Wang’s Happy Trading

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NASA Zero Gravity Water Bubble- Testing for Wang’s Happytrading Metamorphosis: Getting Ready For Liftoff

From Briefing.com

Periodicals Wrap-Up for Friday, June 27th
WALL STREET JOURNAL: The Wall Street Journal reported that is is not yet certain whether Merrill Lynch (MER) will need to raise money. If it does, selling common stock could be expensive due to a 12-month protection the bank offered the investors that bought $12B in common and preferred shares earlier this year and selling assets like its interest in Bloomberg may present a different problem…The Wall Street Journal also reported that investigators from the European Union are probing deeper into the pharmaceutical industry in an effort to determine whether drug companies have used unfair tactics to increase prices and block competition. Investigators have reportedly ask for views on direct-to-pharmacy distribution channels, which Pfizer (PFE) and AstraZeneca (AZN) recently established in Britain…FINANCIAL TIMES: After Anheuser-Busch (BUD) said it would reject InBev’s $46B bid as “financially inadequate,” InBev said it would launch a hostile bid. According to court documents, the Financial Times reported that InBev is preparing to launch a proxy battle seeking the removal of Anheuser’s entire board…The Financial Times also reported that soaring energy prices are forcing U.S. consumer goods company Procter & Gamble (PG) to rethink how it distributes products. The company may consider shifting manufacturing sites closer to consumers in order to lower its transport bill…

If Merrill Lynch needs to raise more capital choices are few-WSJ
If as expected Merrill Lynch’s (MER) losses continue to mount raising additional capital may be much more difficult than it was when CEO John Thain took over the firm, according to the Wall Street Journal’s “Heard on the Street”. Yesterday two key analysts cut their earnings expectations for Merrill. Over the past 52 weeks the stock is down over 60%. Second quarter write-downs could be about $4.2B. Merrill could sell more common stock or sell off assets, including interests in Bloomberg and BlackRock (BLK), but each move comes with complications. But Thain may have no choice with the firm’s survival at stake.

U.S. equity futures now point to a lower open; Personal income, spending up
Stock futures are pointing to a lower open as crude oil prices continue to hit record highs. Oil crossed the $142 a barrel level earlier and the futures fell. Investors received some economic data from the Commerce Department, namely the personal income and spending reports which showed personal income rose 1.9% versus an expected increase of 0.4%, and spending rose 0.8% versus an expected increase of 0.7%. The numbers had a positive effect on the futures, but oil prices remain in the forefront.

IGT downgraded to Equal Weight from Overweight@MSCO
Morgan Stanley lowered IGT estimates citing reduced share gains and weakening gaming operations.

CHL downgraded to Neutral from Buy@MLCO

WYNN downgraded to Underweight from Hold@KEYB
KeyBanc said the Las Vegas gaming market continues to be pressured by the slowing economy and higher fuel prices and that believes Macau is still strong, but not as strong as many anticipated. The firm downgraded WYNN based on lowered WYNN estimates and negative group psychology. Target $70.

Coal-$QL: Price Has Gone Parabolic
We noted the extreme rise in Coal last week and the importance this plays in power generation. Approximately 55% of the electricity in the US is generated by coal-fired plants. Although Crude Oil gets the attention, it is the price of Coal, not Crude, that has gone exponential. This week alone as of yesterday, Coal was up +8.28% for the week. For the year-to-date, up +133.9%. The impact on businesses this summer is likely to be extreme. Those that would be particularly sensitive are, for example, online companies that cannot idle plant. Being always-on is going to carry a significant price tag.

Forest Oil-FST upgraded to Buy from Hold@DBAB
Deutsche Bank upgraded shares to reflect the company’s improved free cash flow profile, strong production growth outlook and exposure to two emerging North American shale plays. Target raised to $88 from $65.

KB Home-KBH reports Q2 EPS ($3.30) vs. consensus of (94c)
KBH reports Q2 revenue $639.1M vs. consensus of $691.29M. The company cites a 41% decrease in homes delivered and a 17% decline in the average selling price for the delinein revenue from last year.

