Prism Morning Call 09-17-09

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CURRENT MARKET SENTIMENT Up we went, never came down only for the Dow and S&P to finish 9791, 1068 respectively, making the ever anticipating retracement fading further in the background. The market will stay in neutral territory until the Philadelphia Fed number releases and thereafter will show its real intention. While volume has been a bit more than usual, the selling pressure has been non-existent. The net result is an unbounded upside. Only an unlikely occurrence will trigger a downfall. The pivot is the best guidance.

ECONOMIC NUMBERS AND DATA Time (ET)

Indicator

Date

Actual

Expectation

Range

Prior

8:30 AM

Housing Starts

Sep 17

598K

598K

570K to 640K

581K

8:30 AM

Building Permits

Sep 17

579K

583K

566K to 610K

560K

8:30 AM

Initial Jobless Claims

Sep 17

545K

555K

530K to 580K

550K

8:30 AM

Continuing Claims

Sep 17

6230K

6100K

6088K

10:00 AM

Philadelphia Fed

Sep 17

8.0

6000K to 6230K 2.5 to 14.4

10:30 AM

Nat Gas Storage Change

Sep 17

80

59 to 86

69

4.2

TECHNICAL Indices

S2

S1

Pivot

R1

R2

INDU (DOW)

9636

9682

9756

9831

9877

SPUZ (S&P)

1036

1053

1063

1073

1079

MARKET HIGHLIGHTS 09/17/2009 PRISM CALL Housing and employment data came out this morning mixed. Housing was in line with expectations, and initial claims were a tad better, but continuing claims were significantly worse. Futures are trading down a little, but mostly neutral. We are looking at conservatively selling the oil, gold and maybe steel stocks off the open for a quick move down. At 10AM we have the Philadelphia Fed number, which we anticipate will be bullish. The best move has been to fade the spike, if it spikes up short it, if down, buy it. After the dust settles, the market will probably be range bound, up 50 to down 50 points. This market won’t sell-off until we see selling pressure, which has been lacking. When pressure comes in, the market will eventually get smacked, but until then, play the trend, which is mostly positive.

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 DD

Weak TRV

AA

MRK

UTX

VZ

JPM

HPQ

UPGRADES / DOWNGRADES Stock Upgraded
Nucor (NUE) Genworth Financial (GNW) Blockbuster (BBI) Viacom (VIA.B) Anadarko Petro (APC) Citigroup (C) Stock Downgraded  ABB (ABB) Arcelor Mittal (MT) BorgWarner (BWA) Black & Decker (BDK) BHP Billiton (BHP)

House

Current Price

Price Adjustment

Target Price

Citigroup

48.11

Buy

$57

Deutsche Bank

13.14

Buy

$18

S&P

1.37

‘B’

UBS

28.10

Buy

Boutique firm Boutique firm

64.85

Strong Buy

4.20

Accumulate

Current Price

Price Adjustment

21.02

Hold

House Deutsche Bank Societe Generale KeyBanc

42.00

Hold

32.87

Hold

UBS

50.53

Neutral

JP Morgan

68.89

Underweight

Target Price

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$50

COMMODITY PRICES Commodity

Price

OIL

72.27

0.24

GOLD

1018

2.00






FOREIGN MARKETS Market

Price




FTSE

5155.81

31.68

0.62

DAX

5728.87

28.61

0.5

NIKKEI

10443.8

173.03

1.68

HANG SENG

21768.51

365.59

1.71

CHINA

3060.26

60.55

2.02



%

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NEWS ALERT Growth in UK retail sales stalls – BBC European market summary; FTSE hits highest close in 12 months: FTSE +0.8%, CAC +0.49%, DAX +0.6% JAH Jarden ests and target raised to $31 at Oppenheimer following sit down with President and COO (26.96 ) TSRA Tessera Tech raises Q3 revenue guidance above consensus (27.95 ) AMR AMR Corp announces $2.9 bln in additional liquidity and new aircraft financing (7.35 ) MGM MGM Mirage announces proposed private placement of $350 mln in senior unsecured notes due 2018 (12.40 ) ALV Autoliv raises Q3 sales outlook, raises Q3 operating magin; sees FY09 sales above consensus (36.56 ) MHS Medco Health Solutions cut to Neutral from Buy by Goldman- DJ (55.96 ) Asia markets close: Nikkei +1.68%, Hang Seng +1.71%, Shanghai Composite +2.02%, Sensex -8 pts FWLT Foster Wheeler raised to Buy from Neutral by Goldman- DJ (32.99 ) XNPT Xenoport: Positive Ph. 2b results for GSK1838262 (XP13512) reported

