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Morning Quickie $

 

Keystone Morning Quickie        August 26th 2009

Market Commentary

 
 
 Futures are drifting lower this morning after a rise in Durable-goods orders was higher than expected, but the details in report were disappointing. Traders are being cautious ahead of new home sales data that will be out at 10am EST.

 
The trading environment right now is as expected. Late Summer, pre-holiday trading! That being said, We must be extremely patient in trade selection. The tug of war between the Bulls and Bears has become more evident over the last few trading days. After the big move up in the markets, the bears look like there ready to stand their ground a bit more. The rallies have been narrower and the pullback a bit stonger. However, we still have had little expectation for follow through to downside. We have been trading both sides of the market taking small profits, small losses. With the volume light, the moves will become even more erratic until we put the labor day holiday behind us.  So, Please be selective in your trades and call it a day if you get some profits in your account.

 
 
 
 

Call us at 212-594-8900 if you would like to discuss any of our trading programs.
 
 
 
 
 

Technical Levels
 

50 Day          200 Day

S&P                                                                      954             877
DOW                                                                     8852            8318
NASDAQ                                                               1899           1654

Keystone’s Trades

 

Target (TGT)   long trade   – We are still sticking with TGT as a long candiadate.2nd quarter earnings fell 6.3 percent, but beat wall street expectations.   Since the earnings the stock has trended higher. The volume has been a bit light over the last few days, so we will see if the gains consolidate a bit at these levels and than look for an entry. We would look for an entry around $45.84

 

  Stop loss: $44.55  

 

initial Profit target: $ 47

 
Profit target: $50

  
 
Applied Materials (AMAT) short sale –  AMAT made 3 day lows yesterday and closed below the daily 20 EMA. It has had a strong rally since early July and it seems poised to test the bottom of the range around the $13 level

 

      profit target is $13

 

 

Stop loss: $ 13.75


 

 
Economic Numbers 
 

 

7:00 MBA Mortgage Applications
8:30 Durable Goods Orders
10:00 New Home Sales
10:30 EIA Petroleum Status
11:30 Fed’s Lockhart speaks on economy
 
 
Notable earnings before Wednesday’s open: DLTR, WSM
Notable earnings after Wednesday’s close: CWTR, GES, TIVO

 

 
 

 
 

 

 

Top News Stories
 

 

BoA settlement “at war with common sense.” The SEC and Bank of America (BAC), still waiting for court approval of a $33M settlement over Merrill Lynch bonus payments, will have to wait a little longer. Jed Rakoff, the federal judge presiding over the case, slammed the SEC yesterday, saying the decision to let individual executives off the hook is “at war with common sense.” The SEC said it will provide additional information requested by Rakoff by the new submission deadline of September 9.
 
Dueling deficit projections. Both the White House and the Congressional Budget Office updated their deficit projections yesterday. The White House expects the ten-year budget deficit to reach $9T, up from $7.1T, and said it will work to bring down the “higher than desirable” figure (though some note the ten-year projections are far less relevant, and less worrying, than the one-year projections). It expects a $1.58T deficit for the current fiscal year. The CBO forecasts a 2009 deficit of $1.6T and a ten-year deficit of $7.14T, arriving at the lower figure mostly by assuming tax cuts set to expire in 2011 will end as planned, despite the fact that they will likely be extended. (Read the CBO’s budget report (.pdf) or the White House report (.pdf))
 
Sony strikes back at Kindle. Gearing up for the holiday shopping season, Sony (SNE) unveiled a new e-book reader with wireless capabilities that could present the strongest competition to date for Amazon’s (AMZN) Kindle. At $399, the reader is $100 more than the entry-level Kindle but has a touch screen and, critically, allows readers to access books from a much broader range of sources, including temporary loans from libraries. The device will reach stores in December.
 
