Thursday, May 31, 2007
The big number tomorrow is the monthly non farm payrolls figures. The Barron's survey says the consensus figure expected is 135,000 with unemployment expected at 4.5%.
Some interesting corporate developments tonight:
Bancroft Family Agrees to Meet with Murdoch Over Dow Jones Sale;
Wall Street always loves layoff news: Dell Lays Off 8000 As 1Q Earnings Fall - shares jump 6%.
So, if Wachovia (WB) is buying AG Edwards (AGE) for $89.50 why did more than 2000 June 90 AGE calls trade today? Late today Bank of America put out a note stating that the WB bid was "fair" but not full and upped its target to $95. hmm.
Reiterate Overweight. DIVX is trading at 15.3 times FY08 PF EPS estimate of $0.91, a 32% discount to the mean of our coverage universe. With FY07 revenue growth tracking 45% y/y and pretax income growing 78%, DIVX looks significantly undervalued.We hosted investor meetings with DIVX management yesterday. The story, essentially unchanged since the IPO, remains encouraging – weexpect a slew of new DIVX-certified products (incl DIVX Connected) in2H07, including STB/DVRs. With the stock still under pressure, we aremissing something. In our view, this very strong growth story should now appeal to value investors too. Reiterate Overweight
Maxim Group, Price Target $25:
What should investors do with DIVX stock? We remain upbeatabout DIVX and continue to recommend that investors Buy thestock. While yesterday’s investor presentation didn’t provide much new information, we believe that the additional color about 1Qresults and 2Q guidance, a conciliatory tone, and further discussionabout the company’s growth drivers should help assuage someinvestor concerns. After 1Q07’s disappointing (on a number offronts) conference call, we believe that recent stock price weaknessis more a factor of management effectively communicating withinvestors than executing on its business plan.
Cannacord Adams, Price Target $26:
On the heels of the Q1 report, DivX shares have been making new lows. We believe the stock is oversold and that patience should be rewarded at current levels as new DivX-enabled devices ship this fall, fueling a highmargin IP Licensing model.We would be aggressive buyers at current levels.
DIVX trading up +0.85 (5.63%)
In spite of the barely growing economy at .6% annualized growth in Q1, stocks are poised to open higher (the notion being the Fed won't need to lift rate and may need to cut). Deals continue to be the dominant theme with AG Edwards (AGE) being taken out at a $10 premium.
I've got anoher appointment I have to run out to. More early in the afternoon.
Wednesday, May 30, 2007
I want to thank a donor for New England who kicked a nice donation into the Paypal tip jar today. That is much appreciated. Between subscriptions for publications, even fees to have the S&P ticker up, the site is costing deep five figures to operate.
The Dow managed to close above 13,600 for the first time. While indicators like RSI above 70 may warn of overbought conditions, so long as private equity remains active there is a major floor of support under the market. The market was also able to blow off the latest Shanghai surprise since a one day 6.5% didn't even get the Shanghai market to close beneath its 20 day moving average, and unlike the February China market swoon, this one wasn't accompanied by a flight to yen which suddenly caused an unwinding of carry trades to take the U.S. stock market down hard. The Yen was little changed today.
Latest deal tonight: Ceridian agrees to be sold for $5.3B.
Rumors of deals continue to capture the hearts and minds of speculators. Cleveland Cliffs (CLF) surged $3.52 or more than 3% today on speculation CLF is holding talks to be bought by CVRD (RTP) for around $100 a share. CLF surged another 3% to $84.30 after it got a very favorable mention from Cramer on CNBC this evening. I have been long CLF since last Friday.
GDP revision and jobless claims hit the market at 8:30 tomorrow morning. Manufacturing and construction spending data at 9:45 and 10.
Eventually it will all end badly. When? I have no idea, but I continue to keep a close eye on SPX put and call activity and the volatility index among other indicators. The Washington Post reminds today the housing ATM is broken. That will surely catch up with the consumer at some point.
This would also mean a bad day in the markets - if this were enacted: http://www.whitehouse.gov/news/releases/2007/05/20070509-12.html.
