Wang’s Happy Trading

Submitted By Optiondragon

“Days Go by”- Dirty Vegas

From Briefing.com

Periodicals Wrap-Up for Tuesday, July 8th
WALL STREET JOURNAL: A loss of confidence in the government sponsored mortgage firms Fannie Mae (FNM) and Freddie Mac (FRE) resulted in both companies shares plunging about 15% to 14 year lows. Because the two are the largest providers of funding for mortgages in the U.S., their troubles are significant as both may have to issue billions of dollars in stock to save themselves, diluting current shareholders, according to the Wall Street Journal…For 75 years the NFL’s Pittsburgh Steelers have been owned by the Rooney family, but that may now change as the Wall Street Journal reported that the family is seeking to sell the football team which is valued at about $1.2B. One potential buyer is Stanley Druckenmiller, a billionaire, and chairman of Duquesne Capital Management in Pittsburgh…FINANCIAL TIMES: British Prime Minister Gordon Brown yesterday raised the issue of visa problems facing BP (BP) employees in Russia with Russian President Dmitry Medvedev, but Medvedev did not make any concessions on the issue, according to the Financial Times. Some people have suggested that BP’s billionaire partners in its Russian joint venture, TNK-BP, have orchestrated the visa problems in order to gain control of the venture…

Increasing mortgage defaults send Fannie and Freddie shares to 14 year lows-WSJ
A loss of confidence in the government sponsored mortgage firms Fannie Mae (FNM) and Freddie Mac (FRE) resulted in both companies shares plunging about 15% to 14 year lows. Because the two are the largest providers of funding for mortgages in the U.S., their troubles are significant as both may have to issue billions of dollars in stock to save themselves, diluting current shareholders, according to the Wall Street Journal. One immediate result is that home buyers will have to pay even more to borrow. Another firm, IndyMac Bancorp (IMB), has said it will now stop marking almost all types of home loans.

Oil production at large Mexican field has dropped sharply-FT
Daily production at Mexico’s Cantarell oil complex, one of the world’s largest oil fields, has dropped by a third in the past year. Average daily production at the complex sank to a little over 1M barrels a day in May, versus 1.6M a year earlier. Mexico’s total oil production dropped about 10% year-over-year in May.

Repsol is still looking to Russia for desperately needed energy-FT
Even as many energy companies shy away from Russia, Spanish energy company Repsol (REP) is looking to increase its presence there, because the Spanish company’s reserves are very low. The company’s 2.4B barrels of oil equivalent will last it about six and a half years at current rates. However, Repsol’s ventures in Russia have produced minimal gains so far. Repsol is hoping its venture off the Brazilian coast proves to be more fruitful.

Pickens looks to drive political, economic agenda of the U.S.-USA Today
In an effort to help shape the political and economic agenda of the U.S., Texas oilman T. Boone Pickens will today unrwap the Pickens Plan, his plan for cutting the country’s demand for foreign oil by more than a third in under a decade. Pickens will, to promote the plan, bankroll www.pickensplan.com, what his aides say is the biggest public policy ad campaign ever and goes live today.

Swift Energy continues to diversify as it grows-IBD
Swift Energy (SFY) witnessed the oil shock of 1979 and the oil crash in the mid-1980s. It survived both, expanded into other areas and has thrived, especially with current record oil prices, giving it double digit earnings and revenue growth, according to Investor’s Business Daily’s “the New America”. Its diversity is by product, geography and geological assets. “We tend not to get too excited when things are going great, which they are, and we tend not to get too down when things turn around and go the other way,” says Paul Vincent, Swift’s investor relations manager. At the end of 2007 Swift had the energy equivalent of 134M barrels of oil in proven reserves, up 14% from the previous year. The company expects production to grow 10% to 15% this year. First quarter earnings per share jumped 79% to $1.61, as sales climbed 53% to $199M. Swift will release its second quarter numbers on August 7. Analysts see EPS surging 71% to $2.20, with estimates of a 53% jump in revenue to $243.6M. The consensus estimate calls for Swift’s earnings this year to be up 64% to $8.68.

