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Pockets of Strength But Otherwise A Boring Session

|Includes: AAPL, ACV-OLD, AU Optronics Corp. (AUO), DHR, EL, KEI, UL
The market has settled into a pattern that sees early weakness followed by midday buying. It tells me those smart enough to buy on dips are willing to hold as pressure mounts on those fence-sitters who must now deal with a different kind of fear. That is fear of missing the boat. The thing is that investors, for the most part, aren't taking the bait. On that note, it could mean we see a noticeable pullback into the close. I do like the action in coal stocks and semiconductors. The action in coal is really compelling as it's an American sector that could benefit hugely from demand in China, which saw coal imports increase 68% in the first half of the year. There is always the overhang of regulations and clean energy zealots hurting profits and opportunities, but the demand is there.

Speaking of demand, solar stocks are heating up, and again it seems like the Chinese solar stocks are acting better than their U.S. counterparts.
The semiconductor space has been building momentum, and looks especially attractive today. Otherwise, the market in general is in wait-and-see mode. It really is a game of chicken at this point. The guys holding all of the winners have the edge as they try to keep the pressure going by not dumping until we get a peak at the jobs report next Friday.

Manufacturing Savior?

A piece on Bloomberg today says the President could easily get back his mojo by forcing the dollar lower, which would improve exports. The implication is greater global demand means more manufacturing opportunities. Tomorrow, we get the ISM report on manufacturing. It stands to reason the report could show a sharp decrease in activity based on recent regional reports. Of course, this line of logical thinking really doesn't have any place in the market, right? (I'm just being a little cynical.)
One thing that's really moving around fast is the takeover rumors and contract rumors.

  • AUO trading huge volume on scuttlebutt it just got a major contract from Apple (NASDAQ:AAPL). BCSI has been in and out of the rumor mill for a couple of weeks, the stock is higher today as the rumor has resurfaced. My opinion is that both rumors are plausible, but I would only play those stocks as trades.
  • One of the reasons for the excitement in solar could be acquisition news that Danaher Corp. (NYSE:DHR) is buying Keithley Instruments (KEI) for $300.0 million in a deal that has the shares of KEI up more than 70%. 
  • I like the action on Estee Lauder (NYSE:EL), although I'm not officially hearing anything. Typically a move by a giant like Unilever (NYSE:UL), which announced the takeover of Alberto-Culver (NYSE:ACV) this week, triggers additional deals by its rivals. EL has a $12.0 billion market cap so a suitor would have to have deep pockets and maybe investment banking help.