Today we have jobs data coming out which should give us further insight into how the US economy is doing. Looking at all of the economic news we have coming out today, investors should look for the Initial Claims (Consensus 375k), Continuing Claims (Consensus 3300k), Export Prices Ex - Ag, Import Prices Ex - Oil and the Treasury Budget (Consensus -$60 Billion).
US futures are lower at this time, following the lead of Europe for now. We did have Brazil and South Korea cut rates yesterday, so this could be the beginning of a round of easing for the central banks, something for investors to be aware of.
If any readers have certain stocks they would like to get an opinion on, submit it to our message box here on Seeking Alpha or via our email and we will include it in an article. Please select companies with market caps at least around $500 million with volume of at least 1 million shares a day. We will try to include as many of these as possible each week.
Looking at Asian markets we see markets are mixed:
All Ordinaries - down 0.70%
Shanghai Composite - up 0.46%
Nikkei 225 - down 1.48%
NZSE 50 - up 0.65%
Seoul Composite - down 2.24%
In Europe markets are lower:
CAC 40 - down 0.41%
DAX - down 0.87%
FTSE 100 - down 0.75%
OSE - down 0.64%
Technology
There was an interesting article in The Wall Street Journal yesterday discussing Apple (AAPL) and the drop off in volume in the shares. Our readers know we have wondered this here more than a few times, so we were quite interested to read how small investors have gravitated towards the options in order to allocate less of their capital here yet get a decent amount of exposure. What many are probably missing is that they have inadvertently taken on far more risk than they realize, especially in the short-term options. It was a great article and worth the read, and answers that question which has puzzled us for some time now. Volume yesterday was rather strong by recent standards as 18.6 million shares as shares fell $3.78 (0.62%) to close at $604.43/share.
Sirius XM (SIRI) has remained strong and yesterday although the shares were down they never fell below $2.02/share as support was found there. The chart was worrisome here as it fell from the upper left to the lower right and finished just above the lows for the day - however we are talking about a move of less than 1% during a day when the markets performed poorly. Volume was decent at 23.1 million shares as investors saw shares close at $2.03/share having fallen $0.015 (0.73%). Investors should watch this one to make sure it does not fall below the $2/share level.
We are interested by Facebook (FB) this morning as shares continue to trend lower. Yesterday we saw shares fall $0.50 (1.59%) to close at $30.97/share on volume of 13.6 million shares. We think that there may be a buying opportunity at the $30/share level, depending on the general market movement of course. One would think that the company would exceed expectation for earnings this quarter as is usually the case for IPOs. Investors should keep in mind that the user growth can disappoint, along with time spent on the site so long as the company continues to demonstrate an ability to monetize the rest of its gigantic user base.
Biotechnology
Arena Pharmaceuticals (ARNA) was down yesterday $0.68 (5.76%) to close at $11.13/share yesterday as 22.8 million shares were traded. The volume was down a bit, but that is to be expected as the news cycle has died down a bit and volatility continues to fall. Based on the price targets we released yesterday we would be buyers of this as shares approach $10/share. We find value there and would use shares purchased around that level to trade around one's core position or simply add to that position. We would not try to get fancy with shorting others hoping to bring diet drugs to market while using the proceeds to go long Arena or shorting Arena to go long those players on the assumption that their drugs get approved as the trade is pretty risky. Simply choose to go either long or neutral these stocks and play them from there, that is our advice this morning to the questions that came in yesterday.
Homebuilders
Beazer (BZH) had another session of heavy trading yesterday as the company announced that they priced the $300 million offering they announced this week. Shares traded lower by $0.10 (3.36%) to close at $2.88/share. The volume traded in yesterday's session was 47.3 million shares. We see data showing home prices going up, however our contacts in the real estate industry inform us that many are keeping properties off of the market and converting houses they move out of to rentals rather than go through the hassles and mark downs in this market. So we would not be buyers of those creating new supply at this moment, better to catch them on the upswing.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
By Mathew Smith - Source: seekingalpha.com
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