China Leads Declines
Stocks are selling off around the world. And China is in the lead. The Shanghai Composite is down 23% since August 4. Former Morgan Stanley Asia economist Andy Xie says Chinese stocks have been in bubble mode and there are more declines to come.
The main issue for China is the same as it is here in the U.S.: prices are getting ahead of fundamentals. At least, that's the fear. It's funny, though, that nobody looks at AIG's moonshot and concludes the U.S. stock market is a bubble.
I sure hope this isn't the end of the rally, because I'm really growing fond of my new term, the Cash for Clunker Stock rally.
*****In his morning missive to his TradeMaster Daily Stock Alerts readers, Jason Cimpl offered the following advice: "Pay close attention to any weakness in our early warning sign groups such as small caps, technology, oil and bonds, as ways to gauge a top in the US indices."
For clarification, if the Cash for Clunker Stock rally is over, we will see bonds rally as investors move into safe-haven investments. So far today at least bonds are down right along with stocks. And since U.S. stocks are down only slightly, I think it would be prudent to consider the current action profit-taking for now.
******We should probably add shipping stocks to Jason's list of stocks to watch. The Baltic Dry Index, a leading indicator that measures shipping rates, is down 28% this month.
Shipping rates are down mainly because China is buying less iron-ore. And new ships being delivered is expanding supply and helping drive prices lower.
The Baltic Dry Index was absolutely decimated at the outset of the global recession. SmallCapInvestor PRO readers made 65% on shipping stock Genco (NYSE:GNK) as shipping rates recovered. We took profits on July 22, as the Baltic Dry Index was showing signs that it would roll over.
If shipping rates fall another 50%, as some are expecting, it will mean two things. One, the bloom will be off the global economic recovery and the Cash for Clunker Stock rally will have ended. And two, it will be time to buy shipping stocks again.
*****Before we get too bearish, though, please note that two M&A deals were announced today. Disney (NYSE:DIS) is buying Marvel (NYSE:MVL) for $4 billion and oil services company Baker Hughes (NYSE:BHI) is buying BJ Services (NYSE:BJS) for $5.5 billion.
Mergers and acquisitions are generally considered bullish because they indicate that the acquiring company feels prices are attractive and there is growth ahead.
That's especially significant in the case of Baker Hughes. There's not an analyst out there who hasn't been saying that oil prices have risen too high in the current environment of growing supply and falling demand.
Oil is an important indicator of investor expectations for the economy. And now, it seems, even the "insiders" are getting more bullish on oil prices.
Oil is trading below $71 today. That's a far cry from the $50-$60 range that some say is fair value. And a move to these levels is looking less and less likely.
Best regards,
Ian Wyatt
Editor
Small Cap Investor Daily
P.S. My book The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks is coming out on September 14 - visit www.smallcapbook.com to learn more. You can also follow me on http://twitter.com/ianwyatt
Ian Wyatt is the Chief Investment Strategist of SmallCapInvestor.com and author of The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks. You can learn more about his book and receive small-cap stock picks at www.smallcapbook.com.
Solar Stocks RSOL and SOL Lead Small Caps in Friday's Trading
Opening volume was higher in this morning's session with all the major indices, except the Dow, trading in the negative. As of press time at 10:40 A.M. Eastern the Dow is trading just positive at 8,768.67 while the Nasdaq and S&P 500 were down 0.10% and 0.04%, respectively.
Leading small cap gainers today was Real Goods Solar (Nasdaq:RSOL) up 42% on news of a $30 million contract to install a solar power program for the Freemont Union School District in California. RSOL is a commercial solar energy integrator in the California and Colorado markets.
Other gainers in this morning's session include Cadiz (Nasdaq:CDZI) up 40%; American Woodmark (Nasdaq:AMWD) up 18.9% on posting a surprise Q4 profit; and Chinese solar firm Renesola (NYSE:SOL) up 16.9%.
Small cap decliners include United PanAm Financial (Nasdaq:UPFC) down $1.02 to $2.96 for a loss of 26.1% after a notice of delisting from the Nasdaq; Hawkins (Nasdaq:HWKN) down 14.1%; Exide Technologies (Nasdaq:XIDE) down 16.2%.
No sooner do I say that the news cycle is turning negative, we get some significant upgrades in the financial sector. Goldman Sachs (NYSE:GS) got an "outperform" rating and rose 5.2%.
RBC Capital Markets called KeyCorp (NYSE:KEY) a "top pick" and the shares ramped 20%. And Fifth Third Bancorp (Nasdaq:FITB) rose 7% after it reported that it has filled the capital shortfall identified during the Treasury's "stress tests."
At least for a day, the financials re-took their leadership for the markets. Though it should be noted that the Financials ETF (AMEX:XLF) has not made a new high, and the financials are sharing the stage with energy stocks.
*****Money managers report that a lot of cash is sitting in the sidelines. Both individual and institutional investors have been slow to get back into the stock market.
Of course, that's exactly the scenario that can keep stocks moving higher. At least, so long as the economic data doesn't take a turn for the worse.
*****Citigroup reported in a research note that put options volume is picking up and so is the Volatility Index, the VIX. Investors buy put options to profit form downside moves for stock prices. Institutional investors protect gains in large portfolios with put options.
