Wang’s Happy Trading

Submitted By OptionDragon

Pink Floyd - Money

INTC lowered its first-quarter gross margin forecast to 54% compared to the previous forecast of 56%. The margin contraction is due to weakness in NAND pricing. INTC is slightly down in premarket. This bodes worse for SNDK. I feel bad for the Wall Street Warrior guys (they were selling this stock to clients at $50). SNDK has done nothing but drop the last 6 months. Expect further weakness or a flatline until NAND prices firm up. This does not bode well for the Semi sector or ^SOXX and you could see sympathy action in all.

PBR is gapping down and reported fourth-quarter profit declined amid high costs of imported petroleum products and lower production. The profit short fall was largely because of the strength of their currency. They are splitting the stock 2 for 1, it will be intersting to see if they can buck the weak morning trend.

STX is raising guidance for the quarter for its fiscal third quarter to a range of 68c-67c vs. consensus of 63c. You should see STX with some strength today. Should. Weakness in tech could nullify the news.

OPEC has decided not to raise production to ease prices. OPEC’s president cited the economic slowdown and world demand as reasons for not increasing output, saying that oil inventories are very high and that there will less demand in the second half of 2008.
Oil prices could hover here at these highs for some time. These oil countries are paid in US dollars and they have been seeing the devaluation as a problem since it is losing value.

BHP is again trying their best to back their bid for RTP. “According to banking sources, BHP Billiton (BHP) is looking at a record $55B loan to back its hostile bid for Rio Tinto (RTP). The sources said BHP and Barclays (BCS), Citigroup (C), Goldman Sachs (GS), HSBC (HBC), Santander (STD), UBS (UBS) and BNP Paribas (BNPQY), the mandated lead arrangers, have spoken with ten relationship banks in order to sub-underwrite the loan. Around $40M of the proposed loan will refinance Rio Tinto’s loan, while the rest may help finance a $30B share buyback, BHP said.”

AMBAC Fin’l (ABK) is trading down (-2.01%) after the Financial Times noted the company had rejected a proposal to divide the company into two separate units (one in AAA munis and the other structured products).

Staples (SPLS) is trading down (-6.8%) after a worse than expected earnings report before the bell.

C announced more possible job cuts of up to 30,000 jobs. Not good for anyone. This is causing more weakness in the financials as well as possibilities of more writedowns and more needed capital infusions to avert an increasing problem. As of yesterday’s close, Citigroup’s price is $23.11/share. With total assets totaling over $113B, this puts Citigroup’s book value at $21.80 / share. In the past 10 years, Citigroup’s share price has never come this close to it’s book value. This doesn’t factor in the black hole of their exposure to various instruments not being able to be priced.

CLWR missed on both top and bottom, lowered guidance and will see additional pressure for the forseeable future even with a gap down. CLWR reports Q4 revenue $45.38M vs. consensus of $46.02M. Sees FY08 revenue $205M-$215M vs. consensus of $270.82M.
Short candidate. Although, Think Equity believes shares could trade sharply higher on a potential new multi-party joint venture (JV) with Sprint and several funding partners as CLWR’s spectrum asset becomes increasingly apparent.

ICE reports record futures volume. We could see some good movement possibly.

Bernake is speaking today in Florida about foreclosures and that will be closely watched by the markets. There are some other Fed speak events so keep an eye on those remarks. All together one can gauge how the Fed feels before their Fed cuts on Mar 18th.
On Thursday, the ECB and Bank of England are both meeting.

Art Cashin one of my fav traders on the floor to listen to says that if we break 1317 Golidlocks is out the door and he also still believes we will test the Jan lows and it will be a “pass” or “fail” test, on failure we will go much lower. He doesn’t like how the market is shaping up this morning.

The weakness in demand for NAND and the INTC note confirmation does not bode well for AAPL and its iPod sales. Further weakness in AAPL could happen.
GOOG gapping down $5 on no news. The 4 horsemen will move together.

I do not like how this market has been acting, there is a definate buyers strike and only short covering for the bounces. It seems everyone wants a wash out to occur but you need a big event in order for it to happen. No one wants to be that person. long FXY is still a great idea as well as long Vix. Calls on both are a good idea.

Shorts are being rewarded over longs and I don’t see that changing anytime soon. When you see it you’ll know. Don’t argue with the market. Let the market be your guide to directional plays. Be patient and stay positive above all else, focus on the NOW.

Good Luck and May the Force Be With You.