The Chinese market dive was brought on by an increase in a tax on trades by the Chinese government from .1% to .3%. The tax increase is part of what is seen as a series of measured responses by Beijing to cool rampant speculation. Prior to last night's swoon, the Shanghai benchmark was up 62% year to date. While it's all well and good for the Chinese government to be 'measured', there's still plenty of risk that they push too hard to cool things and cause a classic boom/bust scenario that will hurt global equity markets.
The ADP employment report indicates that Friday's official payrolls data could be a bit softer than what economists are expecting: U.S. private payrolls up 97,000 in May: ADP. Earlier, the Mortgage Bankers reported softer activity: US mortgage applications fell last week-MBA. At midday we'll see the minutes that were taken at the last FOMC meeting.
Is ICE gaining the upper hand in the battle for Chicago Board of Trade? ICE signs exclusive deal with CBOE.
Crude oil, dollar, bonds little changed. Gold down $2.
Tuesday, May 29, 2007
In the ongoing intercourse of business on Wall Street volume was lighter than usual and the range was fairly tight, but with an upward bias. Deals remain a primary buying motivator. Who next will be taken out for a rich premium? And once again, the deals that have been announced involved companies with little mention in the rumor mill. This included the $7 bln CDW takeout and the $15 bln buyout of Archstone; little in the way of huge options activity beforehand. It really makes me view any name as a possible takeover target coming out of the rumor as suspect with the best strategy being a time spread to capitalize of volatility fluctuations, or to go long on certain names that have been perpetually mentioned on Wednesday and dump by Friday.
There is a certain level of desperation where these rumored deals are concerned - where it almost seems as if money for speculation in the options market is no object - where money is thrown at anything with even a hint of a possible buyout. Micron Technology (MU) is a case in point. While the activity slowed considerably from last week, nearly 37,000 June calls traded again today. Blackstone has been the rumored suitor for a price of $16 a share. The rumored Blackstone interest is being given more credence than usual on Wall Street trading desks because if Blackstone were to buy, China would indirectly - because of its $3 bln non voting stake in Blackstone - gain a bigger piece of the action in DRAM which is now dominated by companies based in Korea, but with China in hot pursuit. Still, MU slipped 1-cent today to $11.96 as investors moved into a "show me" state of mind after a deal failed to materialize this past weekend.
Tomorrow's not a completely dead day on the earnings front. A bunch of retailers will play show and tell including: RL, CHS, DLTR, WSM, PSS, DBRN and JAS. JOYB and NOVL will also be posting for a little high tech fun.
Every bit of economic data is very important as 10 year treasury yields back up toward 4.9%. Tomorrow the key release is the ADP Employment Report which will give us some inkling into what this Friday's employment report for May will show. Economists are expecting May non farm payrolls to rise by 135,000.
Oh, and what's going on with the ABX indices again? More trouble ahead on the mortgage front as demand again increases for credit default swaps?
The dollar was a touch weaker today, but what has me keeping an eye on forex is the apparent bottoming, or at least near bottoming of carry trade funding currencies like the Yen, the Swiss Franc and even the Czech Koruna. This is another reason why every bit of economic data is important. Prospects for a tighter Fed will certainly impact the carry trade situation (near 10% returns in this realm in a month and a half) and ultimately stock market liquidity.
Many are already heralding the end of the rise in gasoline this season as the march to Memorial Day is now history: OIL FUTURES: Nymex Crude Drops $2 On Nigeria ; Gasoline Slumps. There are many reasons to be bearish with Cushing brimming with crude, pressure on someone or a group who have been stopped out of arb or crack positions, etc. But the simple fact of the matter is that gasoline stocks remain well below normal for this time of year. I won't be standing in front of weak technicals in my trading of crude, I'll just be mostly standing pat to see how all of this shakes out in the days ahead since I'm not completely convinced the rally in energy is over for the summer.
And a big face off on Wednesday: Steve Jobs and Bill Gates to make rare joint appearance tomorrow
My January post contains the link to the treasuy report which contains the $50+ Trillion figure.
Monday, May 28, 2007
From the Wall Street Journal:
"Tishman and Lehman are near a pact to buy Archstone-Smith, a top apartment real-estate trust, for more than $12 billion."
And there are more likely deals...
Rio Tinto may join Alcan race, Norsk Hydro also in the fray.