Earnings Season: Sentiment Review and Outlook
Investor sentiment coming into Earnings Season, which is traditionally seen as starting today with Alcoa’s report, is very bearish. The reasons appear obvious given the breaks in March lows, higher than average volatility, wide credit spreads, record input prices in materials, food and energy as well as very low earnings expectations outside of Tech stocks. We had noted last week that these are ideal conditions for some form of rally to take place. Many of the bearish factors noted other than credit issues have been with us throughout the entire up move since 2004. The one key that made that up move possible was positive forward guidance. Outside of Tech stocks, expectations for earnings, especially in Financial stocks, have been crushed. For rallies in those names, all that may be needed is less than horrific news. The focus will be less on the quarter reported and more about guidance. If guidance is poorer than lowered expectations, we won’t see a rally. If it is inline or better with less uncertainty, we will likely see something start that could be traded. That may not mean we have seen index lows however. It is possible that additional write-downs in the Financial names will fail to spark conditions for a rally. We could instead see a long drag along lows. For Tech stocks, expectations may simply have been set too high with this area being a very crowded long trade. In this scenario on an index basis we might still see price declines while select sectors rally. Index declines could be exacerbated by declines in Energy if the commodity outlook dims over the next several weeks. This is contrary to equity bull expectations, but we should recall that Financials, Tech and Energy have almost equal weights in the S&P 500. The sectors that may be most likely to rally are Consumer Discretionary (short-covering), Industrials, Consumer Staples and Health Care (short-covering). Financials could see an extended short-covering rally on much better than expected news. That may be a brief respite given the fundamental backdrop. We should note that a July rally is likely to be short-lived unless surprises are positive in the extreme. Our expectation is that conditions into the election will not be favorable for higher equity prices.

TEVA added to Conviction Buy List; maintain Buy@GSCO
Goldman added TEVA to its Conviction Buy List citing valuation following disappointing Copaxone results and views Azilect as a near-term driver.

Semiconductors: Estimates lowered on lower US GDP outlook@MSCO
Morgan Stanley lowered estimates for semiconductors citing reduced expectations for U.S. GDP growth but continues to positive on ALTR, BRCM, and PMCS.

RIMM likely to hold market share, reiterate Top Pick@LEHM
Lehman said Blackberry’s vertical integration in enterprise provide a high barrier to entry. The firm said their is increased competition for the consumer but the company is likely to hold material market share. RIMM is the analyst’s top pick in the group.

Boone Pickens says oil low over next two years is $100/bbl-CNBC

Crude Oil-$CL: The Technical Picture: Death of Crude?
The “death” of Crude has been making the rounds again after yesterday’s price drop. In Tuesday’s pre-market the $140 level has been broken on the Light Sweet contract but not on the Brent. The roughly $1 spread between the two contracts continues. One notable factor is the G8 commitment to cut carbon emissions in half by 2050 that was headlined this morning. Despite the news we remain skeptical that the price drop in Crude is a death blow to the rally. First, all commodities except Coal dropped sharply yesterday. Many contracts are rolling this week and that is no doubt a factor. There is often both volatile action and large price drops as this takes place. If one looks back at weekly charts for Crude, that is apparent in the second or first week of each month. There is also little doubt that traders have been cautious around G8 given the prospect for coordinated action. Since the agenda targeted high food and energy prices, this was prudent. What would get us bearish? On a technical basis, the Light Sweet contract would need to break the 10-week moving average at $134.46. That is the proxy for the uptrend leg for this year. Next, the 50-day moving average at $130.15 would need to be broken as well. If both these levels were voided, not by a touch but a hard break over at least a week, then the current uptrend leg would be broken. The bad news for Crude bears is that it is touches or breaks of these uptrend proxies that usually bring in buyers and lead to even higher highs.

GOOG: Should meet or beat high end of expectations@SUSQ
Susquehanna said GOOG is seeing ongoing demand for search offerings despite the weakening macro environment. With the addition of a full quarter from DoubleClick, the firm believes GOOG should meet or beat high end of expectations. Shares are Positive rated. Target $635.

MA upgraded to Outperform from Market Perform@RAJA

ELN initiated with a Neutral@COWN
Cowen cites valuation and PML concerns for its Neutral rating.

