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Keystone Morning Quickie$

 

Keystone Morning Quickie        August 19th 2009

Market Commentary

 
 
Futures are pointing lower this morning following a 4.3% drop on the Shanghai index which is now down 19.8% from the level it was at just 2 weeks ago. Yesterday the 9222 level was a significant resistance point on the Dow, we fought to get above it a number of times, only to fail late in the day and closed below it. The positive earnings of the last quarter have been priced in and now investors and traders are starting to look at the bigger picture to decide if the recovery is as far long as the market has claimed it to be.  Hewlett Packard (HPQ) earnings  fell 19% as sales of pcs, printers and software all declined. That being said, All indications would say that today will be a day where we should get follow through to the downside, however, if the last number of weeks have proved anything, we must use trailing stop losses on our short and book profits, anticipating the possible rally.
 
 
 
 

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Technical Levels
 

50 Day          200 Day

S&P                                                                      946               875
DOW                                                                     8782            8313
NASDAQ                                                               1884           1646

Keystone’s Trades

 

Target (TGT)   long trade   – 2nd quarter earnings fell 6.3 percent, but beat wall street expectations.  gapped higher yesterday on high volume.  It is coming into heavy resistance at $45. If it can trade above $45, we will enter a long position and look for a big move up from there/

 

 
  Stop loss: $44   

 

initial Profit target: $ 47

 
Profit target: $50

  
 
Electronic Arts(ERTS) short sale –  It has been showing signs of weakness, as the market has been strong. traded lower yesterday on heavy volume. Approaching the 200 EMA at $19.33. If it can trade below the 200, we will put on our first entry. looking foe a multi point move.

  

  profit target is $17.63

 
Stop loss: $20.23


 

 
Economic Numbers 
 

 

 

7:00 MBA Mortgage Applications
10:30 EIA Petroleum Status
 
Notable earnings before Wednesday’s open: BJ, DE, EV, YGE
Notable earnings after Wednesday’s close: HAR, HOTT, JDSU, LTD, NTAP, PETM, SNPS

 
 

 

 

Top News Stories
 

 

AIG CEO changes restructuring plan. New AIG (AIG) CEO Robert Benmosche is already making his presence felt in the company, calling off a planned sale of the insurer’s investment advisory unit in order to “continue to build a world-class financial advisory business.” The scrapped sale is an early sign that more significant changes may be in store for AIG’s restructuring plans as Benmosche conducts a “strategic review” of the company. Shares -1.8% premarket (7:00 ET).
 
Regulators pressured Citi on management. According to a confidential June agreement between Citigroup (C), the Federal Reserve, the Office of the Comptroller of the Currency and the FDIC, Citigroup said it would consider replacing then-CFO Ned Kelly by October. Kelly resigned in July after less than four months on the job once he learned of the agreement. The arrangement between Citigroup and regulators emphasizes just how large a role authorities have played in Citigroup’s management shake-up and contradicts the official account of the episode that had been presented by both sides. Shares -2.2% premarket (7:00 ET).
 
Tax probe nets other European banks. As wealthy U.S. citizens embroiled in the UBS (UBS) tax probe join a tax-evasion amnesty program, authorities have received information on ten other Swiss and European banks where Americans held accounts, potentially opening new fronts in the IRS’s investigation of tax crimes. Banks named in the disclosures, including Credit Suisse (CS), Julius Baer Holding and Union Bancaire Privee, haven’t necessarily engaged in any wrongdoing. Meanwhile, the U.S. is building criminal cases against more than 150 of UBS’ American clients, and that number is expected to grow.
 
MSFT fights to keep selling Word. Microsoft filed to stay an injunction that could prevent the company from selling its core Word software, arguing the injunction would cause “irreparable harm.” The permanent injunction was issued last week and barred Microsoft from selling recent versions of Word because it infringes on a patent held by technology firm i4i Inc. If upheld, Microsoft will have to significantly change a major upgrade to the software due to launch next year and will have to stop selling versions of Word 2003 and Word 2007.
 
IMF: Global recovery begins. Olivier Blanchard, the IMF’s chief economist, said the global economic recovery has begun but a sustainable recovery will require fundamental changes, including a U.S. shift towards more exports and an Asian shift towards more imports. Potential economic output may also remain depressed as “the crisis has left deep scars, which will affect both supply and demand for many years to come.”
 
HP calls tech spending bottom. Hewlett-Packard (HPQ) narrowly beat earnings expectations in its most recent quarter (see details below), but saw sales fall sharply in several key business areas, including PCs and printers. Looking forward, the company said it sees a “stabilized market” and that technology spending has already hit bottom.
 
Macquarie buys asset manager. Continuing an industry trend of consolidation, Australian investment bank Macquarie Group agreed to buy U.S. asset manager Delaware Investments from Lincoln National Corp. (LNC) for $428M. The deal will raise Macquarie’s total assets under management to over $300B.
 
Mortgage apps rise. Mortgage applications rose 5.6% from last week, MBA said. The average interest rate on 30-year fixed-rate mortgages fell to 5.15% from 5.38%.
 
Retail sales. Chain store sales fell 0.7% in the first two weeks of August, Redbook said, slightly worse than the -0.6% expected. According to ICSC, weekly sales were down 0.6% Y/Y and down 0.9% from the previous week as heavy discounts failed to increase sales.
 
Housing starts miss consensus (.pdf). July Housing Starts came in at 581K vs. consensus of 605K. Permits were 560K vs. 577K. Starts were 1% lower than June’s 587K (revised) and 37.7% lower than last July.
 
Prices fall. July’s Producer Price Index was -0.9% vs. consensus of -0.3% and +1.8% in June. Core PPI fell 0.1% vs. consensus of +0.1% and +0.5% in June. Core producer prices were down 6.8% from a year ago.

 

 
 
 

 

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