Morning Coffee with TradingMarkets

  • February 4, 2008
  • David Penn

Good Morning!

Giants Upset Patriots In Super Bowl XLII… Stocks Make Biggest Weekly Gain Five Years… Will Google White Knight Yahoo?… Toyota Profits Feared Weaker… Insider Buying Outstrips Insider Selling… Bank of England May Cut Rate… Wells Fargo, Wachovia Downgraded… Gold, Silver Down… American Express Lower… Archer Danields Midland Posts Strong Second Quarter… GameStop, RealNetworks Higher in Pre-Market.

Asian stocks up… European stocks up… Greenbacks moving higher against the yen, lower against the 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

Will Google “White Knight” Yahoo? – Wall Street Journal

Google CEO Schmidt contacted Yahoo CEO Yang to offer assistance in fending off Microsoft’s unsolicited $44.6 billion offer for the company. Yahoo on Friday said that it would consider the unsolicited bid from Microsoft. Observers say it is unlikely that Google would seek to acquire Yahoo. Based on their PowerRatings, neither Google nor Yahoo represent especially attractive opportunities for investors right now. And there are at least two stocks in the Application Software industry that are more likely than Microsoft to be higher than the average stock in a year’s time. Get those names at PowerRatings.net.

How Easy Money Saves the Dollar – Bloomberg

Lower rates will spur economic growth, leading to a surprisngly strong dollar. Or so say a growing number of currency traders, who have switched from being dollar bearish to dollar bullish recently. New-found emphasis on relative growth as opposed to absolute borrowing costs among reasons why currency traders are unwinding their bets against the greenback.

Can Clorox Ride a Recession – Kiplinger

Consumer stocks tend to fare well when the economy begins to slow down. With the U.S. economy still on recession watch, does that mean stocks like Clorox will be likely to outperform? Based on its high PowerRating, Clorox may be as far as many investors need to look when it comes to a stock that is more likely than the average stock to be higher in a year’s time.

Jobs Down, Dollar Up? – DailyFX.com

For all the talk of recession and the rally in bonds, the dollar has yet to succumb to the collapse that many dollar bears have said is inevitable. The most recent dollar strength in the wake of the announcement of a soft non-farm payrolls report was another in a series of surprisingly strong moves higher by the dollar. Here’s Kathy Lien, Chief Strategist for DailyFX, with her take.

Humana Earnings – CNN Money

Humana reaffirmed earnings less than 30 days ago, leading the stock to all-time highs. With its earnings announcement today of 57% profit growth in the fourth quarter, Humana handily beat analyst estimates.
Humana’s PowerRating marks the company as one that is more likely than the average stock to be higher in a year’s time. What’s more, Humana comes from an industry with a similarly high PowerRating, suggesting that there are more opportunities for investors in the Health Care Plans industry group. Visit PowerRatings.net to find out those names

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
UltraShort Semiconductors ProShares SSG 9
Actuate ACTU 8
Healthways HWAY 8
Repligen RGEN 8
eHealth EHTH 8

» View More Stocks

TradingMarkets Tracking the Wizards

Growth Guru Goes for the Gold – Barron’s

With $3 billion under management, Essex Investment’s Joseph McNay is a growth investors who is going for the gold when it comes to stocks. McNay sees the U.S. economy as already in a recession, and is among the legions of investors who are still pessimistic over the dollar. Says McNay, “I would rather own the Chinese currency than the U.S. currency.”

Cramer’s Got Your Stimulus Package Right Here! – New York Magazine

Calling current stimulus proposals the “stupidest, most wasteful, and least effective idea possible” to turn the economy around, Mad Money guru Jim Cramer stumps for guarantees for mortgage bondholders and slashing the Fed funds rate in half. Putting the focus on the weak housing market, rather than sprinkling cash over the economy in general is at the heart of Cramer’s “shock the market” stimulus plan.

Currencies a Tough Trade in 2007 – FINalternatives

As was the case with John W. Henry’s currency-based hedge funds, managed futures funds run by Campbell & Company suffered most of their losses as a result of currency market exposure. Sales of higher yielding currencies such as the British pound were key to losses in currency trading, though smaller losses were also experienced in fixed-income and equity trading.

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TradingMarkets Playbook

The markets are short-term overbought. The number of stocks that are up for multiple consecutive days, or that have values in the Relative Strength Index above 98 are impressive. While all this is evidence of strength, it is worth remembering that this strength comes in the context of weak markets that are still trading below their 200-day moving averages. Of course, the strength we see is strength to be selling, not buying. If the market does correct at or near these levels, then there is a good chance it will provide the kind of weakness that will allow for good opportunities going forward.

Larry Connor’s “5 Mistakes to Avoid in a Market Trading Below its 200-day Moving Average” is available at TradingMarkets.com, and is a worthwhile re-read if you feel your bullish spirits getting a little excited in the wake of the market’s largest weekly gain in many, many months. While the market has shown significant strength in recent days, stocks are far from out of the woods at this point. That said, any correction or restest of the lows is likely to bring with it a surge of negative sentiment. And there is an important difference between being wary of stocks below their 200-day moving average, and being panicked about a market that has yet to show that is truly ready to move higher significantly higher.

David Penn is Senior Editor at TradingMarkets.com.

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