Jim Cramer Blog

Stocks extended gains on Tuesday as data showing February pending homes sales unexpectedly rose suggested the housing market was stabilizing, easing concerns about fallout from the subprime mortgage lending crisis.
Stocks had already been helped by a drop in crude oil prices.
The Dow Jones industrial average (DJI:^DJI - News) was up 96.22 points, or 0.78 percent, at 12,478.52. The Standard & Poor's 500 Index (^SPX - News) was up 9.92 points, or 0.70 percent, at 1,434.47. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was up 22.88 points, or 0.94 percent, at 2,445.14.
Published by Reuters

Labels: DJI, IXIC, SPX

U.S. stocks fell on Monday, after a report showing weaker-than-expected March factory activity revived concerns about the economy's health and a rise in inflation.
The data reversed an advance by stocks sparked by several large takeovers or news of possible deals.
The Institute for Supply Management said factory activity grew in March but at a slower rate than in February and less than analysts had forecast.
It also showed a jump in an inflation component, suggesting rising price pressures could dissuade the Federal Reserve from cutting interest rates soon even as growth slows.
"This (data) is not a number that should support the market. It's highlighting the weakening economy and the inflationary concern that has yet to give the Fed reason to cut interest rates," said Barry Hyman, equity market strategist at EKN Financial Services Inc in New York.
The Dow Jones industrial average (DJI:^DJI - News) was down 14.14 points, or 0.11 percent, at 12,340.21. The Standard & Poor's 500 Index (^SPX - News) was down 3.11 points, or 0.22 percent, at 1,417.75. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was down 7.96 points, or 0.33 percent, at 2,413.68.
Shares of interest-rate sensitive sectors, including banks, led losses, with shares of Citigroup Inc. (NYSE:C - News) down 1.4 percent and Bank of America Corp.'s (NYSE:BAC - News) stock off 1.5 percent.
Takeover news, including a $29 billion proposed buyout of First Data Corp. (NYSE:FDC - News), limited a broader sell-off.
Shares of Citigroup dropped to $50.62 on the New York Stock Exchange, where shares of Bank of America fell to $50.24.
On Nasdaq, shares of Microsoft Corp. (NasdaqGS:MSFT - News), the software maker among tech bellwethers, dropped 0.72 percent to $27.67.
But First Data shares jumped 21.2 percent to $32.69 after the credit-card and payment processor said it had agreed to be bought by private equity firm Kohlberg Kravis Roberts & Co. (KKR.UL). The announcement by First Data valued the deal at $29 billion -- the second largest buyout ever. For details, see (ID:nN02384673).
The sell-off in banking shares also followed a profit warning from M&T Bank Corp. (NYSE:MTB - News), whose stock dropped 7.9 percent to $106.60, after it said late on Friday problems in mortgages with limited income documentation would hurt results. For more on the subprime mortgage market, see (ID:nN16195443).
About 63 banks, or 12.5 percent of U.S.-listed banks, traded within $1 of or below their 52-week lows, according to Reuters data.
Published by Ellis Mnyandu

