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It’s Friday June 16, 2006, and we had some follow through in yesterdays trading session as the Nasdaq shot up over 2.8%, the S&P 500 jumped 2.1% and the Dow pushed its way through the 11,000 mark. But the volume on the Indexes weren’t as heavy as they should’ve been with these gains. It would’ve been a better situation for this jump to spread over a couple of days to avoid a big pullback but the market hung in there. So we may see a slight pullback today but we are looking for additional upside before the weekend.
Now lets take a look at Natural Gas. July natural gas rallied up over 61 cents to over $7.2 per mil BTU. That brings us to a company that we were hesitant about when it was over the $25 number because of a couple of reasons. First it was in a downward trading pattern and second their main source of revenue comes from the Gulf Coast, most specifically New Orleans, LA. Now it’s still a risky situation but under $19 your downside should be limited compared to the upside potential.
We spoke about precious and base metals moving on the upside on Thursday and that’s exactly what they did by the end of the trading day. Bringing many of the gold, silver, and copper stocks right along with it. Companies like Rio Tinto (NYSE: RTP), BHP Billiton (NYSE: BHP), Crystallex International (AMEX: KRY), Newmont Mining (NYSE: NEM), Peru Copper (AMEX: CUP) and Bema Gold (AMEX: BGO) move higher, but the big boys didn’t do too shabby either as Southern Copper (NYSE: PCU) added $5.94 to close at $77.94, Phelps Dodge (NYSE: PD) shot up $4.23 to close at $80.64, U.S. Steel (NYSE: X) rose $4.51 to close at $64.00 and Steel Dynamics (NASDAQ: STLD) traded up $4.66 to close at $55.57.
Now the precious and base metal stocks were not the only ones to do the whatoosie, oil and oil related stocks joined the party as companies like Petroleo Brasil (NYSE: PBR) which traded up $5.37 to close at $78.47, Oceaneering International (NYSE: OII) which traded up $6.59 to close at $78.96 and Ultra Petroleum (NYSE: UPL) which traded up $5.06 to close at $52.69 added to the rally as crude oil prices rose.
Now we should see follow through today in the oil sector as traders may be covering their short positions ahead of the weekend.
Political Front
Iranian President Mahmoud Ahmadinejad is continuing to get as much out of this tense situation as possible as he said a set of incentives and penalties aimed at persuading Tehran to curtail its nuclear programs was a positive step but left the door open in regards to how they would respond. So the beat goes on.
In the United States, President Bush inked the paperwork that has established the largest ocean wildlife reserve in the world. It is located along a string of islands and reefs that stretch 1,400 miles northwest of the main Hawaiian Islands. So President Bush is on a roll as this is sure to tack on to his favorable rating.
Sticking to the U.S., House Republicans have structured a debate on Iraq to show support for the U.S. Troops. The intent is to force lawmakers to take a position either way on withdrawing U.S. forces from Iraq in its fourth year. This is scheduled to kick off today.
Tid Bits
The founder of Microsoft (NASDAQ: MSFT) and one the richest people on the planet, Bill Gates, will be hanging up his day to day hat at the company by 2008, he will be passing the baton to his Chief Technology Officer Ray Ozzie when he steps down. Gates will be concentrating on his charitable efforts through the Bill & Melinda Gates Foundation. Now rumors are spreading rapidly that Steve Ballmer will be the next to step aside as the software giant struggles to find a way to keep itself relevant in the coming years as companies like Google (NASDAQ: GOOG) are nipping at its heels.
China Construction Bank is having a fire sale as they have sold a decent portfolio of reposed mortgage assets with a face value of US$120 million (960 million yuan) to a foreign investment group. They only received 19% of the face value of the assets, so hence the fire sale. This included both commercial property and land. This is just the start as they are scheduled to unload another billion plus worth of repossessed mortgages by year-end.
Google (NASDAQ: GOOG) is on a tear as they have just unveiled a government site search, basically this is a new function that will allow web surfers to locate data and information that are available on federal agency websites. This should come in handy not only for web surfers but for the government agencies themselves, giving their employees access to information quickly and easily.
After a series of question and answer sessions with the U.S Attorney’s Office and the SEC, it came to light that the former CEO of the New York Stock Exchange Richard Grasso took the 5th over 150 times during the numerous sessions with them. Grasso brought value to the NYSE during his tenure, he was attacked for his compensation package, which was voted on by the then members of the NYSE, and he continues to be hounded as it relates to the AIG situation. This is a developing situation.
Movers and Shakers
Some major movers in yesterdays trading session included Energy Conversion Devices (NASDAQ: ENER), which traded up $5.44 to close at $37.43 on Thursday. The stock just rode the momentum of the sector and you should see some follow through in today’s trading session.
GFI Group Inc (NASDAQ: GFIG) shot up yesterday after Citigroup Investment Research upgraded the stock from a Hold to A Buy. It rose $5.42 to close at $52.05.
Las Vegas Sands (NYSE: LVS) shot up $4.78 to close at $68.05, which brings the stock closer to its 52 week high. But we may see a pullback on the stock after the quick run up.
