Wang’s Happy Trading

Submitted By Optiondragon

From Briefing.com

Periodicals Wrap-Up for Wednesday, July 30th
WALL STREET JOURNAL: During a conference call with analysts, the Wall Street Journal reported that EarthLink (ELNK) CEO Rolla Huff indicated the company is open to doing a deal with Time Warner’s (TWX) AOL unit after commenting that the company wants to open the door for consolidation in the Internet dial-up access market…The Wall Street Journal reported that, due to falling used-vehicle prices and continued turmoil in the credit markets, General Motors (GM) and Ford (F) are said to be scaling back significantly their auto-leasing business. A spokesperson for the auto-finance unit Wells Fargo (WFC) also informed dealers it will no longer finance leases after this month…FINANCIAL TIMES: The Financial Times reported that following Merrill Lynch’s (MER) disposal of $30B in mortgage-related securities, global banks that include UBS (UBS) and Citigroup (C) are under pressure to right down or sell billions of dollars in toxic assets…BASF SE is said to be on the lookout for acquisitions in the U.S. and one of the possible acquisition targets is W.R. Grace & Co. (GRA), the Financial Times Deutschland reported…BLOOMBERG: As losses as its securities unit increase, Bloomberg reported that shareholders are putting pressure on Deutsche Bank (DB) to buy a German consumer lender such as Deutsche Postbank…

Investors want other banks to follow in Merrill’s footsteps-FT
The world’s largest banks, including Citigroup (C) and UBS (UBS), are coming under more pressure to write down or sell billions of dollars in toxic assets, after Merrill Lynch (MER) announced that it would sell $6.7B of its collateralized debt obligations. However, Merrill sold the debt obligations for just 22 cents on the dollar, leading to worries that banks may have to take more large writedowns and carry out highly dilutive capital raising transactions.

Transocean and Tidewater can be had near record-low valuations-Barron’s Online
After the pullback in the price of oil, two offshore energy-services stocks, Transocean (RIG) and Tidewater (TDW), are down from their lofty heights to very attractive valuations. Not only are Transocean and Tidewater market leaders in the hottest space in energy, but right now their stocks are also the cheapest in the offshore drilling industry. Jefferies analyst Judson Bailey says, “I think the pullback in both instances is probably overdone.” Offshore drilling activity continues to be robust in the global hunt for oil to meet rising demand and replace aging fields. Day rates for drilling rigs and vessels continue to rise due to limited supplies. This bullish cycle should last several more years given that companies exploring for oil and gas are signing pricier contracts extending into 2015-2017 to stake claims on those rigs. The nine new rigs Transocean will receive in 2009-2011 are already contracted. With this flood of free cash flow, Tidewater is expected to tag on another stock-buyback program, and Transocean could do the same or offer a hefty special dividend. Bailey says he is banking on a turnaround in Tidewater’s stock after management stepped up efforts to manage high repair and maintenance costs for its fleet. Transocean is more of a multiple expansion story as the market starts to appreciate its highly visible double-digit earnings growth. So unless there is a drastic downturn in the global economy, shares of Transocean and Tidewater should leap ahead with solid earnings growth.

Merrill Lynch “takes it lumps” and moves on-WSJ
By selling $30B of CDOs for an average price of 22c on the dollar, Merrill Lynch (MER) John Thain admitted that the losses in the financial market aren’t just “going away,” the Wall Street Journal’s “Heard on the Street” says. Instead of freeing their balance sheet by selling hard-hit assets at a loss, other financial chiefs are digging themselves deeper and will end up taking a worse hit when they attempt to fix the problem. The WSJ points to Citigroup (C), which analysts have said may need to reduce their value by an additional 21%, or Bank of America (BAC), which currently values its CDOs at about 35c on the dollar and “makes no sense”. In light of Merrill’s sale, other large banks including UBS (UBS), Barclays (BCS) and Royal Bank of Scotland (RBS) may all need to reassess their CDO holdings.

Vulture investors ravenous for distressed paper-WSJ
The Wall Street Journal reports that more deals could be coming such as the one Lone Star Funds formed with Merrill Lynch (MER) to buy $30.6B of its toxic CDOs at a 78% discount to face value, indicating a ravenous hunger by vulture investors for distressed paper. The WSJ says dozens of firms — including BlackRock (BLK), Citadel Investment and Fortress Investment — have raised funds, possibly as much as $100B in all to invest in distressed mortgages. If extended to all deals, these funds could have the power to purchase around $400B; distressed owners’ holdings of toxic paper could add up to nearly $1T, investors say.

