Friday, May 18, 2007

Morning Market Comment

We're going into expiration-Friday with strong stock futures. While there was a large exercise of OEX calls late yesterday, 695 and above for OEX will help to maintain a positive bias for the market today.

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%.

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