Tag - Etfc

Yesterday rare earth stocks sold off quickly. The timing was perfect as I wrote a bullish article on this sector, suggesting that these stocks had further to run. For those who are invested in this space, or are looking to add exposure, days like yesterday when many of these stocks are off 10 percent, or more, are a great time to add exposure.

Today was options expiration and it made for dull trading. The S&P 500 finished up 2.74 at 921, the Dow Industrials finished down 16.85 at 8,538XXX. The Nasdaq was the strong index, it finished the day up 19.75 at 1,827 on a Goldman Sachs (NYSE:GS) upgrade of Microsoft (Nasdaq:MSFT). 

Oil prices fell below $70. But even better, gasoline futures dropped below $2 after inventory data showed a huge surplus. That suggests prices at the pump may start to head lower.

Large cap oil stocks like Exxon-Mobil (NYSE:XOM) and Chevron (NYSE:CVX) were down in the 1% range, but several micro-cap oil & gas exploration stocks were up. Brigham Exploration (Nasdaq:BEXP) was up 4.36%, Kodiak Oil (AMEX:KOG) was up 7% and Cano Petroleum (AMEX:CFW) was up 3.5%.

The Russell 2000 finished much like its large-cap brethren, with a minimal 3.16 point gain.

Top small cap winners for the day included TerreStar (Nasdaq:TSTR) up 30%, Sealy (NYSE:ZZ) up 20.5% and Smith and Wesson (Nasdaq:SWHC) up 21.9%.

Small cap decliners of note include A-Power Energy (Nasdaq:APWR) down 12%, E*Trade (Nasdaq:ETFC) down 11% and Cost Plus (Nasdaq:CPWM) down 13%.

So now the government is actually going to subsidize car sales with up to $4,500 in incentives for car buyers who get rid of cars that get 18 mpg or less.  

I understand that the auto industry is hurting. And I also get that more efficient cars help reduce our dependence on foreign oil. But is it appropriate to use tax payer dollars to fund auto purchases?  

Perhaps if we were talking about something that is a necessity, like farming, subsidies make some sense. After all, we need farmers. I think we have to consider cars a luxury, or at least a discretionary purchase.  

Not only that, but a car subsidy can only create temporary demand. And given the precipitous drop in car sales (10 million vehicles will be sold this year as opposed to 16 million in 2007), it's highly unlikely any momentum can be created. Not with unemployment on the rise. And not with home values still falling.  

*****Increasing demand based on stimulus spending is a temporary fix. The government is just buying time hoping that the economy will recover. But many of the signs of recovery are based in stimulus spending.  

*****Analysts are now acknowledging that oil has been rallying on a falling dollar and on expectations of price inflation. Of course, the potential for price inflation is, once again, directly related to government stimulus spending.  

The massive amounts of Treasury bonds that have been and will be sold are boosting interest rates and driving the value of the U.S. dollar down. So any asset priced in dollars is rising in price. Like oil. Mind you, that doesn't mean its value is rising, just its price.
 
At some point, higher oil prices will affect the prices of other goods. But as I've noted before, it's likely to be a while before producers are able to raise prices in the current economic environment. Remember, it wasn't until 2007 that inflation really started to become an issue.  

*****Another catalyst for commodity prices in general is supply. Global demand is down, credit has been difficult to get, and miners and producers have not been investing in increasing supply.  

That sets the stage for supply/demand imbalances when economic growth returns.  
We'll be discussing these topics and our bullish outlook for commodity stocks in next Wednesday's Video Conference. It's titled Inflation Busters: Discover the Stocks to Grow and Protect Your Wealth and will air on Wednesday, June 24 at 6 pm. It's free to attend, you can sign up HERE.  

*****Jason Cimpl, technical analyst at TradeMaster Daily Stock Alerts, has his latest video chart analysis ready for you. Last Friday, Jason absolutely nailed this week's trading. I hope you find this week's analysis just as useful. Here's the LINK.  

The Russell 2000 (NYSE: IWM) has picked up speed and is outpacing the other major U.S. indices this afternoon. At 2:06 p.m. ET, the small-cap index had advanced 1.86 points, or 0.24%, to 774.24. The Dow Jones Industrial Average (INDU) was up 32.44 points, or 0.25%, to 13,075.18.

Investors are modestly bullish following news that banking giants Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC) and JPMorgan Chase & Co. (NYSE: JPM) have agreed to create a structured fund of at least $75 billion to help revive the short-term debt market, according to a report by The New York Times after the start of trading. The fund could be operational within a couple of weeks.

That news helped lift financial shares and send big- and small-cap stocks on an upward trajectory.

Otherwise, the day began quietly, as the bond market is closed and no major economic releases are scheduled as Americans honor Veterans Day.

International Business Machines Corp. (NYSE: IBM) made the headlines on news that it will buy business intelligence software maker Cognos Inc. (TSE: CSN) for $5 billion, while shares of online broker E*Trade Financial Corp. (Nasdaq: ETFC) are in dire straits on news of an analyst downgrade and the possibility of bankruptcy.

The Russell 2000 (NYSE: IWM) is gaining ground after opening little changed this morning as Veterans Day leaves investors with little news to analyze.

