BOTTOM LINE: The Portfolio is about even into the final hour as gains in my Index shorts and Energy-related shorts are offsetting losses in my Semi longs, Networking longs and Medical longs. I added to my (QQQQ), (EEM) and (IWM) shorts today, thus leaving the Portfolio 25% net long. The tone of the market is very negative as the advance/decline line is substantially lower, every sector is falling and volume is heavy. I am seeing some signs of stabilization the tech sector; however, there is still quite a bit of short-term complacency given today's losses. The Johnson Redbook same-store sales index rose 3.30% year over year last week vs. a 1.7% rise the prior week. This is the strongest reading since the first week of February. The long-term average is a gain of around 2.5%. I continue to expect retail to perform more in line with the market going forward. I also still expect stock selection within the sector to become even more important as consumer spending is likely in the initial stages of slowing to average levels. I expect US stocks to trade mixed-to-lower into the close from current levels as more economically sensitive companies see further profit-taking.
Tuesday, April 11, 2006
Stocks Lower into Final Hour on Energy Worries and Continued Profit-taking
Today's Headlines
Bloomberg:
- GM’s Saturn division, whose sales peaked a dozen years ago, is turning to new models with European styling to shake up its humdrum image and boost profit with higher-priced vehicles.
- UBS AG, Europe’s largest bank by assets, agreed to buy the private client network of Minneapolis-based Piper Jaffray Companies(PJC) for as much as $875 million to expand its wealth management business in the US.
- Heartened by increased hiring and wage growth this year, economists raised their 2006 US growth forecast, according to the latest monthly survey on the economy by Bloomberg.
- The benchmark index in Saudi Arabia, the world’s largest oil producer, continued its recent plunge for a third day on concern that prices don’t reflect prospects for profit growth after a three-year rally.
- Nokia(NOK) said handset prices in the first quarter exceeded the company’s forecast as more advanced models were sold.
- Federal prosecutors will charge people who worked for Merrill Lynch(MER) and Goldman Sachs(GS) with insider trading.
- Merck(MRK) should pay $9 million in punitive damages to a man who blamed the drug for his heart attack, a jury ruled.
- The IRS is examining some electronic-payment transactions processed by EBay’s(EBAY) PayPal unit to find US taxpayers who keep unreported income in offshore accounts, officials said.
- Fidelity Investments bought 12 million shares of United Airlines parent UAL Corp., becoming the carrier’s biggest stockholder with a 13% stake.
- Iranian Presidetn Ahmadinejad said his country completed its first enrichment of uranium two days ago.
- Nasdaq Stock Market(NDAQ) bought 15% of London Stock Exchange for $781.5 million, less than two weeks after withdrawing its takeover offer.
Wall Street Journal:
- Alcatel SA’s(ALA) proposed acquisition of Lucent Technologies(LU) could prompt a similar offer by another telecom technology company for Juniper Networks(JNPR).
- The US is preparing plans to cut the number of troops in Iraq and hand over responsibility for security to local forces, citing military officials.
- Humana Inc.(HUM) is marketing consumer-directed plans that offer various deductible-premium combinations, and is making contacts with potential customers as a way to keep down medical costs.
- Carnival Corp.(CCL), Royal Caribbean Cruises(RCL) and other cruise lines are offering deep discounts to draw customers as industry growth slows amid hurricanes and safety concerns.
NY Times:
- China’s population, recognizing the power of independent organization, are increasingly challenging what is a totalitarian system of government in their country.
- McDonald’s Corp.(MCD) is beginning to use call centers in other parts of the country to take orders from drive-through windows.
- The United Farm Workers, the biggest US union of agricultural laborers, plans to announce today that it has signed the first nationwide contract covering agricultural guest workers.
CNet News.com:
- Lenovo Group Ltd. will sell its ThinkPad notebook computers and 3000 line desktop systems in Best Buy’s(BBY) stores.
Atlanta Journal-Constitution:
- Georgia’s tax revenue is more than $1 billion ahead of the same period a year ago, spurred by double-digit growth in sales and income tax receipts.
Financial Times:
- Walt Disney’s(DIS) plan to offer hit ABC television shows free on the Internet is a sensible way of experimenting with ways of boosting advertising using technology.
Reuters:
- Time Warner’s(TWX) cable unit is in early-stage discussions about developing an auction system that would let advertisers bid for ad spots on video-on-demand channels.
- GM’s Saturn division, whose sales peaked a dozen years ago, is turning to new models with European styling to shake up its humdrum image and boost profit with higher-priced vehicles.
- UBS AG, Europe’s largest bank by assets, agreed to buy the private client network of Minneapolis-based Piper Jaffray Companies(PJC) for as much as $875 million to expand its wealth management business in the US.
- Heartened by increased hiring and wage growth this year, economists raised their 2006 US growth forecast, according to the latest monthly survey on the economy by Bloomberg.
- The benchmark index in Saudi Arabia, the world’s largest oil producer, continued its recent plunge for a third day on concern that prices don’t reflect prospects for profit growth after a three-year rally.
- Nokia(NOK) said handset prices in the first quarter exceeded the company’s forecast as more advanced models were sold.
