The market is climbing a “wall of worry.” I don’t know if that is a good thing because it seems that at some point the market will “have a great fall” if just one of those worries looks legitimate.
We should be happy with the DOW, S&P and Nasdaq all comfortably above my support levels but I see potential problems and until we see DOW 11K+, Nas 2,300 and S&P 1,300 I won’t be all that comfortable going into January.
Gold is all the way down to $504 this morning and I’ll bet PDG wishes they had accepted ABX’s offer last week! The strongest remaining gold stock is our NEM pick but look for that to give up a bit if gold doesn’t rebound.
ATVI is a major disaster with lowered guidance that will drag down the whole game industry. People will read into this that this ties in with BBY’s problems so anything electronic may suffer until someone comes out with positive news (I’m betting it will be Piper’s channel check on Apple).
Microsoft is paying people to like their stock with a 12.5% dividend increase (and no special this year which is what people were worried about). This does not make them a buy yet.
Copper is taking off again but it will be hard to stop the downward momentum of PD and PCU.
A draw down in natural gas of less than 150U will cause the price to drop back below 15. This week last year the drawdown was 60U so I think the expectations are silly but we’ll see.
SNDK got an uprgrade today and I think this stock has taken enough of a beating that it will certainly rally back to $55. I don’t like the options on this stock as the premiums are outrageous but they did get a win in court and may hold some valuable patents down the road (if they are not ultimately found to be the property of STM in another suit).
Just when you thought the BCRX trade was going to get away from us, the company stabbed shareholders in the heart by offering up another 2M shares (8%) for sale at $13.46. The reason for the cash infusion is to rush development and testing of their flu vaccine so I still like the stock as a hold, if the Jan $15s we sold get wiped out then our basis is just $13.25 anyway and the institutional sale should set a nice floor.
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Big court decision on MO could go either way today. There is a lot more downside than upside as most people think the company will be able to deflect the class action suit. Did the company make you think that “light” cigarettes were less harmful than regular ones? I can’t even imagine what the alternative is: Were they called light because they had less calories? Did they weigh less? Was it a color thing?
You can play this as a risky spread of the Jun $85 call for $1.70 and the Jun $60 put for $1.70 and quickly sell whichever one is wrong based on the decision. The stock was at $50 last year and will be there again if this goes against them but if they win, the breakup value of the clean company is in the $90s.
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AMGN is buying out ABGX to take full control of potential blockbuster colon cancer drug, panitumumab. Unlike the General Dynamics deal, this one will be universally hailed as a bargain, even with the 50% premium Amgen is paying. Expect AMGN to break at least to $78.75 resistance today but also expect a competing bid as this moves forward.
BSC blew by estimates today with phenomenal earnings but there is heavy downward momentum to overcome in the sector so we might get a good entry point on this one.
