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Monthly Archives: February 2012

Market Update

The broad market continues to chop along with a modest loss, but energy stocks are displaying strength again. The Energy sector is now up 0.6%, which makes it the best performing group this morning. Energy plays also outperformed in the prior session, when the sector scored a gain of almost 1%. Helping to drive demand for shares of energy companies is the recent climb in crude oil prices, which have crossed into positive territory to trade with an incremental gain at $106.35 per barrel. Oil hasn’t consistently traded at such heights in many months.

Market Update

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Unraveling the Myth of Cholesterol

“(NaturalNews) The idea of cholesterol creating cardiac problems has caused obsessive cholesterol count blood testing for decades. Another outcome of this scare was obsessively avoiding fat, especially saturated fats.

The food industry responded with low and no fat foods from milk to cottage cheese and more. Processed foods promoted their low or no fat contents as though they were the healthiest foods in the freezer.

Healthy fats such as coconut oil and palm oil were spurned and replaced by very unhealthy trans-fat, processed and heated cooking oils. Relatively healthy whole butters were replaced by plastic margarines.

However, this myth of cholesterol dangers lurking in saturated fats waiting to clog your arteries and cause you to die of cardiac arrest is beginning to unravel.

Unraveling the myth of cholesterol

A meta-analysis of properly performed previous studies on heart health and saturated fats concluded there was no association between cardiac issues and saturated fats. This was published in the American Journal of Clinical Nutrition (AJCN) on January 13th, 2010. (1)

Meta-analysis is a statistical method of proving or disproving varied epidemiological studies within a set topic. The AJCN meta-analysis covered studies involving 350,000 subjects who were followed for 5 to 23 years.

The trend set by the saturated fat high cholesterol disinformation a few decades ago has resulted in many Americans eating less fat and showing lower blood cholesterol levels. Yet, heart disease rates have continued to rise along with diabetes, pre-diabetes and obesity. (1)

Dr. William Davis explains in his article “A Headline You Will Never See: 60 Year Old Man Dies of Cholesterol” that cholesterol doesn’t kill “any more than a bad paint job on your car could cause a fatal car accident.” (1)

He explains the cause of most heart attacks and coronary problems is atherosclerotic plaque in the coronary arteries, which can build up and rupture or clog the arteries. He goes on to describe other factors that can cause plaque ruptures, including inflammatory pneumonia.

Though there can be some cholesterol in the plaque, cholesterol itself is waxy and pliable. Cholesterol is important for brain cells, nerves and other cellular structural components. Calcium deposits (calcification) in artery interiors are much worse components of plaque. It belongs in your bones and not in your arteries. Vitamin K2 helps transport calcium out of your blood and into your bones.

Dr. Davis recommends avoiding cholesterol panels for heart health concerns and opting for a measure of coronary atherosclerotic plaque.

The scam continues despite overwhelming contradictory evidence

Learn more:

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An Argument for a Ephemeral Oil Rally

A number of analysts are pointing out that oil prices may have moved up too quickly and the move is potentially unjustified. These price increases (with a large move today alone – see chart below) have been driven by two factors:

1. The Greek “resolution” may be pointing to a global economic stabilization that will increase demand.
2. Iran’s belligerent attitude and nuclear ambitions are creating fears of supply disruptions.

Let’s address both of these items.

Today’s move in Brent crude


1. The Greek resolution still has numerous risks even if the deal closes. But that’s not the real issue. People forget just how broken the Eurozone’ financial system is. Credit is extraordinarily tight, bank deleveraging has only just begun, and the dependence on central bank financing will take a long time to heal. A Eurozone-wide recession is inevitable and with that will come a reduction in oil consumption (as the chart below from Capital Economics shows.) With slower growth expected across BRIC nations as well, the GDP “stabilization” is not likely to support large increases in demand for oil.

EU GDP (with forecast by Capital Economics) vs. EU oil consumption


2. China and India, the only large customers for Iranian oil now have that nation in a vice. The only reason to buy from Iran and risk upsetting the US and EU is obtaining a material discount. China and India can always wait and buy crude at market prices elsewhere, but Iran cannot afford to forego critical oil revenues for very long. It will cave in and sell what it can to India and China at rock bottom prices – its revenues deteriorating further.

