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Monday, August 30th, 2010
12:45pm (EST)
It’s been a slow day of trading although the bears took an early stab at stocks and pushed the market lower at the open. The bulls have battled back somewhat but they didn’t seem too inspired despite a flurry of merger and acquisition (M&A) news today. The lack of follow-through from Friday’s big push isn’t a good sign to start the week and the bulls will face major resistance levels if they do mount a rally today.
In corporate news, Intel (INTC, $18.07, down $0.30) said it was buying Infineon Technologies AG’s wireless-solutions business for nearly $1.4 billion in cash. This wasn’t a huge deal for Intel, which warned of lower revenue growth for the current quarter, but it was a smart one. The deal with Infineon will bolster Intel’s internet business and allow the company to offer a full range of wireless options, including 3G, Wi-Fi and Wi-Max.
3M (MMM, $80.29, down $0.71) stepped-up to the plate and offered Cogent (COGT, $10.72, up $1.81) $10.50 a share to do a deal. Shares are up 20% and Wall Street is valuing the marriage at $1 billion. 3M is in love with Cogent’s toys which capture electronic fingerprint and palm print images that can then be used to encode prints into searchable files. This allow cross-referencing and companies or agencies can then compare a set of prints to a database.
And finally, in a deal that looks like the ante may have to be raised, Genzyme (GENZ, $70.10, up $2.48) is up 4% after rejecting Sanofi-Aventis (SNY, $29.03, up $0.11) proposal to acquire them for $69 a share in cash. Genzyme has an impressive drug in its pipeline and could be holding out for $80-$85 a share. They think they have something special with Campath, a multiple sclerosis drug that is in the experimental stages, and Genzyme wants a bigger premium to account for potential sales.
As we head to press, the Dow is down 68 points, or 0.7%, and is at 10,082. We mentioned in our Weekly Wrap that resistance would come in at 10,200 and the low for the day has been 10,071.
The S&P is lower by 7 points, or 0.7%, and is at 1,057. The index continues to have trouble with the 1,070 level and a break below 1,040 will not be good for the bulls. The S&P has traded to a low of 1,056 today.
The Nasdaq is once again leading the way to the downside as the index is off by 16 points, or 0.8%, to 2,137. Tech has traded to a high of 2,154 and the 2,150 level continues to act as strong resistance. Support is at 2,100 and then 2,050.
We have updated all of our current trades and we have spent much of the morning looking for new trades this week. There are a few we like, but we want to do more research before adding them to our Watch List which is already exploding with possible plays were are eyeballing. Subscribers, check the Members Area for the updates.
Tags: 3M, GENZ, INTC, option picks, SNY, stock options trading
Posted in Market Commentary, Mergers and Acquisitions | Comments Off
Friday, August 27th, 2010
9:10am (EST)
The market zigzagged for much of Thursday’s session but there was trouble on the 2pm horizon after the Kansas City Fed spoke. Things took a turn for the worse for the bulls after hearing the region’s manufacturing index fell to 0 in August, down substantially from July’s reading of 14.
The news sparked a fresh wave of selling which sent the major averages below support levels once again.
The Dow finished with a loss of nearly 75 points, or 0.7%, closing at 9,985 and below the physiological 10,000 level. Cisco Systems (CSCO, $20.70, down $0.51) led the Dow lower as the index settled below 10,000 for the first time since early July.
We mentioned in our Weekly Wrap there was a good chance the bears would take out 10,000 this week and now their cross-hairs are on 9,800. The 10,000-10,100 area will now act as resistance today with 10,200 now the second layer of resistance going forward.
The S&P 500 fell 8 points, or 0.8%, to finish at 1,047 and below its own support level of 1,050. It was also the index’s first close under this level since July and 1,000 appears to be in play with a test to 950, possibly.
The Nasdaq got slugged for a double-deuce (22 points), or 1.1%, to settle at 2,118. We mentioned yesterday that Tech will lead the way up or down and the index managed to stay above the 2,100 level, for now. Our next near-term targets are 2,050 and if that level fails then the index could fall to 1,900 on panic selling.
In M&A (merger and acquisitions) news this morning, Dell (DELL, $11.75, down $0.04) announced that its bid to acquire 3Par (PAR, $26.03, down $0.73) for $27 per share has been accepted. The offer beat out another bid from Hewlett-Packard (HPQ, $38.22, down $0.02) last night after HPQ trumped Dell’s re-raised offer of $24.30.
Look for HPQ to come back with yet another bid.
Futures are pointing towards a decent open after hearing the latest gross domestic product (GDP) numbers. GDP for the second quarter came in better-than-expected at 1.6%, down from 2.4%, previously, and exceeded expectations for growth of 1.4%.
As a result, the Dow futures are higher by 57 points to 10,024 while the S&P 500 futures are up 8 points to 1,052. The Nasdaq 100 futures are showing a 13 point pop to 1,780 as we go to press.
