Monday proved a flat trading day as early-week earnings reports were relatively in line with expectations and investors positioned their portfolios in anticipation of a potential "next move" by the Fed, which may be considering relaxing some of the stimulus measures that have been in place for a few years as a result of the global economic breakdown. The Fed is scheduled to meet for the first time this year on Tuesday.
The markets remain at multi-year highs right now and with political cooperation in Washington tag-teaming with encouraging economic indicators, it could be that the worst is behind us, although it's still smart, in my opinion, to entertain the fact that we're still not completely in the clear. Although the U.S. economy is gaining strength, others around the globe - mainly in Europe - remain on shaky footing and the media has chosen not to discuss such issues with any fervor of late, but it's only a matter of time before those headlines make rounds again and potentially compel investors to take a more cautious tone over the short term. Additionally, after such an impressive early-year run, some profit taking may set in and lead to a slight pullback.
International markets, which had already modestly pulled back after early-year rallies, picked up steam again on Tuesday, indicating that any broad-market pullback periods would only be temporary to allow for consolidation, barring any unforeseen breakdown in an otherwise impressive recovery. If anything, the incessant volatility of 2012 looks to have tapered off in 2013 and has the markets trading with more stability than we've seen in a while. That could be a good sign that things are returning to normal.
If that's truly the case, then more attention will be paid to individual stocks and stories. Here are a few to keep an eye on for Tuesday, 29 January, 2013 ...
Yahoo! Moving On Earnings Beat
Shares of Yahoo! Inc. (YHOO) were moving higher during the pre-market hours on Tuesday after an earnings beat on Monday afternoon threw an exclamation point on the company's rebound efforts since new CEO Marissa Mayer took the helm last summer. Although management emphasized during its earnings call that there's still a long road ahead before the company can potentially reclaim its luster lost with the rise of Google (GOOG) and other competitors, reports of strength in its search advertising business and projections of future growth based on the re-vamping of many of its on-line sites and services sparked enough investor excitement to move shares higher by three percent on Monday evening and into the early hours on Tuesday.
For the quarter, Yahoo's revenue jumped by four percent on a year-over-year basis and earnings beat estimates by four cents a share. These are nice early signs of a resurgence, but investors should still beware that the sector remains highly competitive and it's highly unlikely that lost glory can be re-had quickly. That said, if there is one sector where things can change over night, it's the Internet, search and social media sector - one fad can rally the masses in a hurry. Given the positive trends under the new skipper, YHOO could turn into a methodical long term growth play again.
Ford Flies As Earnings Impress
Ford Motor Company (F) shares were up by over two percent during the pre-market on Tuesday, also on the strength of an earnings report that surpassed consensus expectations. Earnings rolled in at a rate of thirty one cents per share against estimates of twenty five cents/share on revenue of $34.5 billion. The bulk of the earnings resulted from a strong North American market, but a wider loss was still predicted for its operations in Europe. Ford remains a solid long term play to consider for those looking to diversify into the auto market based on the company's rebound from the lows of the economic crisis and continued rebound in the North American markets. Although a stale European economy is likely to temper overall growth until the turnaround on this continent takes shape across the pond, too, the potential of an eventual European turnaround fuels the belief that Ford still has significant room to grow as the global economy methodically rebounds. Jumping all-in right after a hot earnings report is probably not the best move, especially considering the profit-taking that may go on in the market as a whole over the near future, but evidence is there that Ford can continue to truck along into a solid future for the long term portfolio. It's also only a matter of time before hype starts taking shape surrounding the Ford Atlas, possibly the next generation of the market-leading F-150 series.
