Prism Morning Call 09-21-09
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CURRENT MARKET SENTIMENT Celebrating a 200 points gain for the week, the street was thrilled! The quadruple witching neither exhibited volatility nor fulfilled the Rosh Hashanah sale. This implies 200 points or more on the upside to a Dow higher than 10,000 which can easily be achieved with: 1. Monday: Leading indicator 2. Wednesday: FOMC Rate Decision 3. Friday: New home sales and Michigan sentiments. If so, we expect the Dow to hover 10084-10222 for the week. For weakness, the weekly pivot S&P (1059) is the demarcation line. Therefore, use the pull back as buy signal above this number.
MARKET HIGHLIGHTS 09/21/2009
PRISM CALL ECONOMIC NUMBERS AND DATA Time (ET)
Indicator
Date
10:00 AM
Leading Indicators
Sep 21
Actual
Expectation
Range
Prior
0.7%
0.0% to 1.0%
0.6%
TECHNICAL Indices
S2
S1
Pivot
R1
R2
INDU (DOW)
9754
9731
98173
9856
9880
SPUZ (S&P)
1060
1063
1068
1072
1075
DOW STOCK TO WATCH Strong BA
Weak MMM
JPM
XOM
KO
AXP
PG
TRV
Market is seeing the first weak opening in a while. The problem is the market has often been buying the down openings and until selling pressure comes into the market, we don’t see a reason to change. Market will probably sell down between 7090 points off the open then bounce up to 9786 area. If the market breaks through that number it has room to take this market up. Our economics office believes the market has upside potential to 10,222. If the market cant hold the initial down move, it will go to 9722 and try to defend. Any bigger selloff will require selling pressure, which has been absent to date.
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.
UPGRADES / DOWNGRADES Stock Upgraded Waters (WAT) Celgene (CELG) Novellus Systems (NVLS) Royal Dutch Shell (RDS) Allianz (AZ)
House
Current Price
Price Adjustment
Target Price
Barclays
55.32
Overweight
$65
Baird
52.54
Outperform
$65
Credit Suisse
20.51
Outperform
BofA/Merrill
58.70
Buy
JP Morgan
12.16
Overweight
Agilent Technologies (A)
Barclays
28.37
Overweight
$33
Fedex (FDX)
Argus
76.17
Buy
$97
Reliance Steel (RS) Campbell Soup (CPB) Costco (COST)
KeyBanc Capital Mkts Argus
42.60
Buy
$54
32.29
Buy
$37
Willaim Blair
57.55
Outperform
House
Current Price
Price Adjustment
Soleil
97.14
Hold
Soleil
54.25
Hold
Exane BNP Paribas HSBC
40.50
Neutral
55.25
Neutral
Baird
47.71
Neutral
$50
Leerink Swann
5.18
Market Perform
$6
RBC Capital Markets
21.94
Sector Perform
Stock Downgraded Potash (POT) Mosaic (MOS) Arcelor Mittal (MT) Lukoil (LUKOY) MidAmerica Apt (MAA) Arena Pharma (ARNA) Jack In the Box
Target Price
$56
Page |2
COMMODITY PRICES Commodity
Price
OIL
70.64
1.40
GOLD
1003
7.10
FOREIGN MARKETS Market
Price
%
FTSE
5131.42
41.47
-0.8
DAX
5636.03
67.80
-1.19
NIKKEI
10370/54
HANG SENG
21472.85
CHINA
2967.011
-
150.60
4.344
-0.7 0.15
Page |3