Crude Oil-$CL: Bullish Breakout
Light Sweet has broken out of the horizontal range we noted last week. The top line of that pattern was at the $139.50 area. Potential for this pattern, which is akin to a bullish flag, works to the $148.50 area. Seen in a different context, the flag was a pause in the uptrend. The target being discussed is simply a move to uptrend resistance projected forward from the peaks in price in March and May of this year. In other words, a move to the upper bounds of a longer time-frame bullish price channel. This would suggest the move is not extreme but part of a larger, normal, bullish trend price projection in the longer-term.

MER could possibly announce a loss in quarter-CNBC
Charlie Gasparino is discussing CEO Thain’s credibility issues, saying MER could report a loss and that it may need to raise additional capital, despite Thain saying the company would not.

MER: Now expect a Q2 writedown of $5.4B@LEHM
Lehman now expects Merrill to post a Q2 writedown of $5.4B, an increase of $3B, due to recent credit downgrades of monoline insurers and widening credit spreads. Additionally, the firm lowered its Q2 EPS estimate to ($2.78) from (64c). Shares are Equal Weight rated.

RIMM initiated with an Underperform, target $100@FBCO
Credit Suisse expects RIMM’s earnings growth to slow on expected shares loss at AT&T and gross margin pressure.

Evergreen Solar-ESLR 18.18M share Secondary priced@9.50; mgr LEHM
The deal size was reduced to 18,180,000 shares from 20,000,000 shares.

Quicksilver Resources-KWK upgraded to Buy from Add@LYON

EDU target lowered to $86 from $93, maintain Buy@PIPR
Piper believes the Sichuan earthquake and upcoming Beijing Olympics represent near-term headwinds for the company, but that their long-term investment thesis remains intact.

Fed may soon make it easier for private equity firms to invest in banks-WSJ
Banks stocks are falling through the roof and now the Federal Reserve may soon allow private equity firms and other institutions to more easily invest in troubled banks, reports the Wall Street Journal. “This would be a bit of a sea change for the Fed,” says Gregory Lyons at the law firm Goodwin Procter. “A number of banks would love to access the private-equity pool. It’s a clean slug of money.” There’s no guarantee that private equity firms will want to but the Fed is reviewing federal law about bank ownership.

IMCL initiated with an Overweight, target $50@TWPT
Thomas Weisel believes IMCL is attractively valued as Erbitux is positioned to capitalize on a number of label-expanding opportunities and that concerns of KRAS-related revenue loss in colorectal cancer and the clinical utility of FLEX lung cancer data are overstated.

OSIP initiated with an Overweight, target $54@TWPT
Thomas Weisel believes OSIP’s Tarceva is positioned for significant growth and that concerns of emerging competition have created an attractive entry point.

China Mobile-CHL says biggest obstacle on iPhone deal removed-Bloomberg
According to Bloomberg, China Mobile said Apple’s (AAPL) decision to abandon its policy of sharing revenue from its iPhone handsets with carriers has cleared the biggest obstacle to an agreement with the company.