RIM Set For Wednesday Launch
Research In Motion (RIMM) shares will be in the spotlight again on Tuesday, given the much-anticipated launch of its BlackBerry 10 platform, which is currently slated for a Wednesday release. A stock resurgence based on hype and potential had shares flying towards the twenty dollar mark earlier in the month, but they have since retreated - with a seven percent drop on Monday - as investors likely banked some profits and others played the 'sell the news' game as the launch is now imminent. Given the quick rise in share price that made the stock a triple in just a few months time, investors may be moving forward at a more cautionary pace since the speculative nature of the sub-$10 prices has faded and the stock is now positioned to trade more in-line with actual numbers and guidance. The days of the event-based catalyst trade for RIMM may be over and investors will want proof now that BlackBerry can reclaim some of its past glory. There's reason to believe that the brand can again thrive as consumers often flock to the hottest new product on the market.
In addition to the BB10 launch, RIM also sits on a boatload of patents that add inherent value to the company and any potential suitors. Although the company would sit on much more solid footing should the BB10 launch start strong, talk of a merger or acquisition can still materialize and effect the RIMM share price. Just recently it was rumored that Lenovo was interested in making a move for the company and shares may still be depressed enough that such talk could again enter the equation.
RIM's BB10 launch ceremony will be available via webcast on Wednesday morning. Tuesday will be the last day of posturing before the event.
Healthcare, Biotech, Pharmaceutical:
Clarification On Upcoming AEterna Zentaris Catalysts
In the weekly write up published Monday, we discussed the potential for shares of AEterna Zentaris (AEZS) to start moving based on the pipeline potential and upcoming catalysts. In regards to the upcoming Phase III trial milestone for Perifisone in the treatment of multiple myeloma (MM) within the current quarter, it should be more accurately noted - as outlined in a "Fact Sheet" published on the company website - that this will be an interim analysis of the data by an independent monitoring committee which, upon review, will recommend (or not) that the trial be continued. Such events often provide investors with a clear sign of validation, or not, of the effectiveness of the trial. It should also be noted, however, that these reviews may be more keen on safety and not necessarily efficacy. For instance, Oncothyreon's (ONTY) Stimuvax trials were recommended to move forward last spring, too, by an independent board, but the trial ended up not meeting its endpoints. So while a recommendation for continuation is a positive event, it's not a definitive sign of success.
Although some skepticism remains surrounding Perifisone in the eyes of investors following the early-2012 trial failure, analyst optimism has been higher in regards to the potential for success in the MM trial and an interim look by the independent committee could reaffirm that fact.
AEZS shares moved higher by six percent on Monday and could continue that trend as the Perifisone and other catalyst continue to play out over the duration of the quarter. Keryx Biopharmaceuticals (KERX) showed us on Monday just how quickly the tide can turn for a once-beaten down stock in this sector.
Amarin In Accumulation Zone
Amarin Corp. (AMRN) shares are un-moved this week, even with the report of Vascepa's official commercial launch sparking a new beginning for the company. Bloomberg numbers show a modest overall decrease in short activity, but the number is still significant enough to indicate that the shorts feel emboldened by the amount of time they have to cover, given the relatively slow paces of an independent product launch.
As mentioned previously, NCE could change that scenario quickly, especially if quick buyout talk resurfaces after/if a decision is announced, but for the time being AMRN should continue to trade at attractive accumulation levels for those still believing in the long term future of Vascepa meeting it's billion-dollar market potential. The fact that some popular financial media outlets - that had been AMRN bears - have turned slightly positive in their approach to the company may help nudge some of the short interest to cover. For the time being, AMRN continues to trade as a 'buy the dips' play, and the stock can be considered in a dip.
Roundup: Pre-market indicators looked as if stocks could open the day lower on Tuesday as some financial headlines took a more pessimistic tone than has been the trend of late. The Fed will hold its first session of the year on Tuesday, too, garnering a significant amount of market attention as any notes and/or actions stemming from the meeting could provide some nice insight into how the big boys view the overall health of the economy and its recovery. As mentioned above, we could also start seeing a pullback in stimulus measures, but it's likely that those measures would only be modestly pulled at first, so as not to hamper the rebound that's already been realized.
Disclosure: I am long AMRN.