead of Bernanke. The SPX is back above its 50-day and the key 1275 level. Most of the energy stocks have bounced back also (I nibbled at some this morning).

If it keeps up, it is possible that short-covering kicks in and exacerbates things. There are a lot of bears out there. The Real Money bull/bear survey of more than 1000 individual and institutional investors showed more bears than bulls for the second straight week.

Options Expensing Could Hurt Earnings

The Wall St. Journal had a story today about companies whose earnings will be lowered due to the new options expensing regulations. They cite firms like BRCM, MEDI, MMC, CRM, etc. The article cites a Goldman Sachs analyst who is telling investors to avoid 30 such companies, whose earnings are subject to sharp downward revisions.

Here is the link to the full story

Waiting for Bernanke

Morning News of Note:
  • MS: Discover to Offer a New Debit Card Discover Financial Services, which has more than 50 million cardholders, will for the first time offer a debit card to banks that previously issued only cards from Visa and MasterCard. The debit card from Discover, a unit of Morgan Stanley, the securities firm, will be the first new signature debit program available to financial institutions since a ruling in a 2004 antitrust case allowed banks that issued Visa and MasterCard to also offer other brands. (Full Story) NY Times
  • GOOG BE: BearingPoint to Help Sell Google Technology Consulting Firm to Integrate Search Product That Sorts Companies' Records BearingPoint Inc., a McLean consulting firm that has been mired in accounting problems for the past year, has struck a deal with Google Inc. to sell and integrate technology the search-industry giant created for corporations. BearingPoint executives said they do not know how much revenue will result from the deal, which is expected to be announced today, but the firm is creating a 100-person unit dedicated to the venture. (Full Story) Washington Post
  • BP CVX XOM APC DVN: U.S. Royalty Plan to Give Windfall to Oil Companies The federal government is on the verge of one of the biggest giveaways of oil and gas in American history, worth an estimated $7 billion over five years New projections, buried in the Interior Department's just-published budget plan, anticipate that the government will let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government. (Full Story) NY Times
  • SBUX: Starbucks to Continue Expansion Into China Starbucks Corp. Chairman Howard Schultz said the Seattle coffee giant will continue its aggressive expansion into China. "The No.1 priority for our company in terms of new growth is China," Mr. Schultz said in an interview here. "We are as excited and enthused about our course in China as about any country we have entered." (Full Story) WSJ
  • KBH TOL: KB Home Blames Declining Orders On Cooling Market Home builder KB Home reported a surge in cancellations and a drop in orders in the past two months, the latest indication that the hot housing market appears to be cooling and a sign that the softening may not be limited to the luxury segment. The disclosure from KB Home follows last week's announcement from high-end builder Toll Brothers Inc. that new orders fell sharply in the first quarter. (Full Story) WSJ

Market Comments: Retail sales came in stronger than expected this morning, and that is helping the retail stocks get a bit of a bounce. WAG also got upgraded at Raymond James, saying valuation was attractive. TGT said that same-store sales came in at the low end of its range.

Everyone is talking about how the markets are cautious ahead of Bernanke giving his testimony, but every financial stock on my screen is up this morning.

RIG reported earnings and said the 1H06 would be weak due to drilling delays. This is sending waves over the energy complex. But I think these stocks have come down enough, and I am now going to start looking for opportunities to add. I still think the service stocks and Canadian energy trusts are attractive.


Quote of the (Valentines) Day

"Women prefer men who have something tender about them-- especially the legal kind." - Kay Ingram

Monday, February 13, 2006

Market Still Churning Below Resistance

The market rallied a bit into the close to mitigate some of the selling damage. Volume finished at below average levels. Breadth was negative, but the Hi/Lo index is still in positive territory.

The market is now short-term oversold, and will likely rally this week. But bearish sentiment is only beginning to build. The put/call ratio was above 1.0 today. If the market rallies this week, and then comes back down to test recent lows, I suspect that will bring out a lot higher levels of pessimism and get some recent bulls to throw in the towel.

