BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Networking longs, Computer longs and Semi longs. I covered some of my (IWM)/(QQQQ) shorts this morning, thus leaving the Portfolio 75% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, most sectors are higher and volume is heavy. The rotation into tech from commodity stocks is a big positive. It could lead to more short-term weakness, however longer-term it is necessary for strong broad market performance. I expect US stocks to trade mixed-to-higher into the close from current levels on lower commodity prices, short-covering and buying in the technology sector.
Wednesday, February 08, 2006
Stocks Sharply Higher Into the Final Hour, Led by Gains in Technology Shares
Today's Headlines
Bloomberg:
- Protective Life(PL) agreed to buy JPMorgan Chase’s insurance business for about $1.2 billion in cash.
- AU Optronics(AUO), the world’s third-largest maker of liquid-crystal displays for computers and televisions, posted profit in the fourth quarter that beat estimates after demand for flat-panel televisions soared.
- Al Michaels, play-by-play announcer on ABC’s “Monday Night Football” since 1986, won’t be working on the show when it moves to cable-channel ESPN this year.
- Nortel Networks(NT) may pay more than $2.4 billion in cash and stock to end shareholder lawsuits stemming from the company’s accounting fraud.
- Crude oil is little changed and gasoline is falling to a one-month low after the EIA reported that US motor-fuel stockpiles surged to the highest in 11 months.
Wall Street Journal:
- The US Senate Finance Committee is probing whether Fannie Mae(FNM) and Freddie Mac(FRE) might have inappropriately used their charitable foundations and other non-profit entities to dodge campaign-financing laws to lobby Congress.
- Wal-Mart Stores(WMT) plans to revamp some stores to appeal to wealthier customers, citing John Menzer, vice chairman of US stores.
- A US Bankruptcy Court judge ordered an ethics probe into whether lawyer David Boies’ firm should have disclosed partners’ links to companies used by the firm’s client, Adelphia Communications.
- The US is providing drugs to 471,000 AIDS patients in the developing world, marking a big expansion in the country’s aid program.
- Nuance Communications(NUAN), whose speech-recognition software is used by clients including Verizon Wireless(VZ) and Wal-Mart Stores(WMT), agreed to buy Dictaphone(DCTA) for $357 million.
- Democrats in the US Senate plan to use a parliamentary tactic to force Republicans to boost taxes by as much as $30 billion in return for a two-year extension of lower capital-gains and dividend taxes.
- PanAmSat Holding(PA), which is being bought by Intelsat Ltd., will become the first satellite operator to distribute programming it owns in the US.
NY Times:
- Univision Communications(UVN), the no. 5 US television network and the no. 1 US Spanish-language network, may sell itself.
USA Today:
- The Bush administration will announce a new anti-drug initiative that includes urging more US states to set up databases that can track people who get multiple prescriptions of frequently abused medications such as OxyContin.
Tex Report:
- Taiwan’s coal imports fell 35% in January to 3.75 million metric tons from the same month a year ago.
Aviation Week & Space Technology:
- Boeing(BA) will start to build an extended and more fuel-efficient version of its single-aisle 737 aircraft.
Interfax:
- Foreign oil companies in Turkmenistan plan to raise output 30% this year to 3 million tons, citing unidentified officials from the oil and gas ministry.
- Protective Life(PL) agreed to buy JPMorgan Chase’s insurance business for about $1.2 billion in cash.
- AU Optronics(AUO), the world’s third-largest maker of liquid-crystal displays for computers and televisions, posted profit in the fourth quarter that beat estimates after demand for flat-panel televisions soared.
- Al Michaels, play-by-play announcer on ABC’s “Monday Night Football” since 1986, won’t be working on the show when it moves to cable-channel ESPN this year.
- Nortel Networks(NT) may pay more than $2.4 billion in cash and stock to end shareholder lawsuits stemming from the company’s accounting fraud.
- Crude oil is little changed and gasoline is falling to a one-month low after the EIA reported that US motor-fuel stockpiles surged to the highest in 11 months.
