Tag - Gluu

The stock market has remained in a holding pattern all week, as traders wait to see what kind of a compromise Congress and the White House can reach over federal spending as the August 2nd deadline looms large.

While the major small cap stock indexes don't show it, there were plenty of big moves Thursday as investors found positive signs spread among the ruins. Three of the top five performers all hit 52-week highs, and a management change helped the day's top small cap stock, Universal Forest Products, post a healthy 21 percent increase despite a 69 percent profit drop in the second quarter.

The Russell 2000 Index lost 1.63 percent in value and the Standard & Poor's Small Cap 600 dropped a similar 1.64 percent. While the Nasdaq Stock Market dropped 1.22 percent, two other major U.S. stock indexes held their ground a little better - the Dow Jones Industrial Average closed 0.44 percent lower, and the Standard & Poor's 500 was off 0.67 percent.

I've found and interesting small cap company operating in the mobile technology industry - one that stood out from the pack because it has morphed two trends into one business model for those on the go.

But there's a catch: This microcap company is looking to make money by giving away their products.

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.

Casella Waste Systems Inc (Nasdaq:CWST), Pyramid Oil Co (Nasdaq:PDO) and Pantry Inc (Nasdaq:PTRY) are among the biggest percentage gainers in Thursday's trading among companies with market capitalizations under $1 billion.

Also included among the results: ORBCOMM Inc (Nasdaq:ORBC), Array BioPharma Inc (Nasdaq:ARRY), Summit Financial Group Inc (Nasdaq:SMMF), United States Lime & Minerals Inc (Nasdaq:USLM), Glu Mobile Inc (Nasdaq:GLUU) and USANA Health Sciences Inc (Nasdaq:USNA).

Here are the biggest percentage gainers among small caps:

SeaChange International (Nasdaq: SEAC), Solarfun Power Holdings Co., Ltd. (Nasdaq: SOLF) and China Finance Online Co. (Nasdaq: JRJC) are among the most actively traded companies in Friday pre-market trading among those with market capitalizations under $750 million:

Gevity HR, Inc. (Nasdaq: GVHR), Somaxon Pharmaceuticals, Inc. (Nasdaq: SOMX) and Glu Mobile Inc. (Nasdaq: GLUU) are among the biggest percentage losers in Monday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage losers:

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are in negative territory as credit fears return to Wall Street. At 1:46 p.m. ET, the small-cap index had shed 9.67 points, or 1.21%, to 788.11. The Dow Jones Industrial Average (INDU) was down 108.44 points, or 0.80%, to 13,486.66.

Financial stocks are leading the way down after Citigroup Inc. (NYSE: C) announced before the start of trading that it expects additional losses of up to $11 billion after already suffering $6.5 billion in credit-related losses in the third quarter.

Analysts are estimating that the credit problems will negatively affect Citibank in the fourth-quarter and lead to a net loss.

The news brought out the bears and spooked investors, who were hoping that this summer’s credit problems were in the past, but recent events have revived the issue. Investors will also want to see if other banks and brokerages report additional losses.

Many financial institutions bought securities backed by subprime mortgages that have become worthless in the wake of the recession in the U.S. housing market and the wave of foreclosures by cash-strapped homeowners.

Small-cap stocks are also sagging this afternoon, with Sanders Morris Harris Group Inc. (Nasdaq: SMHG) down 2% while Stifel Financial Corp. (Nasdaq: SF) has dropped 6%.

The Russell 2000 (NYSE: IWM) bounced around but eventually posted a modest gain following news of strong U.S. job growth in October. The small-cap index added 2.60 points, or 0.33%, to 797.78. The Dow Jones Industrial Average (INDU) gained 27.23 points, or 0.20%, to 13,595.10.

On a year-to-date basis, the Russell 2000 has increased 1.32%, while the Dow has added 8.98% and the S&P 500 has gained 6.57%.

Labor markets are tight and job growth is stronger than expected, the U.S. Labor Department reported this morning. Non-farm payrolls increased 166,000 in October, more than double the projected rise of 80,000. That’s a sign that the U.S. economy will most likely avoid recession. Payrolls increased a downwardly adjusted increase of 96,000 in September.

The unemployment rate stayed at 4.7%.

“The October employment report showed unexpected strength in the labor market, but largely on account of services,” said Arun Raha, vice president of Economic Research and Consulting for the North American operations of reinsurance company Swiss Re, in an email. “However, the overall economy remains tentative given the weakness in the housing market and high energy prices.”

The jobs report also showed that average hourly earnings increased $0.03, or 0.2%, to $17.58 during October. That’s 3.8% above the level a year ago, suggesting that the tight labor market is not pushing up inflation.

Stocks opened with solid gains, but the bullish mood was short-lived as investors turned their attention to an article in The Wall Street Journal that claimed that Merrill Lynch & Co. Inc. (NYSE: MER) has made deals with hedge funds to postpone when it records losses due to bets made on securities backed by subprime mortgages. The New York-based financial services giant may have to write down $10 billion in losses, according to the article.

Shares of Glu Mobile Inc. (Nasdaq: GLUU) are swooning today after the publisher of mobile games issued lower-than-expected guidance for the fourth quarter and 2008 in its third-quarter earnings press release after Thursday’s close; and was downgraded by a slew of investment banks.