Coca-Cola purchase of Highland Spring said to be in pipeline.
URS buying Washington Group for $2.6B.
Avaya reportedly in talks to be sold.
CVRD declines comment on talks to buy Cleveland-Cliffs.
Stock futures are showing a modest gain this evening. Tuesday's economic data features consumer confidence figures at 10 a.m. Thursday features revise GDP, manufacturing data and jobless claims figures. Friday is the big day for reports with the monthly employment data due for release along with figures on housing, personal spending and consumer sentiment.
Friday, May 25, 2007
Israel A. Englander & Co., will be on CNBC this morning at around 11 A.M. Scott is a CMT, ROP and RFA and all around options expert who has written books on the subject.
A good chunk of the folks heading to their Memorial Day destinations will do it using an automobile. Triple-A guesses that more than 32 mln will people will use a motor vehicle to travel 50 miles or more during the holiday weekend, up about 2% from last year and despite record high gasoline prices. My own anecdotal indicator is observing traffic on Sunday afternoons headed south (since I'm usually going north after a visit to mom's house) on the NY Thruway to the Tappan Zee Bridge toll bottle. Last weekend the Thurway (I 287/87) was jammed packed. Travel experts say those with holiday weekend budgets strained by the high price of gasoline will offset that cost by perhaps staying in slightly cheaper accommodations, or by buying less tourist trap junk, eating at a cheaper restaurant, etc. Energy remains a big concern for the markets because of its impact on the driving force of the economy: consumer spending. And there appears to little relief in sight at the pump: Gasoline prices rise on low inventories, refinery outages. Keep praying there is no hurricane strike on energy assets later this summer in the Gulf of Mexico.
Energy is also driven by geopolitical events and surely stories like these keep the pressure up:
Iran will push nuclear program 'to the limit'
Oil edges up on Nigeria woes
Iran’s leader warns Israel on war in Lebanon
From an options standpoint, a three day weekend should be looked at with caution. There have been many situations lately where option volatility is ramped up, especially in front month contracts, due to rumor mill speculation. Buying and holding those types of options through the long weekend, unless a given deal happens, will result in an unpleasant decay in value by the time Tuesday rolls around. Be careful.
On the corporate front this morning, M&A remains a dominant theme:
Coke to buy Glaceau in $4 billion deal.
Ah, dah Sveeden: Nasdaq to buy Nordic bourse group OMX for $3.7 bln.
There's more buzz surrounding Apple's iPhone. CNBC reported that June 20th is the release date, citing a "local store". PC World is stoking some controversy over whether AT&T stores are taking iPhone pre orders.
We get Existing Home sales data at 10 today.
A few quick analyst notes:
- Banc of America starts Gilead (GILD) with a Buy and $94 target
- Friedman Billings starts Hewlett Packard (HPQ) with a Outperform and $53 target
- HSBC downgrades Tiffany (TIF) to a Neutral on valuation.
Thursday, May 24, 2007
Chips were also a key ingredient today - the wrong ingredient for the bulls. The spinal tap for investors without the benefit of anesthesia from Network Appliances (NTAP) and its lowered guidance late yesterday and the Komag (KOMG) warning from this morning also weighed heavy on the market. I've noted in recent days that a rise in the market without at least a little leadership from the chips is not a good thing and could be a forward indicator for things to come in the broader market. The Semi Holders (SMH) today completed filling the late April upward gap today on heavier than normal volume.
I'm not by any means declaring the bull dead, but it will be interesting, with the S&P perched at its 20 day moving avg, to see if we don't end up testing S&P 1500 sooner rather than later.
Who do you believe given the problems with prescription meds in recent years?
Door #1: US FDA Warned Glaxo in 2001 About Avandia Marketing (Update2)
Door #2: Avandia is safe, says drug maker
Monty, I'll go with Door #1.
U.S. weekly jobless claims were up 15,000 to 311,000, the first weekly rise in six. Existing home sales are due at 10 and I think we get a better idea of the bulls can save the day after those numbers are out.
There are already some decent headwinds:
GM gets SEC request, details Delphi exposure.
Toll Brothers profit tumbles.
A warning from Komag (KOMG): Komag Updates Second Quarter 2007 Business Outlook
Following the comments of Greenspan and the likelihood of a Chinese market crash, the Chinese market slipped about a half-percent overnight.