Subscribers, check the Members Area for the updates.
Tags: CSCO, Dell, option picks, PAR, stock options trading
Posted in Market Analysis, Mergers and Acquisitions | Comments Off
Monday, August 23rd, 2010
9:00am (EST)
Futures are pointing towards a slightly higher open this morning as mergers and acquisitions (M&A) have once again taken center stage.
Hewlett-Packard (HPQ, $39.85, down $0.91) has made a $1.5 billion bid for data storage provider 3Par (PAR, $18.04, up $0.01) this morning, just a week after rival Dell (DELL, $12.07, up $0.03) agreed to acquire the company for $1.1 billion.
Both HP and Dell have been looking to expand beyond personal computers and they see an attractive candidate in 3Par. HP it will pay $24 a share to acquire the company, or a 33% premium over Dell’s bid of $18 a share.
Elsewhere, HSBC Holdings (HBC, $49.30, down $0.63) is in talks to buy a controlling stake in Nedbank Group from Old Mutual for as much as $7 billion.
Potash (POT, $149.67, up $0.84) is higher in pre-market trading and over $152 after formally rejected BHP Billiton’s (BHP, $67.44, dup $0.09) offer and is getting interest from other companies (and countries).
M&A activity continues to heat up in the dog days of August as companies with strong balance sheets and excess cash go on the hunt for bargains. This positive catalyst could help the bulls’ case in holding current levels on the major indexes as potential acquisitions are a sign companies are confident the economy will grow and business will improve in the coming quarters.
Ahead we head to press, Dow futures are up 25 points to 10,227 while the S&P 500 futures are up 4 points to 1,074. The Nasdaq 100 futures are higher by 10 to 1,835.
We have a lot to cover this morning as we have made some adjustments to our exit targets for some of our trades. We also have a NEW TRADE we profile to replace a few that were closed from last week.
Subscribers, check the Members Area for the updates.
Tags: 3Par, BHP, Dell, HBC, HPQ, option picks, PAR, POT, stock options trading
Posted in Market Analysis, Mergers and Acquisitions | Comments Off
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M&A News Doesn’t Excite Market
Monday, August 30th, 2010
12:45pm (EST)
It’s been a slow day of trading although the bears took an early stab at stocks and pushed the market lower at the open. The bulls have battled back somewhat but they didn’t seem too inspired despite a flurry of merger and acquisition (M&A) news today. The lack of follow-through from Friday’s big push isn’t a good sign to start the week and the bulls will face major resistance levels if they do mount a rally today.
In corporate news, Intel (INTC, $18.07, down $0.30) said it was buying Infineon Technologies AG’s wireless-solutions business for nearly $1.4 billion in cash. This wasn’t a huge deal for Intel, which warned of lower revenue growth for the current quarter, but it was a smart one. The deal with Infineon will bolster Intel’s internet business and allow the company to offer a full range of wireless options, including 3G, Wi-Fi and Wi-Max.
3M (MMM, $80.29, down $0.71) stepped-up to the plate and offered Cogent (COGT, $10.72, up $1.81) $10.50 a share to do a deal. Shares are up 20% and Wall Street is valuing the marriage at $1 billion. 3M is in love with Cogent’s toys which capture electronic fingerprint and palm print images that can then be used to encode prints into searchable files. This allow cross-referencing and companies or agencies can then compare a set of prints to a database.
And finally, in a deal that looks like the ante may have to be raised, Genzyme (GENZ, $70.10, up $2.48) is up 4% after rejecting Sanofi-Aventis (SNY, $29.03, up $0.11) proposal to acquire them for $69 a share in cash. Genzyme has an impressive drug in its pipeline and could be holding out for $80-$85 a share. They think they have something special with Campath, a multiple sclerosis drug that is in the experimental stages, and Genzyme wants a bigger premium to account for potential sales.
As we head to press, the Dow is down 68 points, or 0.7%, and is at 10,082. We mentioned in our Weekly Wrap that resistance would come in at 10,200 and the low for the day has been 10,071.
The S&P is lower by 7 points, or 0.7%, and is at 1,057. The index continues to have trouble with the 1,070 level and a break below 1,040 will not be good for the bulls. The S&P has traded to a low of 1,056 today.
The Nasdaq is once again leading the way to the downside as the index is off by 16 points, or 0.8%, to 2,137. Tech has traded to a high of 2,154 and the 2,150 level continues to act as strong resistance. Support is at 2,100 and then 2,050.
We have updated all of our current trades and we have spent much of the morning looking for new trades this week. There are a few we like, but we want to do more research before adding them to our Watch List which is already exploding with possible plays were are eyeballing. Subscribers, check the Members Area for the updates.
Tags: 3M, GENZ, INTC, option picks, SNY, stock options trading
Posted in Market Commentary, Mergers and Acquisitions | Comments Off