Friday, November 06, 2009

Bear Radar

Style Underperformer:
Small-Cap Value (-.28%)

Sector Underperformers:
Oil Tankers (-1.62%), Hospitals (-1.53%) and Oil Service (-1.53%)

Stocks Falling on Unusual Volume:
FRED, BID, AIG, PHI, CSTR, RAIL, HANS, RRGB, VRSN, CPKI, STEC, GB and SUN


Stocks With Unusual Put Option Activity:
1) KWK 2) CTXS 3) TSO 4) CF 5) NITE

Bull Radar

Style Outperformer:
Large-Cap Growth (+.11%)

Sector Outperformers:
Restaurants (+1.23%), Airlines (+1.23%) and Gaming (+1.15%)

Stocks Rising on Unusual Volume:
GE, AMZN, EZPW, IAG, NEM, LOW, TSCO, CMC, BW, AWH, XL, BCS, CCI, ENOC, AIRM, NILE, GXDX, APEI, SWKS, ASEI, ANSS, PEET, NVDA, FSYS, ICFI, SBUX, UEIC, COHR, ROVI, EBIX, ARST, SAM, WHI, WG, CCC, MGA, LNY, CVS, MFW and IGT


Stocks With Unusual Call Option Activity:
1) SWKS 2) MWW 3) JDSU 4) ATVI 5) HANS

Trading Links

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Thursday, November 05, 2009

Friday Watch

Late-Night Headlines

Wall Street Journal:

- Democratic Sen. Mary Landrieu says she generally backs President Barack Obama's health-care overhaul efforts. But she'd like to see a few items in the bill before voting for it, including bigger federal Medicaid payments for her home state of Louisiana, extended health coverage for her pet cause of foster children, and help for teaching hospitals in her state. While pushing more spending in those areas, Ms. Landrieu also wants the plan to cut the overall amount the nation spends on health care. As Democratic leaders enter the intensive phase of their drive to pass health legislation, they must satisfy 60 Mary Landrieus in the Senate -- every Democrat and the two Democratic-friendly independents, each with individual priorities -- as they try to hold together a fragile coalition with no room for error. And that has only become more complicated as Democrats from conservative states puzzle over what to make of Republican victories Tuesday in governor's races in Virginia and New Jersey.

- A U.S. Army major opened fire Thursday on fellow troops at the giant Fort Hood Army Base in central Texas, killing 12 people and wounding at least 31 in one of the worst incidents of soldier-on-soldier violence in U.S. military history. Authorities said immediately after the shootings that they had killed the suspected shooter, Maj. Nidal Malik Hasan, but later in the evening they recanted and said that he was alive and in stable condition at a hospital, watched by a guard.

- Divisions among Democrats were on display Thursday in a Senate committee vote approving a climate-change bill. Sen. Max Baucus (D., Mont.) voted against his own party's climate-change bill, calling for a scaled-back measure that might win more bipartisan support. Mr. Baucus, a key player in the health-care overhaul debate, said the measure set too ambitious a target for reducing greenhouse-gas emissions by 2020, and hadn't done enough to protect farmers. Republicans boycotted the 11-1 vote in the Senate Environment and Public Works Committee. They said more study needed to be done on the potential harm to the economy from the measure's cap on emissions, and its requirement that businesses buy permits, which could be traded, to emit carbon dioxide and other gases. The tensions among Democrats point to the wider debate within the party about how aggressively to push the leading issues on President Barack Obama's agenda after Tuesday's election setbacks. Moderate Democrats worry about moving too fast for voters, while liberals say swift action on issues like climate change and health care will remotivate the party's base.

- On Jan. 20, Barack Obama began a race against time. The White House knew its liberal agenda would prove unpopular in many parts of the country represented by Democrats. So long as the president looked strong, those Blue Dogs and freshmen and swing-state senators would stick. Show them any sign of weakness, however, and rattled Dems would begin to care more about their own re-elections than they did their president. Tuesday, the White House hit that tipping point.

- Three Decades of Subsidized Risk by Charles Gasparino. There’s a reason Dick Fuld didn’t believe Lehman would be allowed to fail.


Barron’s:

- Could the 30% slide in Research In Motion (RIMM) shares put the company in play? TheDeal.com’s DealScape blog raised that question today.


CBS:

- The Senate's Democratic majority won't attend Democratic Gov. David Paterson's joint address to the Legislature Monday, when he will try to build support for attacking New York's latest fiscal crisis, according to state officials informed of the decision. "We're not returning for a photo op" for Paterson, a senior Democratic official said of the governor, who is languishing in the polls as he seeks election in 2010.


Politico:

- Election Day losses in Virginia and New Jersey have congressional Democrats focused like never before on jobs — their own. While the White House and party leaders are urging calm, Democratic incumbents from red states and Republican-leaning districts are anything but; Tuesday's statehouse defeats have left them acutely aware that their votes on health care reform and other major Obama initiatives could be career-enders in 2010 or beyond. “I should be nervous,” said Rep. Parker Griffith, a freshman Democrat from Huntsville, Ala. Griffith said the Democratic rank and file is “very, very sensitive” to the fact that issues being pushed by party leaders “have the potential to cost some of our front-line members their seats.”


The Business Insider:

- The virtual goods market in the U.S. is ready to take off. Right now, the U.S. only has 28% of the total market. By 2013, the U.S. will make up 41% of the market with $2.5 billion in sales, according to research from Piper Jaffray.