Wall Street Journal:
- The US Senate Finance Committee is probing whether Fannie Mae(FNM) and Freddie Mac(FRE) might have inappropriately used their charitable foundations and other non-profit entities to dodge campaign-financing laws to lobby Congress.
- Wal-Mart Stores(WMT) plans to revamp some stores to appeal to wealthier customers, citing John Menzer, vice chairman of US stores.
- A US Bankruptcy Court judge ordered an ethics probe into whether lawyer David Boies’ firm should have disclosed partners’ links to companies used by the firm’s client, Adelphia Communications.
- The US is providing drugs to 471,000 AIDS patients in the developing world, marking a big expansion in the country’s aid program.
- Nuance Communications(NUAN), whose speech-recognition software is used by clients including Verizon Wireless(VZ) and Wal-Mart Stores(WMT), agreed to buy Dictaphone(DCTA) for $357 million.
- Democrats in the US Senate plan to use a parliamentary tactic to force Republicans to boost taxes by as much as $30 billion in return for a two-year extension of lower capital-gains and dividend taxes.
- PanAmSat Holding(PA), which is being bought by Intelsat Ltd., will become the first satellite operator to distribute programming it owns in the US.
NY Times:
- Univision Communications(UVN), the no. 5 US television network and the no. 1 US Spanish-language network, may sell itself.
USA Today:
- The Bush administration will announce a new anti-drug initiative that includes urging more US states to set up databases that can track people who get multiple prescriptions of frequently abused medications such as OxyContin.
Tex Report:
- Taiwan’s coal imports fell 35% in January to 3.75 million metric tons from the same month a year ago.
Aviation Week & Space Technology:
- Boeing(BA) will start to build an extended and more fuel-efficient version of its single-aisle 737 aircraft.
Interfax:
- Foreign oil companies in Turkmenistan plan to raise output 30% this year to 3 million tons, citing unidentified officials from the oil and gas ministry.
Wednesday Watch
Late-Night Headlines
Bloomberg:
- BlueScope Steel Ltd., Australia’s largest steelmaker, said full-year earnings may fall as much as 53% after prices of the alloy declined because of a glut of production from China.
Financial Times:
- The UN, the European Union and the Organization of the Islamic Conference have called for an end to violence after the publication of satirical drawings of the prophet Muhammad, citing a joint statement.
- EBay Inc.(EBAY), Google(GOOG), Yahoo!(YHOO) and Amazon.com(AMZN) will focus on their core businesses rather than compete with each other, citing an interview with EBay CEO Whitman.
London-based Times:
- The threat of terrorism has been the main driver of higher gold prices, citing former US Fed Chairman Alan Greenspan.
International Oil Daily:
- Iraq is planning to export 1.55 million barrels of oil a day in February, an increase of 275,000 barrels a day from January.
Guardian:
- Sweden aims to “break” its dependency on oil to become the world’s first oil-free economy within 15 years.
China Post:
- China will have deployed 1,800 guided missiles by 2010 and it will have created aircraft carrier battle groups by 2015, posing a serious threat to Taiwan.
China Securities Journal:
- Prices of flat steel products including cold-rolled sheets used in cars and appliances will fall this year because of rising supplies, citing a government report.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (BSX), (SPG), (PFE), (CSCO), (CAKE) and (FSH).
- Reiterated Underperform on (TOL), (BMC) and (TCO).
Night Trading
Asian Indices are -1.50% to -.75% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated +.12%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
(ACL)/.82
(APPB)/.27
(CI)/1.66
(DF)/.53
(DO)/.61
(EDS)/.23
(ENER)/-.18
(FCL)/.34
(IACI)/.46
(NWS/A)/.20
(PEP)/.65
(PRU)/1.22
(RAI)/1.52
(JOE)/.53
(TMK)/1.18
(VFC)/1.14
(WWW)/.36
(XTO)/1.10
(ZBRA)/.39
Upcoming Splits
- None of note
Economic Releases
- None of note
Bloomberg:
- BlueScope Steel Ltd., Australia’s largest steelmaker, said full-year earnings may fall as much as 53% after prices of the alloy declined because of a glut of production from China.