The great climate change debate is hitting the board rooms: Investors push Exxon board member on climate .
Interesting little write up on iPhones and whether pre-paids will be available: CNET: Prepaid iPhones? We'll see about that.
On the Dow Jones (DJ) battle front, Citi's Smith Barney has an interesting report out. The analyst there lifted DJ's target to $55 from 37, but maintains a hold. The report says there's a 65% chance Murdoch lifts his offer to $65 and that it's accepted. Citi thinks there's a 35% Newscorp (NWS) is rejected and no chance someone walks in with a competing bid.
I continue to watch the Alcan (AL) situation closely: Alcan up on report of talks. I may comment further later today.
Wednesday, May 23, 2007
Former Fed head Alan Greenspan threw a wet blanket on the proceedings of the bulls by (and remember he is now a gainfully employed bond guy) proclaiming that the floor will soon be removed from the Chinese stock market. Ya think?
Stock players have also been keeping a wary eye on the bond market: 10-year yield at 3 1/2-month high.
Fifth Third (FITB). I more than doubled on my calls and dumped them. No news to explain that thundering options pile on. Perhaps I should have held some, but "sell too soon" are not bad words to live by when a gift-option practically falls from out of a blue sky.
Yesterday Illionios Tool Works (ITW) rallied on takeover speculation. NY Times DealBook asks why a director would be selling shares. Good Question. http://dealbook.blogs.nytimes.com/2007/05/23/big-tool-deal-in-the-works/,
The call volume has been amazing today on Apple (AAPL). At one point the stock was up at 115 (all time high) and the June 125 calls were trading like hot cakes. But AAPL is well off the highs the day. Piper has a report out saying that iPod sales look light for May, according to NPD data.
Now that Alcan (AL) has rejected Aloca (AA), the question is who's the White Knight? BHP in Alcan white knight talks. AL will move a couple of dollars higher this morning.
Here's a deal, but with a small premium: Morgan Stanley to buy Crescent Real Estate
The stride is right for Payless: Stride Rite to be acquired by Payless. Stride Rite (SRR) is up 32% in pre market trading.
Could there actually be interest on the part of some of the Bancrofts in Murdoch's offer? Bancrofts and Murdoch to meet.
Speaking of deals and/or potential deals: Could Daimler Be Takeover Bait?.
There's non-deal news as well:
Cypress Bioscience (CYPB) is up 107%, and Forest Labs (FRX) surging as well: Forest, Cypress Post Preliminary Milnacipran Data. With this news a variety of firms upgraded FRX.
As noted last night, Medtronic beat the street and is up 4% (long here). Piper also upgraded to Outperform.
Other developments to watch:
- Troubles for Amgen: NY subpoenas Amgen sales, marketing data
- SEC to finalize Sarbanes-Oxley tweaks
- They're suprised, but we're not: Speed of subprime bust surprises lenders CNNMoney.
Other analyst comments of note:
- Matrix downgrades Advanced Micro (AMD) to strong sell citing loss of market share to Intel (INTC)
- After earnings last night, Analog (ADI) downgraded to Sell at Merrill
- Valueclick (VCLK) downgraded to Neutral at Credit Suisse due to valuation
Coming our way at 10:30 the latest energy inventory data - should be interesting in light of yesterday's slide in RBOB.
No economic data again today. Tomorrow the markets will be confronted with Durable Goods, Jobless Claims and New Home sales figures.
Forex - Dollar firm after Lacker comments; 10 year treasury down 1/32nd, yield at 4.835%. Gold is up $3.
Tuesday, May 22, 2007
After the bell Alcan said, NO: Alcan rejects takeover by Alcoa, but says its in talks with third parites; stock takes off after hours.
Medtronic (MDT) - I stuck with it and they didn't guide lower. They generalized their guidance to say their "comfortable" with fiscal '08 consensus estimates of double digit revenue growth. Management added that profit growth would grow at a faster pace. At last check the stock was up more than 3%.
The energy markets paid little notice as commodities sank in general today...
