Tag - Wmb

Software developer Wind River (Nasdaq:WIND) is the small cap leader today posting a 44% gain as of press time, 1:15 P.M. Eastern, on news of its acquisition by industry giant Intel (Nasdaq:INTC).

With the deal expected to close during the summer, Intel has committed to a price of $11.50 per share. As of this writing, shares of Wind River are going for $11.53. This certainly follows my thesis of technology, in addition to healthcare and energy, leading small caps for the foreseeable future.

Another big small cap gainer for today includes investment banker Cowen Group (Nasdaq:COWN) up 28.5% on news of its impending merger with Ramius, LLC, a privately held asset management firm. The new company will retain the Cowen name and is expected to continue trading on the Nasdaq.

Other small cap gainers include First Industrial Realty Trust (NYSE:FR) up 37.9% on news of closing three secured financial transactions for $154 million; Atlas Pipeline (NYSE:APL) up 16.1% to $7.57 (you'll recall Atlas was a big winner yesterday after announcing it's joint venture with Williams (NYSE:WMB). Since Friday's close, Atlas has rewarded investors with a 44% gain.

Small cap decliners include Abercrombie (NYSE:ANF), maker of popular clothing directed to the youth market, posting a loss of 10.6% in today's trading after reporting same store sales had fallen 28%; Northeast Bancorp (Nasdaq:NBN) of Lewiston, Maine, down 14.7%; and The Gap (NYSE:GPS) down 7.9% on reporting that sales fell 6% versus one year ago.

All major indices are reporting positive gains as of press time with the Russell 2000 Index up 1.12% to 528.56, the Dow up 0.70% to 8,735.80, the S&P 500 up 0.96% to 940.74, and the Nasdaq up 1.07% to 1,845.37. Analysts attribute much of this to reports showing that the number of unemployed still receiving benefits dropped unexpectedly for the first time in nearly five months.

Also big in today's news was crude oil hitting another high for 2009. New York Mercantile Exchange oil hit $69.56 in earlier trading today, meaning that crude oil is now nearly twice as expensive as it was in February.

Note: I've recently released a report on three small cap oil plays that will take advantage of crude oil's drive to even higher prices this year. In fact, one of these stocks has already given investors a nice 148% gain since we added it on March 30th. And there's still more action with this and the other two stocks. You can request your copy of the report HERE.

*****Yesterday, Ben Bernanke told the House Budget Committee:

"In recent weeks, yields on longer-term Treasury securities and fixed-rate mortgages have risen…[t]hese increases appear to reflect concerns about large federal deficits…"

Hmmm. I would swear that Treasury Secretary Geithner just told China that rising interest rates were a sign of optimism for the U.S. economy. Can rising rates be both good and bad? All I know is that if you listen to government long enough, anything and everything is possible.

Rising interest rates on Treasury bonds mean that prices are falling. Whether you're talking dollars or doughnuts, prices tend to fall when there's oversupply. And right now, with the Federal government raising trillions to fund stimulus spending and budget deficits, there's a more-than-adequate supply of T-bills.

Competition also affects interest rates, or yields, on T-bills. If the arcane valuation formulas running on server banks in the basement of some hedge fund say that the stock market is likely to post an 8% gain, few managers will get too excited about the 5% return on long bonds. That 5% yield must rise (with the price of the bond falling) to entice buyers.

So when Geithner says that rising yields indicate optimism, he's telling the truth to a degree. Yes, now that the economy is recovering a bit, investors believe that stocks are a better investment than bonds. And that's good. But one reason stocks are attractive is because bonds are so unattractive.

*****I suspect the Chinese know all this. They probably also know that they benefit by lending us money. Heck, if Chinese money delays the hard choices long enough, they may ascend to the throne of world's largest economy sooner than expected. 

*****Bernanke also took the opportunity to warn Congress about rising deficits. He said "Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth."

Let's not forget Bernanke has supported the policies that got us where we are. Now let's see what he proposes to help get us out of this mess.

*****The last time I made the observation that the news cycle was turning negative, we saw stocks consolidate their recent gains, instead of turning lower.

Well, it seems to me that the news cycle is starting to turn negative again. 

Bernanke repeated his belief that the recession is ending, but the financial media chose to latch on to his statement that recovery will be slow. Improving manufacturing data was deemed "not-as-good-as-expected."

Will this lead to a sell-off, another period of consolidation, or will more positive data emerge to keep the markets moving higher? I don't know, but I am on alert…

That's it for today.

P.S. One way to help insulate your portfolio (particularly if you're retired or even if it's a few years off) from the government's loose monetary policy is by holding dividend stocks. These stocks give you a regular payout and have tremendous upside. Be sure to check out my new research report with five such winning stocks right now. You can get it HERE.

Small Caps putting up the biggest gains at press time (2:30 P.M. Eastern) include La-Z-Boy (NYSE:LZB) up 36.2% after an upgrade to strong buy from Raymond James, Atlas Pipeline Holdings (NYSE:AHD) up 30.2% after announcing a joint venture with Williams (NYSE:WMB) to expand Atlas's presence in Pennsylvania, Tivo (Nasdaq:TIVO) up 51.1%, Human Genome Sciences (Nasdaq:HGSI) up 16.7%, and Applied Signal Technology (Nasdaq:APSG) up 16%.