Labels: BAC, C, DJI, FDC, IXIC, MSFT, MTB, SPX

Drop in energy prices push the Dow ($INDU) to the flat line. This blue chip index ended the session with a gain of just 0.56 points to 12,666.87. The S&P 500 ($SPX) added 2.02 points to 1,450.02. The NASDAQ ($COMPQ) was the best performer of the day, up 19.01 points to close at 2,490.50. Volume remained moderate with the NYSE trading 1.48 billion shares and the Naz turning over 2.23 billion. Market breadth was positive by a 19-to-14 and 19-to-12 ratio on the Big Board and Naz respectively.Volatility in oil prices created volatility in the Dow Wednesday. Crude rose to a high of $59.84 today, but closed with a loss of $1.17 a barrel to $57.71. Oil inventory levels fell 0.4 million barrels, but distillates and gasoline reserves saw much larger declines of 3.7 million and 2.6 million barrels respectively. As a result, Exxon Mobil (XOM) shares fell 0.47 percent and the AMEX Oil Index ($XOI) fell half a percent as well. Tech stocks fared well Wednesday following a strong report by Cisco Systems (CSCO). The networking giant saw a 40 percent rise in profits and provided an outlook that was very optimistic. This led to a gain of 2.97 percent for CSCO, with the stock closing at $28.09. Nonetheless, the stock did close off its intraday high at $28.85. Shares of Amazon.com (AMZN) tacked on 1.9 percent today after it announced a partnership with TiVo (TIVO). He deal will allow AMZN to offer movies and TV shows that can be sent to a TiVo device. This news really helped out TIVO shares, which gained 8.9 percent on the session to close at $5.97. Shares of Texas Instruments (TXN) fell 0.6 percent after Infineon Tech (IFX) received a contract to supply chips to Nokia (NOK). Though IFX states the deal will not end their relationship using TXN chips, it was taken as bad news for TXN. However, IFX shares rallied 10.5 percent on the announcement. In economic news, fourth-quarter productivity was strong at growth of 3.0 percent. This is above estimates for a reading of 2.0 percent and well above an adjusted third-quarter decline of 0.1 percent. Unit labor costs, a key measure of inflation, came in at 1.7 percent, which was 3-tenths below estimates. This data points to an economy that is showing moderate strength, while avoiding inflationary pressures due to strong productivity growth.
Jody Osborne

Labels: AMZN, CSCO, IFX, NOK, SPX, Tivo, TXN, XOI, XOM

Apollo Investment (AINV)One area that continues to steal the headlines is private equity lending by hedge funds and high-profile private equity pools of capital. The move to go private is sweeping many industries, as many companies simply find it easier to operate more efficiently being private as opposed to being beholden to the rigors of the Sarbanes-Oxley reporting requirements for publicly traded companies. As such, Business Development Companies, or BDCs, like Apollo Investment (NasdaqGS:AINV - News) that invest in mid-size private growth companies are poised to continue their winning ways in 2007.
The stock pays a dividend yield of 9% and is forecasted to grow top-line revenues by 33% in the current year.
Diana Shipping (DSX)Everyone wants a "Chindia" (China plus India) play to leverage on the whole emerging market theme surrounding the Pan-Asian continent. Here I like Diana Shipping (NYSE:DSX - News), a dry-bulk cargo operator throwing off a dividend yield of 10%.
Two thirds of the world's commerce travels by seaborne freight, 60% of that freight is oil and gas, the other 40% dry bulk. Demand from China and India for coal, iron ore, cement, grain, fertilizer, sugar and other commodities are driving strong imports of these raw materials, while finished goods flow out to vast consumer end markets.
Covered Call Fund (BEP)I want a broad market component to my model portfolio, one that pays well yet mimics the broader averages. In this case, I like the S&P 500 Covered Call Fund (NYSE:BEP - News), a closed-end option income fund kicking out a 10.7% dividend yield. The fund returned 29% for us last year against the Standard & Poor's 500 Index (CDNX:SPX.V - News) return of 14%, and I'm looking for the BEP to again outperform the benchmark equity index.
This fund pays dividends only twice a year, which helps to keep down expenses, but by paying a big dividend in December, BEP shares have pulled back about 5% off their December highs, affording investors an attractive entry point during the current market's consolidation phase.
Deerfield Triarc Capital (DFR)Another sector of the market that I expect to perform well is the area of specialty finance, where companies are set up as mortgage REITs, but yet aren't really in the lending business. Companies like Deerfield Triarc Capital (NYSE:DFR - News) targets the following asset classes for investments: real estate-related securities, asset-backed securities, bank loans and related derivatives, and leveraged finance instruments.
Specialty REITs like DFR don't process loans like traditional mortgage REITs. They operate more like an investor, trading in structured notes and loans, while also investing in private commercial real estate deals. In fact, DFR can invest up to 25% of its capital into private deals it finds suitable, which adds a little venture sizzle to an otherwise steady-Eddie business.
As a REIT, the company is required to pay out 90% of its income in the form of dividends and that puts the current yield at 10.28%. What's not to love?
Advent/Claymore Enhanced Growth & Income Fund (LCM)Convertible securities should also outperform most other asset classes in 2007. This class of security has historically done particularly well after the Federal Reserve is done tightening rates. Two things happen when Fed policy goes to neutral as is its current stance; income investors try to lock in yield, and the stock market heads higher on the basis of the Fed pausing. In both cases, convertible stocks and convertible bonds rally smartly. I like the Advent/Claymore Enhanced Growth & Income Fund (NYSE:LCM - News), which is trading at a slight discount to its NAV while paying shareholders a dividend yield of 8.2%.

