Tag - Amd

Stocks jumped today after consecutively back to back good reports from Goldman Sachs (NYSE:GS) and Intel (Nasdaq:INTC) as well as a surprise from Gannett (NYSE:GCI) that it beat profit estimates by 9 cents, driving shares up 28%.

Good news kept flowing as investors were treated to revisions from the Federal Reserve Open Market Committee that the economy will shrink from 1% to 1.5% in 2009 as opposed to its earlier prognostication of 1.3% to 2%. The committee raised its inflation projection for 2010 to a range of 1.2% to 1.8%.

The Dow was up sharply by 256 points to close at 8,616, the highest its been in a month. The Nasdaq closed up 63 points to 1,863 and the S&P 500 roared to 933, up 27 points from yesterday's close at 906.

Small-cap stocks fared well with the Russell 2000 closing at 509, up 15 points. 
 

Today's volume leaders in the small-cap space include yesterday's leader, CIT Group (NYSE:CIT) with over 74 million shares traded, although trading was halted before the close on impending news concerning discussion with the federal government. Other small-cap volume leaders include Huntington Bancshares (Nasdaq:HBAN), and Sirius XM Radio (Nasdaq:SIRI).

Small-cap gainers were lead by Targacept (Nasdaq:TRGT) up 137% after news broke that its depression treatment drug candidate, currently called TC-5214, was able to significantly outperform a placebo drug in testing on patients with major depression disorders. The company announced that it expects to start late-stage trials of the drug in Q2 2010 and is in talks with several potential partners to help complete the drug's development.

Other small-cap gainers include a one-time holding with SmallCapInvestor PRO, Brigham Exploration (Nasdaq:BEXP) up 23%; Ferro Corporation (NYSE:FOE) up 35%; and beleaguered newspaper giant Gannett (NYSE:GCI) up 30%.

*****If you've ever wondered what it's like to be Warren Buffett and have more cash than you can spend or invest, just ask China. China just announced that it has over $2 trillion in foreign reserves.  

That is an unbelievable amount of cash to have accumulated. Bloomberg reports that China's reserves doubled in less than 3 years.  

This much money means two things: China can support it's GDP growth as long as it chooses to; and, China will continue to buy Treasuries. 
Sherman Chan, a Moody's economist in Australia said, "China has the strongest prospects out of all major economies, so it is not surprising that hot money is flowing back…China has certainly recovered from the downturn, and it is on a strong footing now." 

That's why we've been loading up on Chinese stocks in SmallCapInvestor Pro. It's not too late to profit from our top Chinese stocks. Click here for details.  

*****Yesterday morning it was Goldman Sachs (NYSE:GS). Then last night, it was Intel (Nasdaq:INTC). The world's biggest chip maker crushed earnings, but then did the unthinkable and offered a 3rd quarter revenue forecast that is as much as 14% higher than what analysts were expecting.  

Between Goldman and Intel, I'll take Intel. Intel is selling a product. And apparently, consumer demand for Intel's product is stronger than anyone imagined. Sure, much of the strength is coming from Asia (back to my China comment above), but, so what? Revenue is revenue. 

Other semiconductor companies were rallying in after hours, including Texas Instruments (NYSE:TXN) and Advanced Micro Devices (NYSE:AMD).   
As for Goldman, I didn't think that stock will stay over $150. Not that it matters. TradeMaster's Jason Cimpl has made money shorting Goldman. But as for me, Goldman is on the "Never Short" list along with Google (Nasdaq:GOOG) and Apple (Nasdaq:AAPL). They may have bad days, their stocks may get a beat-down once in a while, but these are solid companies with a penchant for finding profits no matter what the economy is doing. 