While some former market leaders are well off their highs (AAPL, SNDK, GOOG, etc), others have been hanging in very well (VAR, GS, WFR, STX). I think the latter make better trades as we come out of this correction.

Have a great night--

long GOOG

Notable Stocks

Here are some stocks showing up on my high-volume screen:
  • BLK - buyout talk from Merrill
  • CMED - high volume break back above 50-day
  • BER - high volume break to new highs
  • NTE - high volume reversal; EPS related
  • QSII - continuation of Friday's gap down
  • ASPV - returns from the stratosphere
  • AAV - energy related selloff
  • KWK - oil leader breaks below 50-day

Market Comments: Energy prices and related stocks are lower across the board this morning, despite the storm in the Northeast as well as Middle East tensions. This selling looks overdone given the current levels of energy prices.

The only minor positives about this selloff are that volume levels are fairly light compared to last week, and that the put/call ratios are spiking higher, as more fear gets built into the market.

long AAV

College 529 Plans

About a year and a half ago, my daughter was born. Naturally, my first thought was to get her college savings plan started. I researched the 529 plans available, which seemed like the best savings vehicle.

You can choose to go with any State's Plan. If your state offers tax breaks, you probably want to go with your home state. But my state did not, so I chose to go with Utah's plan. It is administered by Vanguard, so the fees were among the lowest in the country. It also had a variety of investment options, while some plans only had a few options.

SmartMoney recently graded the 520 Plans, and I was pleased to see Utah in the top 3 picks. This is by no means an endorsemnt of that plan. I am just illustrating the methodology I used to pick a plan for my daughter.

You can read the article, and if you haven't started one of these for your kids, I would recommend doing so.

Monday Morning Musings

Morning News of Note:
  • GOOG: In the Drink INVESTORS HAVE BEEN FIXATED on Google the past few weeks, as its shares have tumbled nearly 25% from a peak of $475 -- and the fact is, there could be a lot more tumbling ahead. The share price could well be cut in half over the next year as the Internet giant grapples with growing competition from Microsoft and Yahoo!, increased pricing pressures in its online ad sales and mounting concern about what's known as click fraud. Suffice it to say, there are those who disagree: Fans insist that Google (ticker: GOOG) is headed to $500, maybe even $2,000. But the list of challenges the company faces is nothing short of mind-googling. (Full Story) BARRONS
  • MDRX CERN: At Last, Digital Doctors DOCTORS HAVE COMPUTERIZED THEIR PRACTICES at a rate I find hard to describe: Unhurried? Sluggish? Snail-paced? Enter your doctor's office and the administrator still hands you a clipboard, stacked with paper forms for you to bring up to date. Errors in medical records cause a significant share of pain and spending, so a couple of years ago I wrote hopefully about electronic-prescribing products from vendors like Allscripts Healthcare Solutions ("Here Come e-Pills," May 17, 2004). I'm even more hopeful now. Success came slowly to the little Chicago-based company (ticker: MDRX), but it has become a growing supplier of software for all sorts of medical record-keeping, doubling its shares from a 2004 level of 8 bucks, to a recent 17. Hospital suppliers of health-care information technology like Cerner (CERN) have also seen their shares double, as the medical industry becomes -- at long last -- automated. (Full Story) BARRONS
  • BLK MER: Merrill and BlackRock Are Said to Be Near Deal Merrill Lynch is nearing a deal to sell its asset management division to BlackRock, a fast-growing fund manager, in exchange for a large stake in the company, according to people close to the discussions. The deal, which could be completed this week, would be a coup for Merrill Lynch and a disappointment for John J. Mack, the chief executive of Morgan Stanley, who just weeks ago had pursued a similar agreement with BlackRock and its chief executive, Laurence D. Fink. (Full Story) NY Times
  • MFST RIMM: Microsoft Challenges BlackBerry With New Mobile-Email Devices In an effort to muscle in on BlackBerry's stronghold on the mobile email market, Microsoft Corp. today plans to unveil several devices as well as offers from cellphone-service providers to make it easier for its customers to get messages on the go. The initiatives build on software upgrades Microsoft announced in June to give customers immediate access to new email messages. Research In Motion Ltd.'s BlackBerry devices long have offered services that continuously deliver -- or push -- email to the handsets. (Full Story) WSJ
  • Mad Money Summary: Jim Cramer opened his show on Friday discussing a German company, Fresenius Medical Care (FMS), a company which is involved in dialysis machines. He said the company is a play on the aging baby boomers. He said he also liked DaVite (DVA), and said it would be OK to buy that along with Fresenius. Cramer then discussed an upgrade that he "would actually listen to" from Friedman Billings Ramsay. The call was an upgrade to Outperform from Market Perform on InfraSource Services (IFS), a company which he said could make some mad money. Cramer then discussed a way to make money off of the introduction of the 30-year bond, by investing in futures index CBOT (BOT), which will see increased volume as 30-year futures contracts will now trade on the index. Opening his mailbag, Cramer discussed optionsExpress (OXPS), which he likes despite their high fees; Bennetton Group (BNG), which he would ring the register on; Cree (CREE), which he would not buy; and Broadcom (BRCM), which he likes as a tech stock. In the Lightning Round, Cramer was bullish on NTMI, HSY, JDSU, CAJ, CNXT, ACAD, KMI, DOW, YHOO, TJX, SHLD, APH, DIGE, NBR, PEP and PG, and was bearish on CKCM, AMZN, KNOT, CIEN, BKH, HUN, VCLK and CVH

