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Keystone Morning Quickie$

 

Keystone Morning Quickie        August 13th 2009

Market Commentary

 
 
Futures are pointing to a higher open helped by a surprise rise in German and French output in the second quarter, some optimistic commenets from the Federal reserve yesterday and stronger than expected earnings from Walmart(WMT).Bank of America(BAC) is also trading higher after news was released that fund manager John Paulson bought 168 million shares of BAC in the 2nd quarter.
 
On the other hand, Forclosures rose 7% compared to last month, making a new record high. Retail sales also came in lighter than expected.
 
The Market should open above the 1010 level, if we can hold that level and break through last fridays high of 1018., we may see some heavy buying enter the markets as the retail investor will not want to feel like they are missing the move and will put some cash to work.
 
Again, as always we will pay attention to the market internals to decide if there may be a possible reversal in store.
 
 
 

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                                                                      942           874
DOW                                                                     8739          8304
NASDAQ                                                               1873           1639

Keystone’s Trades

 

Walmart (WMT)   long trade   –  Walmart began to rally on monday in the anticipation of positive earnings. Today the earnings released were better than expected. It tested the 200 ma yesterday at $50.84 and failed. This morning, it will be opening above this level. We will look to enter a long position around the $51 level and use the 200 day as our stop.

 

Stop loss: $50.80

 

  Profit target: $ 53.00 

 

 
Coca Cola (KO) short sale – After consolidating for the last 2 weeks, KO broke to the downside yesterday and closing below the 50 EMA ($49.07), on a day where the market was strong.

 

 
 
   
Initial profit target is $48.21

 

  profit target is $46.32 

 


 

 
Economic Numbers 
 

 

 

8:30 Retail Sales
8:30 Jobless Claims
8:30 Import/Export Prices
9:00 RBC CASH Index
10:00 Business Inventories
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
4:30 PM Money Supply
 
 
Notable earnings before Thursday’s open: DPS, EL, GIL, KSS, URBN, WMT
Notable earnings after Thursday’s close: BBI, DV, JWN 
 

 

 

Top News Stories
 

 

UBS reaches tax settlement. UBS (UBS) and the Swiss and U.S. governments finalized a settlement in an ongoing tax evasion probe. Details of the settlement will likely be filed over the next week, but UBS clients will reportedly be allowed to appeal to a Swiss tribunal before their information is handed over to U.S. authorities. The IRS will likely end up with details on 8,000-10,000 accounts, down from the 52,000 it asked for. Shares +5.2% premarket (7:00 ET).
WTO rules against China. The WTO ruled China’s import and distribution regulations for books, songs and movies violated international trade laws and the terms of China’s accession to the WTO in 2001. The ruling is a victory for the U.S., which brought the case, and offers some hope to the U.S. and Europe, which have seen China becom e increasingly nationalistic in its trade policies. China said it regrets the WTO’s decision and wouldn’t rule out an appeal.
Surprise growth in Germany, France. Germany’s GDP rose an unexpected 0.3% in Q2 vs. forecasts of a 0.3% contraction, led by increases in private and public consumption, construction and net trade. The economy shrank 7.1% compared to Q2 2008 vs. an expected 7.3% drop. France also posted 0.3% growth in Q2, helping the broader eurozone contract at a milder 0.1% pace and raising hopes of a regional recovery.
Investors jump On2 Google lawsuits. Investors in On2 Technologies (ONT) have filed lawsuits against Google (GOOG) in New York and Delaware, claiming the companies’ $106.5M all-stock deal is structured to favor the search giant and rewards On2 executives at the expense of shareholders. The plaintiffs are seeking a permanent injunction blocking the deal.
No surprises from FOMC. As expected, the Federal Open Market Committee maintained the federal funds rate at 0-0.25% and expects it to remain there “for an extended period.” Economic activity is “likely to remain weak for a time,” but it’s “leveling out” and there should be a “gradual resumption of sustainable economic growth in a context of price stability” while inflation remains “subdued for some time.” The Federal Reserve will wind down $300B of Treasury purchases by the end of October instead of September. (Read the Fed’s release)
Pequot could face SEC charges. In a letter to investors, Arthur Samberg said that both he and his firm Pequot Capital had received Wells Notices from the SEC around six weeks ago, advising them of possible civil charges in connection to 2001 trading in Microsoft (MSFT). Samberg and Pequot said the trades weren’t based on material or private information. The development shouldn’t slow Pequot’s liquidation, which Samberg announced in May be cause regulatory inquiries “cast a cloud over the firm and have become a source of personal distraction.”
Delta circles NY market. Delta (DAL) intensified its efforts to dominate the New York air-travel market by acquiring 125 takeoff/landing slots at LaGuardia Airport from US Airways (LCC). The move will boost Delta’s New York flights by 85%, stepping up the competition with rivals Continental (CAL) and JetBlue (JBLU). In exchange, Delta gave US Airways 42 slots at Ronald Reagan Washington National Airport and the rights to fly to Tokyo and Sao Paulo.
$100M payday safe from pay czar, for now. Sources say Andrew Hall, the energy trader who stands to collect up to $100M from Citigroup (C) this year, will likely be exempt from interference by pay czar Kenneth Feinberg because his contract was signed before a cut-off date of Feb. 11, 2009. Though Feinberg will have flexibility in applying his authority on a case-by-case basis, he “can’t force a TARP recipient to break a contractual obligation that is grandfathered under the statute.” Hall has reportedly suggested converting a substantial amount of his compensation to equity from cash to avoid any potential problems.
AIG’s Greenberg settles again. Former AIG (AIG) chief Hank Greenberg and five other defendants agreed to pay $115M to settle a shareholder lawsuit alleging investors lost money because of fra udulent accounting and pay practices at AIG. The cost of the settlement will be largely taken care of by an insurance policy covering company executives’ legal costs. Earlier this month, Greenberg agreed to pay $15M to settle SEC charges of accounting fraud.
Record foreclosures. Home foreclosures set another record in July, marking the third new record in five months, with foreclosure activity rising 7% from the previous month and 32% from the previous year. One in every 355 homes with a loan received a foreclosure filing in July, despite continued relief efforts by the government.
U.S. deficit grows. The U.S. deficit for July came in at nearly $181B, bringing the 2009 total to $1.26T and marking the tenth consecutive month of deficits. The White House expects the deficit to reach $1.841T in the fiscal year ending Sept. 30, which would be an all-time record. Outlays rose 26% and receipts fell 6% from a year ago.

 

 
 
 

 

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