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Börsipäev 25. november

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  • Rev Shark:

    Market Ready to Cool Off
    11/25/2005 8:54 AM EST
    Govern a great nation as you would cook a small fish. Do not overdo it.

    --Lao Tzu

    The day after Thanksgiving and the kickoff of the holiday shopping season make this a good time to reflect on overdoing it. It is human nature to always seek out too much of a good thing, and we see that play out over and over again the stock market. The market always ends up going further than is reasonable and then corrects the overindulgence in a rather painful manner.

    One great certainty about this market is that the current rally will eventually end and that a painful correction will take place. The one great question we need to focus on is "When?"

    The market continued to advance on Wednesday, but unlike the action in recent days, it stumbled into the close and ended up near the lows of the day. Moreover, small-caps were weak, with some of the stocks that have been recent leaders selling off aggressively.

    While still obviously in good shape technically, the market has been overdoing it -- it's extended and in need of a rest or a pullback. The action on Wednesday gave us a little taste of what a correction might feel like. The high-beta stocks that lead the market up will be the ones that get sold first and the hardest.

    It is particularly important now to watch how the market deals with its overindulgence of gains. If it pulls back on light volume and technology, retail and/or finance stocks that show relative strength we will be OK. But if volume increases, leadership shifts to oil and gold, and support levels start to fall, then we better be ready for a more painful bout of profit-taking. There are some good gains out there, and the rush to protect them can cause some quick spikes down if enough investors feel they may slip away.

    Trading closes today at 1 p.m. EST, and it's going to be choppy. Historically this tends to be a day with a positive trading bias, but the late action on Wednesday is cause for a little concern. There obviously was some profit-taking, and with the market still very extended, that could carry over into today. Regardless, we need to keep in mind that the thin trading today will allow some stocks to be pushed around randomly, so don't read too much into what happens today

    Early indications are quiet. Oil and gold are down a tad, and the news wires are dead.



  • See vist: 28-Oct-05 FTN Midwest Upgrade PIR from Sell to Neutral
  • Legg Mason downgrades Yahoo (YHOO 42.13) to Hold from Buy on valuation

    Deutsche Bank upgrades M-Systems (FLSH 29.70) to Buy from Hold and raises their tgt to $38, as they believe the prices of its fables/OEM operating strategy have only recently come together, just as industry changes favor this model

    Piper Jaffray raises their tgt on Apple (AAPL 69.34) to $79 from $68, as their checks over the holiday weekend indicate that iPod demand remains very strong, but iPod supply at non-Apple retailers is tight, given Apple is holding inventory for its own stores

    Morgan Stanley upgrades Deere (DE 67.68) to Overweight from Equal-Weight and raises their tgt to $80 from $75 based on their belief that negative sentiment for the ag cycle in general is troughing

    Deutsche Bank raises their Best Buy (BBY 50.63) tgt to $59 from $53 and raises their Circuit City (CC 21.38) tgt to $21 from $17, to reflect a more upbeat holiday outlook, which they say was confirmed in their recent channel checks

    Thomas Weisel downgrades Netflix (NFLX 29.25) to Peer Perform from Outperform primarily on valuation, as they believe the current stock price largely reflects the improved competitive environment and positive operating momentum at NFLX.

    Citigroup expects Intel (INTC 26.81) to increase rev guidance to $10.5-$10.7 bln (mid-point $10.6 bln) from $10.2-$10.8 bln (mid-point $10.5 bln) given generally solid PC demand data points for Oct/Nov and gross margin guidance expected to remain at already high 63%

    CSFB initiates Chicago Mercantile Exchange (CME 396.90) with a Neutral and $375 tgt as they believe foreign exchange market share growth and the electronic migration of options on futures products are CME's best near-term opportunities, but think shares are fairly valued

    The WSJ reports weekend sales were strong at discount stores and electronics retailers, but some still worry the holiday selling season could lose steam. Discount stores and electronics and home-furnishings retailers came out swinging. Customers filled shopping carts with laptop computers, flat-screen television sets, DVD players and other hardware purchased at deep discounts. Thanksgiving weekend sales in stores surged 22% from a year ago to about $27.9 billion, the National Retail Federation said yesterday, in what it called "blockbuster" results. The figure, based on a survey by the industry group of 4,209 consumers, includes some online sales. The average weekend shopper spent $302.81. At least one other assessment, however, was less rosy. An influential survey by ShopperTrak RCT Corp. of Chicago detected a 0.9% drop in sales on the Friday after Thanksgiving, compared with strong sales for the same day a year ago.


  • Before the open, Bernstein raised their ests for Nov comps, Q3, and FY06, saying Nov sales look to be significantly stronger than expected. Firm says their Nov survey of Pier 1 store managers was easily the best in seven months, and in sum their survey suggests that Nov comps will be the strongest at PIR in nearly two years. While firm is not yet ready to call a definitive turn in the business, they believe PIR is poised for significant near-term upside, driven by a stronger than expected Nov comps combined with heavy (10%+) short interest in the shares

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