Market Comments: Barron's did a hatched job on Google, but I think we may look back on this as helping to put in a bottom for the stock. ELOS missed EPS by 2 cents, but that stock looks like the miss was already priced in.

Management at CHK announced they have hedged a considerable portion of their production for 2006, 2007, & 2008. Does that mean that are finally calling a top in the spot prices for crude oil and natural gas?

The market is lower so far this morning, which sets us up for a possible change in trend. That being, a weak open followed by a strong close, which is how I prefer it. Bernanke gives his first testimony before Congress on Wednesday and Thursday. I think these meetings will be more hype than substance, but there is the possibility that Ben tries to sound a little hawkish and jawbone the markets.

long MSFT

Saturday, February 11, 2006

Weekly Recap

Despite what felt like a pretty bad week, the SPX squeaked out a positive week. And the major indexes are still in positive territory year-to-date.

Here is the weekly recap--

I still think this correction has a little more time to put in before the market is in good shape to rally. Many of the market leaders are trading well off their highs, and below the major moving averages. The SPX and Comp are also below their respective 50-days, signaling a neutral trend at best.

Bullish sentiment is beginning to wane, which is a start. Check back for a review of the sentiment indicators.

Friday, February 10, 2006

Notable Stocks

Here are some stocks that standout today:
  • ULTI - high volume breakout
  • NFP - close to new highs
  • EMR - BP contract spurs new highs
  • SGMS - NY lottery win spurs breakout
  • QSII - misses EPS by 10 cents; gap down
  • SYNA - day 2 of selloff; rumors of lost AAPL contracts
  • VMSI - high volume gap lower
  • DP - misses EPS estimates
  • CRM - gap below 50-day moving average
  • ACI - weak EPS leads to sharp selloff
  • PMTI - meets views, but not lofty expectations

Market Comments: The market has rallied back strongly from this mornings swoon. While this is better than closing at its lows, I suspect that it stems from short-covering before the weekend, as the bears chalk up a winning week and take profits.

long EMR

A La Carte Cable?

There is a story out today that debates the benefits to the consumer of having a la carte options for cable channels. I have to strongly disagree with the analyst that CNBC had on this morning who argued that it would raise the costs for consumers.

Who wants all those channels they jam down our throats? Leave it up to supply and demand. Consumers will pay for the channels they desire. If someone prices thier channel too high, they won't get as many subscribers. Just seems like a better model to me. But then again, I am a capitalist.