Commodities sag as crude oil, gold and grains futures all decline
I've been watching Medtronic call options activity (I am long in this name) and more than 13,000 June 52.5 calls have traded today vs open interest of 9,500. More than 10,000 out of the money June 55 have traded as well, though volume has not exceeded open interest. So there appears to be a very confident call options crowd ahead of earnings tonight.
This morning Lazard said the company will like beat when it releases earnings this evening. However, yesterday Cowen alerted that MDT might lower '08 guidance. I've got 3 more hours to decided if I remain long.
Edit; OptionMonster reporting on their site, almost all the action in the 52.5 calls has been buys. ANother options pro in NY I talked mentioned takeover speculation and that bull spreads are being initiated. Interesting stuff. I;ve got to run out to Trader Joes... back later.
CBS has acquired Wallstrip... details here at http://www.howardlindzon.com/. A huge congratulations to Howard and the rest of the Wallstrip team!
Further details here: CNET:Wallstrip's Lindzon confirms CBS buy.
Energy will continue to be a focus. WTI is down a tad this morning at just under $66 a barrel. If articles like this have a modicum of likelihood: Guardian: Iran's secret plan for summer offensive to force US out of Iraq - then the respite from the recent surge in gasoline that many are predicting after Memorial Day is likely not to happen. Oh, and don't forget: At 11 this morning, NOAA will be releasing its summertime hurricane forecast. Private forecasters including AccuWeather are already predicting an active season. Key in today's forecast is whether a bias is mentioned toward it being an East Coast season, or a Gulf season.
Notable analyst calls...
- The negative New England Journal of Medicine report on Glaxo's (GSK) Avandia drug has prompted ABN and Deutsche Bank to downgrade GSK to hold.
- Goldman downgraded the Steel sector Neutral from Attractive
- Merrill downgraded a variety of mem chip makers to Neutral. including Sandisk, Samsung, Hynix, and ProMos.
- Goldman notes the former CEO and founder of Monster (MNST) sold a million shares last week. While this former officer is no longer employed and not privvy to inside information, the firm thinks the sale inidcates a sale of MNTR is not imminent.
"Robert Kyosaki - What a Joke" is the title of a thoughtful piece on the guywho was one of the chief advocates of house flipping. Worth the read.
On the Bloomberg for President watch - interesting that Google ads for Mikebloomberg.com are starting to pop up:
Monday, May 21, 2007
The air proved a bit too thin for the bulls today in record closing high S&P 500 territory with the index missing an all time close by just a few points. It was really the energy story that got trader's attention and helped to take stock off the highs: the continued rise in crude oil and the ascent of the retail gasoline price to record highs in real dollar terms.
Headlines like this: Israeli killed in rocket attack from Gaza and Al Qaeda's New Front in Lebanon only serve to add an element of concern in the energy market about stability in the Middle East. Add to that, worries about Nigeria and the result... Oil above $66 on Nigeria worry, US gasoline eyed.
Late today, news from Tracinda was no mirage: Tracinda looks to buy Bellagio, CityCenter from MGM. MGM jumped 15%.
The options screener was interesting today...
Elan (ELN) options were active on word that its Alzheimers treatment is going into advanced phase testing. The time to pounce on those was Friday, which featured unusually heavy call volume in the June 17.5 strike (took my profit there first thing this morning).
Amazon (AMZN) options volume remains amazing heavy as spreaders and directional players make their bets. 15k June 75s trading today - some folks have high hopes.
Valueclick (VCLK). They must have read Howard Lindzon's recent posts about Valueclick being a likely takeover target.
OptionsXpress (OXPS) was the subject of rumors that E*Trade would like to buy them. I did a brief in and out trade on that one today.
Yahoo! (YHOO) volume was especially heavy in the out of the money July calls - no doubt 37 to 42.5 and 35 to 40 July calendar spreads are the latest rage. This Seeking Alpha article gives some food for thought.
No comment on the rest since some are newly rolled out July calls. All info provided for informational purposes, not recommendations.
Not mentioned on CNBC. There's was a huge turf battle within the FDA that let to just the approvable letter. It really could be the basis for a good book on the 'politics' involved in getting these drugs to market. One of these days I will elaborate.
