Prism Morning Call 09-15-09
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2385 Executive Center Drive, Suite 400 • Boca Raton, Florida 33431 Phone: (561) 922-5266 • Fax: (561) 623-6235
CURRENT MARKET SENTIMENT A quiet and forgetful number, S&P 1050 is equally important for the street as the Dow 9600. We came close yet finished short of the target. This is the center piece of today and with some added extra prior to considering a trip southward. Thus, the pivot 1044 and 9600 are the supports. The selling pressure did not materialize on the initial move yesterday, hence be cognizant that the same may occur today.
MARKET HIGHLIGHTS 09/15/2009
ECONOMIC NUMBERS AND DATA Time (ET)
Indicator
Date
Actual
Expectation
Range
Prior
8:30 AM
Producer Price Index MoM
Sep 15
1.7%
0.8%
-0.3% to 2.0%
-0.9%
8:30 AM
PPI Ex Food & Energy MoM
Sep 15
0.2%
0.1%
-0.1% to 0.4%
-0.1%
Advanced Retail Sales
Sep 15
2.7%
1.9%
0.8% to 3.8%
-0.1%
8:30 AM
Retail Sales Less Autos
Sep 15
1.1%
0.4%
-0.1% to 1.0%
-0.6%
8:30 AM
Empire Manufacturing
Sep 15
18.88
15.00
5.00 to 18.00
`12.08
10:00 AM
Business Inventories
Sep 15
-0.9%
-1.4% to -0.5%
-1.1%
8:30 AM
TECHNICAL Indices
S2
S1
Pivot
R1
R2
INDU (DOW)
9502
9539
9597
9656
9693
SPUZ (S&P)
1029
1035
1044
1053
1059
PRISM CALL
PPI and retail numbers came out strong, indicating an up opening on the market. I am looking at fading this up open. I expect them to start up, than take the market down. The market will probably sell off then slowly move back up, like it did yesterday, with the Dow being up at least 50 points at some point in the day.
Page |1 RISK DISCLAIMER: There is a very high degree of risk involved in trading equities. Trading is not for every investor and only risk capital should be used. Past results are not indicative of future returns. Prism Trading School, LLC (“Prism”) and all individuals affiliated with Prism assume no responsibilities for your trading and investment results. The indicators, strategies, articles and all other features are for educational purposes only and should not be construed as investment advice. Any person who chooses to use this information as a basis for their trading assumes all the liability and risk for themselves and hereby and absolutely agrees to indemnify and hold harmless Prism, its principals, agents and employees. All of the material contained herein is believed to be correct, however, Prism will not be held responsible for accidental oversights, typos or incorrect information from sources that generate fundamental and technical information. Prism does not warrant the completeness or accuracy of such information, and does not warrant any results from the use of the information. Your use of Prism materials is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade and make your own independent decisions regarding any securities mentioned herein. Prism affiliates may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.
DOW STOCK TO WATCH Strong MMM
Weak UTX
DD
AXP
JPM
WMT
KO
PG
UPGRADES / DOWNGRADES Stock Upgraded Novartis (NVS) Ebay (EBAY) Yahoo! (YHOO) OSI Pharm (OSIP_ Cardinal Health (CAH) Stock Downgraded Arena Pharma (ARNA) Goodrich (GR) FLIR Systems (FLIR) UBS (UBS)
House
Current Price
Price Adjustment
Target Price
Jefferies & Co UBS
47.70
Buy
23.82
Buy
$28
Bernstein
15.59
Outperform
$21
Goldman
34.51
Neutral
Goldman
26.63
Buy
House
Current Price
Price Adjustment
Rodman & Renshaw
4.95
Market Perform
BofA/Merrill
56.48
Neutral
JP Morgan
27.31
Neutral
Exane BNP Paribas
18.13
Neutral
Target Price
Page |2
COMMODITY PRICES Commodity
Price
OIL
69.31
0.45
GOLD
998.80
2.30
FOREIGN MARKETS Market
Price
FTSE
5042.99
24.14
0.48
DAX
5620.34
0.10
0
NIKKEI
10217.62
15.65
0.15
HANG SENG
20866.37
CHINA
3033.728
65.83 6.987
%
-0.31 0.23
Page |3
NEWS ALERT German ZEW Index disappoints – WSJ German economic expectations rose by less than forecast in September, indicating that it may take a while before the economy returns to a sustainable growth path KFT Kraft Foods may sell assets for Cadbury bid - NY Post (26.11 ) KFT might sell assets like Maxwell House and Oscar Mayer in order to raise enough cash to finance an acquisition of Cadbury (CBY). Jefferies & Co upgrades Novartis (NVS 47.70) to Buy from Hold saying Novartis offers good near term underlying growth, some potentially positive catalysts during the next six to twelve months and a relatively safe haven for investors from wider economic issues. The firm says with most, if not all, divisions now looking fundamentally stronger, they are more optimistic on 12 month earnings momentum UBS upgrades Ebay (EBAY 23.82) to Buy from Neutral and raises their tgt to $28 from $24 saying recent data from top eBay vendor ChannelAdvisor and other channel checks suggest eBay same store sales may be starting to turn a corner. Bernstein upgrades Yahoo! (YHOO 15.59) to Outperform from Market Perform and raises their tgt to $21 from $18 