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Morning Quickie $

Keystone Morning Quickie September 21st 2009

Market Commentary

The futures are down this morning but have regained some ground on the news that Dell computers will buy Perot systems for $3.9 billion and an upbeat report on the housing market from Lennar. Many analysts have come out and said the market is “overbought”. We have heard this before and we will hear it again, but until we see a change in order flow , we will have to continue to buy pullbacks and test the short side , only with caution and minimal expectations. 1025 is an important level in the $SPX to watch. If we trade below, we may some additional selling as nobody wants to see their profits of the last several months disappear.. Leading indicators at 10am EST should give us some direction.

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Technical Levels

50 Day 200 Day
S&P 997 891
DOW 9251 8413
NASDAQ 1985 1701

Keystone’s Trades

Morgan Stanley (MS) long trade

After naming a new CEO last weak Morgan Stanley has played catch up with the rest of the market. MS had been relatively weak to the market for a couple of weeks and we were riding the short side, but once they named a new CEO their was some clarity and a breathe of fresh air. We believe the stock will pull back a bit and we will be waiting patiently for an entry. We will look to enter the long at around the $30 level or will buy the breakout above $32.

Profit target: $16.75

stop loss: $13.90

CVS Caremark (CVS) short sale – CVS has trended higher since June, but it seems as though the trend has ended and a possibe reversal is in store. After hitting $37.78 earlier this month, the stock has seen some selling pressure. A big chunk of that selling was done on Friday with almost 2o million shares trading hands, a day when the rest of the market had light volume due to the Jewish holiday. We will look for continued selling pressure as the future are down a bit this morning. CvS broke a support level at around $36.22 on friday and we see this pulling back to at least $35

Longer term target:$34

Stop loss: $ 29

Economic Calendar

10:00 Conference Board’s Leading Indicators
10:00 FHFA Housing Price Index
12:00 HUD Secretary Shaun Donovan speaks on Helping Homeowners Avoid Foreclosure

Notable earnings before Monday’s open: LEN

Top News Stories

Dell buys Perot for $3.9B. Dell (DELL) said early Monday it will acquire Perot Systems (PER) for $3.9B, or $30/share, creating a “comprehensive, customer-focused IT-solutions company.” Perot will become Dell’s services unit, to be headed by Perot CEO Peter Altabef; Dell directors will ‘consider’ chairman Ross Perot Jr. for appointment to its board. Over the past year, the two have produced a combined $16B in enterprise-hardware and IT-services revenue, with half of that coming from enhanced services and support. Shares of Perot closed at $17.91 on Friday.

Building a more robust global economy. Ahead of this week’s Pittsburgh summit, G-20 leaders are scrambling to finalize a framework that will promote stable global growth in part by correcting imbalances in the U.S. and China. The U.S.-led proposal, known as the Framework for Sustainable and Balanced Growth, involves broad changes to economic policies in the U.S., Asia, and Europe, including the U.S. saving more and reducing its deficit, and China relying less on exports. Potential sticking points include China’s reluctance to participate, how to enforce any commitments, and a divergence of opinions on how to estimate future world growth.

BofA forced to spill the beans. A House panel has told Bank of America (BAC) it cannot use attorney-client privilege to keep details of its purchase of Merrill Lynch out of Congress. Panel chairman Edolphus Towns wants Bank of America to reveal information it’s kept secret for months, which could impact a range of ongoing probes into the merger, including one by the SEC, another by NY AG Andrew Cuomo and a third by the DoJ. Towns has given BofA until noon today to provide answers and documentation.

Fed rejects public review. Sources say the Fed has rejected a request by Treasury Secretary Tim Geithner for a public review of its structure and governance. Fed officials say the review – which would have examined the Fed’s ability to accomplish its existing and proposed functions, and the role of regional Fed banks – could have threatened its independence.

FCC to push for open internet. The FCC will today recommend broad new rules that aim to force internet carriers to treat all traffic equally. Currently, some providers block and/or slow the transfer of large files such as videos and music, which they say hogs bandwidth. Sources say FCC chief Julius Genachowski will also push to expand net equality to wireless internet access, a concept fiercely opposed by wireless carriers like AT&T (T). If implemented, net neutrality could drastically impact how ISPs and wireless carriers charge for access, and could encourage internet companies to launch new data-intensive services.

RBS weighs huge share sale. Royal Bank of Scotland (RBS) is in talks with shareholders to gauge the appetite for a £5B ($8.1B) share issue in an attempt to stop the British government’s stake in the bank from creeping higher. The U.K.’s stake in RBS is set to reach more than 80% under the terms of its toxic asset insurance program. Last June, RBS raised £12.3B in a disastrous takeover of ABN Amro.

Ka-boom! Walt Disney’s (DIS) $4B acquisition of Marvel Entertainment (MVL) hit a snag Sunday after heirs to revered comic book artist Jack Kirby, creator of many of Marvel’s mainstays, filed claims challenging Marvel’s long-term rights to some of its superheros. In a statement, Disney said the claims are an attempt to terminate Marvel’s rights 7-10 years from now, and “were fully considered in the acquisition.”

Santander to raise $7.35B in Brazilian IPO. Santander (STD) plans to raise almost €5B ($7.35B) through the previously announced IPO of 16% of its Brazilian unit. The target is well above the €2.5B analysts expected. The bulk of the proceeds will be spent opening another 600 branches in Brazil.

Heading off say on pay. A group of companies including AT&T (T), Cisco (CSCO), H-P (HPQ) and Tyco (TYC) will announce today a joint effort to voluntarily change their pay practices, a move aimed at heading off potentially more onerous restrictions out of Washington. The group, led by the Conference Board, will endorse principles that tie incentives to long-term success rather than short-term gains, and advocates doing away with ‘overly generous’ golden parachutes, but stops short of signing off on ‘say on pay’ legislation that would give shareholders a vote on executive pay.

The return of risk appetite. Global and emerging-markets bond funds, and global stock funds and sector funds, saw the highest inflows this year in the latest week, while money-market funds had their second-biggest weekly outflows. Risk appetite is clearly on the rise, although the move remains cautious, with bond funds growing at a faster clip than stock funds.

One more chance. The IRS will announce today it’s extending its amnesty program, giving wealthy Americans with secret offshore accounts another 22 days, until Oct. 15, to come forward. The program, which began in March as a way of luring UBS (UBS) clients of out of the woodwork, has attracted 3,000 taxpayers so far, compared with just 80 last year

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