In the mean time Iran is struggling to pay for the food imports the population desperately needs. Many Middle Eastern brokers who sell gran to Iran have not been paid and food cargo ships are not unloading. Domestic inflation is out of control. The official numbers point to inflation that is now above 20%.

Iran official YOY CPI (Bloomberg)


This is in fact consistent with the latest numbers from the CIA:


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Morning Market Update


The three major US equities indexes opened lower this morning as manufacturing data from Europe came in below expectations and the ratings cut to ‘CCC’ on Greek debt by Fitch Ratings has cooled expectations of Greece’s ability to meet its promises. In the first half hour of trading, the DJIA is up about 3 points at around 12,969, the Nasdaq Composite is lower by nearly 4 points at around 2,945, and the S&P 500 is down less than 1 point at around 1,362.

There are several stocks trading more heavily than usual this morning, and also experiencing large gains or drops in share prices. These include the Sourcefire Inc. (NASDAQ: FIRE), FuelCell Energy Inc. (NASDAQ: FCEL), Garmin Ltd. (NASDAQ: GRMN), Lumber Liquidators Holdings Inc. (NYSE: LL), and Newfield Exploration Co. (NYSE: NFX).

Sourcefire is up more than 19% at $42.70 after posting a new 52-week high of $43.88 earlier. Volume is already about 3x the daily average of about 437,000 shares traded. The Internet security provider handily beat earnings and revenue expectations last night.

FuelCell is up nearly 13% at $1.66. Volume is already nearly double the daily average of 1.2 million shares traded. The fuel cell maker has signed a joint venture deal to develop fuel cells in Europe and could benefit from a decision by Apple Inc. (NASDAQ: AAPL) to build a clean-energy data center in North Carolina.

Garmin is up nearly 9% at $48.65 after posting a new 52-week high of $49.93 earlier. Volume is already about 3x the daily average of around 1 million shares traded. The GPS maker reported better-than-expected earnings and gave guidance above estimates. More coverage here.

Lumber Liquidators is down more than -12% at $18.85. Volume is already nearly equal to the daily average of around 358,000 shares traded. The hardwood floor retailer missed EPS estimates this morning and offered weak guidance.

Newfield is down more than -9% at $38.39. Volume is already equal to the daily average of about 2.2 million shares traded. The independent oil & gas company missed EPS and revenue estimates last night.

Paul Ausick

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Today’s Money Flows

                                                          (in millions) 
Apple                          AAPL    NASD      511.66       +50.5       1.11 
Gilead Sciences                GILD    NASD       43.97       +18.3       1.60 
Home Depot                     HD      NYSE       47.03       +16.2       2.87 
Cisco Systems                  CSCO    NASD       20.32       +13.3       2.22 
IBM                            IBM     NYSE      193.44       +13.1       1.81 
Intel                          INTC    NASD       27.23       +12.3       2.36 
PwrShrs QQQ Tr Series 1        QQQ     NASD       63.52        +9.7       1.40 
Caterpillar                    CAT     NYSE      115.96        +9.4       1.44 
UnitedHealth Group             UNH     NYSE       55.39        +9.0       2.96 
Wells Fargo                    WFC     NYSE       30.59        +8.8       2.11 
Johnson & Johnson              JNJ     NYSE       65.20        +8.1       1.65 
iShrs MSCI Emerg Mkts          EEM     ARCA       43.76        +7.7       1.64 
Baidu                          BIDU    NASD      133.13        +7.6       1.14 
Two Harbors Inv                TWO     NYSE        9.98        +7.4       2.33 
Medtronic Inc                  MDT     NYSE       38.04        +7.1       1.75 
Pfizer                         PFE     NYSE       21.19        +7.0       1.92 
Vodafone Grp                   VOD     NASD       27.30        +7.0       3.67 
Ford Motor                     F       NYSE       12.40        +6.7       1.82 
AlcatelLucent ADS              ALU     NYSE        2.48        +6.3       4.67 
Westport Innovations           WPRT    NASD       43.62        +6.0       1.34 

