Today we have a ton of economic news which should help push the market higher, especially once Europe is closed and we no longer have to worry about any surprises hitting the news wires. Up today we have Retail Sales (Consensus 0.2%), Retail Sales Ex-Auto (Consensus 0.2%), CPI (Consensus 0%), Core CPI (Consensus 0.2%), Empire Manufacturing (Consensus 8.4), Net Long-Term TIC Flows, Business Inventories (Consensus 0.3%) and the NAHB Housing Market Index (Consensus 26).
Looking at Asian markets we see markets are lower:
All Ordinaries - down 0.82%
Shanghai Composite - down 0.25%
Nikkei 225 - down 0.81%
NZSE 50 - down 0.57%
Seoul Composite - down 0.77%
In Europe markets are lower:
CAC 40 - up 0.78%
DAX - up 0.38%
FTSE 100 - up 0.36%
OSE - up 0.77%
Technology
Renren (RENN) was down $0.20 (3.51%) in regular trading to close at $5.49 before the company announced earnings last night. They beat on revenues by $2 million and on EPS by a penny, which was good. One issues however is that the company sees second quarter revenue coming in below estimates - but ironically this was not enough to keep shares from rising in after-hours trading. One thing to watch this week is the fact that this is a social networking site and as such might ride Facebook's coattails higher.
For those left out of the IPO, Zynga (ZNGA) could be a viable periphery play on social networking. Shares were up $0.47 (6.28%) to close at $7.95/share on 23.7 million shares of volume - which is much higher than normal. For those with a higher conviction about this whole social networking bull market and faith that the IPO Friday will pull all players higher, the options market could enable one to get cheap leverage as they expire at the close of trading Friday. That is not a trade we recommend due to the low price of the shares, but for those who really know what they are doing in the options market there may be opportunity.
It finally happened at Sirius XM (SIRI), that being the drop we thought was inevitable once the $2.20/share level was breached. Shares fell $0.105 (4.94%) to close at $2.02/share on volume of 92 million. Although we admitted got lucky on this one with Malone's help first pushing shares higher and then lower with his moves, we are now justified for our previous in-and-out recommendations and the stops would have saved an investor good money by now by forcing one out as shares fell. We were not popular with Sirius longs, and not even Sirius shorts, but the trading was correct.
Biotechnology
Arena Pharmaceuticals (ARNA) finished $0.25/share higher, or 3.93%, on Monday with volume of 25 million. We recommended taking profits yesterday and this is due to the fact that with a lack of news in the coming weeks and the rise of day traders in the stock we see the potential for shares to back off a bit. That is simply based on experience, however if one looks at the chart, as the shares approach $7/share, we are headed for some long-term resistance - there is the possibility that good news can easily push the shares higher, but this goes back over 4 years and is something to be aware of in the short-term as still nothing is guaranteed. At a minimum we would take initial investments out of this one for now, but that is simply our preference to minimize risk in the current market.
Banking
JP Morgan (JPM) closed down another $1.17 (3.17%) at $35.79/share on volume of 96 million. We find it ironic, really just sad, that people are calling for Jaimie Dimon's resignation. Are they serious?! The guy guided the bank through the financial crisis relatively unscathed when compared to its peers, and now people want to run him and his team out of town over a $2 billion loss? We wonder how many CEOs other banks would have gone through by now if this was the threshold for a CEO to fall upon their sword. We think this is utter nonsense and simply proves the short-sightedness of our time and the jealousy on Wall Street. This is a minor setback, and this bank will be back.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
