September 28, 2012
Apple Versus Google: Who’s Winning the War in Maps?
 A week into the release of the iPhone 5, the backlash over Apple’s (AAPL) decision to drop Google (GOOG) Maps and introduce its own less-than-precise mapping application is out in full force. Apple, to its credit, has come out and owned its decision to launch a flawed product. “We own this; we manage the vendors. This is no one’s issue but ours,” an unnamed Apple executive told the New York Times, adding that the company will “pour as much time and manpower into repairing Maps as it takes.” It has now emerged that the Apple/Google maps contract had another year to go before it expired, so the decision by Apple to drop Google was a purely strategic one. As Matthew Yglesias of Slate notes, the Cupertino, California-based company is hoping to “take advantage of Apple’s extraordinarily strong market position right (more)…
As Sam Sees It: Investors Are Undervaluing Stocks as Wall Street Expects Third Quarter Trough
 Each week, we tap the insight of Sam Stovall, Chief Equity Strategist for S&P Capital IQ, for his perspective on the current market. EQ: In this week’s Sector Watch, you discussed the Rule of 20. What is this metric and what can it tell us about the market? Stovall: The Rule of 20 is a very old and very simple metric used to decide if the market is cheap, expensive, or fairly valued. Simply stated, if you take the trailing 12-month price-to-earnings ratio and add in the inflation rate, a result of 20 would imply that the market is fairly valued. An amount less than 20 indicates that the market is undervalued and an amount higher than 20 implies that the market is overvalued. Since 1948, the interesting thing is the S&P 500 has traded at a median level of 19.8, (more)…
What Wall Street is Saying About McDonald’s
 Price targets on fast food restaurant company McDonalds Corp. (MCD) seem to coming together around $100 per share based upon recent analyst commentary. Friday morning, Janney Capital Markets’ analyst Mark Kalinowski cut his rating on the burger maker from “buy” to “neutral,” citing concerns over same store sales and “challenging year-over-year comparisons” that may be signaling a deceleration in the company. Kalinowski said that he is hearing industry buzz that same store sales in September for McDonalds could be the worst figures of 2012 for that metric. The analyst cut his price target on Oak Brook, Illinois-based McDonalds from $105 to $100 with the ratings move. He also noted that shares have risen from about $86 to more than $93 each in less than two months; perhaps not offering the best value at the moment. Conversely, Analysts at Zacks boosted (more)…
China Stocks Hold Gains Ahead of Long Holiday
 China stocks on Friday eased into next week’s long holiday with gains from mid-September intact but with no sign of another rally soon. The Hang Seng Index in Hong Kong edged 0.4% higher to close at 20,840, up 0.05% for the week. The index of Chinese companies inched up 0.6% for the day and 0.03% for the week to end at 9,832. The market has traded in a narrow range after shooting up 7.8% from September 5 to 14 due to new money-easing policies by central banks in Europe and the U.S. Next week Chinese markets will close for Golden Week, a combination of National Day and Mid-Autumn Festival celebrations. Hong Kong’s stock exchange will shut down Monday and Tuesday. “The market is in a holiday mood, and not many traders are active,” said Francis Lun, managing director at Lyncean (more)…
Finish Line Boosts Expectations, Pens Deal with Macy’s
 Topping Wall Street predictions, The Finish Line Inc. (FINL) said this morning that is expects fiscal 2013 earnings to rise by 6 percent to 9 percent over 2012 totals of $1.53 per share. Helping to fuel this growth will be a freshly disclosed sales agreement with Macy’s (M) to become its exclusive athletic footwear partner. The Indianapolis-based sports apparel retailer anticipates the new partnership to add $250 million to $350 million to sales in the long term. In today’s earnings report, Finish Line cruised past analyst’s estimates with second quarter profit increasing to $24.97 million, or 49 cents per share, from $20.9 million, or 39 cents per share in the second quarter last year. Sales blossomed to $385 million in the latest quarter as compared to $332 million the year prior. Analysts were calling for earnings of 44 cents per (more)…
Bulls Battling News of Global Economic Slump, Fiscal Cliff