                                                          (in millions) 
iShrs Russell 2000             IWM     ARCA       82.05       -70.6       0.30 
Health Care REIT               HCN     NYSE       53.52       -26.4       0.42 
iShrs MSCI S Korea             EWY     ARCA       59.04       -22.6       0.08 
Wal-Mart Stores                WMT     NYSE       59.46       -19.5       0.59 
Bank Of America                BAC     NYSE        8.03       -13.9       0.71 
Microsoft                      MSFT    NASD       31.58       -12.9       0.61 
Google                         GOOG    NASD      612.71       -11.5       0.84 
Oracle                         ORCL    NASD       28.98       -10.5       0.41 
Edwards Lifesciences           EW      NYSE       74.71       -10.5       0.22 
Mosaic                         MOS     NYSE       59.01        -9.4       0.77 
Amazoncom                      AMZN    NASD      181.05        -8.7       0.79 
Qualcomm                       QCOM    NASD       62.64        -7.9       0.51 
AT&T                           T       NYSE       30.27        -7.3       0.52 
Hewlett-Packard                HPQ     NYSE       28.89        -7.0       0.59 
Merck                          MRK     NYSE       38.01        -6.7       0.43 
Chesapeake Energy              CHK     NYSE       23.73        -6.6       0.77 
Vanguard Div Appreciation      VIG     ARCA       57.36        -6.5       0.10 
VISA  (Cl A)                   V       NYSE      114.73        -6.5       0.62 
BP PLC                         BP      NYSE       46.96        -6.4       0.35 
McDonald's                     MCD     NYSE      100.47        -6.3       0.49

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52 Week Highs and Lows


New Highs 46 

COMPANY                       SYMBOL      HIGH                VOLUME 
-------                       ------      ----                ------ 
Acuity                        AYI         62.23               22,534 
Amer Vanguard                 AVD         17.37                8,228 
Ameriprise Finl 7.75% Nts     AMPpA       29.60                2,451 
Ares Cap Sr. Nts 2040         ARY         26.17                  800 
Bonanza Creek Energy          BCEI        18.32               29,513 
Cedar Fair LP                 FUN         28.90               22,320 
Clean Harbors                 CLH         71.63              275,225 
Colfax                        CFX         37.64               31,788 
ContinentalRes                CLR         91.47              144,384 
Core Labs                     CLB         124.00              32,197 
DWS Hi Incm Opps Fd           DHG         15.65               23,813 
EV National Municipal Opp     EOT         21.78               11,587 
Embotelladora B               AKO/B       31.20                1,922 
Entergy Louis 1 Mtg Bd        ELA         28.13                2,137 
Extra Space Storage           EXR         27.63              119,467 
F M C Corp                    FMC         99.49               73,915 
Fst Niagara Finl Pfd B        FNFGpB      28.08                8,663 
First Republic Bk Pfd A       FRCpA       25.38               11,198 
Herbalife                     HLF         67.40            1,883,401 
Hubbell B                     HUB/B       77.35               14,553 
Kinder Morgan Mgmt            KMR         80.54               28,809 
La-Z-Boy                      LZB         14.69              161,671 
Lions Gate Entertainment      LGF         12.75              289,392 
Lithia Motors                 LAD         27.51              150,516 
Lorillard Inc                 LO          130.13             192,520 
Magellan Midstream            MMP         72.53               17,788 
Mastercard                    MA          403.80             174,600 
Mead Johnson Nutrition        MJN         78.15              201,066 
Mississippi Pwr Dep. pfd.     MPpD        26.90                  478 
Movado Group                  MOV         21.09               13,728 
Neenah Paper                  NP          27.47                6,634 
Nuveen PA Div Shs 2015        NVYpC       10.48               11,256 
Oil States Intl               OIS         87.15              105,548 
Pulte Hms 7.375% Sr Nts       PHA         25.19                1,404 
Rlty Incm Monthly Pfd         OpF         25.20               13,653 
Regency Ctrs Pfd              REGpF       25.39               35,710 
Rouse Properties              RSE         14.75               20,362 
Sturm Ruger                   RGR         46.68               53,858 
TJX Cos                       TJX         35.55            1,214,825 
Targa Resources Partners      NGLS        41.42               20,254 
Team                          TISI        31.39                4,920 
Telus Corp                    TU          55.65               35,815 
USANA Health Sciences         USNA        38.97                3,300 
Wesco Aircraft Holdings       WAIR        15.37              139,102 
World Fuel Svcs               INT         48.80               37,876 
Wright Express                WXS         62.18                6,809 