Here is the story. Let me know what you think--

Bears in the Spotlight

Morning News of Note:
  • EMR: Emerson Electric-EMR awarded major automation contract from BP. Emerson has been named the main automation contractor for the replacement of aging process automation systems at BP's three largest U.S. refineries
  • ADM PEIX DVSA: Can Ethanol Pump Up Investors' Returns? THE GRASS IS GETTING GREENER for ethanol, the alternative fuel that may offer investment opportunities in the coming years. In his State of the Union address last week, President Bush talked up "cutting-edge methods of producing ethanol," because, as he put it, "America is addicted to oil." Cellulosic ethanol, derived from wood chips, grass and other natural waste, is cheaper to produce than corn ethanol and could be at gas pumps within six years, the president said. (Full Story) BARRONS
  • TWX: Time Inc. Plans Salty, Secretive Web 'Magazine' The latest magazine from the world's largest magazine company isn't really a magazine, and its creator won't talk about it. But it is symbolically, even strategically, important. Time Inc. is expected to launch a Web site called Office Pirates in coming weeks -- and details are scarce because in the online world, building buzz through traditional marketing is not only ineffective, but it could also scuttle the word-of-mouth appeal. (Full Story) WSJ
  • US Economy: WSJ survey of economists; majority est fed funds 4.75% by June, sees rates holding 4.7% through end06; about 75% said Bernanke more likely to raise rates too high
  • Fund Flows: equity fund inflows $771m, ex ETFs inflows $4.2bln; ex ETFs financial/banking funds rptd lgst outflows ($72m) since 4/13/05; ex ETFs gold and natural resource fund inflows trailing 4wk avg $360m/wk; ETF flows: EFA $514m, DIA $434m, IVV $190m, IJR $169m, SPY ($2.21bln), QQQQ ($901m), IWM ($889m), XLE ($642m), IYR ($361m), XLF ($296m); taxable bond funds rptd inflows $1.3bln, ex ETFs inflows $1.5bln, corp fund inflows $399m, HY funds rptd outflows ($40m); money mkt funds rptd outflows ($4.669bln) -- AMG Data
  • Mad Money Summary: Cramer opened his show up by admitting that he can make mistakes, such as his call on Pain Therapeutics (PTIE). He recently was negative on the company in his Lightning Round because he felt the company was too risky. He has reevaluated the company and believes it is on the cutting edge of modern medicine, developing state of the art pain killers. Cramer then discussed Public Storage (PSA), which owns and operates large storage facilities, which he believes will be prosperous because "people like to own stuff." The company posted a great Q4 and is currently bidding for Shurgard Storage Centers (SHU). Cramer said that Ryder (R) is also a play on the storage trend. Cramer then focused on Essex (KEYW), which he said " is basically a bunch of PhDs with high-level NSA clearance doing tons of spy work for our government," and could make investors a ton of money if they invest before the story hits Wall Street's radar. Reading his mailbag, Cramer said Clear Channel Communications (CCU) was a bad stock to own, profits should be taken on Rediff (REDF), ABB (ABB) was worth taking a look at as a play on nuclear energy and Take-Two Interactive (TTWO) was a bad play in the video game industry. In the Lightning Round, Cramer was bullish on American International Group (AIG), Albany International (AIN), Dynegy (DYN), Maverick Tube (MVK), Hexcel (HXL), Advanced Micro (AMD), Sirius Radio (SIRI), Statoil (STO), Navteq (NVT), Grainger (GWW) and Ameritrade (AMTD) and was bearish on eBay (EBAY), Lucent (LU), Crocs (CROX), Activision (ATVI), Time Warner (TWX), American Axel (AXL), XM Satellite (XMSR), Juniper Networks (JNPR), Oracle (ORCL), Ashland (ASH) and Satyam (SIFY).

Market Comments: The market sold off into the close yesterday, and that selling has continued from the open this morning. Energy stocks are again extremely weak. This is a bit odd considering how high oil still is. Unless you think there is going to be a global recession.

