The StreetWise Investor ®

Monday, October 3, 2011

Franklin Fund Group estimates cut...

Franklin Resources (BEN) is lower today after JP Morgan cut the shares to underweight, saying fund performance and returns have shown signs of material weakening. Franklin's flagship fund takes significant currency risk, the firm notes, causing it to significantly underperform its global fixed income fund peers.

Franklin Funds is down 3.54 to 92.10 today. Here is the weekly chart:

Stocks turn lower again....

We are now at the lows of the day, as there doesn't seem to be a reason to buy stocks here. Traders are piling on the banks and we have Eastman Kodak and American Airlines both seem to be slipping into the possible bankruptcy category.

Dow -131
Nas -42
S&P -17 to 1111

The VIX is currently at 43.96

Gold and silver both rallying.

Bank of America falls below $6...

Bank of America (BAC) sinks below $6, hitting its lowest price since March 2009. The shares are about 15% lower than the level they were at when Buffett announced his investment in the bank. Like the Goldman and GE deals, the move may pay off for Buffett; for shareholders, not so much.

On a separate note, BAC's website has been down since they made the announcement on Friday that they were going to charge $5 a month for customers to use their debit cards. The company claims that the site is just running very slow due to the volume of people accessing it.

Is American Airlines headed for bankruptcy?

Shares of American Airlines (AMR) are now off over 15% after this morning's downgrade on sector peers kickstarts renewed banter about the carrier filing for bankruptcy.

AMR is down 0.50 to 2.46 today. Here is the weekly chart:

Noon Update...

The markets are improving as many analysts have come out defending stocks this morning. Also, there is some optimism that October may be a turnaround month for the markets.

Historically, September is the worst month for stocks. Even though we have seen several crashes in October, October historically has been the best month for market turnarounds.

Right now:

Dow +8
Nas -8
S&P -1 to 1130

Morgan Stanley says it's time to buy Netflix...

Morgan Stanley sees the recent sharp selloff in Netflix (NFLX) making a "much more compelling" valuation, plus an earnings call that could bring a positive surprise on subscriber guidance. Also, producers of cult TV comedy "Arrested Development" reportedly are in talks with Netflix about distributing some new episodes that would serve as a prelude to a movie.

Netflix is up 4.25 today to 117.52

Stocks rally after ISM Manufacturing number release...

Stocks have turned positive following a better than expected ISM Manufacturing number, released at 10 am.

Dow +48
Nas +12
S&P +5

Wow...the trading is really getting wild. Huge swings in minutes...

I do think the market is way overdone to the downside, but right now we are being held hostage by the goings on in Europe and Asia.

At 10:00 am...

Stocks broadly lower as the rumor mill is swirling about bank troubles here in the U.S...

Dow -91
Nas -26
S&P -9 to 1122

The Volatility Index (VIX) is climbing again...currently up 0.58 to 43.54

The VIX is a reading of the degree of fear that is in the market. In the past ten years, the VIX has been normally around 20. During that period, any time it has spiked above the 40-45 range, that has signaled excessive fear and an oversold market...typically soon leading to a market rally. We'll keep an eye on the over the next week.

Yahoo partners with ABC News...

Yahoo (YHOO) announces it is forming a partnership with ABC News (DIS). The deal will make ABC News the "premier news provider" for Yahoo News, and result in ABC developing a "new original web series." Yahoo News is the most popular news site in the U.S., with traffic slightly higher than CNN.com (TWX).

Let the 4th Quarter begin....

Not looking good on the open, but there is a tremendous amount of bad news already baked in...

Dolphin Tale leads weekend movies...

“Dolphin Tale” rose to first place in its second weekend of release, taking in $14.2 million at theaters in the U.S. and Canada for Time Warner Inc. (TWX)’s Warner Bros. studio.

The film unseated the 3-D re-release of “The Lion King,” which ranked No. 1 for the prior two weekends, and edged out four new movies, researcher Hollywood.com Box-Office said yesterday in an e-mailed statement. Walt Disney Co. (DIS)’s “The Lion King” dropped to third with $11.1 million.

