Morning Coffee with TradingMarkets

  • February 7, 2008
  • David Penn

Good Morning!

Bank of England Cuts Rate to 5.25%… Rolls-Royce Profits Up 18%… PepsiCo Profits Slip for Fourth Quarter… ECB Leaves Rate Unchanged… Pending Home Sales Feared Lower… Aetna Profits Up… Gold Moving Higher… MBIA Plans to Raise $750 To Defend Credit Rating… Wal-Mart’s January Sales Weaker Than Expected…

Asian stocks up… European stocks down… Greenbacks moving higher against the Euro, British pound… And the futures are trending lower in the hour before the bell.

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TradingMarkets 5 Business Stories You Need to Know

Justice Dept. Sends CME Reeling – Financial Times

Call for separation of clearing houses from futures exchanges sends panic through investors in CME Group, which posted nearly double earnings this week, and Nymex. Shares of both exchanges fell more than 17% on the day. Yesterday we suggested that CME was an average opportunity in an industry group that had other stocks that were more likely than CME to be higher in a year’s time based on their higher PowerRatings. We profiled those stocks for you in an article for PowerRatings.net, “Getting Business in Shape: Four Management Services Stocks for Investors.”

PepsiCo’s Q4 Profits Down, Sales Up – Bloomberg

Year earlier tax gain cited for lower profits in fourth quarter for PepsiCo. At the same timeIncreased demand for snack products, particularly outside the United States, helped boost revenues.
PepsiCo is what I like to call a “good house in a good neighborhood” stock. That’s a stock with a high PowerRating that is in an industry that also has a high PowerRating. For investors using PowerRatings to buy stocks that are more likely than the average stock to be higher in a year’s time, high PowerRatings stocks from high PowerRatings industries can’t be beat.

Euro Lower Against Dollar, Yen Ahead of ECB Announcement – Bloomberg

Just how bearish can you be on the U.S. dollar if rates are falling in Europe and Great Britain as well? That is one of the questions that currency traders were puzzling over in the days leading up to lending rate announcements from the European Central Bank and the Bank of England. With the Bank of England cutting and the European Central Bank standing pat, will the dollar find reason to rally?

Cisco Slips on Slow Growth Worries – CNN Money

Shares of Cisco Systems moved lower on Wednesday as forecast for third quarter revenues disappointed analysts. Cisco was down more than 7% on the day. Traders using our PowerRatings Charts saw two excellent opportunities to sell the stock over the past few months as failed bounces during the stock’s move lower since December were anticipated by sharp drops in the stock’s Short Term PowerRating. See for yourself at the PowerRatings charts at PowerRatings.net.

Wal-Mart January Sales Disappoint – Bloomberg

Lower than expected revenues from sales of gift cards as well as winter storms blamed for Wal-Mart’s softer sales in January. The company maintained its earnings forecast, however, for the fourth quarter. Based on its PowerRating, Wal-Mart is an average opportunity for investors right now, as are many of the other companies in the stock’s industry group.

For more stories as they happen, go to our Breaking News section.

TradingMarkets 7 Stocks You Need to Know for Today

Here are 7 stocks for traders for today from TradingMarkets.com:

For a list of today’s highest PowerRating stocks, click here.

TradingMarkets 5 Top PowerRatings Stocks for Today

Company
 Symbol PowerRatings
Stanley SXE 10
Healthways HWAY 9
Adolor ADLR 9
Somanetics SMTS 8
Raser Technologies RZ 8

View More Stocks

TradingMarkets Tracking the Wizards

Clarium Capital Up 40% in 2007, 24% in January – FINalternatives

Hedge fund run by former co-founder of PayPal, Peter Thiel, continues its amazing pace of outperformance from 2007 into 2008 with a strongly positive January. Bets against leveraged financial stocks as well as the U.S. dollar were credited for many of the funds gains late last year. Clarium Capital Management is based out of San Francisco and has $4 billion under management.

Buffett: No Credit Crunch, Lower Dollar – Bloomberg

Money remains available and easy to borrow, says the world’s most famous investor, making talk of a credit crunch inaccurate. Buffett also stated that current U.S. economic policies are likely to continue to undermine the strength of the dollar. Buffett also addressed questions about the role his Berkshire Hathaway will play going forward as a bond insurer at an appearance in Toronto.

Carl Icahn: Investor, Activist, Blogger – New York Times

Famed investor who has never backed down from asserting the best interests of shareholders (as he saw them) will launch a new blog called the Icahn Report. The Icahn Report will focus on issues involving corporate governance. The blog wil reportedly be interactive, with readers able to correspond with Icahn once the blog is officially up and running.

View Portfolios of Prominent Investors

TradingMarkets Playbook

The weakness in the futures is suggesting both a down open as well as the likelihood that the market will test the late January lows over the next few sessions. Moreover, many market technians received sell signals as of yesterday’s close, which is probably contributing to the negative tone of the markets before the open on Thursday. Now the time for traders to focus on weak stocks that have shown unusual strength coming out of the late January bounce, as well as strong stocks that may be moving toward the support of their 200-day moving averages. Again, the reaction to any selling will be as important–if not more so–than the selling itself.

As always and until the markets recover, our guide remains Larry Connor’s primer “Five Mistakes to Avoid in a Market Trading Below its 200-day Moving Average” available for free at TradingMarkets.com.

David Penn is Senior Editor at TradingMarkets.com.

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