Financial Times:
- The UN, the European Union and the Organization of the Islamic Conference have called for an end to violence after the publication of satirical drawings of the prophet Muhammad, citing a joint statement.
- EBay Inc.(EBAY), Google(GOOG), Yahoo!(YHOO) and Amazon.com(AMZN) will focus on their core businesses rather than compete with each other, citing an interview with EBay CEO Whitman.
London-based Times:
- The threat of terrorism has been the main driver of higher gold prices, citing former US Fed Chairman Alan Greenspan.
International Oil Daily:
- Iraq is planning to export 1.55 million barrels of oil a day in February, an increase of 275,000 barrels a day from January.
Guardian:
- Sweden aims to “break” its dependency on oil to become the world’s first oil-free economy within 15 years.
China Post:
- China will have deployed 1,800 guided missiles by 2010 and it will have created aircraft carrier battle groups by 2015, posing a serious threat to Taiwan.
China Securities Journal:
- Prices of flat steel products including cold-rolled sheets used in cars and appliances will fall this year because of rising supplies, citing a government report.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (BSX), (SPG), (PFE), (CSCO), (CAKE) and (FSH).
- Reiterated Underperform on (TOL), (BMC) and (TCO).
Night Trading
Asian Indices are -1.50% to -.75% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated +.12%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
(ACL)/.82
(APPB)/.27
(CI)/1.66
(DF)/.53
(DO)/.61
(EDS)/.23
(ENER)/-.18
(FCL)/.34
(IACI)/.46
(NWS/A)/.20
(PEP)/.65
(PRU)/1.22
(RAI)/1.52
(JOE)/.53
(TMK)/1.18
(VFC)/1.14
(WWW)/.36
(XTO)/1.10
(ZBRA)/.39
Upcoming Splits
- None of note
Economic Releases
- None of note
BOTTOM LINE: Asian indices are lower on losses in commodity-related stocks in the region. I expect US equities to open modestly lower and to rally later in the afternoon, fishing modestly higher. The Portfolio is 50% net long heading into the day.
Tuesday, February 07, 2006
Stocks Finish Lower as Commodity Stock Mania Subsides
Indices
S&P 500 1,254.78 -.81%
DJIA 10,749.76 -.45%
NASDAQ 2,244.96 -.61%
Russell 2000 717.18 -1.47%
S&P Barra Growth 596.39 -.84%
S&P Barra Value 654.57 -.78%
Morgan Stanley Consumer 588.76 +.04%
Morgan Stanley Cyclical 774.58 -1.13%
Morgan Stanley Technology 525.89 -.17%
Transports 4,229.62 -1.42%
Utilities 404.50 -.76%
Put/Call .94 +11.90%
NYSE Arms 1.41 +47.08%
Volatility(VIX) 13.59 +4.22%
ISE Sentiment 153.00 -6.13%
US Dollar 90.22 -.08%
CRB 336.43 -1.99%
Futures Spot Prices
Crude Oil 63.03 -.08%
Unleaded Gasoline 159.20 -.13%
Natural Gas 7.92 +.89%
Heating Oil 168.90 -.17%
Gold 552.20 -.50%
Base Metals 172.96 -2.13%
Copper 227.05 -.33%
10-year US Treasury Yield 4.56% +.49%
Leading Sectors
Semis +.11%
Broadcasting unch.
HMOs -.04%
Lagging Sectors
Steel -4.87%
Oil Service -6.10%
Gold & Silver -7.08%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on (PFGC), (WAG), (X), (OXY) and (CSCO).
- Reiterated Underperform on (BMC).
Afternoon/Evening Headlines
Bloomberg:
- ABC’s Super Bowl broadcast drew the highest national ratings since 2000 as the Pittsburgh Steelers won a record-tying fifth NFL championship.
- President Bush honored Coretta Scott King as “God’s servant,” saying at the funeral for the widow of slain civil rights leader Martin Luther King Jr. that she was an example of strength and dignity who continued her husband’s service in the cause of civil rights.
- Billionaire investor Carl Icahn proposed breaking Time Warner(TWX) into four pieces to increase the value of the world’s largest media company by as much as $45 billion.