saying they think YHOO's current price is too low because it implies the operating business is worth only $4.50 after cash and Asian assets have been stripped out. Firm says this stands in contrast to their view that the core business is worth at least $9.50 per share. They further think that the market is not giving sufficient credit for Yahoo!'s 40% stake in Alibaba where they expect at least two of the four remaining operating businesses to be taken to an IPO within the next 2 years. BOE mulls lowering reserve rate – WSJ NVS Novartis AG investigational bronchodilator QAB149 improves lung function and reduces breathlessness compared to tiotropium in patients with COPD (47.70 ) COF Capital One reports Aug U.S. Card (~70% of the Trust) Net Charge-Off Rate of 9.32% vs 9.83% in July 2009 (38.32 ) Co also reports U.S. Card 30+ Days delinquent rate of 5.09% vs 4.83% in July C Citigroup Explores Bid to Pare U.S. Stake - WSJ (4.52 ) China lodges WTO complaint over US tire tariffs – AFP
Page |4
NEWS ALERT OSK Oshkosh Truck awarded additional 352 M-ATVs worth $189 mln (32.10 ) MRK Merck announces European Union Commission approves expanded Use of ISENTRESS, from MSD, in Adult Patients with HIV-1 infection (32.89 ) LZ raises 2009 EPS guidance to $6.10-6.40, excluding charges, vs $5.92 First Call consensus, up from $5.70-6.00, ex charges U.S. Chain store sales increased 0.02% in Sep 12 week vs +0.6% in prior week, according to ICSC/Goldman Sachs PARD Poniard Pharma Announces Pivotal Phase 3 SPEAR Trial Evaluating Picoplatin in Small Cell Lung Cancer 320th Event Target; Event Enables Overall Survival Analysis of Registration SPEAR Trial BBY Best Buy misses by $0.05, beats on revs; guides FY10 EPS in-line, revs above consensus ITW Illinois Tool raises Q3 guidance 3 New York residences raided in terrorism probe – AP U.S. Chain store sales increased 0.02% in Sep 12 week vs +0.6% in prior week, according to ICSC/Goldman Sachs Wells Fargo upgrades CBS (CBS 11.86) to Outperform from Market Perform Wells Fargo upgrades Cooper Industries (CBE 36.63) to Outperform from Market Perform Citigroup upgrades Arcelor Mittal (MT 40.27) to Buy from Hold
Page |5
CURRENT MARKET SENTIMENT A quiet and forgetful number, S&P 1050 is equally important for the street as the Dow 9600. We came close yet finished short of the target. This is the center piece of today and with some added extra prior to considering a trip southward. Thus, the pivot 1044 and 9600 are the supports. The selling pressure did not materialize on the initial move yesterday, hence be cognizant that the same may occur today.
MARKET HIGHLIGHTS 09/15/2009
ECONOMIC NUMBERS AND DATA Time (ET)
Indicator
Date
Actual
Expectation
Range
Prior
8:30 AM
Producer Price Index MoM
Sep 15
1.7%
0.8%
-0.3% to 2.0%
-0.9%
8:30 AM
PPI Ex Food & Energy MoM
Sep 15
0.2%
0.1%
-0.1% to 0.4%
-0.1%
Advanced Retail Sales
Sep 15
2.7%
1.9%
0.8% to 3.8%
-0.1%
8:30 AM
Retail Sales Less Autos
Sep 15
1.1%
0.4%
-0.1% to 1.0%
-0.6%
8:30 AM
Empire Manufacturing
Sep 15
18.88
15.00
5.00 to 18.00
`12.08
10:00 AM
Business Inventories
Sep 15
-0.9%
-1.4% to -0.5%
-1.1%
8:30 AM
TECHNICAL Indices
S2
S1
Pivot
R1
R2
INDU (DOW)
9502
9539
9597
9656
9693
SPUZ (S&P)
1029
1035
1044
1053
1059
PRISM CALL
PPI and retail numbers came out strong, indicating an up opening on the market. I am looking at fading this up open. I expect them to start up, than take the market down. The market will probably sell off then slowly move back up, like it did yesterday, with the Dow being up at least 50 points at some point in the day.
Page |1 RISK DISCLAIMER: There is a very high degree of risk involved in trading equities. Trading is not for every investor and only risk capital should be used. Past results are not indicative of future returns. Prism Trading School, LLC (“Prism”) and all individuals affiliated with Prism assume no responsibilities for your trading and investment results. The indicators, strategies, articles and all other features are for educational purposes only and should not be construed as investment advice. Any person who chooses to use this information as a basis for their trading assumes all the liability and risk for themselves and hereby and absolutely agrees to indemnify and hold harmless Prism, its principals, agents and employees. All of the material contained herein is believed to be correct, however, Prism will not be held responsible for accidental oversights, typos or incorrect information from sources that generate fundamental and technical information. Prism does not warrant the completeness or accuracy of such information, and does not warrant any results from the use of the information. Your use of Prism materials is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade and make your own independent decisions regarding any securities mentioned herein. Prism affiliates may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.