For the full year of 2008, ending Dec. 31, 2008, the company said it now expects revenues to be between $80 million and $85 million, well below the consensus of $97.08 million nine analysts surveyed by Thomson were projecting.

Glu said it expects net income to be between $3.7 million and $6.3 million, or between $0.12 and $0.20 per diluted share, which excludes $1.2 million for amortization of intangibles and approximately $6.4 million of anticipated stock-based compensation. The new guidance range falls below the mean estimate of $0.15 per share 10 analysts on average were forecasting.

During the third quarter, the company said it experienced strong growth in North and South America and saw renewed growth in the Asia Pacific market, but said the growth in those regions was dulled down by slower growth in certain geographies in Europe.

Deutsche Bank analyst Jonathan Goldberg downgraded the small cap to “hold” from “buy,” based on a slowdown in the company’s European sales. In reference to the weakening sales in Europe, Goldberg writes, “this trend seems to be worsening and is a cause for concern … the magnitude of the short-fall will impact Glu for many quarters to come.”

The Russell 2000 (NYSE: IWM) is moving erratically this afternoon as trading is choppy halfway through the session. At 1:23 p.m. ET, the small-cap index had added 2.45 points, or 0.31%, to 797.63. The Dow Jones Industrial Average (INDU) was down 10 points, or 0.07%, to 13,557.87.

Small-cap stocks went on a rollercoaster ride during the first half of today’s session as investors reacted to both bullish and bearish news.

The bulls appeared first, encouraged by news before the opening that non-farm payrolls increased 166,000 in October, according to the U.S. Labor Department. That’s more than double the projected rise of 80,000, a sign that the labor market remains tight and that the U.S. economy will most likely avoid recession. Payrolls increased a downwardly adjusted increase of 96,000 in September.

The unemployment rate stayed at 4.7%.

But the bulls relished for just a few minutes before yielding the floor to the bears.

Investors turned their attention to an article in The Wall Street Journal that claims that Merrill Lynch & Co. Inc. (NYSE: MER) has made deals with hedge funds to postpone when it records losses due to bets made on securities backed by subprime mortgages. The New York-based financial services giant may have to write down $10 billion in losses.

News of the article, which was published before the start of trading, spooked investors and spread fears concerning the extent of damage from this summer’s credit squeeze. Financial stocks immediately took a hit and dragged down the rest.

The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are in negative territory despite news of a better-than-expected October jobs report.

At 10:28 a.m. ET, the small-cap index had lost 3.69 points, or 0.46%, to 791.49. The Dow was down 51.21 points, or 0.38%, to 13,516.66.

Non-farm payrolls increased 166,000 in October, compared with a downwardly adjusted increase of 96,000 in September, the U.S. Labor Department announced before the start of trading. That’s more than double the projected rise of 80,000 and a sign that the labor market remains tight and that the U.S. economy will most likely avoid recession.

The unemployment rate is unchanged at 4.7%.

The surprisingly strong jobs report makes it less likely that the U.S. Federal Reserve will move to lower the target interest rate during the remainder of 2007.

The jobs report also showed that average hourly earnings increased $0.03, or 0.2%, to $17.58 during October. That’s a rise of 3.8% from one year ago, suggesting that the tight labor market is not fueling inflation by putting too much upward pressure on wages.

The small-cap futures were logically higher and stocks opened in positive territory.

But the bullish sentiment did not last long, with the financial sector as the catalyst for the negative change.

The Russell 2000 (NYSE: IWM) futures are higher on news of an unexpectedly strong October jobs report.

Non-farm payrolls increased 166,000 in October, the U.S. Labor Department reported this morning. That’s significantly above the projected increase of between 80,000 and 90,000 and a welcome sign that the labor market remains strong despite problems in the housing sector. Payrolls rose 96,000 in September.

The unemployment rate is holding steady at 4.7%.

Elsewhere, investors will also be paying attention to numbers on factory orders for September, which will be released by the U.S. Census Bureau at 10 a.m. ET. Economists are expecting a slight decline.

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:

• RadiSys Corp. (RSYS), up 21% on news of a narrower third-quarter loss.
• Vanda Pharmaceuticals Inc. (VNDA), up 19% on news it said it no longer intends to offer convertible senior notes.
• GB&T Bancshares Inc. (GBTB), up 15% on news it is being acquired by SunTrust Banks, Inc. (STI).

Biggest percentage losers:

• Glu Mobile Inc. (GLUU), down 24% on news of a third-quarter net loss.
• Universal Electronics Inc. (UEIC), down 12% despite news of a solid third-quarter.
• Trump Entertainment Resorts, Inc. (TRMP) down 12% despite news of a higher third-quarter profit.

The Russell 2000 is holding on to its early gains in afternoon trading, as investors react to better-than-expected economic news.  Among specific small caps, Glu Mobile Inc. (Nasdaq: GLUU) reported earnings that outpaced expectations, while news of an increase in profit boosted shares of FortuNet, Inc. (Nasdaq: FNET).

At 2:20 p.m. ET the Russell 2000 added 0.90 points, or 0.11 percent, to 829.36.  The Dow Jones Industrial Average was up 8.37 points, or 0.06 percent, to 13,220.25, on track for a third consecutive record close.