BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Semi longs, Networking longs and Energy-related shorts. I added to my IWM and QQQQ shorts today, thus leaving the Portfolio 50% net long. The tone of the market is negative as the advance/decline line is lower, sector performance is mostly negative and volume is above average. The fact that commodity and cyclical stock price gains are accelerating into likely weaker economic data is raising the odds of a market pullback, rather than further consolidation. I believe those buying these securities are looking at the past, not the future. I expect US stocks to trade mixed-to-lower into the close from current levels on worries over higher energy prices.
Friday, April 21, 2006
Stocks Lower into Final Hour as Energy Prices Rise
Today's Headlines
Bloomberg:
- Crude oil rose to $74.45/bbl. on speculation that shipments from Iran and Nigeria will be disrupted as the US increases output of gasoline for the summer driving season.
- Ameristar Casinos(ASCA) raised its off for Aztar Corp.(AZR) to $1.6 billion, escalating the four-way bidding war for the owner of the Tropicana casinos.
Wall Street Journal:
- Advanced Micro Devices(AMD) is in a position to gain ground on its rival, Intel(INTC), which has dominated the computer microprocessor market for years, with its strategy of treating its hardware customers as partners.
- Shares of KCS Energy(KCS) advanced after media reports that Petrohawk Energy(HAWK) will buy the company in a transaction worth $1.6 billion.
- US mutual-fund investors, in a belated response to the three-year rally in emerging-market stocks, invested $11.7 billion in diversified emerging-market funds between the start of October and the end of February. Caution is called for, citing Kirk Henry who manages the Dreyfus Premier Emerging Markets Fund, as extreme inflows are generally a sign of a market peak.
- Bausch & Lomb(BOL) is a classic example of a distressed “value” stock, which finds itself in the midst of a crisis because some customers who used a contact-lens cleaning solution made by the company caught a rare fungal eye infection.
CNBC:
- JPMorgan Chase(JPM) CEO Dimon wants to buy a “big-named” brokerage or commercial lender once his company is performing better financially.
NY Post:
- John Malone’s Liberty Media(L) is near an agreement with Time Warner(TWX) to acquire Major League Baseball’s Atlanta Braves franchise, in exchange for Time Warner(TWX) shares and a stake in Court TV.
NY Times:
- The FDA said studies haven’t shown medical benefits from marijuana use, contradicting other scientific reports.
USA Today:
- The US Border Patrol may have as many as 12,100 agents in the field by the end of September, or about as many as the FBI, which is the nation’s largest law enforcement agency.
Irish Independent:
- Digicel Ltd., a Caribbean mobile operator owned by Irish businessman Denis O’Brien, plans to move into the US mobile-phone market.
Interfax:
- Russia is opposed to the use of military force to resolve the international community’s nuclear dispute with Iran.
- Crude oil rose to $74.45/bbl. on speculation that shipments from Iran and Nigeria will be disrupted as the US increases output of gasoline for the summer driving season.
- Ameristar Casinos(ASCA) raised its off for Aztar Corp.(AZR) to $1.6 billion, escalating the four-way bidding war for the owner of the Tropicana casinos.
Wall Street Journal:
- Advanced Micro Devices(AMD) is in a position to gain ground on its rival, Intel(INTC), which has dominated the computer microprocessor market for years, with its strategy of treating its hardware customers as partners.
- Shares of KCS Energy(KCS) advanced after media reports that Petrohawk Energy(HAWK) will buy the company in a transaction worth $1.6 billion.
- US mutual-fund investors, in a belated response to the three-year rally in emerging-market stocks, invested $11.7 billion in diversified emerging-market funds between the start of October and the end of February. Caution is called for, citing Kirk Henry who manages the Dreyfus Premier Emerging Markets Fund, as extreme inflows are generally a sign of a market peak.
- Bausch & Lomb(BOL) is a classic example of a distressed “value” stock, which finds itself in the midst of a crisis because some customers who used a contact-lens cleaning solution made by the company caught a rare fungal eye infection.
CNBC:
- JPMorgan Chase(JPM) CEO Dimon wants to buy a “big-named” brokerage or commercial lender once his company is performing better financially.
NY Post:
- John Malone’s Liberty Media(L) is near an agreement with Time Warner(TWX) to acquire Major League Baseball’s Atlanta Braves franchise, in exchange for Time Warner(TWX) shares and a stake in Court TV.
NY Times:
- The FDA said studies haven’t shown medical benefits from marijuana use, contradicting other scientific reports.
USA Today:
- The US Border Patrol may have as many as 12,100 agents in the field by the end of September, or about as many as the FBI, which is the nation’s largest law enforcement agency.
Irish Independent:
- Digicel Ltd., a Caribbean mobile operator owned by Irish businessman Denis O’Brien, plans to move into the US mobile-phone market.
Interfax:
- Russia is opposed to the use of military force to resolve the international community’s nuclear dispute with Iran.
Thursday, April 20, 2006
Friday Watch
Late-Night Headlines
Bloomberg:
- Hong Kong’s stock market has replaced Canada’s as the world’s sixth biggest, as more Chinese companies such as China Construction Bank carried out initial public offerings in the city.
- General Motors Corp.(GM) said its China affiliate more than doubled its profit in the period, helping the world’s largest carmaker improve its performance.
Business Week:
- The shares of Sprint Nextel Corp.(S) are cheap and may produce an annual return of 27% for the next three years, citing Ivan Krsticevic, senior portfolio manager at Elliott Management.
Late Buy/Sell Recommendations
Goldman Sachs:
- Raised AUO to Neutral from Underperform.
Night Trading
Asian Indices are -.50% to +.50% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.24%.
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
- (MMM)/1.14
- (ACI)/.58
- (BSG)/.17
- (F)/.25
- (FO)/1.02
- (GDT)/.33
- (IR)/.72
- (MYG)/-.02
- (MCD)/.49
- (RSH)/.17
- (RCL)/.48
- (SLB)/.54
- (PCU)/3.07
- (WYE)/.73
Upcoming Splits
- (CW) 2-for-1
Economic Releases
- None of note.
Bloomberg:
- Hong Kong’s stock market has replaced Canada’s as the world’s sixth biggest, as more Chinese companies such as China Construction Bank carried out initial public offerings in the city.
- General Motors Corp.(GM) said its China affiliate more than doubled its profit in the period, helping the world’s largest carmaker improve its performance.
Business Week:
- The shares of Sprint Nextel Corp.(S) are cheap and may produce an annual return of 27% for the next three years, citing Ivan Krsticevic, senior portfolio manager at Elliott Management.
Late Buy/Sell Recommendations
Goldman Sachs:
- Raised AUO to Neutral from Underperform.
Night Trading
Asian Indices are -.50% to +.50% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.24%.
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
- (MMM)/1.14
- (ACI)/.58
- (BSG)/.17
- (F)/.25
- (FO)/1.02
- (GDT)/.33
- (IR)/.72
- (MYG)/-.02
- (MCD)/.49
- (RSH)/.17
- (RCL)/.48
- (SLB)/.54
- (PCU)/3.07
- (WYE)/.73
Upcoming Splits
- (CW) 2-for-1
Economic Releases
- None of note.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology stocks in the region. I expect US equities to open mixed and to rally modestly into the afternoon. The Portfolio is 75% net long heading into the day.
***Alert***
I will be unable to post the Thursday Close due to a scheduling conflict. I will post the Friday Watch later this evening.
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