Chip stocks are also down quite a bit this morning. But that group has had a big runup so far this year, so a correction should be expected. I will be looking to take advantage of weakness in both groups in the near future.

The SPX hasn't broken below Tuesdays lows (1253), but it's close. I as posted yesterday, the index got up near 1275, which proved stiff resistance. Now the market comes back down, which should bring out higher levels of bearishness and help form some sort of bottom.

These short-term bottoms are usually more of a process than an event, which is why we simply need to continue to monitor the price/volume action, gauge investor sentiment, and prepare our buy list so we are ready.

long EMR, TWX

Quote of the Day

"If God dropped acid, would he see people." - Steven Wright

Thursday, February 09, 2006

Afternoon Swoon

The market started strong out of the gate this morning, but you know how I worry about too much, too soon when we get early morning pops like that.

The market is rolling over this afternoon. Market leaders like GOOG, AAPL, SNDK, and CME are all trading in the red. WFMI is down nearly $6 after it's earnings report. QSII is down quite a bit also.

The Fed's Moskow made some hawkish remarks about inflation today, which didn't help things. And the 10-year yield is sharply lower at 4.53%. Flat city on the yield curve.

Let's see how the market holds up in the final hour.

Day 2 of the Bounce

Morning News of Note:
  • DIS: Disney and the Great Wall Hong Kong's Magic Kingdom Struggles to Attract Chinese Who 'Don't Understand' Park Li Zeng, a fourteen-year-old Chinese tourist, wandered Hong Kong Disneyland yesterday -- and left after two hours. Mr. Li isn't that familiar with Mickey Mouse and his companions, and he and his father didn't take any rides, buy souvenirs, or eat food. "We don't understand this park," said the teenager, waiting for his tour bus. "We gave up looking at the map." (Full Story) WSJ
  • GOOG: Google Updates Tool For Computer Users To Search Desktops Google Inc. plans to release an updated version of its software for searching the contents of a hard drive that will let consumers access information stored on other computers they use. For consumers who activate the new feature in the software, which is known as Google Desktop Search, the search company will temporarily store the text contents of the user's files on its own computers before transferring them to a second computer the consumer uses. (Full Story) WSJ
  • Asia Economy: BoJ keeps interest rates at 0%; Gov Toshihiko Fukui said core CPI will show clear gains in Jan and after; said judgement of core CPI will become increasingly important at next policy meeting; Japanese Jan consumer confidence 49.5 vs 46.7 in Dec, highest since June90, index only been above 50 four times since 1982 // Bank of Korea raised interest rates 25bps to 4%
  • Mad Money Summary: Cramer's battered stock of the day was Vitesse Semiconductor (VTSS), which he said was a great pin on the momentum of Cisco (CSCO). Cramer then advised a caller to stay away from Avnet (AVT), saying the margins in the distributor business are too low. Cramer then brought on Starbucks (SBUX) founder and chairman Howard Schulz, who said his company plans to open 30,000 stores worldwide, including 15,000 internationally, and that he feels the company is only "at the embryonic stages of our international expansion." Cramer then discussed genetically modified foods, which he feels will make money for Syngenta (SYT) and Monsanto (MON), although he said not to buy Monsanto before its earnings release today. In the lightning round, Cramer was bullish on HANS, BKHM, BCRX, CB, UPL, MU, UNH, BTU, ECA, TLM, WYE and VRSN, and was bearish on AVP, ISLE, EXC, REDF, OMN, GST and AZN.

Market Comments: The market is getting a strong bounce at the open. BBY reported strong earnings, which is helping tech stocks also. The SPX has broken above its overhead 50-day moving average, and is closing in on the 1275-level.

I would expect this area to offer some resistance on this attempt, and for the market to consolidate further. Volume was strong on yesterday's rally, which is a good sign. But the number of stocks making new highs has shrunk.

While today could very well be another up day for the market, I am holding off for a bit before making new buys.

Wednesday, February 08, 2006

Notable Stocks

The market is getting a bounce here, but it doesn't feel like it has a ton of conviction. Recent leaders like GOOG and ISRG are still trading down.