At 10:02 a.m. ET, the small-cap index had added 1.93 points, or 0.25%, to 774.31. The Dow Jones Industrial Average (INDU) was up 22.60 points, or 0.17%, to 13,065.34.

Corporate deal-making is coming into focus this morning, following an announcement by International Business Machines Corp. (NYSE: IBM) that it will buy Cognos Inc. (TSE: CSN), a Canadian maker of business intelligence software, for $5 billion.

The offer was expected, as Armonk, N.Y.-based IBM’s rivals had previously also made purchases of intelligence software companies.

Meanwhile, online broker E*Trade Financial Corp. (Nasdaq: ETFC) was downgraded by Citigroup Inc. (NYSE: C) and the possibility of bankruptcy was raised.

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

Biggest percentage gainers:

• Globecomm Systems Inc. (GCOM), up 15% on news of a contract with the U.S. Army.
• Dice Holdings Inc. (DHX), up 11%.
• ChemGenex Pharmaceuticals Ltd. (CXSP), up 10%.

Biggest percentage losers:

• Alto Palermo S.A. (APSA), down 24%.
• Basin Water Inc. (BWTR), down 13%.
• ExlService Holdings Inc. (EXLS) down 9%.

The Russell 2000 (NYSE: IWM) futures are a whisker above the index’s closing level on Friday and small-cap stocks are set for a flat holiday opening.

News of corporate deal-making is grabbing the headlines this morning, as International Business Machines Corp. (NYSE: IBM) announced that it will buy Cognos Inc. (TSE: CSN), a maker of business intelligence software, for $5 billion.

Meanwhile, online broker E*Trade Financial Corp. (Nasdaq: ETFC) was downgraded by Citigroup Inc. (NYSE: C) and the possibility of bankruptcy was raised.

No major economic indicators are scheduled for release today and trading volume promises to be light as Americans observe Veterans Day.

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:

• Shengdatech Inc. (SDTH), up 9% on news of a rise in third-quarter profit.
• VASCO Data Security International Inc. (VDSI), up 8% on news it is expanding its product offerings.
• Internet Initiative Japan Inc. (IIJI), up 7% on news of a rise in fiscal second-quarter profit.

Biggest percentage losers:

• Perceptron Inc. (PRCP), down 42%.
• General Communication Inc. (GNCMA) down 8%.
• GPC Biotech AG (GPCB) down 8%.

The Russell 2000 (NYSE: IWM) and the Dow gained on news of mergers and acquisitions, while major banks moved to boost liquidity. The small-cap index added 10.18 points, or 1.29%, to 798.56, its fifth consecutive positive close. The Dow Jones Industrial Average (INDU) added 145.27 points, or 1.11%, to 13,236.13.

Stocks started higher as the bulls reacted to news of mergers and acquisitions, where action has been lacking of late.

MGM Mirage (NYSE: MGM), the world’s second largest casino company, will sell a 9.5% stake to Dubai World for $5 billion, according to news reports before the opening bell. The state-owned Dubai World will also buy 50% of CityCenter, a hotel and residential development scheduled to open in 2009, for an additional $2.7 billion.

Additionally, The Wall Street Journal reported that TD Ameritrade Holding Corp. (Nasdaq: AMTD), which provides online securities brokerage services, is in merger talks with rival E*Trade Financial Corp. (Nasdaq: ETFC).

The Russell 2000 (NYSE: IWM) and the Dow have trimmed their gains but are still in positive territory following news that four major U.S. banks borrowed money from the U.S. Federal Reserve. At 2:15 p.m. the small-cap index had added 7.76 points, or 0.98%, to 796.14. The Dow Jones Industrial Average (INDU) had climbed 97.31 points, or 0.74%, to 13,188.17.

Citigroup Inc. (NYSE: C) announced this afternoon that it has borrowed $500 million directly from the Fed.

The New York-based financial services giant, a Dow component, said that it is borrowing the funds “on behalf of clients.”  It became the first to take advantage of the Fed’s lower discount rate, which was dropped to 5.75% from 6.25% on Friday to encourage banks to borrow money and inject it into the financial markets.

The discount rate is the interest rate the U.S. central bank charges commercial banks on loans they receive.

The Russell 2000 (NYSE: IWM) is leading the rally with the Dow Jones Industrial Average (INDU) in tow as stocks react to news of mergers and acquisitions.

At 10:04 a.m. ET the small-cap index had added 9.59 points, or 1.22%, to 797.97. The Dow was up 97.71 points, or 0.75%, to 13,188.57.

MGM Mirage (NYSE: MGM) will sell a 9.5% stake to Dubai World for $5 billion, according to news reports this morning. That comes to a price of $84 per share, 13% above the stock’s closing price of $74.32 on Tuesday.

Under the terms of the deal, which was approved by MGM’s board on Tuesday, Dubai World will also pay $2.7 billion to acquire 50% of CityCenter, a hotel and residential development slated to open in 2009.

The Russell 2000 (NYSE: IWM) futures are rising and the small-cap index is poised to move up following news of mergers and acquisitions.

MGM Mirage (NYSE: MGM) will sell a 9.5% stake to state-owned Dubai World for $5 billion, according to news reports this morning. That comes to a price of $84 per share, 13% above the stock’s closing price of $74.32 on Tuesday.

Mergers and acquisitions have been absent during the past few weeks, as markets have been affected by a credit squeeze.