Amazon.com will let other sites use its payment service-NY Times
The New York Times reports that Amazon.com (AMZN) will allow a new payment service that will offer other line retailers to use on their Web sites. Checkout by Amazon will also let the sites calculate sales tax and shipping costs, purchase tracking and the use of its one-click ordering system. This service and Amazon Simple Pay will compete with eBay’s (EBAY) PayPal.

Wyeth-WYE: Shares defended@MLCO

First Solar-FSLR: Expect a beat and raise quarter tonight@PACS
Pacific Crest believes FSLR’s Q2 could see $10M in revenue upside from module efficiency and a 4% increase in the currency exchange rate. If the Malaysian 1 factory could report better-than-expected output of 20MW, PacCrest thinks the total upside could reach $35M in Q2. PacCrest believes Q3 revenue guidance should exceed consensus of $298M by $20M. They rate FSLR an Outperform.

Better than expected jobs data pushes stock futures higher
Stock futures continue to indicate a slightly higher open. In addition to steady oil prices near $122.00 per barrel, investors received positive news on employment. The ADP Employment report, which measures non-farm private employment activity, showed a gain of +6,000 jobs. Analysts had been predicting a loss of -60k jobs. The better than expected number had a positive effect on the futures, and they are now well above fair value.

Elan Corp-ELN: Lowering bapineuzumab value by $10/share@COWN
Cowen said bapineuzumab Ph II data raised unepxected questions regarding the robustness of bapineuzumab’s efficay and about chances of Ph III success. As a result, the analyst lowered bapineuzumab’s value by $4-5B, or $10 per ELN share. Cowen rates ELN Neutral.

Elan Corp-ELN: View weakness as a buying opportunity@LEER
Leerink attributes today’s sell-off to overblown expectations for the Phase II trial of bapineuzumab and thinks the data supports broader clinical testing of beta amyloid-modulating therapies. The firm made no changes to their valuation and maintains an Outperform rating.

Solar Energy: Cautious on 2009 outlook for industry@OPCO
Oppenheimer notes that a Spanish commission recommended a 300 MW feed-in tariff for solar energy in 2009, and the firm believes the solar industry’s pricing is peaking while the cost of raw materials may still be a problem in 2009. The firm prefers CSIQ, JASO, and ENER, but they are waiting for share prices to drop.

PNC Financial-PNC: Well positioned in current environment@BARD
Baird is optimistic on PNC’s opportunities to take market share given its strong balance sheet and earnings power vs. competitors. Shares are Outperform rated.

Cummins-CMI reports Q2 EPS $1.49 vs. consensus of $1.23
Reports Q2 revenue $3.89B vs. consensus of $3.88B.
Cummins-CMI sees FY08 sales growth of 15%

National Oilwell-NOV target raised to $110 from $105 after strong quarter@SBSH
Citigroup raised their estimates to reflect a stronger pace of orders for drilling rig equipment and drill pipe and maintains a Buy rating.

Bush signs housing, economic recovery bill CNN reports-Dow Jones

Acorda Therapeutics-ACOR announces positive Neuregulins data
Acorda Therapeutics, Inc. presented data on the company’s neuregulin molecule GGF2 demonstrating improved cardiac function in preclinical models of heart failure. The data also indicated that GGF2 provided more benefit than other neuregulin fragments that were also tested. In preclinical testing, neuregulins have shown the potential to reduce and even reverse dysfunction of congestive heart failure by strengthening and protecting heart muscle cells. Data on GGF2 were presented on July 29 at the Basic Cardiovascular Sciences Conference in Keystone, CO.

Whiting Petroleum-WLL: Expect strong 2H08 production forecast@WCHV
After EOG released data on two Bakken wells in which Whiting has stakes, Wachovia predicts that Whiting will issue a strong production outlook for 2H08. The firm maintained their Outperform rating on Whiting.

Myriad Genetics-MYGN upgraded to Outperform from Sector Perform@RBCM
RBC Capital upgraded MYGN citing solid core molecular diagnostics growth and increased confidence that the spin-out will generate better shareholder value. Target to $72 from $37.

