Tag -  HLCS 

Stocks mostly fell today as the market rally is showing signs of losing steam. Indeed investors seemed cautious on back-to-back bad news from consumer confidence falling to 65.7 from 66.0 in July and initial unemployment claims for last week were 570,000.

The Dow ended the day at 9,544, down 36 points; the Nasdaq finished at 2,029, up just over a point; and the S&P 500 stood at 1,029, down 2 points.

Advances and declines were about evenly matched on the NYSE and Amex while declines lead advances 5 to 3 on the Nasdaq.

The Russell 2000, a composite index of the 2,000 leading small-cap stocks as defined by Russell Investments, closed at 58X, down 2 points.

Small-cap leaders trading over 1 million shares include Helios BioSciences (Nasdaq:HLCS), up 20%; Echelon Corporation (Nasdaq:ELON), down 22%; Curis (Nasdaq:CRIS), up 20%; and Glu Mobile (Nasdaq:GLUU), up 20%

*****The New York Times article is titled "AIG Rises, and Many Ask Why". After all, the company is 80% owned by the government, owes around $180 billion, is cash-flow negative and would be in even worse shape were it not for accounting changes that help it keep toxic mortgage assets unfairly valued.

And to top it off, the company is actively seeking buyers for its best business units, which will impair its ability to earn its way back to health.

Why would anyone buy this stock? Simple. This is the Cash for Clunker Stock Rally. The worse your balance sheet is, the higher your stock price will go. AIG's stock price has quadrupled in a month. Indeed, yesterday it was the most active stock with 149 million shares traded; six times more than the next highest traded stocks on the NYSE (those would be HIG and NOK at about 23.5 million each). And AIG's volume yesterday was nearly five times its 50-day average volume. That's simply amazing.

But it goes to show you with cheap money and a government guarantee that there is no risk in the financial markets.

*****I can only imagine how Mr. Otelli and crew feel over at Intel (Nasdaq:INTC). Intel is very well run business. So far as I know, it never invested in mortgage back securities and didn't engage in any activity that could be considered a threat to the American economy.

In fact, one could argue the exact opposite - that the productivity gains America has enjoyed from computing power are a direct result of Intel's innovation. Of course, that didn't prevent Intel's stock from getting cut in half after the actions of AIG and its ilk brought the U.S. economy to its knees.

Today, Intel raised its revenue estimates for the current quarter, a sign that the company is weathering the difficult economic environment admirably. Investors have rewarded the company with a 5% move higher for the stock.

Of course, AIG was up 13% in the early going this morning.

Clearly, it's better to be a complete disaster of a company these days.

*****Yesterday, the Dow Industrials were off nearly 100 points in the early going, as initial jobless came in worse than expected and second quarter GDP couldn't be massaged to show anything better than the 1% decline economists were expecting.

By the end of the day, the Dow was up 40 points. "Buy the dips" is the mantra for the Cash for Clunker Stock Rally. 

I'm starting to feel a little sorry for the bears, who think every red tick is the start of the massive correction they expect any day now. But with money as cheap as it is, and a government hell-bent on supporting asset prices, it's hard to imagine a significant correction without some kind of shock to the system.

Of course, the Cash for Clunker Stock Rally will end at some point. But it would not be wise to bet on when. After all, a market can remain irrational longer than you (or I) can remain solvent.

*****Now, please enjoy TradeMaster Daily Stock Alerts Jason Cimpl and his weekly video chart analysis. It's online now and Jason once again shares with you his synopsis of this week's trading activity and gives you his prognostication for next week's market movements. CLICK HERE for his video.

Until tomorrow,

Ian Wyatt
Editor
Small Cap Investor Daily

P.S. - I received even more emails overnight about my Recovery Portfolio service. Seems like a lot of investors are interested but just keep losing the link. That's fine. Here's the link to my Recovery Portfolio service and how I'm turning $100,000 to $250,000 in the next 4 years. CLICK HERE. I also explain why its $100,000 and not something absurd like $1,000,000 and give you an opportunity to get my new report on 5 outstanding funds that Financial Advisors aren't sharing with their clients (shame on them, but good for you). CLICK HERE for Recovery Portfolio.

P.P.S. My book The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks is coming out on September 14 - visit www.smallcapbook.com to learn more. You can also follow me on http://twitter.com/ianwyatt 

Ian Wyatt is the Chief Investment Strategist of SmallCapInvestor.com and author of The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks. You can learn more about his book and receive small-cap stock picks at www.smallcapbook.com.

Today's session is a reversal from the first two days of the week with stocks on the major indices all trading up ahead of the conclusion of the Federal Reserve's meeting today. Analysts and traders expect the Fed to hold rates near zero. Investors are taking advantage of the buying opportunity created by two consecutive down days under the premise that the rally that started on July 12th will continue. Since that time Dow is up nearly 14%.

As of file time, 12:15 P.M. eastern, the Dow is trading at 9,364, up 1.33%; the Nasdaq is at 2,003, up 1.67%; and the S&P 500 is holding over 1,000 at 1,007, representing a 1.29% gain for the day.