 Yesterday’s bounce was a little stronger than “technically” justified, suggesting money managers are buying on pullbacks even in face of a number of major uncertainties. Both the DJIA and S&P 500 closed at my resistance levels. Internally, the DJIA and Nasdaq Comp. were firm with advancing issues and upside volume topping decliners and downside volume by healthy margins. But the market will open on the downside this morning, yet another test of money managers’ appetite for stocks. Support at DJIA 13,415 (S&P 500: 1433 must hold to prevent a drop to DJIA 13,215 (S&P 500: 1415). Investor’s first read – an edge before the market opens DJIA: 13,485.97 S&P 500: 1447.15 Nasdaq Comp.: 3136.60 Russell 2000: 843.54 (Friday, September 28, 2012 9:16 a.m.) MONEY MANAGERS BUYING ON DIPS: Money managers can be expected to continue to buy on pullbacks, but (more)…
September 27, 2012
Achillion Shares Continue Upward March on Positive Drug News
 Shares of Achillion Pharmaceuticals (ACHN) are on the rise again today after reporting positive results for its hepatitis C (HCV) drug ACH-3102, a second-generation pan-genotypic NS5A inhibitor. In May, the U.S. Food and Drug Administration granted a “fast track” designation for ACH-3102. The New Haven, Connecticut company reported that “significant reductions in HCV RNA were achieved in subjects with resistant variants at baseline.” Combining the latest data with safety and tolerability data from a Phase 1a clinical trial, Achillion is moving forward with a Phase 2 clinical trial evaluating ACH-3102 in combination with ribavirin for the treatment of patients with chronic genotype 1b HCV. Achillion has three more hepatitis C drugs in its pipeline and among a handful of pharmas looking to bring a new oral Hep C drug to market. Currently, the main drug of choice is the injectable (more)…
Trading Price Action Moves Part 2: Volatility Signals
 In the first article of this series, we looked at price action patterns using daily trading ranges and single trend breakout entry signals. This time, we’ll be taking a closer look at the “mechanics” of trading signals. As president of Day Trading University, our training has reached literally thousands of active traders in price action day and swing trading entry patterns using a very specific series of professional trading setups. We will review some of the most useful price action trading strategies in this series of articles. The difference between using price action as a primary strategy, compared to other technical trading approaches, is that the volatility and price movement is considered the most important trading signal. While other indicators can still be used (most notably volume), it’s the overall “profile” of price action movements that takes precedence when making (more)…
Energy Hits a Fork in the Road
 One economic topic that isn’t getting the attention it deserves is the energy policy. The drought of 2012 along with the expiration of subsidies paid to ethanol blenders will make it nearly impossible to reach the Renewable Fuels Standards (RFS) as early as next year. The standards that were put in place to increase this country’s energy independence were based on protectionist interests and were only viable as long as ethanol produced by the U.S. was subsidized while Brazilian ethanol was simultaneously taxed. The difference between U.S. ethanol and Brazilian ethanol is the source of their primary inputs. We use corn, which is slower to grow, harder to use and more expensive than the cane sugar Brazil uses as the feedstock for their ethanol production. It will be very interesting to hear how the Presidential candidates debate their renewable energy (more)…
Sealy Gets in Bed with Tempur-Pedic for $1.3 Billion
 Foam mattress maker Tempur-Pedic (TPX) said this morning that it will pay $2.20 per share to acquire competitor Sealy Corp. (ZZ) in a deal valued at $1.3 billion, including debt. Sealy closed trading at $2.14 on Wednesday, so the deal only represents at 2.8 percent premium, but it is a 23 percent premium compared to Sealy’s 30-day average closing price. The combined global bedding provider will be valued at $2.7 billion, according to TPX management. Public since early 2006, shares of Sealy have traded as high at $17.59 in 2007 and as low as 43 cents in 2009. Sealy, whose brands include Posturepedic®, and Stearns & Foster®, has roots dating back to 1881, 111 years before Tempur-Pedic became a company in 1992. “This is a transformational deal that brings together two great companies, each with globally recognized brands,” said Tempur-Pedic (more)…
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