Wang’s Happy Trading

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From Briefing.com

Periodicals Wrap-Up for Friday, October 10th
WALL STREET JOURNAL: The Wall Street Journal reported that as it looks to sell of its assets, American International Group (AIG) drew down another $9B in government loans to meet massive demands for cash from its trading partners, bringing its government borrowings to $70.3B in the last three weeks…Sir Fred Goodwin, the CEO of Royal Bank of Scotland (RBS), is expected to go to the government for funding under the UK’s new bailout plan, which requires the banking industry to raise its capital by $43.2B in the next three months, the Wall Street Journal reported…WASHINGTON POST: According to the Washington Post, the large drops yesterday in the shares of General Motors (GM) and Ford (F) are causing investors and economists to worry that the U.S. manufacturing sector is entering an unimaginable manufacturing downturn…REUTERS: Mithras Capital, a small Yahoo! (YHOO) investor, proposed a new deal to sell the company to Microsoft (MSFT) for $22 a share. Reuters reported that under the proposal, Microsoft would acquire Yahoo!’s search business for $2B less than it offered in July…ABC NEWS: U.S. satellites have gathered data indicating that North Korea is preparing for another nuclear test, even as the U.S. is about to remove the country from its list of state sponsors of terrorism. However, ABC News reported that some officials believe that the North Korean activities are a negotiating tactic, or saber rattling…

Bloody Day Picks: Steel and Houses- BusinessWeek
George Putnam, editor of The Turnaround Letter, says the situation looks bloody enough in the markets to make this a time to start buying. He notes that in most market crashes since 1974, the S&P’s 500-stock index posted double-digit gains 12 months later. So good news may lie ahead. Jeffrey Kleintop, chief strategist at investment firm LPL Financial says, “the turning point in past recessions was intervention by policymakers.” In this environment, most analysts focus on companies with strong cash flow, profitability, sales, and dividend yields. Leo Larkin of S&P, is recommending Nuecor (NUE) with a 12 month target of $66. Bernie Schaeffer of Schaeffer’s Investment Research recommends buying homebuilders. His top choice: Meritage Homes (MTH) with a 12-month target of $40.

Asian Markets Wrap-Up for Friday, October 10
Stocks in Asian continued their retreat..JAPAN: The Nikkei 225 Stock Average dropped 881.06, or 9.6%, to 8,276.43, while the broader Topix index tumbled 64.25, or 7.1%, to 840.86. Mitsubishi UFJ Financial Group (MTU) lost 8.5% to Y710. Mizuho Financial Group (MFG) dived 12% to Y330,000. Sumitomo Mitsui Financial Group fell 8.2% to Y552,000. Mitsubishi Estate slumped 8.1% to Y1,642. Mitsui Fudosan Co. was down 6.8% to Y1,575. T&D Holdings sank 11% to Y4,220. Tokio Marine Holdings (TKMOY) dropped 11% to Y3,100. Nintendo Co. (NTDOY) gained 4.6% to Y36,600. Mitsubishi Corp. added 3.2% to Y1,720. Kawasaki Heavy Industries (KWHIY) was up 4.9% to Y170…CHINA: The CSI 300 Index retreated 88.34, or 4.4%, to 1,906.96. Merchants Bank lost 3.8% to 13.84 yuan. Bank of China was down 6.3% to 3.11 yuan. China Construction Bank Corp. fell 2.4% to 4.11 yuan. Shenhua slid 5.7% to 20.22 yuan. Datong Coal Industry Co. dropped 8.8% to 11.82 yuan. Chihong Zinc lost 10% to 9.23 yuan. Jiangxi Copper Co. declined 9.9% to 11.60 yuan. Haitong Securities Co. slipped 0.24 yuan, or 1.2%, to 20.11. Sany Heavy Industry Co. sank 1.61 yuan, or 10%, to 14.64…AUSTRALIA: The S&P/ASX 200 Index declined 360.20 points, or 8.3%, to 3,960.70. National Australia Bank (NABZY) plunged 12% to A$20.80. BHP Billiton (BHP) lost 7% to A$27.74. Rio Tinto Group (RTP) fell 6.4% to A$73. Macquarie Group dropped 9.5% to A$28.52. Valad Property Group retreated 34% to 8.3 cents. Sundance Resources was down 26% to 8.9 cents. Woodside Petroleum (WOPEY) slipped 11% to A$37.20…AROUND ASIA: In Hong Kong, the Hang Seng dropped 1,146.37, or 7.2%, to 14,796.87. HSBC lost 7% to HK$109.80. China Cosco was down 8% to HK$4.69. China Shipping Development Co. sank 7.9% to HK$7…In Thailand, trading was halted for 30 minutes on the SET Index when it fell 10%…Taiwan was closed for a holiday.