*****Government actions are currently filling in for an actual economy. That's how it is in our new "Managed America." Most expect the heavy hand of government to be temporary, and that Managed America can end sooner than later. We'll see… 

I expect the conditions of Managed America - high unemployment, sluggish growth, more regulations, higher taxes, and inflation to last years instead of months. And I've outlined my expectations for investing under these conditions in my new Special Issue of Top Stock Insights. The article is titled Managed America: The New Economic Reality. It's being released this morning. You can sign up for Top Stock Insights and get my blueprint for profiting in Managed America. Click here for your copy now.  

*****Now, as you know, it's Newsletter Advisors Wednesday. And by coincidence we're going to be speaking with Andy Obermueller about profiting from government-driven investing. It's essentially the flip side of the Managed America. Enjoy.

Best regards,

Ian Wyatt
Chief Investment Strategist
SmallCapInvestor.com

Newsletter Advisors Wednesday

This week's NewsletterAdvisors.com investment expert is Andy Obermueller, Chief Investment Strategist and editor for StreetAuthority's Government-Driven Opportunities.

Andy was a journalist before joining StreetAuthority. He worked for the business desks of the Philadelphia Inquirer and the Star-Ledger, New Jersey's largest paper, before going on to lead business coverage for a Texas daily. Andy briefly left the industry to get an inside look at corporate finance as a commercial lender for Wells Fargo's business banking group. He lives in Austin.

Andy, thanks for joining us today, now let's get started.   

Can you explain your investment process and criteria for investments?

I keep a very close watch on the executive branch of the government, including each cabinet department, as well as Congressional action. This gives me a pretty good sense of what Washington is up to. I study the legislation and regulatory proposals and track all the data I can -- there's a lot of it. I then look at which companies will be affected by government action and what that's likely to mean for them.

For instance, the FDA is part of the Department of Health and Human Services. I have a database of every drug in the approval process. For some giant drugmakers -- a Merck, say, or a Pfizer -- a new drug might not have much impact on the bottom line. But when the government approves a drug for a smaller drugmaker, the effect is huge. Those small drugmakers can be extremely lucrative investments -- all because of a government action.

What do you believe gives the government-driven investment style an edge over other investment styles?

Two words: Billion and trillion. These are the dollar terms of the government programs that the newsletter deals with. The U.S. federal government is gargantuan. It's the most powerful financial force on the planet. Every time a public dollar is spent, a private sector profit is realized. That has enormous implications, especially in light of the bailout, the stimulus bill and the administration's willingness to expand the role and reach of government.

Look, I'm passionate about this topic for one reason: it works. I've personally invested using a number of strategies over the years. Like you, I've tried various combinations of value, income and growth strategies. However, I'm not sure I've ever seen anything with as much potential as the government-driven stocks I'm finding.

What sectors do you think offer the most opportunities to profit from government action today?

I like energy and finance. Mr. Obama's move toward a green-collar economy, that is, merging the environmental movement with the gross domestic product, has far-reaching implications for every industry. And the banking system offers vast possibility: Though most large banks have entered a post-bailout phase, many small and midsize financial institutions are still struggling. They will come back -- they are as vital to the national economy as the large banks are too big to fail -- and their stock will follow suit. These two areas are outstanding for investors seeking large returns over the long term.

Ok, let's look at energy. Tell me about a government-driven stock you've dug up in this area.

Well, everyone knows that clean energy is a major part of the Obama agenda.  He hasn't even been in office a year yet and his green initiatives are already playing out.  On June 28th the House passed the "cap-and-trade" bill - which calls for a dramatic reduction in the amount of CO2 that industry can emit. This is historic.

The problem is, 35% of America's carbon emissions come from coal-fired power plants. Why? Because coal is both abundant and cheap in the U.S. -- we're sitting on enough of the stuff to power every home in America for the next 400 years. And at the same time, these coal plants are simply too expensive to replace. It would take $672 billion and several years.

But 'cap and trade' is a major thorn in the side of coal. The only solution I see is to find a way to burn coal without producing CO2. A handful of companies have actually figured out how to do this. Their method, called oxy-coal, is recognized as being perhaps the most promising environmentally-friendly technology on the planet. My favorite pick in this area is Praxair (NYSE:PX). It owns more than 200 patents related to oxy-coal.