- China to take $3 billion stake in Blackstone
- Equity Firms to Buy Alltel in $27.5 Billion Deal
- Merrill taking stake in hedge fund GSO -WSJ
- Hologic to buy Cytyc for $6.2 billion
- Sun Pharma to buy Taro for $454 mln, shares up
- Yahoo eyes MySpace rival?
- Chief of EGL Raises Buyout Bid Yet Again
- DTE Energy to Sell Antrim Shale Gas properties
- Maguire Properties Announces Disposition of Three Orange County ...
I'm also keeping an eye on bond market yields. The 10 yr sure has been making upward progress. The higher above 4.8% on the ten year, the stronger the head winds for the stock market?
- Merrill downgraded Medtronic (MDT) Underweight
- UBS downgrades Intuit (INTU) to Neutral
- ING upgraded BP to Buy from Hold
- Countrywide (CFC) downgraded to Market Perform at Friedman, Billings
Lowes (LOW) with a mixed bag. Q1 earnings a penny light at 48c and revenue light at 12.2 bln vs estimates of $12.4 bln. LOW upped Q2 EPS outlook to 62 to 64c vs consensus of 60c and full year to $1.99 to $2.03 vs estimates of $2.01.
Blackstone is also in the news this morning since it's IPO time: Blackstone sets IPO, could raise $3.87-$4.13 bln.
Sunday, May 20, 2007
A very nice premium in this deal: Hologic to Acquire Cytyc for $6.2B.
27% premium for Taro: Sun Pharmaceutical Industries Agrees to Acquire Taro ...
A $1 bln deal here: Atlas Energy Resources, LLC to Acquire DTE Gas & Oil Company for ...
- Cadbury Still on the Prowl for Hershey (HSY)? Cadbury to unwrap £5bn sweetener.
- $15 bln bid coming for Virgin Media (VMED)? Virgin Media faces private equity bid -paper.
- New CEO: Siemens picks Loescher to be next chief executive.
- Alcoa plans Alcan aerospace and auto sales.
- Citigroup arm may buy stake in Indian broker - paper.
- Warner may offer extra 100 mln stg for EMI -paper.
Saturday, May 19, 2007
Friday, May 18, 2007
There's another blog that I'm adding to the blogroll - a well done blog concerning commodities news and Canadian mining stocks at this link called, Commodity News And Mining Stocks - Wolf Stone.
As the old saying goes, "You're only as good as your information". The two blogs above are fine additions toward getting good info on the markets.
S&P 500 finishes at a 7 year high - just 5 points shy of a new record. Will the record close happen Monday? I actually wouldn't be surprised to see the standard Monday post options expiration reversal at least early on. But the S&P's move above 1520 is an encouraging breakout for the bulls from the recent range bound trading below 1515. I could drag any number of indicators out to worry and fret about the level of the market. Someone the other day even featured comments in one of the comments threads in the blog about someone becoming "ugly bearish". Whether this is 99/2000 all over again when "overbought" meant nothing - I'm not certain, but it seems that bearish bets placed too early will be fatal. I'm of the opinion that The Trend Is Your Friend and when it's over you'll know. My eye will continue to be on 1500 as important support and then 1460.
It was a fairly quiet trading day for me today. I faded the spike on IGT (IGT) by picking up some June 40 puts earlier this morning and dumping them before the close with the stock down more than a dollar from its merger rumor high of the day. Elan (ELN) caught my eye today, in particular the June 17.5 calls where volume was on the extreme side especially relative to open interest. I'm holding that through the weekend, though I was thinking Biotech conference catalysts. There are also Biogen (BIIB) buyout rumors floating around concerning ELN. 25,000 ELN June 17.5 calls traded today vs open interest of 2,400.
When you come back from Howard's blog, check out Steve Ballmer's recent performance...
Here's more on the deal...
Grabbing the headlines this morning: China raises interest rate,bank reserve requirment. The most noticeable impact is a small rise in the Japanese Yen. This is a triple whammy from China with rates, reserves and Yuan trading band all being adjusted.
Deals again are big support to the market...
A huge premium in this deal: Microsoft to Acquire aQuantive, Inc. AQNT being taken out at $66.50 cash. Shares closed yesterday at $35.87. The stock is up over 80%.
