Börsipäev 20. detsember
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UBS downgrades Reynolds American (RAI 96.95) to Neutral from Buy on valuation
Prudential initiates Legg Mason (LM 120.97) with an Underweight and $115 tgt, as they believe the market doesn't fully appreciate the risks associated with the Citigroup and Permal acquisitions (funds of hedge funds)
JMP Securities initiates SanDisk (SNDK 59.72) with an Underperform and $38 tgt, as they believe SNDK is ultimately a cyclical memory semiconductor company
JMP Securities initiates SNDK with a Market Underperform and $38 tgt based on valuation their belief that SNDK is ultimately a cyclical memory semiconductor co.. The firm lists the following reasons: 1) the co, trading at 27.8x CY06 earnings, is overvalued for a cyclical memory company; 2) growing competition from large players such as Samsung, Intel, Micron, ST Micro, Spansion, and emerging China/Taiwan players could commoditize the NAND flash market; 3) historically, the vertical integration model practiced by SanDisk of making, branding, and selling chips, memory modules, and systems such as MP3 music players has never worked within the semiconductor industry; 4) the firm expects a pause in NAND flash memory demand in 1H06 as the industry makes a transition from the relatively mature digital camera and MP3 music market to music equipped cell phonesJMP Securities initiates Portal Player (PLAY 26.66) with an Outperform and $32 tgt, as they believe the stock is attractively valued relative to its secular growth rate of 20% driven by the iPod market
Jefferies initiates Cypress Semi (CY 14.22) with a Hold and $15 tgt, recommending investors to stay on the sidelines until either CY is able to demonstrate cost savings, or a rise in the value of its SunPower holdings creates a favorable arbitrage opportunity
First Albany raises their Apple (AAPL) tgt to $80 from $73
Soleil downgrades BellSouth (BLS 27.85) to Equal Weight from Overweight, saying with the recent events in telecom, the big bounce has taken away much of the upside in the stock
JMP initiates Broadcom (BRCM 47.01) with a Mkt Perform; While the co's growth has accelerated in recent quarters, firm believes that the mkt fully recognizes its near-term growth potential
CSFB raises their Red Hat (RHAT 26.03) to $31 from $24 as they are comfortable that RHAT can meet their forecasts and believe that the shares are attractive at current levels for growth oriented investors
Lehman upgrades EDS (EDS 23.48) to Overweight from Equal-Weight and raises their tgt to $30 from $21, citing the number of measurable improvements the new mgmt team has put in place as well as checks indicating that tech trends in the U.S. are favorable
Majandusstatistika:
PPI -0.7% vs -0.5% consensus
Housing Starts 2123K vs 2020K consensus
Building Permits 2155K vs 2092K consensus
Core PPI +0.1% vs +0.2% consensus
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Rev Shark:
Wait for a Higher High for Proof of Rally Life
12/20/2005 9:17 AM ESTAnd in the end, it's not the years in your life that count. It's the life in your years.
-- Abraham Lincoln
Good morning. With eight trading days left in 2005, the question on the mind of traders is whether there is any life left in this rally that started in mid-October, or are investors ready to shut it down and call it a year? There are plenty of folks who have had lackluster performance this year and would like to push things higher, but many are becoming discouraged by the poor action the last few day. The irony is that the more discouraged investors are now, the better the chances of some good upside action before the end of the year.
Yesterday we had a particularly sour mood in the air. The indices pulled back sharply on lighter volume and closed near the lows. Breadth was poor and the brunt of the selling took place in the Nasdaq and small-caps. The Nasdaq took out some support to the downside at 2230, which probably pushed some market participants out of the market for the remainder of the year.
However, we aren't in that bad of shape overall. The Nasdaq has major support in the 2220 area and although the Russell 2000 Small-Cap Index looks weak, it held support in the 671 area. The S&P moved lower, but still remains in decent shape, with support in the 1250.
The sort of selling we have seen over the last several days is always painful, but it is also necessary for a healthy market. The longer a market goes without a correction, the worse the correction typically is. The market went almost straight up from mid-October, and if you step back and look at the big picture, the correction thus far is really quite mild. Although it hurts to give back gains, we have to make sure we don't lose touch with the context in which this selling took place.
I suspect a lot of folks have painful memories of the way the market fell apart at the very beginning of the year. Many, including me, were looking for positive seasonality to kick off in 2005, but instead, the market fell off a cliff and caught many folks leaning the wrong way. A lot of folks remember this, and are probably feeling skittish about counting on end-of-the-year seasonality. That may actually be a positive rather than a negative, if expectations for positive seasonality are tempered.
The market is now starting to feel a bit oversold and there is even the slight aroma of panic wafting in the air. Even mild panic is a good remedy for a weak market; once everyone who wants to sell has done so, the downside pressure is relieved and the buyers can gain some traction again. If the market can stabilize here, we are in good shape for a decent bounce.
However, it is important not to be overly anticipator about a Santa Claus rally. Although I believe there is a good chance it will occur, we need to stay in somewhat defensive posture until we see better action. We need strong positive breadth and volume, and leadership from growth stocks such as biotechs, semiconductors and financials.
With the market oversold, and support not too far away, the market could perk up at any time, especially in thin holiday and NYC transit strike trade. Don't be too quick to embrace early strength. The safe approach is to wait for a higher high or so and watch to see if opening levels are exceeded. This is an indication that momentum is building for a tradable rally.
We have good housing and PPI reports this morning. Overseas markets were mostly quiet and gold and oil are trading up.
My thanks to Cody for doing a nice job of filling in.