Jim Cramer’s “Mad Money”
Cramer says accept the declines in the market. Investors should raise cash by selling marginal positions and buying stocks that they like, he said. Cramer said that right now he doesn’t like the market other than a couple themes that he is suggesting investors circle the wagons around. He says, “When even Conoco (COP) and Rio (RIO) and even the sacred Potash (POT) go down, I need you to think opportunity, not enemy.” Part of the reason the selloff was so bad Thursday was that companies are forbidden to buy stock at the end of the quarter, Cramer said. Cramer told viewers to sell: C, WM, WB, AIG, FNM and FRE. He reminded that he is fearful of GM and F and doesn’t like the retail homebuilders. He said that investors should always have gold in a diversified portfolio. Cramer said that the companies that will rally are companies that offer what’s in short supply and companies that rise in a recession. He said stocks like: CHK, SLB, HNZ and anything that supplies China with the copper, steel and coal that it needs is to be bought here. The future is offshore drilling, Cramer said. His next pick in the space is Smith International (SII) as a drilling-fluid play. He said the fluids are profitable to sell and have been successful in highly regulated areas like Europe. He said Smith and two other companies make up a drilling fluid oligopoly, making the stock more attractive. Smith also issued a 15M buyback authorization, Cramer said, which means it’s a great stock. SELL BLOCK: Darden (DRI) after the stock’s quick rise in the past week, Cramer said it’s time to ring the register. Cramer then reminded viewers that he had told them to avoid Nike (NKE) and Research In Motion (RIMM) ahead of their earnings. He recommended buying both now that they have gone down. He reiterated previous bearish calls on ConAgra (CAG) and RiteAid (RAD). Stay away from retailers, Cramer said. He warned viewers to stay away from: JCP, SHLD, KSS and DKS. Next, Cramer welcomed Russell Huffer, Apogee’s (APOG) Chairman CEO, to discuss his business. Since Cramer’s recommendation on April 28 as a green-building play, the stock has fallen 16%. Huffer said that the quarter missed the Street expectation, but met the company’s expectation. He said that the company is a long-term investment but his backlogs are bullish signs. Cramer said investors should wait another quarter. “Right now we’re in don’t-buy mode,” he said. LIGHTNING ROUND: (Bullish) TUP; SBUX; WRES; HNZ; GIS; FRO. (Bearish) PENN; HCBK.

Fast Money Position Recap- First Moves: Joe likes SU, Guy likes ALL, Karen likes MRK, Pete likes puts on the SMH.
Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman Owns (GS); Finerman’s Firm Owns (MO), (MSFT), (PM), (SUN), (TSO), (VLO), (AXP), (DVA); Finerman’s Firm Owns SPX Index Puts; Finerman’s Firm And Finerman Own (C) And (C) Leaps; Finerman’s Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Najarian Owns (AAPL), (ANR), (CHK), (RIMM), (TSO), (XLF); Najarian Owns (MER) Puts; Najarian Owns (NUE) Calls, (QID) Calls, (SLB) Calls, (YHOO) Calls; Terranova Owns (BNI), (CME), (FXC), (LUV), (GOOG), (INTC), (IYT), (XLF), (SU), (YHOO),  (FCX); Terranova Owns Dollar Index Futures.
Terranova is chief alternatives strategist at Phoenix Investment Partners;; Phoenix Investment Partners Ltd. Owns (RWX), (DBC), (DBV), (IGE), (AAI), (ALK), (AMR,) (APA), BP plc, British Airways plc, (CHK), (CVX), (COP), (CAL), (DAL), ENI SPA, (XOM), Gazprom, (HA), (HES), (HOC), (HSE), (JBLU), Lukoil, (MRO), (MUR), (OXY), Petrobras Intl Fin, Petro-Canada, (PBR), Petroleos De Venezuela, (QAN), (RJET), Royal Dutch Shell plc A Shares, (SKYW), (LUV,) (SU), (TSO), Texaco Capital, Total SA, (UAUA), (LCC), (VLO).

MER weakness causing markt weakness this morning. This is a vicious cycle, downgrade parade. Even strong pockets are starting to crack. It is such an interesting time right now with parabolic moves and prices in energy shares and commodity prices but new steep selloffs in many other areas of the market such as casinos, financials, emerging markets, autos, airlines, HB’s. The biggest reason for recent market weakness is the lack of big buyers to counterbalance the waves of selling. Oil made a new high this morning in premarket but now pulling back. The market is extremely oversold and it would not surprise me to see a bounce/cover rally at some point next week hopefully lasting longer than a day. Pick plays with a high probability of success, stay patient, run technicals through support and resistance. Good Luck and great trading, see you in the trading room and Happy Birthday to Wang’s Happytrading’s 2 millionth hit. So many more hits to come, so many new plans ready to launch for all our loyal readers present and future. Thank you for your support and adding to the Collective Intelligence. Get ready for Liftoff.