“Dolphin Tale,” based on a true story, follows a young boy’s effort to persuade scientists to create a prosthetic for a dolphin whose tail has been amputated. The 3-D movie benefited from positive word-of-mouth after opening in third place last weekend, trailing the Brad Pitt baseball drama “Moneyball.”

Casino stocks lower...

Macau casino stocks plunge in Hong Kong - outpacing a 4.4% decline in the Hang Seng - on increasing fears tighter credit will cut off the funds of wealthy gamblers. Close to two-thirds of Macau's gaming revenue is kicked up from "junkets" from the mainland.

Las Vegas Sands (LVS) and Wynn Resorts (WYNN) are getting slammed premarket...

Fortune Brands to split company and rename itself...

Fortune Brands, Inc. (FO) will separate the company's businesses and spin off the Fortune Brands Home & Security business after the close of business today. Following the spin-off, Fortune Brands will change its name to Beam and operate as a pure-play spirits company.

The liquor part of the business will trade under the symbol "BEAM" and the Home and Security part of the business will trade under the symbol "FBHS".

IMF sees more downside risk...

Downside risks to the global economy have increased "as of late," said IMF Deputy Managing Director Zhu Min this morning, including the possibility that the U.S. economy could further weaken and that the eurozone debt crisis could spin out of policymakers' control. Countries need to begin "significant deficit reduction," some more urgently than others.

Kodak denies it is seeking bankruptcy...

Eastman Kodak Co. (EK). The photography pioneer denied it had a bankruptcy plan, saying it was committed to meeting its obligations and is still looking for ways to "monetize" its patent portfolio.

Arch Coal cuts outloook...

Arch Coal Inc. (ACI). The coal miner has cut its full-year adjusted earnings outlook, hurt by lost production at the company's Mountain Laurel complex in West Virginia. It lowered its 2011 adjusted earnings per share outlook to $1-$1.40 per share, from its prior estimate of $1.75-$2.15.

Good Morning....

U.S. stock index futures pointed to a lower open for the quarter after Greece said it will miss its deficit targets for the year, raising new doubts over a planned second international bailout. Major U.S. stock indexes ended the previous quarter at its worst since 2008, hit by European debt worries, U.S. credit downgrade and slowing global economy.

Markets will watch for any outcome from a Eurogroup meeting that is expected to discuss leveraging of the EFSF bailout fund and structural reforms in Greece. Some respite might come from U.S. auto sales data, expected to show a 9 percent rise from a year ago as Japanese automakers, impacted by the earthquake, will have enough inventory. Other data on the tap includes ISM index and construction spending.

Sunday, October 2, 2011

Saturday, October 1, 2011

Weekend Review...Stocks hitting new highs....

Here are a few that hit new 52-week highs this week...I'll show the weekly charts on these:

Progress Energy (PGN) - Electric Utilities
Dominion Resources (D) - Electric Utilities
Bristol Myers (BMY) - Drug manufacturers
Treehouse Foods (THS) - packaged foods
ITC Holdings (ITC) - Electric Utilities

I think we have a theme: Electric Utilities

Weekend Review...Stocks hitting new lows...

Combing thru the charts, here are just a few of the stocks that hit new 52-week lows this week. To get a long term perspective, these are monthly charts:

Home Inns and Hotels (HMIN) - China
Peabody Energy (BTU) - Coal
Mosaic (MOS) - Fertilizers
Agrium (AGU) - Agricultue Chemicals
Lazard (LAZ) - Asset Management
Mercado Libre (MELI) - Argentina internet
Deere (DE) - Farm Equipment
Shanda Interactive (SNDA) - China Internet games
Vulcan Materials (VMC) - Building Materials
Urban Outfitters (URBN) - Retail
Hasbro (HAS) - toys and games
Posco (PKX) - Korean steel (Warren Buffett major shareholder)
Research in Motion (RIMM) - Telecomm hardware
Navistar (NAV) - trucks
EOG Resources (EOG) - natural gas
Freport McMoRan (FCX) - copper and gold
Ultra Petroleum (UPL) - independent Oil and Gas
Tidewater (TDW) - Oil Service
Medco Health (MHS) - Pharmacy benefit management
Travelzoo (TZOO) - Internet leisure
St. Jude Medical (STJ) - medical equipment