Labels: AINV, BEP, DFR, DSX, LCM, SPX

Major market indices close in the red following slew of economic data and drop in shares of Intel (INTC). The Dow ($INDU) closed with a loss of 5.44 points to 12,577.15. The S&P 500 ($SPX) fell 1.28 points to 1,430.62. The NASDAQ ($COMPQ) gave up 18.36 points to close at 2,479.42. Volume was solid with the NYSE trading 1.52 billion shares and the Naz turning over 2.32 billion shares. Market breadth was positive on the Big Board by a 17-to-15 margin, but negative on the Naz by a 13-to-17 ratio.Intel shares took a toll on the Dow and Naz with the chip giant seeing its shares fall 5.65 percent. This accounted for more than 10 points on the Dow. Intel released earnings last night that were mostly in line with expectations, but the fact that profits fell 39 percent and the company warned that gross margins in 2007 would be flat, really hurt the stock. This news follows Advanced Micro Devices (AMD) warning last week, yet the Philly Semiconductor Index ($SOX) fell just 0.81 percent. The economy was a factor Wednesday as well with data on producer prices and the Fed Beige Book released. The PPI rose 0.9 percent, which was well above the 0.5 percent expected. However, the core rate, which excludes food and energy prices, rose just 0.2 percent, though this too was above estimates. Nonetheless, the core rate is now up 2.0 percent, which will raise the attention the Fed gives it going forward. However, the consumer price index [CPI] due out tomorrow will get a lot more attention. The Fed Beige Book showed that the economy continues to see moderate growth. However, there seems to be a tightening labor market that could result in wage inflation pressures down the road. The overall feeling is that the economy is growing, albeit slowly, and inflation pressures are residing. This is good news for stocks as the data should keep the Fed on hold for the near term. Nonetheless, traders would always like to see lower rates, but this doesn’t seem likely in the first quarter of 2007.Shares of Apple (AAPL) fell 2.2 percent Wednesday ahead of the company’s earnings release after the bell. However, the stock is up nearly four percent after hours on a very positive release. The maker of Mac computers and the very popular iPod player announced that it mad $1 billion in the fourth-quarter 2006. This was a 78 percent rise with revenues coming in at $7.1 billion. Both figures easily bested estimates and the stock is seeing gains which are taking it to new all-time highs.
Jody Osborne