GE reported near sale of plastics unit
I would imagine that big names recently in the rumor mill (MNST and YHOO come to mind) could get a boost from the concept of the huge premium that MSFT is paying for AQNT.
A brief note on gold. I think it remains soft so long as the Euro is unable to break above old highs above $1.36 (notice the big double top in the Euro). Gold shares, basis XAU, have also failed to provide leadership.
With gold now testing its 100 day moving average it's not looking good. Next support is down in the $630 or the 200 day moving average range. Other metals also weak: Shanghai copper 5-pct limit down on LME, stocks.
The Dendreon (DNDN) disaster continues: Dendreon reduces work force by 15%.
Thursday, May 17, 2007
But at the very least, the market is holding 1500 quite well. Unless data like consumer confidence tomorrow is catastrophic we could see an attempt to go higher thanks to supportive OEX going into expiration. OEX 695, or higher could spark computer driven buy programs. After that, so long as the market holds 1500 and further below 1480, we've got a good shot at taking out all time highs on the S&P. Does it completely make sense? No, but that's the lay of the land for now barring an unforeseen blow up somewhere in the world.
It sure took long enough: Wolfowitz bows to pressure and quits World Bank.
After the bell earnings developments: Intuit shares jump 8%; Focus Media lifts outlook.
Question for Bernanke: "If the housing market propelled the economy a few years back, how can you say it won't hurt the economy?" That would be my question: Bernanke plays down US mortgage woes.
Here's an example of why you should be very careful about listening to analysts ahead of earnings. An analyst at BWS Fianncial earlier today said that Marvell's (MRVL) results could spark a rally to $20. MRVL posted its results, stock up 19-cents this evening. Volume exceeded 2,000 contracts in the MRVL May20 calls... all to expire worthless tomorrow.
Research in Motion (RIMM) is finally finished! RIM says no material impact from restatement.
Implied volatility has been rising on Jeffries (JEF) again. MassMutual has been the rumored buyer. I've been long on this one.
Monster (MNST) continues to be active with theflyonthewall.com noting "chatter" surrounding the name. The Optiondoggy site says there are three bidders. I am long MNST... what the heck.
Lexmark (LXK) surged as much as 7% on speculation is has received a $70 buyout off from China's Lenovo. Smith Barney, however, is saying that a bid is unlikely and maintains a Hold rating. Stock well off the high.
Pogo Producting (PPP) is mentioned again as getting closer to a deal to sell part or all of itself according to various reports on the web. Options trading is not overwhelming, but there is activity out to the $60 strike. I've been long here for a while.
There's a big breaking deal with a 30% premium: ALLIANCE DATA TO BE ACQUIRED BY BLACKSTONE GROUP FOR $7.8 BLN. ADS is the ticker for Alliance, another one that has popped up recently on the Option Screener.
With respect to the offer for 24/7 (TFSM), an analyst at Wedbush says there could be a higher offer. $11.75, says the firm, is too low. Indeed, shares are trading near the $11.90 mark.
There's a good amount of news this morning about takeovers and potential deals...
Here's an announced deal - 24/7 Real Media Announces Agreement to Be Acquired by WPP. The 24/7 (TFSM) options activity has seen spurts of activity in recent weeks.
Bank of America this morning notes that Alltel's (AT) credit spread are at all time highs. BofA says its revised LBO analysis suggests a 60% chance for a $71 offer, 10% chance for a $77 bid.
They also assign 30% chance that a deal falls apart and the stock returns to $55.
Freidman Billings is stoking the flames of merger speculation in some large banking names. FBR says Keybank (KEY) could be acquired by National City (NCC) for $52 a share. FBR says it could be JP Morgan (JPM) for Comerica (CMA) for $85 a share. JP Morgan could also be an acquirer of Suntrust (STI) for nearly $100/shr. FBR says Wells Fargo, US Bancorp, PNC and BB&T are all possible suitors for STI.
Cerberus, the folks who are buying most of Chrysler, appears to be on a buying spree. Cerberus readies BCE bid.
There's an interesting post mortem this morning concerning the engadget.com report yesterday that knocked $4 bln off of Apple's (AAPL) market cap. And there's an interesting twist concerning who's liable.
Motorola lands a big deal: China Postel inks $2.3bn deal with Motorola.