Here are some other stocks making moves on high volume:
  • STMP - gaps higher on strong earnings
  • OXPS - Mad Money mention gooses stock
  • AMX - near new highs
  • MFLX - strong bounce off of 50-day
  • FSH - strong earnings and raised guidance
  • NILE - gaps lower on poor earnings
  • CYBX - also gaps down on earnings miss
  • FEIC - company ends recent merger talks
  • ASPM - gaps down on earnings shortfall

Volume also looks a bit light today. You want to see volume increase on the up days, and decrease on the selloffs. Lately, it has been the other way around. I raised a little more cash today.

long FSH

Due for a Bounce

Morning News of Note:
  • ADI ASML: Chip Companies Left to Their Own Devices HERE'S HOPING CONSUMERS keep buying iPods. Despite many predictions that corporate information-technology departments will start buying like it's 1999 again, consumer purchases may continue to be the bright spot for both electronics and the chips that drive them. The Semiconductor Industry Association last week said worldwide sales of microprocessors rose 6.8% in 2005, to $227.5 billion. (Full Story) BARRONS
  • UVN TWX NWS: Univision Considers Going on the Block Univision Communications, the Spanish-language media company, is considering a plan to put itself up for sale, people briefed on the proposal said last night. An auction for Univision, which is worth nearly $10 billion, could set off a scramble among the country's media giants — the News Corporation, Time Warner and CBS — as they vie for a slice of the lucrative and growing Spanish-language market. (Full Story) NY Times
  • MOT: Using Your Cellphone as a Credit Card U.S. Is Catching Up to Asia In Adding New Services; Overcoming Security Concerns Taking a service that is growing in Asia, Motorola Inc. is planning to launch a system that will allow people to purchase products simply by waving a cellphone with an embedded chip over scanners at the cash register. The U.S. has been late to this game. Companies in Asia have already introduced cellphones that can do everything from buying groceries to purchasing movie tickets. Tokyo commuters can now board trains by waving their phones over a sensor in turnstiles. (Full Story) WSJ
  • GOOG: 'Net Neutrality' Debate Heats Up at Senate Hearing Google Inc. and other Internet companies pressed Congress for a law that would bar telecommunications networks from charging more for some services and controlling what consumers can obtain on the Internet. At the same hearing yesterday, representatives of the telephone and cable-television companies told the Senate Commerce Committee that present regulations are sufficient and that with new fees they could upgrade their networks to deliver a wealth of movies, games and music. (Full Story) WSJ
  • Mad Money Summary: Jim Cramer opened his show last night discussing options trading. Although he believes it is "a serious way to make money on Wall Street," he says it is risky, likening it to a game of Russian roulette. He says one way to make money on the popularity of the practice is to invest in optionsXpress Holdings (OXPS), one of the few online options trading brokerages. Cramer then discussed racinos, or combined racetracks and casinos, where the gambling is usually limited to slot machines. He believes they are the wave of the future, and says one way to play them is to invest in International Game Technology (IGT), which owns 70% of the slot machine market. MarketWatch columnist Herb Greenberg then joined Cramer on stage and debated the merits of Portfolio Recovery Associates (PRAA), which Cramer likes. Greenberg is worried about the company because they are in the business of buying, collecting and managing portfolios of defaulted loans. Greenberg then said he liked ABX Air (ABXA), an airline stock, to which Cramer said is "television suicide," although he gave the stock one-and-a-half thumbs up. Cramer then discussed Vivendi (V), which he said could make viewers a lot of money if they beat the analysts to it. In the Lightning Round, Cramer was bullish on CNXT, SLB, AAUK, MYOG, WLT, ED, ALKS, WFMI, MC and SNE, and was bearish on ESLR, YRCW, BXC, BIDU, UAUA, NWRE and OATS

Market Comments: The market is finally bouncing this morning, although energy stocks remain under pressure. Ditto some of the leaders I've mentioned recently like ISRG and GOOG. Those stocks continue to decline, reflecting that the market is leery right now of very high multiple (P/E) stocks.

