Wang’s Happy Trading

Submitted By Optiondragon

Stealers Wheel - Stuck In The Middle With You

From Briefing.com

This morning JPM cut its S&P targets and GDP targets. S&P 500 year-end 2008 target lowered to 1,450 from 1,590. JP Morgan sees the most attractive upside in the Energy and Financial sectors.

The volume leader is AMBAC Fin’l (ABK), trading down (-17.7%) following negative comments from New York State Insurance Commissioner Eric Dinallo on CNBC’s Squawk Box that the company needs to execute now and that he generally expect a “shake-out” in the business model of bond insurers across the board.

Countrywide Financial (CFC) is trading down (-7.69%) following a story in the Wall Street Journal that the company is the subject of an FBI investigation into potential securities fraud.

McDonald’s (MCD) which is trading up +3.59% after reporting same store sales for February were up +11.7%. Good long candidate.

Ciena (CIEN) is trading down (-1.58%) after Piper Jaffray downgraded the shares to Neutral from Buy and JMP Securities downgraded the name to Market Underperform from Market Perform.

Citigroup expects the reelection of the Socialist Party will result in more favorable solar tariff policies post the current policy’s expiration on September 30, 2008, and would not be surprised to see a relief rally in solar stocks. Citigroup views Suntech Power (STP) as the most important beneficiary of favorable Spanish solar policies and also believes Yingli Green Energy (YGE) should benefit as the company derives over 50% of revenues from Spain. Cowen expects the socialist win to be favorable for solar policy, which is a growth industry that creates jobs. The firm reiterates Outperform ratings on ENER, ESLR, SPWR, STP & TSL. Solars could see some interest today. FSLR, STP and YGE.

JASO upgrade: ThinkEquity expects JASO’s Q4 to be impacted by increased foreign exchange loss and higher share-based compensation but this should have no impact on the core business. The firm lowered its target to $30 from $35.

A rumor is in place that the Fed may once again make a surprise cut in rates with Fed Fund Futures showing a 98% probability of a 75bps cut at the regular meeting. CNBC says that GS says that “you can’t rule it out”. They were referring to an intermeeting cut as soon as today as a possibility. Sounds like a Fed Cut put is being put on the market. Treasury Secretary Henry Paulson last week said the unexpected negative jobs data was not good news and the Fed said they will sell $100B in securities at the TAF auction, and would do more as needed.

BX could see further weakness with disappointing earnings results. Blackstone Group-BX reports Q4 EPS 8 vs. consensus of 19c. Reports Q4 revenue $344.96M vs. consensus of $434.61M. FIG could move in sympathy.

KERX came out with disappointing Phase III results and is the worst gapper down. We did not expect the results to be good and this news came earlier than expected. Great for short positions, the thought was to short the shares and to hedge with the calls. Or to sell volatility premium since the OTM calls were ridiculously priced, we are happy the strategy panned out as expected.
Bear downgraded KERX following the company’s Ph III trial failure of Sulonex.
PGNX is the next biotech on deck in our opinion and has a slated time frame on April 30th. We will be analyzing it and hawking it.

Ultra Petroleum-UPL initiated with a Sector Perform, target 80@RBCM.

ISRG- Reiterate Buy following management meeting. Deutsche Bank left the meeting feeling positive that the robotic surgery story continues to have significant legs both over the near term as well as the long term. They reiterate a Buy rating and $360 target.

JCP and JWN upgraded to Buy by GS.

Today feels like a bounce so I will be looking for some nibbling by buyers in the strongest sector performers in energy, metals and Ag’s.
For energy my focus list is on DVN, EOG, PBR, APA, CEO, SU, UPL, ECA, XTO, SWN, CHK
GLD- AEM, BVN
Coals- ANR, ACI, FDG, JOYG (upgrades), BUCY, CNX
Biotech- IMCL, DNA, AMGN has a FDA meeting this week Thursday
Ags- POT, MOS, CF, DBA

With GS taking about a possible intermeeting cut, I’ll be wathcing the market to see if the market finds some footing here and see if the market becomes weaker for the rest of the day. It is fairly quiet this morning on the news front. I am still in defensive mode and will be taking my cue from Mr. Market (indices) who is always right. Do not rule out shorts so look for setups on both sides and trade along with the market action. You don’t have to trade if we got a flatliner.
Not a big fan of Daylight Savings Time this morning!
Be patient and lets see how the market trades today to get insight into whether buyers are going to come off strike.
Stay positive and focused on your plan ahead.
May the Force be with you.