The good news heading into the weekend is that an aide for the Speaker of the House Boehner stated that the Speaker has no interest in doing anything that creates a default on U.S. debt. That is good news and allows one to believe there is a real possibility that maybe something can be accomplished over the weekend in the form of a deal. It seems that the House Republicans and Senate Democrats can agree on a deal and if that is the case then President Obama will have to sign whatever comes across his desk. He said he would not negotiate, and if everything goes according to what we just laid out then he will be able to hold true to his word AND sign this compromise. All of this also sets the stage for a possible rally into today's session close.
We are looking for value right now and sadly we have not seen the pullback we have been waiting for. Our portfolios have risen in this time, so one cannot complain, but we continue to be on the lookout for bargains...which there seem to be fewer and fewer of each day. We do highlight one name later on in the article where we are about halfway towards a pullback of any significance.
Chart of the Day:
You know you are in a bull market when the big names of an index have returns below those of the general index when both are up strongly, as this chart of the Nasdaq and Nasdaq 100 displays. So long as this trend continues it is hard to be bearish.
Source: Yahoo Finance
We have no economic news today due to the government shutdown.
Asian markets finished lower today:
- All Ordinaries -- down 0.50%
- Shanghai Composite -- CLOSED
- Nikkei 225 -- down 0.94%
- NZSE 50 -- down 0.23%
- Seoul Composite -- down 0.12%
In Europe, markets are mostly higher this morning:
- CAC 40 -- up 0.57%
- DAX -- up 0.09%
- FTSE 100 -- up 0.24%
- OSE -- down 0.15%
We have long wondered how Angie's List (ANGI) was to grow and stay competitive against smaller and more nimble competitors while also growing the top and bottom lines of the company. The concept never really made a whole lot of sense to U.S. except in the case where a person new to town signed up for the site in order to find good help. Even then, after you find good help you probably no longer have a need for the services. Needless to say, we were not at all surprised by the news that the company was going to be lowering prices in key markets to help retain and attract new customers. Shares took it on the chin finishing the session at $17.31/share after having fallen by over 17.50% on above average volume of 12.9 million shares. There are a lot more compelling internet companies out there these days to buy rather than Angie's List.
Cree (CREE) shares shot up yesterday by over 6.50% to close at $73.09/share, very close to the company's 52-week high set before the recent quarterly results hiccup. We recently talked about the analysts coming back to Cree with bullish opinions, even with the news that a sub-$9 LED bulb would be available at Wal-Mart. It seems for every bit of bad news the company gets it also has good news to offset, which was the case this week as it was announced that the company's bulbs received an Energy Star rating which will qualify the products for rebates. The Wal-Mart news might not be so bad either as it draws people into the LED lighting space to experience the benefits and could lead to them needing specialized high-scale bulbs for elsewhere in their home for when they make the switch to all LED lighting. Wal-Mart will only sell the commoditized bulbs, not the specialized ones, so this could be a huge benefit to LED lighting as a whole.
Shares have essentially fully recovered from the disappointment of the company's latest quarter. There are many reasons to be bullish here, and we have, are and will continue to be.
Source: Yahoo Finance
Speaking of tech manufacturers who are seeing lower prices, look no further than TASER International (TASR) which yesterday lowered the prices for its AXON cameras and Evidence.com web service. The AXON flex camera will now be priced at $499, down from $949 while the company will start out memberships at Evidence.com for $9.95/month (see press release here for more). This is a big reduction in pricing and investors were caught off guard by the move and pushed shares down over 10% on the news because of it. TASER has done a great job of coming back from its lows, but it has done so by adding ever more product offerings focused on law enforcement and we think that this field is becoming more commoditized with technology. Some of TASER's gear might quickly become outdated and obsolete with products like Google Glass coming out that can do multiple functions, so with this said we think that long-term we would not want to be present here, nor would we want readers to be long here either.
We have long waited for a pullback in the biotechs for another opportunity to add, but the most desirable names have merely paused on this huge run and not really pulled back in any significant way. We did notice Biogen Idec (BIIB) finished lower by just over 5% yesterday and that move has U.S. intrigued. It could be the start of one of those 10% pullbacks we have been searching for, but with the news the company released today we are not that optimistic (see news release here). Shares are quoted higher by 1% in pre-market trading, but this is a name we have moved to our main watch list page and will be paying close attention to over the next few trading sessions.
The $225/share area looks attractive as far as initial entry points, but $215/share would be optimal in our opinion. It will be key to see when and where support kicks in.
Source: Yahoo Finance
Many readers are familiar with Ulta Salon Cosmetics & Fragrance (ULTA), a long-time followed stock and one that had significant returns over the past few years. We recommended exiting when it appeared the company was running into growing pains, but the company's new CEO has gotten Ulta back on track and bullish sentiment is now returning in a big way, especially after the most recent quarterly results. The latest brokerage to have good things to say about Ulta was Citi yesterday. Citi moved its price target to $145/share from their most recent target of $128/share and also moved the stock onto their U.S. Focus List. There continue to be bright spots in the retail business, and Ulta is among them.