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Keystone Morning Quickie

 

Keystone Morning Quickie        August 11th 2009

Market Commentary

 
Futures are currently pointing to a flat open as traders await coommentary as the Federal reserve begins its 2 day monetary-policy meeting. At 8:30am the labor department will release data which is forecast to show that US unit labor costs fell 5.3 %.
 
The S&P has now rallied more then 50% from the March lows, yet we continue to see buying on any dip in the markets. As we have mentioned many times, there are some opportunities to short, however trade expectations must be small. If you get greedy on any short position, you more than likely will see your profit disappear. Until the market internals start to show weakness, we must be nimble and trade both sides of the market. S&P has resistance in the 1009 area. If we continue to hold below these levels, we may see some selling and profit taking. Remember is is August and typically a very light volume month for trading, so be content with smaller profits for the day and then call it a day. Turn off your computer and go enjoy what is left of Summer.
 
 
 

Call us at 212-594-8900 if you would like to discuss any of our trading programs.
 
 
 
Keystone Trading Concepts: August Special $500 off Programs- call to learn more
 

Technical Levels
 

50 Day          200 Day

S&P                                                                      939           873
DOW                                                                     8717           8297
NASDAQ                                                               1867           1635

Keystone’s Trades

 

CBS   long trade   –  CBS spiked on Friday as The CEO Les Moonves after he said that the advertising recession has ceased receding.  Today they have anounced they have sold 4 radio stations for $40 MILLION. We believe the stock in in play, but we believe a pullback is in store. We would look to enter a long position around the $10.50 level with a target of $11.22
 
Stop loss: $9.57

  

Profit target: $ 11.60

 
 

 
Celgene: (CELG) short sale

 

Celegene tried to break the $58 level 4 different times before the stock started to break down.After gapping up from $48, it is not that surprising.  We are looking for it to fill the gap a bit more. 20 period EMA is at $53.34. We closed a bit below this level last night. We will be looking to enter short on first rally and then look for a test of $50.  Good risk-reward ratio here.
 
   
Initial stop loss is $54.24

 

Initial profit target is $ 48.76

 
 


 

 
Economic Numbers 
 

 

7:45 ICSC Retail Store Sales
8:30 Productivity and Costs
8:55 Redbook
10:00 Wholesale Inventories
12:00 PM Lawrence Summers speaks at Social Security conference
5:00 PM ABC Consumer Confidence Index
 
Notable earnings after Tuesday’s close: AMAT, CLWR, CREE, PAAS 
 

 

 

Top News Stories
 

 

Resolution’s friendly takeover. Life insurer Friends Provident (FRDPY.PK) agreed to be acquired by buyout group Resolution for a revised £1.86B ($3.1B) bid. This is Resolution’s first major acquisition as it seeks to lead a consolidation in the U.K. insurance sector. The agreement comes after Friends’ H1 report of a £98M loss and a forecast that the rest of 2009 will remain “challenging given the uncertain pace of recovery in the U.K. economy.”
 
Small banks may need more money. The Congressional Oversight Panel will release a report today that smaller U.S. banks may still need new capital, possibly as much as $12-14B, to cover troubled loans. While large banks, particularly the 19 stress-tested ones, appear healthy enough to handle more losses, banks with assets of $600M-$1B could face serious challenges, and the report recommends that the Treasury consider expanding programs to help banks with bad assets.
 
Judge withholds approval for BoA settlement. A federal judge refused to approve a $33M settlement between the SEC and Bank of America (BAC) over bonuses given out to Merrill Lynch employees, saying he was unable to determine if it was fair to the public because of a lack of transparency. The judge asked for a “much more detailed account of the underlying facts” as a prerequisite to his approval, suggesting the $33M might not be ‘remotely reasonable’ if Bank of America lied about bonuses, as the SEC alleges.
 
State Street’s legal trust runs low. State Street (STT) said it may not have set aside enough money to cover its legal costs, including fees and penalties over lawsuits and investigations connected to risky investments. State Street had set aside $625M two years ago, and had $193M left in rese rves at the end of June. The company declined to elaborate or say whether it plans to adjust the reserve.
 
Barnes & Nobles buys college bookstore. Barnes & Noble (BKS) is buying sibling Barnes & Noble College Booksellers Inc. from chairman Leonard Riggio for $596M in order to boost its customer base and its revenue. The two companies had operated independently since Barnes & Noble went public in 1993. Barnes & Noble College Booksellers has 624 bookstores on U.S. campuses and had revenue of $1.8B in its most recent fiscal year.
 
Southwest shows Frontier some love. Southwest Airlines (LUV) raised its bid for Frontier Airlines by 50% in a bankruptcy auction, hoping the $170M offer will stave off a competing bid from Republic Airways Holdings (RJET). If successful, Southwest will gain its first flight paths outside the U.S. and gain a foothold in the highly competitive Denver market.
 
Facebook makes a friend. Facebook agreed to buy FriendFeed, netting itself both a social media startup that lets users share content online in real time across various social networks and a prized group of former Google (GOOG) engineers. FriendFeed is similar to Twitter, though significantly less popular. Terms of the deal were not disclosed.
 
BoJ holds rate steady. As expected, Bank of Japan kept its key interest rate unchanged at 0.1%. The bank said it “can’t be confident about the strength of final demand after inventory adjustments and policy measures run their course,” and remains concerned about “downside risks to economic activity and prices” even as the country’s recession shows signs of abating.
 
Employment trends. Conference Board’s Employment Trends Index registered at 88.3, unchanged from the previous month and down 20.1% from last year. Three months of a flat index “suggests that we are getting closer to the point when employers are no longer cutting their workforce. However… we do not expect significant job growth over the next year.”

 

 
 
 

 

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