New Lows 1 

COMPANY                       SYMBOL      LOW                 VOLUME 
-------                       ------      ----                ------ 
Cellcom Israel                CEL         13.93              200,954


New Highs 33 

COMPANY                       SYMBOL      HIGH                VOLUME 
-------                       ------      ----                ------ 
Ansys                         ANSS        65.97               62,116 
Adams Golf                    ADGF        8.29                 3,054 
Altisource Ptfl Sol SA        ASPS        61.15               38,355 
American Railcar Inds         ARII        31.51                6,000 
Atlantic American             AAME        2.50                 3,860 
Auburn National               AUBN        22.38                3,400 
Cincinnati Fincl              CINF        36.05               60,611 
Commercial National Fincl     CNAF        28.00                1,000 
Datawatch Corp                DWCH        11.24                6,100 
Encore Wire                   WIRE        29.90               22,571 
EZchip                        EZCH        38.44              113,002 
Garmin                        GRMN        49.93            2,877,840 
GeoResources                  GEOI        33.89                8,630 
Gladstn Comcl 7.125 C Pfd     GOODN       27.00                  800 
Great Wolf Resorts            WOLF        3.89                74,475 
Intuit                        INTU        61.54            1,448,612 
Key Tronic                    KTCC        10.75               38,697 
LCA-Vision                    LCAV        7.90                11,595 
M B T Fincl                   MBTF        1.94                 7,891 
Medicines Co                  MDCO        22.53              194,308 
Mitcham Industries            MIND        25.74              155,504 
NewLink Genetics              NLNK        9.77                 6,655 
Nortek                        NTK         31.74                  309 
Procera Networks              PKT         20.90              429,729 
Ross Stores                   ROST        53.01              410,838 
Sourcefire                    FIRE        43.88            1,268,133 
Southern Community Fincl      SCMF        2.15                 4,997 
Susser Hldgs                  SUSS        27.11               26,713 
Synergy Pharms Wt             SGYPW       1.70                   376 
Synopsys                      SNPS        30.76              164,906 
Texas Capital Bancshares      TCBI        33.99               26,430 
US Home Systems               USHS        13.20               93,575 
vitacost com Inc              VITC        7.81                 5,370 

New Lows 6 

COMPANY                       SYMBOL      LOW                 VOLUME 
-------                       ------      ----                ------ 
ESSA Bancorp                  ESSA        9.65                 1,501 
Geeknet                       GKNT        13.90               48,770 
Intrnt Gold-Golden Lines      IGLD        6.74                 2,862 
iSh Emg Mk Engy Sectr Cap     EMEY        49.55                  300 
iSh MSCI Emg Mkts Value       EVAL        51.42                  400 
Telik                         TELK        0.14               107,395

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Hilary Clinton to American Business: Stop Hoarding Your Cash and Invest to Spur Domestic Job Growth

“The Secretary of State wants American companies to focus their efforts – and their cash piles – on spurring job growth by investing at home and abroad.

By Tory Newmyer, writer

hillary_clintonClinton: Businesses need to start spending.

FORTUNE — Secretary of State Hillary Clinton on Tuesday issued a challenge to American business: Stop hoarding your cash, and start investing both at home and abroad to spur domestic job growth.

“We can’t help you if you’re not hungry enough to get out there and compete for the business that is going to be available,” Clinton told a lunchtime crowd gathered at the State Department for a first-of-its-kind global business conference. Noting that American companies are sitting on “large cash reserves,” Clinton called on them to “take informed risks that have always been the key to success.”