NEWS ALERT Global bank regulator urges caution – FT BCRX BioCryst Pharm awarded additional $77.2 mln by the U.S. Dept of Health & Human Services to develop Peramivir for influenza (10.02 ) CLSN Celsion announces that Data Safety Monitoring Board Recommends Continuation of it's Phase III ThermoDox Study for Primary Liver Cancer FBR Capital reassesses REIT valuations; upgrades AVB, DEI, DRE, EQR, HME, UDR, WRE and downgrades AMB, BMR, BXP, KRC, and PLD MT Arcelor Mittal too upbeat about steel rebound, say rivals - FT (40.50 ) RIMM Research In Motion ests raised at Kaufman ahead of the qtr (83.62 ) RBS Royal Bank of Scotland eyes 3 bln pounds share issue - FT (18.39 ) China easing Macau visa rules, casinos eye record Oct, according to execs Reuters.com Asia markets close: Hang Seng -0.70%, Shanghai Composite +0.15%, Nikkei closed, Sensex +30 pts G20 should address global challenges, World Bank president says – FT PER Dell to acquire Perot Systems for $3.9 bln or $30 per share in cash (17.91 ) LEN Lennar reports Q3 (Aug) results, misses on revs (16.54 AMGN Amgen: Ph. 3 trial shows denosumab delayed skeletal related events in advanced cancer patients with bone metastases (60.80 ) Senator Dodd favors bank super-cop idea: Aide – Reuters MCO NY Insurance official raises concerns over Moody's - Reuters (23.59 ) Reuters reports an official in the New York Insurance Dept says insurance regulators from across the country are expected to discuss dropping Moody's Investors Service from a list of acceptable rating organizations at a meeting later this week WYNN Wynn to seek $1.6 bln in IPO - WSJ (69.16 ) POT Potash lowers FY09 EPS guidance; expects 3Q09 EPS at low-end of guidance range (97.14 )
Page |4
NEWS ALERT European shares lower in early trade; FTSE -0.8%, CAC -0.7%, DAX -1.1% NTAP NetApp raised to Conviction Buy from Neutral by Goldman- DJ (24.75 ) BK Bank of NY cut to Neutral from Buy by Goldman Sachs -DJ (30.30 ) Meredith Whitney Advisory Group believes optimism on economy and bank earnings may be falsely held; says core fundamentals have not and are not improving
Page |5
CURRENT MARKET SENTIMENT Celebrating a 200 points gain for the week, the street was thrilled! The quadruple witching neither exhibited volatility nor fulfilled the Rosh Hashanah sale. This implies 200 points or more on the upside to a Dow higher than 10,000 which can easily be achieved with: 1. Monday: Leading indicator 2. Wednesday: FOMC Rate Decision 3. Friday: New home sales and Michigan sentiments. If so, we expect the Dow to hover 10084-10222 for the week. For weakness, the weekly pivot S&P (1059) is the demarcation line. Therefore, use the pull back as buy signal above this number.
MARKET HIGHLIGHTS 09/21/2009
PRISM CALL ECONOMIC NUMBERS AND DATA Time (ET)
Indicator
Date
10:00 AM
Leading Indicators
Sep 21
Actual
Expectation
Range
Prior
0.7%
0.0% to 1.0%
0.6%
TECHNICAL Indices
S2
S1
Pivot
R1
R2
INDU (DOW)
9754
9731
98173
9856
9880
SPUZ (S&P)
1060
1063
1068
1072
1075
DOW STOCK TO WATCH Strong BA
Weak MMM
JPM
XOM
KO
AXP
PG
TRV
Market is seeing the first weak opening in a while. The problem is the market has often been buying the down openings and until selling pressure comes into the market, we don’t see a reason to change. Market will probably sell down between 7090 points off the open then bounce up to 9786 area. If the market breaks through that number it has room to take this market up. Our economics office believes the market has upside potential to 10,222. If the market cant hold the initial down move, it will go to 9722 and try to defend. Any bigger selloff will require selling pressure, which has been absent to date.
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.