What are your top three stock recommendations, and what attracts you to each?
I like Verenium Corporation (Nasdaq:VRNM). It's a small company that has engineered the leading biofuel process. It can make ethanol using cellulose, which is in all plant material found on earth. The government has put a ceiling on corn-based ethanol while at the same time mandating a +15,900% increase in the production of these "advanced biofuels" by 2022. What sets this company apart is that the government just gave it the nod to build the world's first commercial-scale cellulosic ethanol plant. There's no reason the explosive growth in this biofuel won't be mirrored by Verenium's stock.

Next I like Energy Recovery (Nasdaq:ERII). It makes a device that's critical to the efficiency of large desalinization plants, which are typically owned by governments. Without its equipment, desalinization is cost-prohibitive. ERII has 70% of the worldwide market, which is expected to double in the next ten years as water becomes ever scarcer. This issue is a lot closer to home than most people realize: Water supplies aren't just critical in the Middle East, they're increasingly important in places like California.

Finally, I like several players in the digital medical records space. The stimulus bill provides for $19 billion for these companies to upgrade the way the health-case system stores patient information. Storing these files digitally will improve physician access to information and not only improve the quality of care but reduce its cost, such as by eliminating unnecessary and potentially redundant medical tests. Among my recommendations here is Quadramed (NYSE:QDHC), which helped the Veterans Administration develop its VistA Program, the first and most successful large-scale electronic medical records system.  

Andy, thanks for the insights on how to profit from government spending and for the recommendations you're following. I'm sure readers will want to follow-up on those. This is certainly an exciting time to invest in companies making billions off the federal government.

Andy Obermueller is the Chief Investment Strategist for StreetAuthority's Government-Driven Investing newsletter. Andy invites you to follow his Government-Driven Investing blog, where he publishes his investing insights for free, at http://www.Government-DrivenInvesting.com

Small-cap stocks fell hard on the opening, pulled down by losses in overseas markets, and ongoing worries about corporate profits as we move through the heart of the earnings season. At 9:52 a.m. ET, the Russell 2000 (NYSE:IWM) down 7.95, or 1.80%, at 434.90, slipping to the lowest point since Dec. 5.

Stock markets in Europe and Asia were in retreat mode overnight, which only added to the selling bias early on in U.S. trading. Across the pond, U.K. data showed the biggest economic contraction since 1980 and the first recession since 1991. The European Stoxx 600 and the Australian equity index slumped to five-year lows, which heightens worries here that major U.S. indices may need a hard retest of those key November lows.

From a charting perspective, there is mild support today for the Russell near 424, but the key downside point is now near 416, which represents a double bottom on daily charts from early December, which was the first critical bounce pullback off the rally from the November lows. If the market starts to stabilize this afternoon, then resistance will be seen approaching 440, then up near 450.

After dreadful economic data on housing starts and unemployment claims Thursday morning, today’s focus reverts back to the rush of big earnings reports. While there have been occasional bright spots like Apple and Google, most of the news has been dreary. Even when a company like General Electric Co. (NYSE:GE) meets the estimate like they did this morning, investors are leery to embrace the news. Shortly after the open, GE was down 3.6%. And more often than not lately, the profit reports are decidedly bearish, such as with Harley Davidson Inc. (NYSE:HOG) or Advanced Micro Devices Inc. (NYSE:AMD) as the motorcycle maker and chipmaker . . .

Small-cap stocks slipped late Friday, as a bleak report on the housing sector, options expiration volatility and ongoing worries about the economy offset a spate of positive earnings in the tech arena. The Russell 2000 (NYSE:IWM) closed down 10.15, or 1.89%, at 526.43. For the week, the Russell was up 3.95, or 0.76%, the first weekly gain since mid-September.