Big decliners include energy darling Valero (NYSE:VLO) down 18.3%, CVR Energy (NYSE:CVI) down 17.4%, Frontier Oil (NYSE:FTO) down 14.9% as crude oil inventories spike to 2.9 million barrels based on data from the U.S. Energy Information Administration.

Yesterday's darling stock, Green Plains Renewable Energy (Nasdaq:GPRE) was one of today's dogs lose 16.2% as volume slows from Monday and Tuesday's trading sessions.

As of press time (2:30 P.M. Eastern) all major indices are off with the S&P 500 leading the decline by a 2.0% drop, followed by the Dow sloughing off 1.5% and the Nasdaq down 1.4%. The Russell 2000 Index, comprised of the 2,000 largest small cap stocks was down 8.5 points, or 1.61% to 518.13.

*****Russia is grumbling. Seems they are not happy that rising debt, slow growth and record Treasury bond sales are dragging the U.S. dollar down. In fact, Russian president Medvedev is calling for some kind of global currency to replace the U.S dollar as the world's reserve currency. (Sound familiar? Like he's taking a page from the Chinese?)

In an interview with CNBC on Monday he said, "We need some kind of universal means of payment, which could create the basis of a future international financial system…"

Of course, this is a horrible idea. As one analyst put it, "It took decades for the euro to be established. I can only imagine how long it would take for the BRIC countries to put together a currency."

*****It's an investing truism that the financials always lead the stock market. Recall that it was bullish comments from Citigroup that kicked off this rally back in early march. And I'm sure nobody needs reminding that it was the financials that kicked off the worst bear market in 80 years.

When the S&P 500 and the Nasdaq blew through their 200-day moving averages on Monday, the financials were out in front. But today, even though the major indices finished with slight gains, many financials finished in the red.

American Express (NYSE:AXP) dropped nearly 5%. JP Morgan (NYSE:JPM) lost 4.46%. Wells Fargo (NYSE:WFC) lost 4% and Citigroup (NYSE:C) lost 4.88%.

Bank of America (NYSE:BAC) is about the only major financial stock to finish in the green, and that was a 1.7% gain. In fact, the Financials SPDR (AMEX:XLF) failed to make a new recovery high along with the Nasdaq and S&P 500.

So what gives? Why have the financials underperformed, and why were they weak today?

*****One clue comes from the Healthcare Select SPDR (AMEX:XLV). As you may know, healthcare stocks are considered defensive stocks. That's because their revenues are seen as being stable as healthcare is a necessary, as opposed to discretionary, expense.

In difficult markets, institutional investors will park their money in healthcare stocks as a way to maintain exposure, but lower risk.

If we compare the Healthcare SPDR XLV to the Financial SPDR XLF, we see an interesting divergence starting on May 8. Healthcare has been trending up since that date. And the Financial SPDR has been trending down. To me, this looks like sector rotation.

It appears that institutional investors are moving money out of aggressive financial investments and into defensive healthcare stocks. When the institutional investors start playing defense, individual investors should pay attention.

*****Technical analyst for TradeMaster Daily Stock Alerts, Jason Cimpl, thinks the rally has about another week before we start seeing some downside. And for good measure, he recommended that his readers take their 29% profits on Fushi Copperweld (Nasdaq:FSIN). This trade took less than 3 weeks. Nice job, Jason.

Jason is still holding the two stocks you may have learned about from the TradeMaster video I included in yesterday's Daily Profit. In case you entered either trade, you should know that Jason has recommended a stop loss for FXI at $35.15 and UNG at $12.60. If you missed the video, you can check it out HERE.

Stocks are in the red today after new data did little to bolster investors’ spirits that the economy is slowly getting better.

At 2:51 pm ET, the Russell 2000 (NYSE:IWM) is down 1.43%, while the Dow is down 1.10% and the S&P 500 is down 1.44%.

Today the Labor Department said consumer prices in April were flat, as economists predicted, while New York-area manufacturing activity and industrial production contracted less than economists expected. Investors remain cautious ahead of several reports out next week on housing.

Small caps bucking the decline today include BioCryst Pharmaceuticals (Nasdaq:BCRX), up 30% after reporting encouraging results from its Phase II lymphoma trial, and Fuqi International (Nasdaq:FUQI), 20% higher following strong first-quarter results.

******You know over the course of the past few months I’ve not held Wall Street or the banking executives in high regard. I hold them almost — that’s almost — singularly accountable for our current recession (Uncle Sam and private citizens who borrowed too much are to blame as well), but the government is beginning to really stick its nose too far. For example, today’s headlines (those not about whether Nancy Pelosi knew about torture and when she knew it) are consumed with government pushing itself on private industry, most notably with the pressure on Bank of America (NYSE:BAC) to change its board.

Granted, “regime change” is a necessity for most of the companies receiving TARP money. After all, they’re the ones who got us into this mess. But shouldn’t it be shareholders forcing the issue? You saw how they forced Ken Lewis of Bank of America to give up his role as chairman. This was done at the shareholder level, not by some bureaucrats in a windowless office overlooking the National Mall.

But for many Beltway insiders this isn’t enough. Someone’s got . . .