DOW STOCK TO WATCH Strong MMM
Weak UTX
DD
AXP
JPM
WMT
KO
PG
UPGRADES / DOWNGRADES Stock Upgraded Novartis (NVS) Ebay (EBAY) Yahoo! (YHOO) OSI Pharm (OSIP_ Cardinal Health (CAH) Stock Downgraded Arena Pharma (ARNA) Goodrich (GR) FLIR Systems (FLIR) UBS (UBS)
House
Current Price
Price Adjustment
Target Price
Jefferies & Co UBS
47.70
Buy
23.82
Buy
$28
Bernstein
15.59
Outperform
$21
Goldman
34.51
Neutral
Goldman
26.63
Buy
House
Current Price
Price Adjustment
Rodman & Renshaw
4.95
Market Perform
BofA/Merrill
56.48
Neutral
JP Morgan
27.31
Neutral
Exane BNP Paribas
18.13
Neutral
Target Price
Page |2
COMMODITY PRICES Commodity
Price
OIL
69.31
0.45
GOLD
998.80
2.30
FOREIGN MARKETS Market
Price
FTSE
5042.99
24.14
0.48
DAX
5620.34
0.10
0
NIKKEI
10217.62
15.65
0.15
HANG SENG
20866.37
CHINA
3033.728
65.83 6.987
%
-0.31 0.23
Page |3
NEWS ALERT German ZEW Index disappoints – WSJ German economic expectations rose by less than forecast in September, indicating that it may take a while before the economy returns to a sustainable growth path KFT Kraft Foods may sell assets for Cadbury bid - NY Post (26.11 ) KFT might sell assets like Maxwell House and Oscar Mayer in order to raise enough cash to finance an acquisition of Cadbury (CBY). Jefferies & Co upgrades Novartis (NVS 47.70) to Buy from Hold saying Novartis offers good near term underlying growth, some potentially positive catalysts during the next six to twelve months and a relatively safe haven for investors from wider economic issues. The firm says with most, if not all, divisions now looking fundamentally stronger, they are more optimistic on 12 month earnings momentum UBS upgrades Ebay (EBAY 23.82) to Buy from Neutral and raises their tgt to $28 from $24 saying recent data from top eBay vendor ChannelAdvisor and other channel checks suggest eBay same store sales may be starting to turn a corner. Bernstein upgrades Yahoo! (YHOO 15.59) to Outperform from Market Perform and raises their tgt to $21 from $18 saying they think YHOO's current price is too low because it implies the operating business is worth only $4.50 after cash and Asian assets have been stripped out. Firm says this stands in contrast to their view that the core business is worth at least $9.50 per share. They further think that the market is not giving sufficient credit for Yahoo!'s 40% stake in Alibaba where they expect at least two of the four remaining operating businesses to be taken to an IPO within the next 2 years. BOE mulls lowering reserve rate – WSJ NVS Novartis AG investigational bronchodilator QAB149 improves lung function and reduces breathlessness compared to tiotropium in patients with COPD (47.70 ) COF Capital One reports Aug U.S. Card (~70% of the Trust) Net Charge-Off Rate of 9.32% vs 9.83% in July 2009 (38.32 ) Co also reports U.S. Card 30+ Days delinquent rate of 5.09% vs 4.83% in July C Citigroup Explores Bid to Pare U.S. Stake - WSJ (4.52 ) China lodges WTO complaint over US tire tariffs – AFP
Page |4
NEWS ALERT OSK Oshkosh Truck awarded additional 352 M-ATVs worth $189 mln (32.10 ) MRK Merck announces European Union Commission approves expanded Use of ISENTRESS, from MSD, in Adult Patients with HIV-1 infection (32.89 ) LZ raises 2009 EPS guidance to $6.10-6.40, excluding charges, vs $5.92 First Call consensus, up from $5.70-6.00, ex charges U.S. Chain store sales increased 0.02% in Sep 12 week vs +0.6% in prior week, according to ICSC/Goldman Sachs PARD Poniard Pharma Announces Pivotal Phase 3 SPEAR Trial Evaluating Picoplatin in Small Cell Lung Cancer 320th Event Target; Event Enables Overall Survival Analysis of Registration SPEAR Trial BBY Best Buy misses by $0.05, beats on revs; guides FY10 EPS in-line, revs above consensus ITW Illinois Tool raises Q3 guidance 3 New York residences raided in terrorism probe – AP U.S. Chain store sales increased 0.02% in Sep 12 week vs +0.6% in prior week, according to ICSC/Goldman Sachs Wells Fargo upgrades CBS (CBS 11.86) to Outperform from Market Perform Wells Fargo upgrades Cooper Industries (CBE 36.63) to Outperform from Market Perform Citigroup upgrades Arcelor Mittal (MT 40.27) to Buy from Hold
Page |5
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