Labels: AAPL, AMD, INTC, SOX, SPX

Another day of gains for stocks heading into a three-day weekend. The Dow ($INDU) closed with an advance of 41.10 points to 12,556.08. The S&P 500 ($SPX) added 6.91 points to 1,430.73. The NASDAQ ($COMPQ) tacked on 17.97 points to close at 2,502.82. Volume was solid with the NYSE trading 1.53 billion shares and the Naz turning over 2.16 billion shares. Market breadth was positive by a 22-to-11 and 19-to-11 margin on the Big Board and the Naz respectively.Stocks battled back from some early weakness Friday to close with solid gains. The Dow, once again, reached an all-time high and the Naz was able to break above the 2,500 mark. Early on, an earnings warning from Advanced Micro Devices (AMD) put pressure on tech stocks, but a better than expected retail sales report helped encourage traders to buy.AMD, the major rival to Intel (INTC), warned last night that lower average selling prices for microprocessors would hurt profits in the fourth-quarter. This news resulted in a number of analyst downgrades and AMD shares took a hit of 9.5 percent on the session. Overall, the news impacted the chip sector, yet the Philly Semiconductor Index ($SOX) closed flat Friday. Most the focus Friday centered on numerous economic reports with the retail sales data getting most the attention. In December, retail sales rose 0.9 percent, 3 tenths higher than expectations. Sales less autos came in at 1.0 percent growth, double estimates. This is the second straight month of solid retail sales growth and this has convinced most analysts that the economy will experience a soft landing. The concern in the report is that growth is occurring faster than expected and this could create a more hawkish Fed. Recent speeches from Fed Presidents have shown that they are still more concerned about inflation and today’s data shows why. Now that traders can quit worrying about a Fed rate cut, they can focus on the strength in the economy and corporate profits, which should benefit stocks. Oil prices battled back today, gaining more than a dollar a barrel. Nonetheless crude sits at $53, well below the $65 price we saw just a month ago. There is talk that oil producers and OPEC are trying to figure ways to put a floor under oil prices. The fact is that OPEC can suggest production cuts, but cartel members just aren’t following these requests. Remember, Monday is the Martin Luther King Jr. holiday and this means the stock markets will be closed. This gives traders time to get ready for the rash of earnings reports that will start to pour out starting next week.
Jody Osborne

Labels: AMD, INDU, INTC, SOX, SPX

Record day for stocks with Naz hitting six year high and the Dow at an all-time high. The Dow ($INDU) closed with an advance of 72.82 points to 12,514.98. The S&P 500 ($SPX) added 8.97 points to 1,423.82. The NASDAQ ($COMPQ) tacked on 25.52 points, or one percent, to close at 2,484.85. Volume was solid with the NYSE trading 1.67 billion shares and the Naz turning over 2.40 billion shares. Market breadth was positive by a 23-to-10 and 20-to-10 margin on the Big Board and the Naz respectively.Despite concerns about economic slowing due to the sell-off in crude prices, stocks rallied Thursday with the tech sector leading the way. After a brief stint in positive territory today, oil once again fell sharply, losing nearly four percent of its value on the session. This put a barrel of crude below $52 and at a low not seen in 20-months. The fear is that slowing demand is a sign that economic slowing is at hand. However, other economic data isn’t necessarily supporting this view.Weekly jobless claims fell by 26,000 claims Thursday to move below 300K. However, the data is suspect due to a holiday shortened week during the reporting period. In England, the BOE decided that growth was too strong, pushing up inflationary pressures so they raised their target interest rate by 25 basis points to match the Fed at 5.25 percent. Shares of Google (GOOG) saw gains of more than two percent Thursday. The Internet giant benefited from positive comments at Goldman Sachs, including the raising of the company’s price target to $595. Goldman believes that Google should release strong fourth-quarter results and that 2007 should be a good one for the company. GOOG shares closed just below $500 on the session.Shares of Apple (AAPL) lost ground Thursday after seeing two strong sessions of gains. The stock has been benefiting from the release of AAPL’s new iPhone product. However, today’s decline also dealt with the iPhone. It seems Cisco (CSCO) believes it has trademarked the term iPhone and is suing Apple as a result. CSCO shares were flat on the session with AAPL down 1.23 percent. For the most part, early signs are that the fourth-quarter saw solid earnings. Alcoa (AA) got the session started off strong on Tuesday and Genentech (DNA) followed up with a better than expected release last night. Earnings warnings have been below average as well and this has many analysts calling for stronger results than the 10 percent profit growth expected for the SPX.
Jody Osborne