The Russell 2000, the leading index reflecting the health of small-cap stocks, is up 2.07% and holding 574.

Small-cap leaders for today include RAIT Financial Trust (NYSE:RAS) up 30%; Wuxi Pharmaceutical (NYSE:WX) up 24%; and Helicos BioSciences Corporation (Nasdaq:HLCS) up 19%. Also up big is a former SmallCapInvestor PRO holding, Brigham Exploration (Nasdaq:BEXP) up 20%. 

The next 12 months look great. Economists are now raising their GDP expectations for the U.S. economy to a minimum of 2% growth for the next four quarters. That's a significant improvement to what they were expecting just a few weeks ago. (One thing to keep in mind however, is that this is moving target, one week they're doom and gloom and the next it's all sunshine.)

The reason should be clear - cheap money and stimulus spending is kick starting both lending and spending, albeit from low levels.

*****The FOMC concludes its latest meeting today and everyone expects interest rates to remain where they are. The stage is being set for inflation to start working prices higher.

And that means oil prices, and prices for other commodities, will start moving even higher. In fact, as I write this oil is over $71 after gapping down yesterday to as low as $69.

Oil has been trading around $70 for a few months, even with growth expectations very low. Now that expectations are rising, we should see oil prices start to move higher, too. This is particularly true as emerging economies begin soaking up supply.

If you haven't started buying commodity stocks to prepare for higher inflation, it's not too late. My Global Commodity Investing advisory service can get you started with profitable recommendations of top commodity stocks from around the world. Click here to find out which stocks will protect and grow your wealth as inflation picks up.

*****Once again, I'd like to thank Daily Profit readers for your t-shirt slogan ideas. As you know, my first book, The Small Cap Investor: Secrets to Winning Big with Small Cap Stocks, is released on September 14. And I'm holding a t-shirt slogan contest on the SmallCapInvestor Facebook page to help kick things off. The winning slogan gets a full year subscription to ALL my advisory services. The voting starts today, click here to cast your vote right now.

As they say, vote early and vote often. Thanks!

Best Regards,

Ian Wyatt
Editor
SCI Daily

DemandTec, Inc. (Nasdaq:DMAN), Orthofix International NV (Nasdaq:OFIX) and AZZ Inc. (NYSE:AZZ) are among the biggest percentage losers in Friday's trading among companies with market capitalizations under $750 million.

Helicos BioSciences Corp. (Nasdaq:HLCS), Blue Coat Systems, Inc. (Nasdaq:BCSI) and Nexity Financial Corp. (Nasdaq:NXTY) are also among the top small-cap percentage losers.

Here are Friday's biggest percentage losers among small caps:

The Russell 2000 (NYSE:IWM) posted a modest gain despite news of bearish comments from U.S. Federal Reserve chairman Ben Bernanke. The small-cap index rose 1.62 points, or 0.23%, to 712.27. The Dow Jones Industrial Average fell 45.44 points, or 0.36%, to 12,608.92.

On a year-to-date basis, the Russell 2000 is down 7.02%, while the Dow has shed 4.94% and the S&P 500 has retreated 6.87%.

“It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke told the congressional Joint Economic Committee after the start of trading.

The comment was made public before the start of the testimony, resulting in a bearish opening.

The assessment contradicts a report by payroll company Automatic Data Processing, Inc. (NYSE:ADP) before the start of trading showing . . .

Beasley Broadcast Group, Inc. (Nasdaq:BBGI), Helicos BioSciences Corp. (Nasdaq:HLCS) and CSK Auto Corp. (NYSE:CAO) are among the biggest percentage gainers in Tuesday's trading among companies with market capitalizations under $750 million.

EnteroMedics Inc. (Nasdaq:ETRM), Crawford & Company (NYSE:CRD.B) and Idenix Pharmaceuticals, Inc. (Nasdaq:IDIX) are also among the top small-cap percentage gainers.

Here are Tuesday's biggest percentage gainers:

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are posting gains on news of a possible interest rate cut. At 2:46 p.m. ET, the small-cap index had advanced 7.49 points, or 1.05%, to 719.61. The Dow Jones Industrial Average (INDU) was up 135.59 points, or 1.06%, to 12,870.90.

“In light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary,” U.S. Federal Reserve chairman Ben Bernanke told an audience at the Women in Housing and Finance and Exchequer Club this afternoon.

Those comments sent stocks rising and fueled speculation that the Fed is considering lowering the federal funds rate. But the bullish mood did not last and within an hour small-cap stocks were back down to their starting level.

Blame the bearish mood on the uncertain economic environment.

The day began with news from U.S. retailers that December sales were weak, suggesting that consumer spending is slowing. That would be a negative development, since consumption is about 70% of gross domestic product.

Economic growth is already being weighed down by the slump in the housing sector and higher energy costs.