MOS expects tight phosphate market for 2H ‘08-Slides
The company reports in an 8-K: The same factors that have driven prices to record levels during the first half of this year � namely strong demand prospects, a big expected drop in Chinese exports and higher raw material costs � are expected to tighten the phosphate market even further during the second half of the year. Recent increases in agricultural commodity prices continue to under-gird a strong phosphate demand outlook worldwide. For example, the 2009 new crop prices for corn, soybeans and wheat climbed to $6.55 per bushel, $14.79 per bushel and $9.40 per bushel, respectively, at the end of June. U.S. phosphate use is forecast to increase 2% to 3% in 2008/09 given the prospect of a rebound in corn acreage to at least the mid-90 million acre range next spring. The latest USDA estimates indicate that U.S. corn stocks will plummet to less than 675 million bushels by the end of the 2008/09 crop year due to a smaller 2008 crop and continued strong demand from both domestic and offshore buyers. USDA right now is evaluating whether to release CRP acres for the 2009 planting season. More exports are needed from U.S. producers because of a large expected drop in Chinese phosphate exports in 2008. China exported 4.0 million tonnes of DAP and MAP in 2007, up sharply from about 1.0 million tonnes in 2006. However, we estimate that Chinese producers shorted local customers by as much as 2.0 million tonnes last year. Chinese planners imposed a 35% export tax on all phosphate products on January 1 and then increased this rate to 135% on April 20 in order to shut off exports and insure adequate supplies for domestic farmers. Raw materials costs continue to escalate. Phosphate rock prices fob Morocco for Q3 shipment have increased to the $450 to $500 per tonne range, up another $100 per tonne from Q2 and up almost $300 per tonne from Q1. Based on these forecasts and assumptions, U.S. DAP/MAP producer stocks are forecast to stay at extremely low levels throughout the 2008/09 fertilizer year. In fact, month-end stocks are projected to drop below the low levels of last year during the next six months.

CRME July volatility Elevated at 195 into data release
CRME closed at $8.66. Phase 2b data is expected soon for a oral formulation of Kynapid (vernakalant), a drug to restore normal heart rhythm in patients with arterial fibrillation. CRME July option implied volatility of 195 is above its 26-week average of 131 according to Track Data, suggesting larger price movement.

BIDU: Checks indicate quarter tracking above estimates@PIPR
Piper’s checks suggest BIDU’s June quarter is tracking slightly above Street estimates and they expect the company to maintain its guidance for the September quarter. Shares remain Buy rated.

ENER selected by General Motors-GM
Energy Conversion Devices, Inc. announced that its UNI-SOLAR(R) thin-film flexible solar laminates will power the world’s largest rooftop solar power system. The 12-megawatt system is being installed on GM’s assembly plant in Figueruelas, Zaragoza, Spain and will become operational in the fall of 2008. ECD will supply the solar laminates through its wholly owned subsidiary, United Solar Ovonic, LLC. When fully operational, the photovoltaic system will have a peak capacity of 12 megawatts, producing as much as 15 million kilowatt hours of “green” energy annually, enough to power approximately 4,500 homes.

Boone Pickens says U.S. is the Saudi Arabia of wind power-CNBC

EGLE initiated with a Buy, target $28@MLCO
GNK initiated with a Buy, target $80@MLCO

For doctors, drug costs and patient care are in conflict-WSJ
James Waisman, an oncologist and a partner at the BreastLink cancer clinic near Los Angeles says, “Patients are at risk and we’re at risk.” These days the exploding cost of drugs to treat various types of cancer are so expense that doctors must wait months for reimbursements, often having to front the money themselves to be able to get the necessary drugs to treat their patients. Drug companies cite the billions it costs to bring drugs to market, and that they give back by helping the poor who need treatment. But for a typical oncologist, according to the Wall Street Journal, treatment is affected by cost. A survey of 167 cancer doctors published in 2007 in the Journal of Clinical Oncology showed that 42% regularly raised the issue of costs when discussing treatment options with patients. Over 20% said costs influence their treatment decisions, and 16% said they omit discussion of very expensive treatments when they know the cost will place great strain on patients’ resources. Doctors are often financially unable to front the costs for drugs, risking their own livelihood.

On The Fly: Asian Markets Wrap-Up for Tuesday, July 8
Stocks declined, as investors worried about the negative effects of inflation and banks’ losses. JAPAN: Shares dropped, led by financial and commodity companies. The Nikkei 225 sank 2.5%, to 13,033.10. Mizuho Financial (MFG), a bank, fell 3.7% and brokerage Nomura Holdings (NMR) slipped 4.6%. Orix (IX), a financial services company, lost 6.3%. Companies involved in energy production declined after the price of crude oil dropped substantially yesterday. Oil production company Inpex sank 5.2%, while Itochu (ITOCF), which invests in oil exploration, declined 4.5% and Mitsui (MITSY), another energy investor, lost 4.4%. Mazda (MZDAF) rose 3%, as the yen’s decline against the euro has improved the company’s prospects this year. AUSTRALIA: Stocks finished lower, after an index measuring the confidence of Australian companies reached its lowest level in seven years. The S&P/ASX 200 Index dropped 1.4% to 4,932.90. Several REITs declined significantly, after S&P downgraded the credit rating of GPT (GPTGF), a REIT. GPT tumbled 11%, while Valad Property Group plunged 14% and Mirvac Group lost 13%. A number of oil companies finished lower, with Santos (STOSY) declining 3.1% and Woodside Petroleum (WOPEY) dipping 2.4%. AROUND ASIA: China’s CSI 300 index rose 0.66%, but South Korea’s KEX 100 retreated 2.81% and Taiwan’s Taiex tumbled 3.94%…Citigroup predicted that Asian countries’ rising inflation and slowing exports would trigger downward revisions of earnings estimates for Asian companies.