Full article

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Most Active Options Trades

FCEL       7/21/12           2.0000        5202            0.3000      up 0.1500 
AAPL       2/24/12         510.0000        2202            7.4000      dn 2.0400 
C          4/21/12          31.0000        1980            3.1500      dn 0.2700 
AAPL       2/24/12         520.0000        1656            3.2000      dn 1.3000 
HPQ        2/24/12          30.0000        1637            0.3800      dn 0.1400 
DELL       5/19/12          18.0000        1404            0.5600      dn 0.6500 
F          4/21/12          13.0000        1051            0.3200      dn 0.0500 
PVR        8/18/12          25.0000        1000            1.0000      dn 0.1000 
AAPL       2/24/12         515.0000         967            5.1000      dn 1.6000 
NFLX       3/17/12         110.0000         936            8.3000      dn 3.2000 

NBR        3/17/12          19.0000        3080            0.1700      dn 0.3800 
PFE        12/22/12          19.0000        2261            1.0500      up 0.0000 
F          2/24/12          12.0000        2064            0.0200      dn 0.0100 
VALE       6/16/12          20.0000        1802            0.4400      dn 0.0200 
VALE       6/16/12          23.0000        1802            1.1100      up 0.0000 
STD        4/21/12           8.0000        1500            0.3500      dn 0.1000 
STD        3/17/12           7.0000        1493            0.1000      up 0.0500 
JAG        3/17/12           5.0000        1479            0.0500      up 0.0000 
BAC        1/19/13           5.0000        1315            0.4100      up 0.0200 
BAC        4/21/12           8.0000        1284            0.5000      up 0.0000 

 CALLS      PUTS           TOTAL 
293441    244114        537555
BAC        2/24/12           8.0000         180            0.1600      dn 0.0100 
DIA        3/17/12         129.0000         155            1.9100      dn 0.0300 
GLD        2/24/12         171.0000         141            0.8500      up 0.0500 
AAPL       2/24/12         510.0000         135            7.5500      dn 1.4000 
AAPL       2/24/12         515.0000         133            5.3000      dn 1.4000 
X          3/17/12          32.0000         122            0.2000      dn 0.0400 
TZA        3/17/12          19.0000         109            1.3000      up 0.0300 
LDK        6/16/12           7.0000         108            0.3700      dn 0.0400 
DELL       5/19/12          16.0000         107            1.6300      dn 1.0500 
AA         3/17/12          11.0000         103            0.1200      dn 0.0100 

LVS        6/16/12          40.0000         164            0.7600      up 0.0300 
LDK        6/16/12           7.0000         162            2.8500      up 0.1300 
MGM        2/24/12          14.0000         155            0.2000      dn 0.1700 
GLD        3/17/12         165.0000         151            1.0200      dn 0.0100 
NFLX       3/17/12         120.0000         112           11.5000      up 2.8000 
BAC        2/24/12           8.0000         100            0.0700      dn 0.0200 
AAPL       2/24/12         500.0000          90            2.2400      up 0.3500 
DELL       3/17/12          16.0000          89            0.1500      up 0.0100 
AAPL       2/24/12         510.0000          73            5.4500      up 0.8000 
GLD        3/17/12         171.0000          70            3.3500      up 0.2100 

 CALLS      PUTS           TOTAL 
9456    13621        23077

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S&P’s Stovall: Stock Market Due for Pullback

“Stocks have done well this year, with the S&P 500 rising 1.4 percent to 1,361 in a week, up 24 percent from its October low and just points shy of its 2011 high.

The Dow, meanwhile, passed the 13,000 mark for the first time since May 2008.

Still, stocks may be due for a breather, and profit taking appears to be likely in the forecast, says Sam Stovall, chief equity strategist at S&P Capital IQ.

“The market continues to work its way higher. We are knocking on the door of the April 29 recovery high. It feels like there are an awful lot of people calling for a correction — or at least a digestion — and I’m one of them,” says Stovall, according to CNBC.

Stocks fell late in 2011 and normally under such scenarios, the rally that follows see equities rebounding about 23 percent in six months.