Arcelor Mittal-MT reports Q2 EPS $4.20 vs. consensus of $2.81
Reports Q2 revenue $37.8M vs. consensus of $35.15B.
Arcelor Mittal-MT sees Q3 EBITDA exceeding $8.5B

Jim Cramer’s “Mad Money”
Cramer was heartened by Merrill’s decision to sell its “bad bonds and collateralized debt obligations.” He said the moves could pave the way for other financially plagued institutions such as Citigroup (C), Wachovia (WB) and Washington Mutual (WM), as it offers them a model for “what they have to do to save themselves.” The second item that ignited a 266.48-point rally in the DJIA was the “remarkably great earnings” of Colgate Palmolive (CL) and US Steel (X). Their results, he said, are “a sign that market wants to rally.” The third item is the collapse of oil prices. He said a fall of oil prices to $110 would drop gas prices to $3.50 a gallon. Cramer said the rally is not over if the the federal government issues a decent employment numbers on Friday. Then, Cramer placed Merrill’s CEO John Thain on his “Wall of Shame”, as he has “over-promised and under-delivered.” Next, the contention of Core Laboratories’ (CLB) CEO David Demshur, is that the stock should not be falling along with oil and gas prices. Demshur maintains his company should do well as long as oil stays above $70 and natural gas is above $6. He said the demand for its services is “inelastic.” Moreover, Demshur said the company has guided for record revenue and profits for Q3 and FY08. Cramer also focused on Kimberly-Clark (KMB), a classic defensive play, but one hurt because of the price of oil. For every $1 in the average price of oil increases, KMB’s annual earnings lose a penny. And for every $1 increase in natural gas, KMB’s annual earnings lose 4c. But Cramer says KMB is in a position to turn things around as the company’s conservative guidance, a possible price increase and the downward trend in oil and gas prices will help. MAD MAIL: AT&T (T) analysts too negative on the stock, but Cramer says its cheap and he likes the dividend. For that matter, he also likes Verizon (VZ) and predicts both stocks will be much higher at year’s end. Lastly, Cramer expressed his dislike again of ethanol mandate, and that it should be scrapped. LIGHTNING ROUND: (Bullish) ABB; RIG. (Bearish) GRMN; GE; HBAN; IPI; POT; AUTH.

Fast Money position recap: First Moves: Jeff says take profits on XLF, Guy likes USB, Karen likes shorting IYR, Pete likes WFC.
Macke Owns (DIS), (MSFT), (WMT), (COST); Adami Owns (GS), ( C), (NUE), (MSFT), (AGU), (INTC), (BTU); Adami’s Wife Works At Schering-Plough; Najarian Owns (TSO); Najarian Owns (WMT) Calls, (XLY) Calls; Najarian Owns (AAPL) Puts and stock; Finerman And Finerman’s Firm Owns C; Finerman’s Firm Owns (MRK), (GS), (VLO), (TSO), (MSFT), (SUN).

(Important note on how to use this upgrade/downgrade list with analyst comments and news….you must parse out the factual data (Factual data is the most important) from the opinionated data and always take all analyst comments with a grain of salt. Do not follow blindly with their recommendations. Remember that technicals are the most powerful force in short term direction for stock prices due to the law of supply and demand.)

Big market rally caught the shorts by surprise and it looks to follow through today off the good jobs number and so far a slight drop in oil this morning. If the oil inventories come in above expectations and oil prices drop again, the market will rally again. I will have my eye on my Optiondragon LIB (Leading Indicator Basket)= UUP+USO+XLF+GS(brokers)+FNM for clues to market direction. The magic number is for the market to break S&P500 1290 and use that level as support. That could draw in more buyers and form a stronger bottom. The biggest question to ask is, “Was all the supply taken out during the recent market drop?” I mean every weak long sold a long time ago and the naked shorting can only persist up to a point. This I why i have been advocating just like Jon Najarian and Cramer, that the SEC SHOULD institute the short sale rule on all stocks. The short attacks have been created with phantom stock. A company employing tens of thousands of people with real lives and real families are being driven into the ground from uncovered naked shorting. It is must easier to institue fear in the markets than hope. Let these short hedge funds and all shorts abide by the rules of the market by borrowing first instead of phantom shorting. You know why they whine? Because its easy money thats why. Its a layup versus a mid range jump shot. There are companies that have more short interest outstanding than their entire float. What is wrong with that? Theorically you can short drive a WAMU right to zero without borrowing one share to sell. It just doesn’t seem right. Pick plays with a high probability of success, plan the trade and trade the plan, have focus and patience, run technicals through supply and demand. Great Luck and HappyTrading!

Good morning. Enthusiasm is one of the most powerful engines of success. When you do a thing, do it with all your might. Put your whole soul into it. Stamp it with your own personality. Be active, be energetic! Nothing great was ever achieved without enthusiasm. -Ralph Waldo Emerson.