Paul Volcker: Leadership needs to use the tools we have to manage the crisis-WSJ
Writing in today’s Wall Street Journal, former Fed Chairman Paul Volcker says, in part, that “we’re at a critical point in the financial crisis…A full scale recession appears unavoidable…Without effective action, fear might take hold, threatening orderly recovery…Financial authorities, in the U.S. and elsewhere, are now in a position to take needed and convincing action to stabilize markets and to restore trust…The problem is international…The inevitable recession can be moderated…Rebuilding will be the job of another day.” Volcker ends by saying: “But never again should so much economic damage be risked by a financial structure so fragile, so overextended, so opaque as that of recent years.”

U.S. equity futures continue to point to a lower open
Futures continue to point to a lower open although they are off their worst levels of the morning. The credit markets remain strained but there was a hint of good news. The U.S. dollar Libor rate plunged to 2.46875% versus yesterday’s 5.09375%. Unfortunately longer term funding costs continued to rise as measures from individual governments and this week’s coordinated central bank interest rate cuts, failed to restore confidence in the frozen interbank markets. The unprecedented tension in global money markets has heightened concerns over counter party creditworthiness and that has led to the concerns in the equity markets.

Google readying options to target iPhone owners-AdWeek
Google (GOOG) is said to be readying new options to target Apple (AAPL) iPhone users directly by advertisers. Under a proposed new option, advertisers will be able to create an iPhone ad group as part of their regular search campaign in order to show different ads in response to searches made from iPhones. Representatives for Google did not confirm the new option, but one said it had been “under consideration”.

All eyes on Morgan Stanley-WSJ
If Morgan Stanley (MS) makes it through the current crisis it may signal a bottom in the market, according to the Wall Street Journal’s “Heard on the Street”. The pressure is on as the firm’s shares fell 26% yesterday. Now that it’s banking status has changed more Federal Reserve funding is available. And a $9B capital infusion is expected next week from Mitsubishi UFJ Financial (MTU). Will it all help? Time will tell.

S&P 500-SPX: The Long Term View
Last night we dug back into a 30-year chart of the S&P 500 to try to get some perspective. Drawing out a linear regression line from the start of the bull market in 1982 and projecting it forward got us an S&P level at around the 900 area, right where we were at the close yesterday. A hand-drawn uptrend line connecting the 1991 low and the 1994 low converged in time with that line, crossed at the bear market low in 2002 / 2003 and got us to the 890 area now. These two levels are support for the bull market uptrend from 1982 onward. If we break this area, it will mark the first time the line has been crossed since the uptrend began. Even during the bear market in 2002 / 2003 we came no where near that line - at the low being 11% away from it. The next level down if we break this 25 year uptrend line is to the 2002 / 2003 low area. Those lows ranged from 788.90 to 768.63. Break those, and next supports are at 755 and 727. Major support would be at the 680 area which was the top of the range from 1996.

Google-GOOG target lowered to $500 from $600 at RBC Capital
RBC lowered their estimates to reflect the macro environment but points out their Q3 checks suggest that search is holding up better than other forms of online advertising. The firm believes GOOG shares are pricing in a “bear-case” scenario and they view the stock as their best long idea. Shares remain Outperform rated.

Solar estimates lowered but see upside to shares, says Lazard Capital
Lazard Capital lowered estimates on solar companies to reflect the current market environment but believes stocks offer significant upside when the market stabilizes. The firm lowered price targets on the following Buy rated stocks: CSIQ target to $27 from $50, CSUN to $6 from $15, ENER to $75 from $95, ESLR to $7.50 from $15, FSLR to $265 from $400, JASO to $17 from $32, SOL to $18 from $30, SPWR to $92 from $130, and STP to $45 from $80.