A strong rally in the last hour of trading lifted the Russell 2000 (NYSE: IWM) and the other major U.S. indices in the green. The small-cap index rose 7.26 points, or 1.03%, to 712.12. The Dow Jones Industrial Average (INDU) added 146.24 points, or 1.16%, to 12,735.31.

On a year-to-date basis, the Russell 2000 has lost 7.04%, while the Dow is down 3.99% and the S&P 500 has declined 4.03%.

An uneven day of trading ended on a bullish note as investors went hunting for bargains late in the session.

Small-cap stocks had no clear direction much of the time, as the bears and bulls struggled and sought to gain a perspective on the state of the U.S. economy. The Russell 2000 spent the early morning near the flat line but slipped and fell at about 11:30 a.m. ET. It bottomed out shortly after 2 p.m. ET as investors reacted to news that Goldman Sachs Group Inc. (NYSE: GS) is predicting a recession.

The New York-based investment bank wrote in a note to its clients that it expects gross domestic product to decline in the second and third quarters, prompting the Fed to keep lowering the federal funds rate until it hits 2.5%.

The federal funds rate, the rate at which commercial banks make overnight loans to each other, currently stands at 4.25%.

The Russell 2000 (NYSE: IWM) futures are pointing south and the small-cap index will most likely fall on news of poor corporate earnings and downgrades.

Investment bank Goldman Sachs Group, Inc. (NYSE: GS) downgraded financial services giant Citigroup Inc. (NYSE: C) to “sell” from “neutral” on fears that it could suffer up to $15 billion in write-downs on collateralized debt obligations over the next two quarters.

The financial services sector has been hit hard by fallout from the meltdown in the subprime mortgage sector, which began after the U.S. housing prices started to stagnate in the second quarter of 2006.

The troubled housing sector is one reason why Lowe’s Companies, Inc. (NYSE: LOW), the nation’s second largest home improvement retailer, announced today that its third-quarter profit fell 10.2%. The Mooresville, N.C.-based company also lowered its fourth-quarter and full-year outlook.

No major economic releases are coming out today.

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Helicos BioSciences Corp. (HLCS), up 10%.
• Micrel, Inc. (MCRL), up 9% on news it has signed a contract to supply commercial solar cells.
• BIDZ.com Inc. (BIDZ), up 6%.

Biggest percentage losers:

• Sify Technologies Ltd. (SIFY), down 15%.
• China Sunergy Co. Ltd. (CSUN) down 5% on news of a wider third-quarter loss.
• AuthenTec Inc. (AUTH) down 4%.

Slade's Ferry Bancorp (Nasdaq: SFBC), Metabolix, Inc. (Nasdaq: MBLX) and Salary.com, Inc. (Nasdaq: SLRY) are among the biggest percentage gainers in Friday's trading among companies with market capitalizations under $750 million.

Here are today's biggest percentage gainers:

The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are posting solid gains in mid-session trading, propelled by news of strong September retail sales. At 1:21 p.m. ET, the small-cap index was up 4.97 points, or 0.60%, to 839.95. The Dow had advanced 50.81 points, or 0.36%, to 14,065.93.

Stocks are climbing following news that retail sales for September increased 0.6% to $380.2 billion, according to the U.S. Census Bureau. That’s more than the projected 0.2% and a sign that consumer spending remains vibrant despite the ongoing slump in the housing sector.

Consumption comprises about 70% of gross domestic product.

Retail sales excluding motor vehicles and parts also outpaced analysts’ projections, rising 0.4%. Wall Street was expecting an increase of 0.3%.

However, a measure of consumer sentiment for October unexpectedly fell, indicating that consumers are cautious about their future spending.

The Reuters/University of Michigan consumer sentiment index declined to a reading of 82 from September’s level of 83.4. Economists were expecting to see a reading of 84.

But that was not enough to rain on the bulls’ parade. Wall Street is seeing nothing but green, with small caps among the best performers so far.

An abrupt late-session reversal pushed down the Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU), wiping out strong gains that came despite weak retail sales. The small-cap index lost 10.21 points, or 1.21%, to 834.98. The Dow tumbled 63.57 points, or 0.45%, to 14,015.12.

Small caps were on track for a strong close and the Dow was in record territory until about 2 p.m. ET, when an abrupt turnout erased all gains and resulted in steep losses.

There appear to be a number of factors that combined to push equities off the cliff.

Financial services giant JPMorgan Chase & Co. (NYSE: JPM) announced staff reductions due to the lower volume of leveraged finance and structured credit, while also lowering its sales estimate for Chinese search engine Baidu—a move that resulted in a decline of major U.S. tech stocks.

Meanwhile, Countrywide Financial Corp. (NYSE: CFC) announced that September mortgage lending tumbled a stunning 44.3% from a year earlier due to tighter lending standards and the ongoing housing slump.

Trading got off to a bullish start following news that Wal-Mart Stores Inc. (NYSE: WMT) raised its third-quarter profit outlook.

Positive news from the world’s largest retailer overshadowed generally weak same-store results for September. Retailers blamed the warm weather, which made it difficult to sell cold-weather items.