Oil has fallen to below $63, which is still very supportive of strong earnings for most energy stocks. But the trend right now is lower, so we don't want to fight it. The weather has also been warm, but cold snaps can occur at any time.

Let's see if this bounce has any momentum. There has been some technical damage to the indexes, so I would expect any bounce to find resistance and then retest lower levels.

long TWX

Quote of the Day

"He that is of the opinion money will do everything may well be susptected of doing everything for money" - Benjamin Franklin

Tuesday, February 07, 2006

Closing Near the Lows

As I suspected based on the recent action of former market leaders, stocks continued to selloff today. The market was down pretty much all day, led by energy stocks. Oil prices fell sharply, which caused nearly all commodity-related issues to come under pressure.

Volume increased from yesterday's levels, qualifying as a distribution day. Breadth was negative, while the Hi/Lo index is still positive. The put/call ratio rose to 0.94, so we are starting to see fear creep into the market.

Calling a market bottom is difficult at this point. My thinking is that most likely we will get a bounce, then come back down and retest, and that could create a more durable bottom. The SPX is only 3% off its high, and hasn't spent all that many weeks correcting. So be patient. But I am beginning to see some attractive opportunities developing, including the energy complex.

Have a great night--

Market Leaders Continue to Falter

Morning News of Note:
  • XOM: Oil Firms Want SEC To Loosen Reserves Rules Thanks to record profits, oil companies are finding it easy to fatten up their bank accounts. But they're having a tougher time convincing skeptics how much oil and natural gas they have in the ground, which is the measure that Wall Street uses to gauge the companies' future profitability. Big Oil's proposed solution to this dilemma? Change how reserves are measured. (Full Story) WSJ
  • GOOG MSFT: Pressuring Microsoft, PC Makers Team Up With Its Software Rivals Dell Is in Talks With Google To Use Search Services; Winning Loyalty at Set-Up 'A Magic Time for End Users' It takes only about five minutes to set up a new personal computer by clicking through a series of introductory screens. In that time, however, many consumers choose software and services they will often use for the life of their machine. Historically, Microsoft Corp. held great sway over this "first-boot sequence" as well as other software preinstalled in the factory. (Full Story) WSJ
  • TOL: Toll Brothers-TOL reports Q1 revenue of approximately $1.33B. Consensus estimates are for $1.35B. TOL lowers its 2006 deliveries to 9,200-9,900 from 9,500-10,200
  • Mad Money Summary: Jim Cramer opened his show discussing Areva, a French company which mines and processes uranium and builds nuclear plants. He then moved on and discussed Texas Roadhouse (TXRH), a regional-to-national food chain, which currently operates in about 34 states. The chain, which is promoted by Willie Nelson, is expanding both geographically and numerically. He said he prefers Texas Roadhouse over Chipotle Mexican Grill (CMG), which he says trades at a multiple greater than Google (GOOG) or Broadcom (BRCM). Cramer's stock pick of the week was Alcan (AL), an aluminum company, because "aluminum will be the metal of 2006." He picked Alcan the night ahead of its earnings release, which is today. In the Lightning Round, Cramer was bullish on AAPL, JCI, NDAQ, NSC, CRDN, STX, PEC, TRN, RACK, SSL, ENER, HW, PCAR, SNY, NBR, STN, VISG and MOT, and was bearish on HET, PFCB, WEN, BBC, WFMI, QDEL, INTC and ARII

Market Comments: Despite all of the worries about Iran and oil supplies, crude prices are down more than a buck this morning, and the energy (stock) complex is trading down across the board. Buying opportunity coming?

As for the market leaders, those stocks continue to decline (see GOOG, ISRG, STP, UARM, etc.). The broker/dealer index is the only sector in the green. In addition to energy, housing stocks are down also after TOL reported disappointing results.

The SPX has broken below last week's lows, and is closing in on erasing all of this year's gains (1248). The volatility indexes are slightly higher, and the put/call is 0.93.

long XOM