Confidence jumps. Conference Board’s Consumer Confidence Index jumped to 54.1 in August, markedly better than the consensus of 48 and higher than the 47.4 registered in July. Confidence “appears to be back on the mend,” Conference Board said of the rebound, though “spending is likely to remain constrained.” Investor confidence improved as well, with the State Street Index rising 3.5 points to 122.9 in August, the fifth straight monthly increase.
 
ING seeks final bank bids. ING Group (ING) is reportedly seeking final bids for its private banking operations, and hopes to get around $1.8B. ING received a €10B ($14.3B) bailout in October from the Netherlands, and is trying to raise up to €8B through asset sales to increase its capital cushion. Shares +3.3% premarket (7:00 ET).
 
Soaring stocks on no news. Fannie Mae (FNM) and Freddie Mac (FRE) continued to trade on extraordinary volume, making Fannie the top-traded stock yesterday and marking a 220% gain for Fannie in the last month. There was no news from either company, and analysts speculated the elevated volume was due to day-traders looking to make a profit. Vonage (VG) rocketed 165% in yesterday’s trading on volume of 33.2M shares compared to a daily average of 2.21M shares. The company announced last week that it plans to enter the mobile applications market, but once again, there were no recent news releases to warrant yesterday’s jump. FNM +5.4%, FRE +1.9%, VG +41.5% premarket (7:00 ET).
 
Toyota trims output. Toyota (TM) plans to halt at least one production line and cut capacity as part of a push to return to profitability amid an extended industry slump. Total cuts could reach 700,000 cars, or 7% of Toyota’s global capacity.
 
Chevron gas project get the go-ahead. Chevron (CVX) won Australian approval for a planned A$50B ($42B) liquefied natural gas project. The approval was one of the last steps needed to clear the way for the joint venture between Chevron, Royal Dutch Shell (RDS.A) and Exxon Mobil (XOM).
 
FAA investigates Southwest. Southwest Airlines (LUV) is under investigation by the Federal Aviation Administration for installing unauthorized parts on at least 42 of its jets and for failing to flag the problem. Though the parts don’t pose an “immediate safety issue,” some of the planes were temporarily grounded. The parts will be replaced in less than two weeks, but Southwest could still face civil penalties.
 
Snail-mail decline prompts USPS buyouts. The U.S. Postal Service, the nation’s second-largest employer, is offering buyouts to up to 30,000 employees in light of falling mail volume and a push for automation. The Postal Service hopes to cut costs by $6B in the current fiscal year.
 
Colonial goes bankrupt. As expected, Colonial BancGroup filed for bankruptcy protection yesterday, eleven days after regulators seized its banking operations and sold most of its assets to BB&T Corp. (BBT). The bankruptcy papers listed $45M in assets and $380M in debt.
 
Home prices continue to improve(.pdf). The S&P/Case-Shiller 20-City Home Price Index registered -15.44% in June vs. last year, better than the -16.4% consensus and last month’s 17.1% drop. This marks the fifth monthly improvement for the index, and the first quarter-over-quarter improvement in three years. The FHFA House Price I ndex (.pdf) rose 0.5% vs. +0.4% consensus, after rising 0.9% in May (revised). Nationwide, prices are down 5% from a year earlier and down 0.7% in Q2 from Q1.
 
Mortgage apps rise. Mortgage applications rose 7.5% from last week, MBA said. The average interest rate on 30-year fixed-rate mortgages rose to 5.24% from 5.15%.
 
Retail sales fall. Chain store sales fell 0.7% in the first three weeks of August, Redbook said, slightly worse than the -0.6% expected. According to ICSC, weekly sales fell 0.2% Y/Y but rose 0.6% from the previous week.
 
Richmond mfg holds steady. The Richmond Federal Reserve’s Manufacturing Index was unchanged, holding steady at July’s 14. Activity in the Central Atlantic region expanded for the fourth straight month, with shipments growing, new orders growing at a slight ly slower rate, and employment steadying. Manufacturers softened their outlook for the next six months.

 

 
 
 

 

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