- Federal prosecutors will charge people who worked for Merrill Lynch(MER) and Goldman Sachs(GS) with insider trading.
- Merck(MRK) should pay $9 million in punitive damages to a man who blamed the drug for his heart attack, a jury ruled.
- The IRS is examining some electronic-payment transactions processed by EBay’s(EBAY) PayPal unit to find US taxpayers who keep unreported income in offshore accounts, officials said.
- Fidelity Investments bought 12 million shares of United Airlines parent UAL Corp., becoming the carrier’s biggest stockholder with a 13% stake.
- Iranian Presidetn Ahmadinejad said his country completed its first enrichment of uranium two days ago.
- Nasdaq Stock Market(NDAQ) bought 15% of London Stock Exchange for $781.5 million, less than two weeks after withdrawing its takeover offer.
Wall Street Journal:
- Alcatel SA’s(ALA) proposed acquisition of Lucent Technologies(LU) could prompt a similar offer by another telecom technology company for Juniper Networks(JNPR).
- The US is preparing plans to cut the number of troops in Iraq and hand over responsibility for security to local forces, citing military officials.
- Humana Inc.(HUM) is marketing consumer-directed plans that offer various deductible-premium combinations, and is making contacts with potential customers as a way to keep down medical costs.
- Carnival Corp.(CCL), Royal Caribbean Cruises(RCL) and other cruise lines are offering deep discounts to draw customers as industry growth slows amid hurricanes and safety concerns.
NY Times:
- China’s population, recognizing the power of independent organization, are increasingly challenging what is a totalitarian system of government in their country.
- McDonald’s Corp.(MCD) is beginning to use call centers in other parts of the country to take orders from drive-through windows.
- The United Farm Workers, the biggest US union of agricultural laborers, plans to announce today that it has signed the first nationwide contract covering agricultural guest workers.
CNet News.com:
- Lenovo Group Ltd. will sell its ThinkPad notebook computers and 3000 line desktop systems in Best Buy’s(BBY) stores.
Atlanta Journal-Constitution:
- Georgia’s tax revenue is more than $1 billion ahead of the same period a year ago, spurred by double-digit growth in sales and income tax receipts.
Financial Times:
- Walt Disney’s(DIS) plan to offer hit ABC television shows free on the Internet is a sensible way of experimenting with ways of boosting advertising using technology.
Reuters:
- Time Warner’s(TWX) cable unit is in early-stage discussions about developing an auction system that would let advertisers bid for ad spots on video-on-demand channels.
Monday, April 10, 2006
Tuesday Watch
Late-Night Headlines
Bloomberg:
- Bausch & Lomb(BOL) said it is temporarily halting shipments of its ReNu solution with MoistureLoc after reports of fungal infections in the US.
- French unions and students, emboldened by their victory over the government on a disputed youth-labor law, are now taking aim at a 2005 measure that makes it easier for small companies to fire workers.
Economic Times:
- India’s crude oil import bill rose to a record of $43.8 billion during 2005, an increase of 46.8%. The bill was larger because of higher oil prices, not an increase in demand, the newspaper said.
Commercial Times:
- Microsoft Corp.(MSFT) is expected to double its orders from Taiwanese suppliers in the second quarter as it accelerates shipments for its Xbox 360 video-game console.
China Daily:
- Applied Materials(AMAT) will build a $225 million support center in the northwestern Chinese city of Xi’an.
Beijing Youth Daily:
- Beijing has registered 14 days of “heavy” air pollution this year, the most in almost six years, citing the city’s environmental bureau.
Late Buy/Sell Recommendations
- None of note
Night Trading
Asian Indices are -1.0% to unch. on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated -.10%.
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
- (BRY)/1.55
- (CRK)/.63
- (DSW)/.24
- (DNA)/.41
- (SWN)/.29
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Trade Deficit for February is estimated to shrink to -$67.5 billion versus -$68.5 billion in January.
2:00 pm EST
- The Monthly Budget Deficit for March is estimated to widen to -$82.1 billion versus -$71.2 billion in February.
Bloomberg:
- Bausch & Lomb(BOL) said it is temporarily halting shipments of its ReNu solution with MoistureLoc after reports of fungal infections in the US.
- French unions and students, emboldened by their victory over the government on a disputed youth-labor law, are now taking aim at a 2005 measure that makes it easier for small companies to fire workers.
Economic Times:
- India’s crude oil import bill rose to a record of $43.8 billion during 2005, an increase of 46.8%. The bill was larger because of higher oil prices, not an increase in demand, the newspaper said.
Commercial Times:
- Microsoft Corp.(MSFT) is expected to double its orders from Taiwanese suppliers in the second quarter as it accelerates shipments for its Xbox 360 video-game console.
China Daily:
- Applied Materials(AMAT) will build a $225 million support center in the northwestern Chinese city of Xi’an.
Beijing Youth Daily:
- Beijing has registered 14 days of “heavy” air pollution this year, the most in almost six years, citing the city’s environmental bureau.
Late Buy/Sell Recommendations
- None of note
Night Trading
Asian Indices are -1.0% to unch. on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated -.10%.