Steve Madden Ltd. (NASDAQ: SHOO) was upgraded to a Strong Buy from an Accumulate by C.L. King, this upgrade sent the stock up $4.64 to close at $30.08. Now the stock still has legs as it could continue it forward motion and reach the $33 maybe $35 mark in the coming weeks.
CEMEX (NYSE: CX) traded up $5.10 to close at $54.64, the company agreed to cancel a US$400-500 million arbitration case against the Indonesian government over a failed put option deal for acquiring a majority stake in PT Semen Gresik. Now it still remains to be seen if this cancellation will open the doors for Cemex to close a US$337 million deal to sell its 24 plus percent Gresik stake to the Rajawali Group. If they do get the green light this could boost the stock further.
Bear Stearns (NYSE: BSC) kick off the financial sector upward swing when they reported blockbuster numbers, the stock rose $7.36 to close at $131.56, while Goldman Sachs (NYSE: GS) traded up $5.62 to close at $144.12 and Black Rock (NYSE: BLK) settled in as it traded up $5.82 to close at $128.33. The whole sector moved higher but we are not going to list every company that moved up. A lot of the brokerage stocks are still not peaking so keep an eye on them, as they are sure to move much higher in 2006.
Other stocks that made nice moves on Thursday include Freightcar America (NASDAQ: RAIL) traded up $4.84 to close at $52.04, Dril-Quip (NYSE: DRQ) traded up $4.79 to close at $74.13, PetroChina (NYSE: PTR) traded up $4.71 to close at $99.18, American Commercial Lines (NASDAQ: ACLI) traded up 45.16 to close at $50.86,
Under Ten
Some stocks that made moves on the upside under ten bucks include Encysive Pharmaceuticals (NASDAQ: ENCY), the company stated that the Food and Drug Administration is reviewing their drug to treat high blood pressure in the pulmonary arteries, a condition called pulmonary arterial hypertension. This sent the stock up over $1.96 to close at $7.01 Back in March the company delayed its study with TBC3711 and the stock dropped from $9.45 to $4.60 within a couple of days, so you may still see some upward movement on Encysive going into next week.
Other stocks that moved higher yesterday under ten bucks included Datalink (NASDAQ: DTLK) which traded up $1.21 to close at $6.16, Daystar Technologies (NASDAQ: DSTI) traded up 98 cents to close at $9.38, Volcano Corp (NASDAQ: VOLC) traded up 95 cents to close at $9.95, Home Solutions America (AMEX: HOM) traded up 90 cents to close at $7.70, Neopharm, Inc (NASDAQ: NEOL) traded up 89 cents to close at $6.87 and 24/7 Real Media (NASDAQ: TFSM) which traded up 81 cents to close at $7.69.
Downers
Believe it or not there were some stocks that actually traded down yesterday and they include PrimeEnergy (NASDAQ: PNRG) which traded down $3.33 to close at $78.47, VeraSun energy (NYSE: VSE) the recent Ethanol IPO dropped down $2.85 to close at $27.15, Nutrisystem (NASDAQ: NTRI) traded down $2.16 to close at 457.42, TeleFlex, Inc (NYSE: TFX) dropped $2.10 to close at $51.28, Daily Journal (NASDAQ: DJCO) traded down $1.19 to close at $38.10 and Altus Pharmaceuticals (NASDAQ: ALTU) traded down $1.12 to close at $18.27.
Now some stocks under ten bucks that received the royal smack down yesterday include Catalyst Semiconductor (NASDAQ: CATS) which traded down 55 cents to close at $3.62, Himax Technologies (NASDAQ: HIMX) traded down 23 cents to close at $4.77, Electro Sensors (NASDAQ: ELSE) traded down 17 cents to close at $4.18 and Advanced Environmental Recycling Tech (NASDAQ: AERTA) traded down 13 cents to close at $3.33.
Analyst Upgrades/Downgrades
Recent Analyst upgrades include Coldwater Creek (NASDAQ: CWTR) which was upgraded to an Accumulate from a Neutral by C.L. King, Sovran Self Storage (NYSE: SSS) was upgraded to a Buy from Hold by AG Edwards, Solectron Corp (NYSE: SLR) was upgraded to a Peer Perform from a Under Perform by Bear Stearns and Nvidia (NASDAQ: NVDA) was upgraded to a Buy from a Neutral by UBS.
Recent Analyst downgrades include Catalyst Semiconductor (NASDAQ: CATS) which was downgraded to a Hold from a Buy by Needham & Co, CV Therapeutics (NASDAQ: CVTX) which was downgraded to a Market Perform from an Outperform by Piper Jaffray, General Mills (NYSE: GIS) was downgraded to a Hold from a Buy by Citigroup Investment Research, and Volt Information Sciences (NYSE: VOL) which was downgraded to a Neutral from a buy by Sidoti & Co.
Recent analyst coverage initiations include Bright Inc (NASDAQ: CELL) it was initiated with a Hold rating by Jefferies & Co, Nova Chemical (NYSE: NCX) was initiated with a Sector Performer rating by CIBC World Markets, FLIR Systems (NASDAQ: FLIR) was initiated with a Buy rating by BB&T Capital Markets and News Corp (NYSE: NWS) which was initiated with a Peer Perform rating by Bear Stearns.
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