Morning Coffee with TradingMarkets

  • December 4, 2007
  • David Penn

Good Morning!

Futures Dip In Pre-Open Trading …Berkshire Buys Junk Bonds…Goldman Cools Toward Tech…Nokia, Merck Raise Forecasts…Moody’s Hits Hershey…Rio Tinto Eludes BHP Billiton…Merrill Adds Chai…Crude Oil Continues to Slide…Florida’s Pension Problems Continue

Stocks move sideways into December as investors turn toward corporate debt both as buyers (Buffett) and sellers (Paulson). Goldman Sachs warns of slower growth in tech spending, while Nokia anticipates wider margins even with cheaper mobile phones. Another day, another Moody’s downgrade … this time Hershey’s “boardroom turmoil” is blamed. And observers debate whether the continued slide in crude oil will result in lower prices at the pump.

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TradingMarkets 5 Business Stories You Need to Know

Buffett Spends $2.1 Billion on High-Yield Bonds – Wall Street Journal

Legendary investor says “one of a kind deal” is not necessarily an endorsement of high-yield corporate bonds in general. Money raised from bond sales to help pay down company’s debt.

Goldman Tiptoes Away from Tech – Internet News

Expectations of slower growth in IT spending in 2008 leads to sector downgrade from “attractive” to “neutral.” Lower earnings per share from software companies also forecast.

Crude Oil Continues To Crumble – USA Today

The threat of $100 per barrel crude fades as speculation of increased production takes prices below $90 for the first time since October.

China’s Top SteelMaker May Bid for Rio Tinto – Guardian Unlimited

$200 billion offer tops previous bid from BHP Billiton as Rio Tinto Group remains in play. Baosteel Chairman admits $200 billion may still not be enough to win the mining company.

Nokia Raises Forecast, Predicts Cheaper Phones – Bloomberg

Higher profit margins in the face of lower prices are expected by the world’s largest market of mobile phones next year. Industry likely to grow by 10% in 2008, though higher in Asia-Pacific region.

» 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
Wynn Resorts WYNN 8
Pharmion PHRM 8
Martek Biosciences MATK 8
Edge Petroleum EPEX 8
ANADIGICS ANAD 8

» View More Stocks

TradingMarkets Tracking the Wizards

Hays: “100% Equities. Zero Cash. Zero Bonds.” – Barron’s

Investor psychology, monetary policy and stock valuations all make Don Hayes, stock advisor and manager of $2 billion Hays Advisory Group, as bullish as it gets.

Paulson Eyes Corporate Debt – Bloomberg

Manager looks to follow up 440% fund gains through bets against subprime debt with similarly bearish wager against corporate debt. Strategy includes derivatives, limited equity holdings and market neutral trading.

Jim Rogers: No Dollars. Buy “Things.” Learn Chinese – Bloomberg

Co-founder of Quantum Fund with George Soros continues to warn investors out of the U.S. dollar and toward commodities. Claims China will “rule the roost” in the 21st century.

TradingMarkets Playbook

We continue to stick with the “perfect scenario” that has guided us for the past few weeks as discussed here in Morning Coffee. Sideways to slightly down is a healthy stage for a market that rocketed off the lows in late November. Short of a return to the sort of panic selling that characterized the first half of November, the benefit of the doubt–and the market momentum–continue to shift in favor of higher stock prices rather than lower ones.

The short-term oversold condition of the markets continues to wane. This sets up an opportunity to see how strongly the market responds to what looks to be early weakness this morning based on market index futures. We discussed here in recent weeks how markets have attempted to sell off both early and late, only to find buyers able to not only bring those markets back to break even, but to close near the highs. This is bullish action.

The sideways trading has started to reveal some bargains, as the number of 8-rated PowerRatings (for Traders) stocks remains healthy. But as we said yesterday, the lack of top-rated PowerRatings stocks suggests that markets may still be a bit overextended in the short-term. As stocks come in, look for these top-rated opportunities to increase.

David Penn is Senior Editor at TradingMarkets.com.

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