for EBAY Skype founders balk at eBay deal - WSJ (24.32 ) BIIB Biogen Idec: Phase III study showed patients lived longer without low-grade lymphoma progressing when Rituxan was used first-line for maintenance (51.55 ) SNY Sanofi-Aventis receives complete response letter from the FDA for Eplivanserin (Ciltyri) Submission (35.79 +0.52) Sanofi-aventis is currently reviewing the content of the complete response letter, in which the FDA has requested additional information regarding benefit-risk. AUXL Auxilium Pharma sees initial sell-the-news reaction to panel recommendation; stock trades down to 35.50 after resumption of trading (35.86 ) -UpdateVVUS Vivus announces 9 mln common share offering (10.79 -0.44)

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NEWS ALERT Regulators of big bond buyers challenge the raters – WSJ The Wall Street Journal reports regulators of some of the biggest bond buyers in the world are considering cutting credit-ratings firms' role in the market in response to botched ratings of complicated mortgage securities. Ratings firms including Standard & Poor's and Moody's Investors Service are facing fresh dissent from state insurance regulators, who are considering moving away from the firms ratings' as a way of measuring the health of insurer portfolios of mortgage-backed bonds. The firms originally assigned high ratings to the securities in the middle of the decade, but they were found to be far less stable when housing prices began declining in 2007. The move is a notable challenge to a ratings system that has long embedded itself in the markets. Insurers are among the most important users of bond ratings, collectively holding some $3 trln in rated bonds in their portfolios. The regulators' moves are at a preliminary stage, but could change how state regulators gauge the quality of the investments backing insurers' policies. The effects of such a change could trickle throughout the world of bond investing, given insurers' outsize role in neuropathic pain associated with post-herpetic neuralgia (19.70 the bond markets. "We just need to take stock of this reliance on a system that allows that kind of shock," in the form of swift and severe downgrades, "and frankly evaluate if there are other alternatives," said New York Insurance Department Deputy Superintendent Hampton Finer in an interview. Amid criticism of ratings agencies, he added, "we're under quite a bit of pressure to respond." Representatives from S&P, a unit of McGraw-Hill (MHP), and Fimalac SA's Fitch Ratings declined to comment on the insurance regulators' plans. Moody's, a unit of Moody's (MCO), declined to comment on the plans as well. The National Association of Insurance Commissioners is scheduled to hold hearings on the matter next week. ORCL Oracle reports EPS in-line, misses on revs (22.13 -0.53) CCL Carnival removed from Conviction Sell List at Goldman; keeps Sell ratingReuters (33.22 ) QDEL Quidel Obtains Special 510(k) Clearance to Add 2009 H1N1 Influenza A Virus Reactivity Information to the QuickVue Influenza A+B Test Package Insert (17.24 ) COL Rockwell Collins narrows FY09 guidance to $3.78-3.83, ex-items vs $3.82 First Call consensus GR Goodrich cut to Buy from Conviction Buy by Goldman Sachs - DJ (55.68 ) COL Rockwell Collins narrows FY09 EPS guidance; sees FY10 EPS in-line, FY10 revs above consensus (48.74 )

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NEWS ALERT FDX FedEx reports EPS in-line, misses on revs; guides Q2 EPS in-line; announces FedEx Express rate increase (78.20 ) WLP WellPoint reinstated with a Neutral at Goldman- Reuters (54.86 ) ESRX Express Scripts reinstated with a Buy at Goldman- Reuters (77.97 ) U.S. unemployment not to peak until 2011, Krugman says - Reuters.com DFS Discover Financial Services prelim $1.07, not comparable to the ($0.11) First Call consensus; managed charge off rate of 8.39% vs the 8.5-9.0% guidance

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