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
- (BRY)/1.55
- (CRK)/.63
- (DSW)/.24
- (DNA)/.41
- (SWN)/.29
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Trade Deficit for February is estimated to shrink to -$67.5 billion versus -$68.5 billion in January.
2:00 pm EST
- The Monthly Budget Deficit for March is estimated to widen to -$82.1 billion versus -$71.2 billion in February.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology stocks in the region. I expect US equities to open mixed and to trade modestly lower into the afternoon. The Portfolio is 50% net long heading into the day.
Stocks Finish Mostly Lower on Average Volume
Indices
S&P 500 1,296.62 +.09%
DJIA 11,141.33 +.19%
NASDAQ 2,333.27 -.25%
Russell 2000 752.95 -.42%
Wilshire 5000 13,104.68 -.01%
S&P Barra Growth 608.83 +.12%
S&P Barra Value 684.82 +.05%
Morgan Stanley Consumer 603.24 -.02%
Morgan Stanley Cyclical 825.40 -.16%
Morgan Stanley Technology 551.36 -.60%
Transports 4,667.13 -.50%
Utilities 388.22 +.54%
Put/Call .83 -6.74%
NYSE Arms .87 -34.71%
Volatility(VIX) 12.19 -.57%
ISE Sentiment 149.00 -1.32%
US Dollar 89.67 -.02%
CRB 339.99 +.83%
Futures Spot Prices
Crude Oil 68.76 +.03%
Unleaded Gasoline 201.35 +.21%
Natural Gas 6.94 +.81%
Heating Oil 194.54 +3.34%
Gold 603.10 +.22%
Base Metals 190.67 +2.62%
Copper 271.85 +.35%
10-year US Treasury Yield 4.95% -.41%
Leading Sectors
Oil Service +2.15%
Energy +1.72%
Broadcasting +.83%
Lagging Sectors
HMOs -1.53%
Disk Drives -1.89%
Airlines -2.12%
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
Citigroup:
- Rated BAC, WFC and JPM Buy.
Afternoon/Evening Headlines
Bloomberg:
- Time Warner’s(TWX) AOL Internet unit may reverse a revenue slide as early as this year, buoyed by a pickup in online advertising and a slowing in customer defections, CEO Parsons said.
- Fidelity Investments almost doubled its holdings in AMR Corp.(AMR) since year-end to become the biggest shareholder in the parent of American Airlines.
- Alcoa Inc.(AA) said its first-quarter profit more than doubled to a record $608 million as metal prices surged.
- Oracle Corp.(ORCL) predicted $250 million to $300 million in annual costs to expense employee stock options.
S&P 500 1,296.62 +.09%
DJIA 11,141.33 +.19%
NASDAQ 2,333.27 -.25%
Russell 2000 752.95 -.42%
Wilshire 5000 13,104.68 -.01%
S&P Barra Growth 608.83 +.12%
S&P Barra Value 684.82 +.05%
Morgan Stanley Consumer 603.24 -.02%
Morgan Stanley Cyclical 825.40 -.16%
Morgan Stanley Technology 551.36 -.60%
Transports 4,667.13 -.50%
Utilities 388.22 +.54%
Put/Call .83 -6.74%
NYSE Arms .87 -34.71%
Volatility(VIX) 12.19 -.57%
ISE Sentiment 149.00 -1.32%
US Dollar 89.67 -.02%
CRB 339.99 +.83%
Futures Spot Prices
Crude Oil 68.76 +.03%
Unleaded Gasoline 201.35 +.21%
Natural Gas 6.94 +.81%
Heating Oil 194.54 +3.34%
Gold 603.10 +.22%
Base Metals 190.67 +2.62%
Copper 271.85 +.35%
10-year US Treasury Yield 4.95% -.41%
Leading Sectors
Oil Service +2.15%
Energy +1.72%
Broadcasting +.83%
Lagging Sectors
HMOs -1.53%
Disk Drives -1.89%
Airlines -2.12%
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
Citigroup:
- Rated BAC, WFC and JPM Buy.
Afternoon/Evening Headlines
Bloomberg:
- Time Warner’s(TWX) AOL Internet unit may reverse a revenue slide as early as this year, buoyed by a pickup in online advertising and a slowing in customer defections, CEO Parsons said.
- Fidelity Investments almost doubled its holdings in AMR Corp.(AMR) since year-end to become the biggest shareholder in the parent of American Airlines.
- Alcoa Inc.(AA) said its first-quarter profit more than doubled to a record $608 million as metal prices surged.
- Oracle Corp.(ORCL) predicted $250 million to $300 million in annual costs to expense employee stock options.
BOTTOM LINE: The Portfolio finished lower today on losses in my Semi longs, Networking longs and Energy-related shorts. 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 lower, sector performance was mostly negative and volume was about average. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was mildly bearish. On the positive side, the bears were unable to capitalize meaningfully on Friday's reversal even as oil approached $70/bbl. The rolling corrections that have characterized trading in individual stocks are helping keep the major averages in bull mode. The networking sector is currently in the midst of one of these declines. I expect this will provide a very good entry point in these stocks over the next few weeks.
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