UPGRADES / DOWNGRADES Stock Upgraded Waters (WAT) Celgene (CELG) Novellus Systems (NVLS) Royal Dutch Shell (RDS) Allianz (AZ)
House
Current Price
Price Adjustment
Target Price
Barclays
55.32
Overweight
$65
Baird
52.54
Outperform
$65
Credit Suisse
20.51
Outperform
BofA/Merrill
58.70
Buy
JP Morgan
12.16
Overweight
Agilent Technologies (A)
Barclays
28.37
Overweight
$33
Fedex (FDX)
Argus
76.17
Buy
$97
Reliance Steel (RS) Campbell Soup (CPB) Costco (COST)
KeyBanc Capital Mkts Argus
42.60
Buy
$54
32.29
Buy
$37
Willaim Blair
57.55
Outperform
House
Current Price
Price Adjustment
Soleil
97.14
Hold
Soleil
54.25
Hold
Exane BNP Paribas HSBC
40.50
Neutral
55.25
Neutral
Baird
47.71
Neutral
$50
Leerink Swann
5.18
Market Perform
$6
RBC Capital Markets
21.94
Sector Perform
Stock Downgraded Potash (POT) Mosaic (MOS) Arcelor Mittal (MT) Lukoil (LUKOY) MidAmerica Apt (MAA) Arena Pharma (ARNA) Jack In the Box
Target Price
$56
Page |2
COMMODITY PRICES Commodity
Price
OIL
70.64
1.40
GOLD
1003
7.10
FOREIGN MARKETS Market
Price
%
FTSE
5131.42
41.47
-0.8
DAX
5636.03
67.80
-1.19
NIKKEI
10370/54
HANG SENG
21472.85
CHINA
2967.011
-
150.60
4.344
-0.7 0.15
Page |3
NEWS ALERT Global bank regulator urges caution – FT BCRX BioCryst Pharm awarded additional $77.2 mln by the U.S. Dept of Health & Human Services to develop Peramivir for influenza (10.02 ) CLSN Celsion announces that Data Safety Monitoring Board Recommends Continuation of it's Phase III ThermoDox Study for Primary Liver Cancer FBR Capital reassesses REIT valuations; upgrades AVB, DEI, DRE, EQR, HME, UDR, WRE and downgrades AMB, BMR, BXP, KRC, and PLD MT Arcelor Mittal too upbeat about steel rebound, say rivals - FT (40.50 ) RIMM Research In Motion ests raised at Kaufman ahead of the qtr (83.62 ) RBS Royal Bank of Scotland eyes 3 bln pounds share issue - FT (18.39 ) China easing Macau visa rules, casinos eye record Oct, according to execs Reuters.com Asia markets close: Hang Seng -0.70%, Shanghai Composite +0.15%, Nikkei closed, Sensex +30 pts G20 should address global challenges, World Bank president says – FT PER Dell to acquire Perot Systems for $3.9 bln or $30 per share in cash (17.91 ) LEN Lennar reports Q3 (Aug) results, misses on revs (16.54 AMGN Amgen: Ph. 3 trial shows denosumab delayed skeletal related events in advanced cancer patients with bone metastases (60.80 ) Senator Dodd favors bank super-cop idea: Aide – Reuters MCO NY Insurance official raises concerns over Moody's - Reuters (23.59 ) Reuters reports an official in the New York Insurance Dept says insurance regulators from across the country are expected to discuss dropping Moody's Investors Service from a list of acceptable rating organizations at a meeting later this week WYNN Wynn to seek $1.6 bln in IPO - WSJ (69.16 ) POT Potash lowers FY09 EPS guidance; expects 3Q09 EPS at low-end of guidance range (97.14 )
Page |4
NEWS ALERT European shares lower in early trade; FTSE -0.8%, CAC -0.7%, DAX -1.1% NTAP NetApp raised to Conviction Buy from Neutral by Goldman- DJ (24.75 ) BK Bank of NY cut to Neutral from Buy by Goldman Sachs -DJ (30.30 ) Meredith Whitney Advisory Group believes optimism on economy and bank earnings may be falsely held; says core fundamentals have not and are not improving
Page |5
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