The Russell also closed above opening levels on weekly charts for the first time since the market unraveled some four weeks ago. In fact, the last time that the Russell closed above opening levels on weekly charts it also was at the highest weekly close of the year, which seems a long way from the current 31% decline for 2008. The Dow finished out the week off 33% for the year, while the S&P 500 is down 36%.

The market had an uneven start to things Friday, as positive earnings from technology firms International Business Machines (NYSE:IBM), Advanced Micro Devices Inc. (NYSE:AMD) and Google Inc. (Nasdaq:GOOG) helped offset worries about options expirations through a month of undeniable losses (the bias for expirations typically lies in the market’s ongoing path).

The mood then turned decidedly bearish shortly before the open when housing starts data came in at the worst pace in 17 years, while single-family home sales slowed to a snail’s pace as well — the worst in 26 years. There really was no way to put a happy face on the housing starts data, and the market slumped 3% to the morning lows before finding a bid.

Still, there were some positive signs for the market to embrace today. For one, the inter-bank lending rate came down again overnight, suggesting that the lending freeze and mistrust among international banks was starting to thaw. Also, billionaire investor Warren Buffett told the world that he was busy moving money out of Treasury instruments and into the stock market — specifically for U.S. companies. Now, what impact the “Oracle of Omaha” really had on the market today is unknown and certainly open for debate, but the richest man in America has a smooth folksy . . .

Small-cap stocks remained lower into mid-session trading, but well off the morning lows as gains in the technology arena spilled over into the broad market. Concerns about the economy, a moribund housing market and expiration jitters kept a lid on some buying interest, but the market was trying to spark a rally heading toward the afternoon. At 12:30 p.m. ET, the Russell 2000 (NYSE:IWM) was down 4.02, or 0.75%, at 532.56. The tech-laden Nasdaq 100 was up 0.98%.

Tech shares received a boost from solid profit reports by bellwether International Business Machines (NYSE:IBM), Advanced Micro Devices Inc. (NYSE:AMD) and Google Inc. (Nasdaq:GOOG). Outside of the gold market, commodity stocks were doing well today, with coal, steel, gas utilities, oil exploration, gas storage and agriculture products all pacing upside sector activity. On the downside, anything tied to housing was struggling, including home furnishing stocks and homebuilder shares. Bank stocks and financial shares were also lagging the general market.

The slip in housing-related industries today is no surprise in the wake of a dreadful housing starts report this morning. Housing starts tumbled to an annual rate of 817,000 units, which is the slowest pace in 17 years. What’s more, the rate of starts for single-family homes was at the worst pace in 26 years. Many market watchers say that the current financial crisis started with the bubble being burst on the housing market, and today’s data suggest that the housing market still hasn’t turned the corner.

With everyone spooked by talk of a deep U.S. recession amid a global slowdown, it still takes a leap of faith to say that current stock market prices reflect a solid investment. Arguably the most prominent investor in America said he is making that leap, as Warren Buffett penned an article in the New York Times saying that he was moving money out of Treasury markets and into stocks of U.S. corporations. Buffett, the richest man in America, has quite a cult following and no doubt inspired legions of traders to take a stab at the market today — or at least soon, even if . . .

Small-cap stocks tumbled hard on the opening, pulled down by terrible housing starts data, fear of a recession and expiration worries, which countered positive earnings news and another dip in Libor rates overnight. At 9:57 a.m. ET, the Russell 2000 (NYSE:IWM) was off 11.14 or 2.08%, at 525.44. Small-caps were leading the way down in equities, which was a troubling signal ahead of the weekend.

The housing starts report came in woefully weak, down 6.3% with the annual rate at 817,000 units, which was well below the forecast of 875,000. The overall rate is the slowest pace since January 1991 and the rate on single-family home units was the lowest in more than 26 years.

The Michigan sentiment survey came in at 57.5, which was well below the forecast of 67.0 and off the September final reading of 70.3. The market had little immediate reaction to the report.