Wednesday, May 16, 2007
I'm going to keep this entry brief. Stocks are up in Asia following more records for Wall Street today. I had wondered a few weeks back if earninings catalysts would simply be replaced with M&A and it has. Plus, it didn't hurt today that a few billionaires disclosed the stocks they're buying - good old fashioned U.S. names like Citi and Union Pacific.... even Microsoft. Am I concerned about the level of the market - sure I am. But liquidity, deals and big investments will continue to push this market higher until the reality eventually settles in that our economy is faltering. That could take the summer to unfold.
I am going to devote some words tomorrow to gold and the volatility index - not together, but in separate posts. While I am long term bullish on gold, very clearly the yellow metal is in for a decent sized drop. And the VIX... up in this 13 to 14 neck of the woods. Interesting, isn't it. I think it will continue to revert to the LONG TERM mean... which is not 10, or 11. How 'bout 18?
Have a good evening.
Stock futures are barely higher approaching the open as stock investments by various billionaires are lifting specific big names like the railroads and Citigroup (C), while weak results and/or guidance from Home Depot (HD) and Applied Materials (AMAT) will be a drag on the market.
OEX open interest looks positive for the bulls IF OEX can remain above 690 going into Friday expiration.
Fresh M&A... Bausch & Lomb in $3.67 bln deal with Warburg Pincus.
As the stock market has climbed - E*Trade daily client trades up 8.8 percent.
What are billionaires investing in these days?
In additional to new stakes in Union Pacific (UNP) and Norfolk Southern (NSC), Berkshire Hatahway's (BRK-A) Warren Buffet has upped his stakes in Johnson and Johnson (JNJ) and Wells Fargo (WFC). He has reduced stakes in Ameriprise (AMP) and H&R Block (HRB).
Lampert buys into Citigroup, Motorola
Investor Soros more than doubles stake in Microsoft
Gates discloses Tractor Supply, PF Chang's stakes
On the tech front...
Following the weak orders outlook given by Applied Materials (AMAT) late yesterday, Citi's Smith Barney maintains a Hold on Applied saying they would be buyers at $17. Cowen downgraded AMAT to Neutral citing the weak orders.
Harpertown and Barcelona are two key destinations in the chip world as Intel (INTC) and Advanced Micro Devices (AMD) continue to duke it out.
Crocs (CROX) is a big mover this morning, up nearly $2. JP Morgan has initiated CROX with an Overweight rating citing the company's strong growth.
Crude oil showing a dip of about 20-cents at just under $63.
The Nikkei 225 creeped higher with a 0.1% gain and the FTSE 100 was down 0.1% in London.
Two day Bank of Japan policy meeting underway - Yen Declines to Record Low Against Euro; Yield Spread to Widen.
... More after the housing starts data is released.
Tuesday, May 15, 2007
AMAT is down 7% total today (including AH trading) at right around $19. While the company beat the street with posted earnings of 29-cents a share for Q2, the company said revenue would be up or down 2% for its present Q3 as orders fall 10 to 15 percent from the 2nd quarter. (Thud sound effect here). While capex among memory chip makers has been strong, business from contract manufacturers and the makers of flat panel displays has been weaker than anticipated. On the conference call CEO Mike Splinter summed it best: "The situation for 2007 can be summed up as simply: memory is it."
The Options Screener has been quiet today. There were a number of x-dividend plays like CVX and MMM that have been taken out.
HSBC (HBC) calls have been active in the aftermath of the company's US results - UPDATE 1-HSBC says on top of US mortgage problems.
Alltel (AT) Jan08 options in the 70 and 75 strikes have seen heavy volume today. AT has been a long talked about candidate for takeover.
Bristol Meyers (BMY) has frequently seen bursts of options volume in later months. This name has also been mentioned as a possible buyout candidate.
Talk of a possible sale of an Ingersoll Rand (IR) unit swelled options trading in the June50 strike. Ingersoll-Rand may sell Bobcat unit.
Vertex (VRTX), trying to develop a new treatment for hepetitis C, seeing heavy volume in May35 and June 35 calls. May 35 volume is over 10,000 with the bid at ZERO. But no news I can find.
The above for informational purposes, not a recommendation to trade.