Reuters:

- Fannie Mae, the largest provider of funding for U.S. home loans, said on Thursday bad mortgages and a federal foreclosure prevention program left it with a $18.9 billion loss, forcing it to tap the Treasury again to plug a hole in its net worth. Fannie Mae (FNM) , seized by the government last year, said the quarterly loss stemmed from $22 billion in credit-related expenses. These included charges on mortgages it bought out of securities as it modified loans under President Barack Obama's foreclosure prevention plan. The company also boosted its provision for credit losses in future quarters, and said it expects those impairments to increase this quarter and through 2010. The assessment is dire for the housing market that has appeared to post a fragile recovery over the past several months with a rebound in home sales and prices in some regions. The company's expectations of future losses and need for Treasury cash complicate the issue of how to extricate it from taxpayer support, while also trying to prevent a more serious fallout in U.S. housing.

- Fourteen people were charged with fraud and conspiracy in a dramatic widening of an insider trading scandal that has ensnared hedge fund managers, top Silicon Valley executives and a bevy of white-shoe advisers.


Financial Times:

- The US hit China with another big trade action on Thursday as it slapped ­preliminary anti-dumping duties on $2.6bn worth of Chinese pipe imports. The commerce department’s decision to impose duties of up to 99 per cent on imports of some steel pipes is the latest in a string of trade spats between over tyres, cars and chickens. It comes less than a fortnight before President Barack Obama’s first visit to China. The ruling will affect more imports by value than Mr Obama’s recent move to impose duties on Chinese tyres, which sparked an international row in which Beijing accused the US of “rampant protectionism”.

Late Buy/Sell Recommendations
Citigroup:

- Upgraded (EQY) to Buy, target $17.50.


Night Trading
Asian Indices are +.50% to +1.50% on average.

Asia Ex-Japan Inv Grade CDS Index 114.50 -2.0 basis points.
S&P 500 futures -.07%.
NASDAQ 100 futures -.06%.


Morning Preview

BNO Breaking Global News of Note

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Asian Financial News

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Briefing.com In Play

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US AM Market Call
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IBD New America
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades

Politico Headlines
Rasmussen Reports Polling


Earnings of Note
Company/EPS Estimate
- (AIG)/1.20

- (BX)/.15

- (EIX)/1.04

- (AES)/.26


Economic Releases

8:30 am EST

- The Change in Non-Farm Payrolls for October is estimated at -175K versus -263K in September.

- The Unemployment Rate for October is estimated at 9.9% versus 9.8% in September.

- Average Hourly Earnings for October are estimated to rise +.1% versus a +.1% gain in September.


10:00 am EST:

- Wholesale Inventories for September are estimated to fall -1.0% versus a -1.3% decline in August.


3:00 pm EST:

- Consumer Credit for September is estimated at -$10.0B versus -$12.0B in August.


Upcoming Splits
- None of Note


Other Potential Market Movers
-
The Fed’s Evans speaking, Fed’s Duke speaking and the (GR) analyst day could also impact trading today.


BOTTOM LINE: Asian indices are higher, boosted by financial and technology shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Finish at Session Highs, Boosted by Biotech, Technology, Alt Energy, HMO, Medical, Bank and Defense Shares

Evening Review
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After-hours Stock Commentary

After-hours Movers

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Stocks Surging into Final Hour on Diminishing Economic Fear, Less Financial Sector Pessimism, Lower Energy Prices

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs, Medical longs, Retail longs, Financial longs and Technology longs. I covered all my (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, every sector is rising and volume is about average. Investor anxiety is very high. Today’s overall market action is very bullish. The VIX is falling -7.58% and is very high at 25.62. The ISE Sentiment Index is below average at 128.0 and the total put/call is slightly above average at .88. Finally, the NYSE Arms has been running slightly above average most of the day, hitting 1.19 at its intraday peak, and is currently .86. The Euro Financial Sector Credit Default Swap Index is falling -.69% today to 66.33 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling -.57% to 103.43 basis points. This index is also well below its Dec. 5th record high of 285.99. The TED spread is up +1 basis point to 24 basis points. The TED spread is now down 440 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising +.18% to 34.69 basis points. The Libor-OIS spread is unch. at 13 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up +3 basis points to 2.15%, which is down 50 basis points since July 7th. The 3-month T-Bill is yielding .03%, which is down -1 basis point today. Cyclical and small-cap shares, which had been under the most pressure of late, are strong outperformers today. HMO, Biotech, Bank, Defense, Coal, Alt Energy, Computer, Semi and Disk Drive stocks are especially strong, rising 2.5%+. The market shouldn’t have been that surprised by today’s strong productivity report(which bodes very well for profitability and future hiring) and Cisco’s earnings report. Thus, today’s broad-based rally is even more impressive. Investor angst gauges have been high throughout the day, considering the magnitude of today’s advance. As well, the AAII % Bulls plunged to 22.2% this week, while the % Bears jumped to 55.6%, which is a large positive. I expect an “around expectations” or “slightly better than expectations” jobs report tomorrow. A “bad” report is unlikely, in my opinion. While the market is extended now very short-term, I expect stocks to build on today’s gains next week. Nikkei futures indicate an +183 open in Japan and DAX futures indicate an +1 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on lower energy prices, less financial sector pessimism, diminishing economic fear, short-covering and bargain-hunting.