- Cisco Systems(CSCO) said second-quarter net income fell on stock-option expenses. The shares rose 4.5% after profit margins beat analyst estimates.
- US public concern over Iran and the threat it poses to US security has risen over the past few month, according to a recent Pew Research Center poll. The poll also found that the public supports wiretapping terror suspects without court approval by a margin of 54% to 43%.
- Crude oil plunged more than $2 a barrel in NY to a four-week low on expectations that an Energy Dept. report tomorrow will show US inventories of oil and gas jumped last week. Gold also declined, falling the most in dollar terms in 13 years.
CNBC:
- The Retail Industry Leaders Association has filed suit over a Maryland law that required retailers to set aside 8% of payroll for worker health-care costs.
S&P 500 1,254.78 -.81%
DJIA 10,749.76 -.45%
NASDAQ 2,244.96 -.61%
Russell 2000 717.18 -1.47%
S&P Barra Growth 596.39 -.84%
S&P Barra Value 654.57 -.78%
Morgan Stanley Consumer 588.76 +.04%
Morgan Stanley Cyclical 774.58 -1.13%
Morgan Stanley Technology 525.89 -.17%
Transports 4,229.62 -1.42%
Utilities 404.50 -.76%
Put/Call .94 +11.90%
NYSE Arms 1.41 +47.08%
Volatility(VIX) 13.59 +4.22%
ISE Sentiment 153.00 -6.13%
US Dollar 90.22 -.08%
CRB 336.43 -1.99%
Futures Spot Prices
Crude Oil 63.03 -.08%
Unleaded Gasoline 159.20 -.13%
Natural Gas 7.92 +.89%
Heating Oil 168.90 -.17%
Gold 552.20 -.50%
Base Metals 172.96 -2.13%
Copper 227.05 -.33%
10-year US Treasury Yield 4.56% +.49%
Leading Sectors
Semis +.11%
Broadcasting unch.
HMOs -.04%
Lagging Sectors
Steel -4.87%
Oil Service -6.10%
Gold & Silver -7.08%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on (PFGC), (WAG), (X), (OXY) and (CSCO).
- Reiterated Underperform on (BMC).
Afternoon/Evening Headlines
Bloomberg:
- ABC’s Super Bowl broadcast drew the highest national ratings since 2000 as the Pittsburgh Steelers won a record-tying fifth NFL championship.
- President Bush honored Coretta Scott King as “God’s servant,” saying at the funeral for the widow of slain civil rights leader Martin Luther King Jr. that she was an example of strength and dignity who continued her husband’s service in the cause of civil rights.
- Billionaire investor Carl Icahn proposed breaking Time Warner(TWX) into four pieces to increase the value of the world’s largest media company by as much as $45 billion.
- Cisco Systems(CSCO) said second-quarter net income fell on stock-option expenses. The shares rose 4.5% after profit margins beat analyst estimates.
- US public concern over Iran and the threat it poses to US security has risen over the past few month, according to a recent Pew Research Center poll. The poll also found that the public supports wiretapping terror suspects without court approval by a margin of 54% to 43%.
- Crude oil plunged more than $2 a barrel in NY to a four-week low on expectations that an Energy Dept. report tomorrow will show US inventories of oil and gas jumped last week. Gold also declined, falling the most in dollar terms in 13 years.
CNBC:
- The Retail Industry Leaders Association has filed suit over a Maryland law that required retailers to set aside 8% of payroll for worker health-care costs.
BOTTOM LINE: The Portfolio finished slightly lower today as losses in my Medical longs, Internet longs and Retail longs. I did not trade in the final hour, thus leaving the Portfolio 50% net long. The tone of the market was negative today as the advance/decline line finished substantially lower, almost every sector declined and volume was heavy. Measures of investor anxiety were higher into the close. Overall, it was a good day for the bears as the major averages finished lower on good volume and poor breadth. However, considering the 5-6% plunges in most commodity stocks, today's losses in the major averages were relatively mild. Moreover, semis finished slightly higher on the day. The NYSE Arms finished at an above-average 1.46, which is a positive. I plan to remain nimble over the coming days as I perceive a leadership change is in the offing.
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