MDVN upgraded to Outperform from Market Perform@RODM
Rodman & Renshaw upgraded MDVN citing valuation of the firm’s pipeline given recent catalyst of positive Ph II results in Huntington’s disease with lead candidate, Dimebon. Target $24

MER estimates lowered on expected Q2 writedowns@WCHV
Wachovia expects $5B of marks for the quarter, centering around CDO exposure and monoline hits in light of recent ratings downgrades, and lowered their Q2 estimate to ($2.16) from 63c and 2008 estimate to ($3.11) from 15c. Further, Wachovia believes potential sales in MER’s BlackRock or Bloomberg stakes would be a negative since these positions are “one of the few remaining positive elements of the MER story.” Shares remain Market Perform rated.

Jim Cramer’s “Mad Money”
Cramer said the market is headed towards an oil-induced recession. With earnings expectations down 11% from last year’s levels, Cramer told viewers it’s time for a shift in strategy. He advocated using any strength in the market to take profits and reposition into defensive stocks and cash. Cramer drew a comparison of today’s markets to that of 1990-91, when the S&P500 saw a drop of 16% due largely in part to weakness in the financials. During that same period, he observed, biotech stocks led the way. He said that traditional recession stocks would normally include the food and beverage names, but with raw costs rising, these stocks, with perhaps the exception of Heinz (HNZ) and General Mills (GIS), are the wrong move for this market. Cramer said he will spend the rest of the week talking about his favorite biotech names. Cramer claimed health care as “the safest sector around” and named Genentech (DNA) as his first biotech favorite. Cramer credits much of Genentech’s strength and future to its cancer-fighting drug Avastin. Cramer also likes Genentech for its myriad other drugs and its strong drug pipeline, which he feels will give the stock many catalysts over the next year. Cramer said it’s time to buy shares of Genentech off the company’s negative press from a recent New York Times story, which he views as a “non-event”, and a perfect entry-point. Next, Cramer welcomed Larry Lee, chair/CEO of RAM Energy (RAME) to discuss the future of natural gas, and natural gas stocks. Lee said that with oil over $100 a barrel, the price of natural gas still has room to run to the upside. Cramer said he felt the stocks in this sector got too hot, too quickly, but reiterated that he’s bullish long-term on the sector. While he urged viewers to exercise caution, he called the recent pullbacks in many of the top natural gas stocks an attractive entry point. MAD MAIL: Cramer told viewers that the fertilizer and mineral stocks are in a free-fall at the moment and that he’s cautious. He said that Sociedad Quimica (SQM) is still one of his favorite names once the bottom has been established. SUDDEN DEATH: (Bullish) MA and FRO. (Bearish) BA, V and GMR. LIGHTNING ROUND: (Bullish) PG. (Bearish) MOS; X; BK and HK.

Fast money position recap- First Moves: Jeff likes USO on a pullback, Karen likes PDE, Pete likes XTO, Guy likes CELG. Macke Owns (ATVI), (WMT), (DIS), (MSFT); Najarian Owns (AAPL), (NOK), (TSO), (XLF), (XTO), (FNM), (ANR); Najarian Owns (FNM) Puts, (MER) Puts; Najarian Owns (RIMM) Calls, (SLB) Calls; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Finerman’s Firm Owns (GE), (MPG), (MSFT), (SUN), (TSO), (VLO); Finerman’s Firm And Finerman Own (PDE); Finerman’s Firm Owns SPX Index Puts; Finerman’s Firm And Finerman Own (C) And (C) Leaps; Finerman’s Firm And Finerman Own (FLS); Finerman’s Firm Is Short (SPG), (IYR), (IJR), (MDY), (SPY), (IWM); Finerman’s Firm Is Short (XME) And Owns (XME) Puts.

I am going to be reactionary today and watch how the market trades before analyzing the best trades to make. Going to act like a defensive back today by reading and then reacting. Watch the opening range and let it develop first. Looks like the downside momentum is starting to lose strength and we may be forming a temporary bottom. I still want to see 2 rally waves on strong volume with good breadth confirmed by the TRIN indicators.
Pick plays with a high probability of success, have focus and patience, plan the trade and trade the plan. Great luck and great trading.