Today marks expirations for stock options, which could add some volatility into the mix. The market has obviously been trending lower for the month, which keeps the bias for expirations on the bearish side of the ledger.

In an op-ed piece in the New York Times, Warren Buffett, the “Oracle of Omaha” and the richest man in America, said that he was buying U.S. stocks. He wrote that the market will likely move higher “perhaps substantially so, well before either sentiment or the economy turns up.” In addition to his stunning success as an investor and buyer of companies, Buffett’s folksy personae has generated quite a following . . .

Small-cap stocks were expected to open lower, pulled down by sloppy housing data, recession fears, expiration jitters ahead of the weekend, and profit-taking from short-term players who caught the recovery move Thursday. Outside of housing starts, most of the “fresh” news in the air this morning was actually supportive, with Libor rates down overnight, earnings surprisingly solid and a bullish note from Warren Buffett. Despite those feel-good items, stock index futures were lower before the soft housing report, suggesting a Russell 2000 (NYSE:IWM) opening of about 1% lower, which would equate to an open near 531.

The housing starts figure came in at an annual rate of 817,000 units, which was well off the projection of 875,000. The immediate reaction to the housing starts data was that losses in stock index futures were extended, while gains in the Treasury market were heightened. The market still will get consumer sentiment data from the Michigan survey later this morning. There is some thought that expirations today will promote choppy, volatile activity.

Inter-bank lending rates (Libor) were lower overnight and have been retreating grudgingly this week, but they still remain lofty relative to typical spread levels.

Most of the big-cap earnings overnight were rosy, with IBM (NYSE:IBM), Google (Nasdaq:GOOG) and Advanced Micro Devices (NYSE:AMD) all beating the forecast on the tech front, while Honeywell topped the consensus on the . . .

The Russell 2000 (NYSE:IWM) is falling as investors fear that corporate earnings will weaken in the face of economic problems.

At 10:08 a.m. ET, the small-cap index was down 3.73 points, or 0.52%, to 708.95. The Dow Jones Industrial Average had declined 65.87 points, or 0.52%, to 12,546.56.

The bears are in control on news after the close on Monday that New York-based aluminum producer Alcoa Inc. (NYSE:AA) saw its first-quarter profit decline more than expected due to higher energy costs and lower metal prices.

“Upstream margins were squeezed by higher energy costs and a weaker U.S. dollar, but the global market remains tight and prices are near historic highs, primarily . . .

The Russell 2000 (NYSE: IWM) and the Dow fell today following news of weakness in the tech sector and unimpressive economic reports. The small-cap index fell 5.82 points, or 0.70%, to 826.15. The Dow Jones Industrial Average (INDU) lost 79.26 points, or 0.56%, to 13,968.05.

Small-cap futures were pointing slightly higher before the opening but the Russell 2000 stumbled out of the gate along with the other major U.S. indices and never ventured into positive territory.

Contributing to the bearish sentiment was Boise, Idaho-based semiconductor maker Micron Technology Inc. (NYSE: MU), which said it is projecting a third quarter net loss of $0.27 per share, compared with a previous guidance calling for a loss of $0.17 per share. Wall Street was expecting the company to post a loss of $0.22 per share.

The tech sector later received another hit when financial services giant Morgan Stanley (NYSE: MS) downgraded chipmakers Intel Corp. (Nasdaq: INTC) and Advanced Micro Devices Inc. (NYSE: AMD), saying that the two companies may be drawn into a price war.

In economic news, the Mortgage Bankers Association reported that its weekly index of mortgage loan application volume fell 2.7% for the seven days ended Sept. 28. However, the four week moving average, a more stable measure, rose 0.5%.

In a sign that the credit squeeze has eased somewhat, the Washington, D.C.-based trade organization also announced that the average contract interest rate for 30-year fixed-rate mortgages decreased to 6.32% from 6.38%.