Stocks already gained that much in less than five months, which ups the chances of a correction, normally defined as a 10 percent drop.

“We think we’re going to get to where we are now, or even as high as 1380 (on the S&P) and then maybe go down to the low 1300s before approaching 1400. That’s the scenario our technicians are talking about,” Stovall says.

Others agree that a correction may be likely, and while it won’t mean the market will necessarily finish the year in negative territory, don’t expect blue skies ahead either thanks to homegrown and European uncertainties.

“This rally is not about irrational enthusiasm as much it is getting rid of irrational fear,” says Brad Sorensen, director of market and sector research for Charles Schwab in Denver, according to CNNMoney.

“There will be more bumps in the road. The whole year is not going to be as smooth as the first six weeks have.”


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Fed: Income Inequality Rose to Record Level in 2010

“Inequality of earnings in the U.S. rose to a postwar high even as transfers of wealth, such as unemployment benefits, reached a record in 2010, according to the Federal Reserve Bank of Minneapolis.

“The bottom 20 percent of the U.S. population has never done so poorly, relative to the median, during the whole postwar period,” Fabrizio Perri and Joe Steinberg wrote in a paper released Tuesday by the Minneapolis Fed. “Low-earning households have become, during the course of the Great Recession, more vulnerable due to large losses in wealth.”

President Barack Obama has made inequality a rallying point for his re-election campaign, calling for legislation to raise taxes on millionaires after Congress extended a temporary payroll tax-cut for workers.

“My message to Congress is, don’t stop here. Keep going,” Obama said Tuesday of the payroll-tax cut at an event meant to highlight U.S. workers who will benefit.

The Senate and the House of Representatives cleared the $145 billion payroll package on Feb. 17, and the White House said Obama plans to sign it into law this week.

Money earned by the bottom 20 percent of U.S. households fell by about 30 percent compared with the median during the recession as workers lost their jobs or decided to leave the labor market, according the Minneapolis Fed study.

After Paying Taxes

Households that were in the bottom 20 percent of earnings in both 2006 and 2008 experienced a $159 decrease in disposable income, or money available after paying income taxes, said the Minneapolis Fed’s Perri, a consultant, and Steinberg, a research analyst. Those that moved into the bottom quintile from a higher-earning category had $12,236 less to spend in 2008 than in 2006, the study found….”

Read more: 

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The ECB Will Likely Turn Off the Money Spigot Next Week

“The European Central Bank wants its second offer of cheap ultra-long funds next week to be its last, putting the onus back on governments to secure the euro zone’s longer-term future.

ECB Interest Rate Decision
Bloomberg / Bloomberg via Getty Images
A Euro sign sculpture stands in front of the European Central Bank’s (ECB) headquarters.

Powerful members of the central bank’s 23-man governing council are privately hoping demand at the February 29 auction will fall well short of the 1 trillion euros (837.8 billion pounds) some expect, backing their view that it should be the last.

Central bank sources say they are worried that banks will become too reliant on ECB[cnbc explains] funds, removing the incentive to restart lending between themselves.

The ECB first offered banks low cost three-year money in December to stave off a freeze in interbank lending that threatened to make the region’s debt crisis much worse.

Banks flocked to take advantage of the offer, filling their coffers, and ECB President Mario Draghi said “a major, major credit crunch” had been averted.

Some European officials have been hoping the central bank would carry on supporting the economy with a series of subsequent cheap money auctions, known as LTROs.

But the ECB wants to keep pressure on governments to improve their defense of the euro zone with better economic policies and by bolstering their European Stability Mechanism (ESM) firewall which will come into being by mid-year.

Making hundreds of billions of euros easily available to banks over a three-year period also risks fuelling a credit binge that some central bankers worry could push up inflation.

The ECB funneled banks nearly half a trillion euros in cash at the first operation on December 21. A Reuters poll of over 60 economists showed a mid-range expectation for it to allot another 492 billion euros next week with some expecting up to a trillion to be taken.

Too Generous

The first LTRO, or longer-term refinancing operation, has already eased market pressures…..”

Full article

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