Looking at the markets today, it appears that we are going to open up red and probably finish the day the same way we open. Markets were lower in Asia and in Europe as well, with U.S. futures lower on the news that came out overnight. Even with the "Fiscal Cliff" facing us, we believe that U.S. lawmakers will solve the very problem they created and the market will rally off of that news, it is a matter of when not if. We would be accumulating cash right now to deploy at some point before year-end as we believe that the market will rally into the New Year.
We have economic news due out today and it is as follows:
- Treasury Budget - -$113.0 Billion
Asian markets finished lower:
- All Ordinaries - down 1.47%
- Shanghai Composite - down 1.51%
- Nikkei 225 - down 0.18%
- NZSE 50 - down 0.34%
- Seoul Composite - down 0.59%
In Europe markets are lower this morning:
- CAC 40 - down 0.81%
- DAX - down 0.43%
- FTSE 100 - down 0.62%
- OSE - down 0.84%
Shares in JC Penney (JCP) were lower again on Monday as investors reacted to a debt downgrade from S&P and worry about the company's future. Investors pushed shares lower by $2.67 (12.94%) to close at $17.97/share on volume of 29.6 million shares during yesterday's session. The debt rating downgrade is just another sign that Wall Street has its doubts about the long-term viability of the company's business plan and whether it will even work in the short-term. These turnarounds take time, and that is something we have learned over the years investing in retailers, but trying to change the way operates and moving away from industry norms seems ill advised at this time. In the current economy couponing is a new trend and right at the peak of this popularity management decided to move the company away from their sales and instead just offer low prices every day. One does not out discount Wal-Mart (WMT).
One retailer that has turned it around is Gap (GPS) which has seen their shares outperform as their namesake brand has turned a corner by offering clothes people actually want. The company was once just as hopeless as JC Penney, but with the turnaround and now new store concept they are rolling out it reminds U.S. of the late 1990s when the company experienced tremendous growth and stock price appreciation. The company reports earnings on November 15th, and this is one of our favorite retail plays so we want investors to keep an eye on this one. It has been beating solidly on their quarterly results lately and it will be interesting to see just how well they did in the last quarter and their outlook going into the Christmas shopping season.
Gilead Sciences (GILD) shares led the way higher yesterday for the big biotech shares as the company's stock rose $8.92 (13.72%) to close at $73.93/share on volume of 30.8 million shares. The catalyst for this move was the results surrounding the company's Hepatitis C treatment from trials. The results are impressive and helped push the company to a new 52-week high, which coincidently was also an all-time high.
Also rising off of results from studies was Celgene (CELG) which rose after the company announced that their drug Abraxane increased the life spans for pancreatic cancer patients. This is the latest cancer which the drug helps delay, and there are indications that the drug could help other patients suffering from other cancers. The company saw shares rise $4.16 (5.82%) to close at $75.66/share on volume of 7.6 million shares based on the news and this is further evidence that the acquisition of the company which created Abraxane is going to pay off as it is already approved to treat lung and breast cancer patients and we could see more added to that list should these positive late stage results continue.
Dendreon (DNDN) is a stock which has been beaten down by investors after disappointing operating results and is coming off of a decent quarter after hitting new lows. Yesterday investors were surprised as Needham came out and initiated coverage of the shares with a Buy rating. The company has a new Chief Executive Officer who should drive results in a positive manner and by all indications he has set the bar and expectations low in order to get the company on track to meet investors' expectations. Coming off of the lows this might be a name our readers who play the biotech sector want to look at.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.