Today will be a very telling day, will the Dow retake the magic 11,000 mark or will that remain the strong upper resistance level that may keep us rangebound for another year?
The Nasdaq is well above 2,300, a logical but unproven psychological resistance level and the S&P is well above it’s danger zone of 1,260.
The Asian markets are flat and Europe is down so my World Money flow indicator says there is cash available for US stocks but I think it may sit on the sidelines until a clear indicator presents itself.
Oil is being entirely held up by the threat of a nuclear stand-off with (coincidently, I’m so sure) the World’s second largest oil producer. This situation can only last so long because the truth is that there is no way Iran will stop selling oil, that would be akin to cutting off your entire head to spite your face. Iran is in a funny position because, although they produce a lot of oil, they do not have much refining capacity. This leaves them vulnerable to sanctions that restrict their imports.
Once traders realize that, boycott or no boycott, that oil will be delivered somewhere, then prices will spiral down – but do not bet on it because another “crisis” will bring it right back up.
Speaking of another crisis, Nigerian rebels are chipping in this week by attacking oil installations in that country. Notice the rotation of countries having “attacks” every time oil starts to tick down… BP seems to have this under control and that news should keep oil from running away today.
Today is the PPI report (expect same old low inflation) and the more important Retail Sales report (expect good but disappointing numbers until they count the web and gift cards) so the market should move up today. If it doesn’t, I will be very concenrned!
Gold is hugging the $550 resistance line all over the world. I am fairly confident this is consolidation for an up move.
Hedge funds got hammered last year and there is growing investor frustration as they find the funds are not as liquid as they may have thought. Expect this to be a boon for traditional investment houses as little new money will go into the hedges this year.
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I’m looking for a rebound in the oil patch today if oil is above $64. We can follow the Valero rule and look at yesterday’s big losers like SU, HAL, DO and NBR. Drilling supplier HYDL shot up yesterday on huge demand and should continue to be strong as they display pricing power.
HPQ is ready to break back up if the Nasdaq is moving in that direction.
IBM is going to be down on some very old news but the SEC is investigating a prior earnings miss much like HDI who rocketed as soon as it was cleared out so this may be a buying opportunity in the near future.
AIG has news that sounds bad but is good. The company is paying $1Bn to settle the fraud charges that have been hanging over the company for the past 2 years. The company has already rebounded from $50 to $70 but that represents barely a budge from last year while earnings are up 25% (even after the hurricane). I like this as an income producer so I will take the Jan ’08 $60s for $17.30 and sell the Feb $75s when they hit $1. Should the stock go the other way, I will sell the Feb $70s for $1.50 which will protect me down to the 50 dma of $68.
HD is too dangerous to own in a down market. The hint of scandal will not go away because it makes very good news (everyone shops there). We can hope this really does drop back down to the 200 dma of $40 so we can buy buy buy!
LU had disappointing revenues so watch out for that sector today!
The TYC split is on but I don’t like the plan at all. Stay away from this one!
After rocketing up to $5 and giving us a clean exit at $4.50, SNFX is back to its normal resting point of $3.25. It may be another few months before it spikes again (if ever, this is a high risk investment) but I do like to keep a little in my virtual portfolio.
Speaking of exits, I got out of TASR yesterday and I will wait to see how it handles its 200 dma of $8.50 before recommiting but I really do believe in this stock long term.
Rising construction costs and falling demand have caused the cancellation of several luxury condo projects in Las Vegas. This is the fastest growing city in the country so we should take this as a very bad sign for the housing industry, especially on the luxury end. You are starting to hear realtors call 10-15% price decreases “a correction but not a crash.” Oh boy!
It looks to me like JNJ is just sticking it to BSX on the Guidant deal, driving the bid up to make it cash painful for their competitor.
A massive screw-up in implementing the new Medicare changes is causing millions of people to go without prescriptions, this will translate to a disappointing quarter for big pharma.
Poor DELL made the mistake of saying that bird flu is good for sales. While true, it is politically incorrect and we know what happened to that show!
FDX took a nice bounce off the 50 dma of $99 yesterday and should be done going down. A move on volume over $101.50 would be a buy sign.
YRCW is pulling back after a very nice run, I think we can get a nice buy in at the 50 dma of $47 but earnings are 1/26 so this could be interesting.
Today SIRI will be up 2 days in a row? Surely this is a sign (BUY) of some sort!
My little MRKL stock is on the move. This is one of my 2 penny stocks that I own for fun but, in full disclosure, I do own 1M shares. It is an $8M cap company with $60M in sales (no profits yet). There have been false alarms in the past so I make no representations that it will go up as the management tends to dilute us on every up move but I have been waiting all quarter for something to happen here and this might be it.
********** Trades of the Day **********
PFE bought out Exubera partner SNY for just $1.3Bn. Seems cheap to me, if PFE breaks its 200 dma of $25.25 we could finally be looking at a real move up.
I usually don’t do risky TOTDs but this is a very good company that makes billions of dollars and certainly shouldn’t be trading all the way down at 2/3 of last year’s price. I like the risk/reward of the March $25s for .80 but I am only in this trade if the stock opens up and stays above $24.
The hidden gem in this transaction is 3rd partner NKTR, who developed the inhaling technology for insulin. While it is tricky to figure out their cut in this, I like buying the stock and selling the Feb $20 calls for $1.25, a ridiculous $3.14 premium!