Analysts Downgrade Summary for Friday, October 10th
MOST NOTEWORTHY: Align Tech (ALGN), Advanced Medical (EYE) and Intel (INTC) were today’s noteworthy downgrades: Deutsche Bank downgraded Align Tech to Hold from Buy as they believe macroeconomic pressures will limit the company’s ability to reach longer term growth expectations. Align’s target was lowered to $8 from $14. Jefferies downgraded shares of Advanced Medical to Underperform from Buy and lowered its target to $9 from $28 following the company’s lowered guidance as they believe macroeconomic pressures affecting LASIK volumes and the unanticipated slowdown in lens care should put continued pressure on the stock. ThinkPanmure expects the macro slowdown and credit crunch to slow Intel’s growth and IT capex spending. The firm downgraded shares to Sell from Buy, lowered its 2009 EPS estimate to $1.01 from $1.35, vs. consensus of $1.46, and cut Intel’s target to $12 from $24…OTHER DOWNGRADES: MGM Mirage (MGM) was lowered to Neutral from Positive at Susquehanna. Charles River Labs (CRL) was downgraded at William Blair to Market Perform from Outperform. Deutsche Bank cut Heinz (HNZ) and MasterCard (MA) to Hold from Buy.

Analysts Upgrade Summary for Friday, October 10th
MOST NOTEWORTHY: Parexel (PRXL), UDR Inc (UDR) and Abercrombie & Fitch (ANF) were today’s noteworthy upgrades: William Blair upgraded Parexel to Outperform from Market Perform on increased conviction in the company’s earnings growth outlook following channel checks. Friedman Billings upgraded UDR Inc to Outperform from Market Perform and raised its target to $22 from $26 citing the company’s approximate 8% implied cap rate on is vastly improved apartment portfolio. Citigroup upgraded Abercrombie & Fitch to Hold from Sell on valuation as they believe weak fundamentals are now priced into the stock…OTHER UPGRADES: Goldman upgraded Portland General Electric (POR) to Buy from Neutral and added shares to the Conviction Buy List. StellarOne (STEL) and Union Bankshares (UBSH) were upgraded to Neutral from Underperform at Baird. Bernstein upgraded DISH Network (DISH) to Market Perform from Underperform.

Analysts Initiation Summary for Friday, October 10th
MOST NOTEWORTHY: Old Second Bancorp (OSBC), Affiliated Computer (ACS) and AnnTaylor (ANN) were today’s noteworthy initiations: Old Second Bancorp was initiated with a Market Perform rating and $17 target at Keefe Bruyette. The firm believes the company’s exposure to strong markets should generate above-average returns. Susquehanna assumed Affiliated Computer with a Positive rating and $55 target and is positive on the company’s low levels of customer concentration and high levels of geographic diversification. Cowen resumed coverage of AnnTaylor with a Neutral rating, citing the company’s share loss to competitors and top-line weakness…OTHER INITIATIONS: MetLife (MET) was assumed with an Overweight rating at Morgan Stanley. JMP Securities initiated HFF Inc (HF) with a Market Perform rating. Genpact (G) was initiated at Susquehanna with a Neutral rating.

Google-GOOG should report below consensus Q3 results, says Bernstein
Bernstein expects Google to report lower than expected Q3 revenue and pro-forma EPS. However, the firm believes the company’s metrics are good and they maintained their Outperform rating. In addition, Bernstein reduced their target to $560 from $600.

Fast Money position recap- Terranova Owns, (AAPL), (EOG), (EXM), (FTO), (FCX), (GS), (MA), (NOV), (POT), (X),  (VLO); Jon Najarian Owns C preferred, WFC preferred, JPM preferred; Karabell Owns (MS), (JPM), (IBM), (AAPL), (GOOG), (FCX), (GLD), (CAT), (AGU); Seymour Owns (MER), (F), (BX) (GE).

Wow what can I say? This is a crash we are experiencing….no buts about this….The only thing one can do is stay in cash or buy protection for your account. I am staying nimble and have done well protecting my accounts and just taking things one day at a time. The credit markets are frozen meaning bank lending is really cold and not moving… I am looking for a bounce but picking a bottom is futile, do not try to do it….when it does bounce meaningfully and we do get out of this mess you will see it clearly.
See you in the trading room.