Labels: AA, AAPL, CSCO, DNA, GOOG, SPX

With only two days left in Santas officially sanctioned rally, much of that bull has already been put to rest. For the abbreviated and suspect work week, the NASDAQ Composite ($COMPQ) and S&P500 ($SPX) saw fit to tack on another .60% thereabouts and onto their existing yearly and not-so-ruff gainers of 10% to 14%.There were no Monday morning marriage agreements this past week, seeing how the home offices were closed for the holiday. However, the market did kick things off on the right foot Tuesday. Handily lower oil prices (USO) on a discounting of idle supply threats from Iran and mild weather on the east coast [down -2.40% on week] helped traders along with profit-engine leadership from the energy sector. The bulls had further help in a no headlines required situation, as an existing and well-positioned technical bounce and seasonal window were gifts left for Wall Streeters still watching the flickering red and green lights. Wednesday offered up some pleasant surprises with light fare M & A stories from Cenveo (CVO) and McClatchy (MNI), continued weakness in crude and the bottom is in cheer on the housing front (XHB). All told, the fodder was sufficient to keep the bulls happy for a second session of upside seasonal gifts. Call it a case of investor indigestion, schnitzeling or perhaps concern over what really matters in the investment decision: Thursday and Friday saw the few remaining investors, pressuring ever-so-slightly, Santas window of opportunity. In the weeks heaviest dose of economic realities, Thursdays better-than-expected economic reports were also apparently seen as the stronger-than-wanted variety. Call it a Catch-22 situation for market bulls intent on the Fed lowering rates in early 2007. That said, surprises pointing to a steadier economy courtesy of the Chicago PMI, existing home sales, weekly claims and a happy consumer resulted in across-the-board spikes on interest rate instruments and a definitive change of tune towards the possibility of the Fed easing its monetary policy. Speaking of investors changing their tune, closing out the week and a day without one iota of economic news, Apple (AAPL) received a tune up of sorts with more than a few folks doing more than just listening in. After two sessions of nefarious stock-option headlines that involved the man behind the music, Steve Jobs & Co. reached an agreement with the Feds. Apple announced that while Mr. Jobs did recommend favorable grants for a few key executives back in 2001, that he didnt personally partake in the inflated gratuities. As such, the company agreed to take an $84 million charge linked to the prior accounting mishap and the SEC, for their part, might have to go search for another high-profile whipping boy.
ON TAP THIS WEEK
The abbreviated work week of just three sessions will be a fairly busy one for economic watchdogs. Manufacturing on the national level courtesy of the ISM index will kick off the New Year for investors. With mixed regional reports of late and the index currently at the contraction/expansion level of 50, a reading removed from that key level will have the capacity to induce further rate debates amongst bulls and bears. The most important report however, or at least heralded, will be Fridays jobs data. Both the speed at which the slowdown is occurring, as well as possible wage-based inflation pressures will be the focus of the release and a Street torn as to what might be better for 2007s market-based Drive for Five.
Wednesday Economic: Construction Spend (-.6%), ISM Index (50), Auto / Truck Sales (5.2M, 7.3M) Earnings: Immucor (BLUD), Sonic (SONC), Merix (MERX)
Thursday Economic: Weekly Claims (318K), Factory Orders (1.4%), ISM Services (57) Earnings: Monsanto (MON), Texas Industries (TXI), Constellation Brands (STZ), Healthways (HWAY), Xyratex (XRTX)FridayEconomic: Nonfarm (110K), Unemployment (4.5%), Hourly Wages (.3%)Earnings: Shaw Group (SGR), Global Payment (GPN)
By Chris Tyler, Optionetics.com

Labels: AAPL, BLUD, CVO, GPN, HWAY, MERX, MNI, MON, SGR, SONC, SPX, STZ, TXI, USO, XHB, XRTX