The VIX measures the cost of put options. When it rises, it means that investors see increasing risk in the stock market. Citigroup's chief technical analyst, Tom Fitzpatrick, believes the rise in the VIX is showing "strong warning signals" for the rally.
*****Bulls vs. Bears, fear vs. greed - that's what it always comes down to. Will the analysts who see better times ahead for the banks win out? Or will those who see "warning signs" be right? As always, we'll see…
*****The gains just keep coming for SmallCapInvestor PRO stocks. Since March, we've seen a 152% gain from our top oil stock, and we had Genco Shipping (NYSE:GNK) hit triple-digit territory before recent weakness took it below that threshold.
Now, one of our top China stocks is knocking on the triple-digit door. The obvious catalyst for this stock will is that it moves off the over-the-counter market and starts trading on the Nasdaq as soon as today. I expect the increased exposure to help drive the share prices higher.
This stock blew through our conservative $8 price target. The new listing and rising prices for its product will have a positive influence on shares. Our target price is being raised to $14 per share. That's about 40% higher from current prices.
I am very bullish on Chinese stocks. And SmallCapInvestor PRO now has 3 Chinese stocks in the portfolio. In fact, we just added one on Wednesday. I've put all three stocks in a brand new Special Report called "Going for Growth: 3 Top Chinese Stocks to Buy NOW." Find out how to get your copy HERE.
Market Extends Rally with Shipper Leading Small Caps
Shippers keep showing up in the top small cap movers. Last week we saw FreeSeas (Nasdaq:FREE), Hornbeck Offshore Services (NYSE:HOS), and Genco Shipping & Trading (NYSE:GNK) putting up big gains. Most economists peg this to the ridiculously low shipping rates from earlier this year and to the boom in commodities trade in emerging markets.
Today's trading has another shipper leading the pack: TOP Ships, Inc. (Nasdaq:TOPS). The Athens, Greece based firm is up 41.4% to $3.24 in today's trading through press time (1:30 P.M. Eastern).
Look for other small cap shippers to "chart new territory" over the coming months as shipping rates increase and global trade gets back on track.
Another repeat for small cap gainers is Green Plains Renewable Energy (Nasdaq:GPRE). Green Plains gapped up yesterday from Friday's close and returned a nice 13% one day gain for investors. It hit $9.38 a little after 11:30 A.M. (Eastern) before falling back to $7.78, a 24.9% gain since yesterday's close.
(Special note: if you're looking for how to profit from all the shippers putting up double digit returns, check out my new report: pro.smallcapinvestor.com/shipping )
Small cap losers for today include EXFO Electro-Optical Engineering (Nasdaq:EXFO), down 19.3%, on news of the recent quarter loss and guidance for the next quarter that revenues for Q3 2009 will come in below the forecasted range. Other decliners include Track Data (Nasdaq:TRACD) down 18%, NewStar Financial (Nasdaq:NEWS) down 15.3%, and Daktronics (Nasdaq:DAKT), maker of large screen displays and electronic scoreboards for stadiums and theaters down 14.1% on news of Q4 profits falling short of Street expectations and indications that any recovery will not be noticeable until 2011.
*****Perhaps you've heard the phrase "the sins of the father shall be visited on the son." Well, here's a case where that's definitely not true:
Yesterday, The Travelers (NYSE:TRV) insurance took the place of its parent Citigroup (NYSE:C) on the Dow Industrials Average.
Reuters reports that in 2002, when Citigroup spun off The Travelers, former Citigroup CEO and founder Sandy Weil said he wanted to focus on "…important opportunities to invest our capital really on a global basis, in much more high-growth businesses."
Apparently that didn't work out too well for Citigroup. The Travelers, on the other hand, is being hailed as an icon of financial stability. Oh, the irony.
*****The Federal Highway Administration said that the number of miles driven collectively by Americans dropped another 3.1 billion miles in March 2009 from a year earlier.
3.1 billion is a big number. So if Americans are driving 3 billion fewer miles a month, it means 36 billion fewer miles a year. Sounds like a huge drop in demand for oil, right?
Well, we'd have to know how many miles are driven a year to be sure. And the article reporting this data conveniently left the total out. That meant I had to do more work…
In perusing the Federal Highway Administration website, I actually couldn't find the raw total miles for 2008. But I found the cumulative estimate made in December of 2008, so that will have to do. The number? 2.9 trillion miles!
Now that's a huge number. (To put it in perspective that would be 15,591 out and return trips to our Sun-it would be like if you travel to and from the sun 42 times day. This is NOT a small number.) And 3.1 billion a month, or even 36 billion a year, kind of pales in comparison, doesn't it?
*****I don't mean to dismiss how much demand destruction has impacted oil prices. But like any market, the oil market clearly over-corrected when it sent oil prices to $33 a barrel.
Have oil traders over-reacted in the opposite direction with oil at $68 a barrel. Maybe. But then again, there's a reason that oil traders are content to pay the lease rates on tankers to store unsold oil. They clearly believe they'll get higher prices later: much higher prices.
*****I discovered yesterday afternoon that the TradeMaster video from technical analyst Jason Cimpl didn't work quite right. So I'm going to make it up to you today by offering you Jason's latest video masterpiece.
This video features the two latest trades Jason issued for his TradeMaster Daily Stock Alerts readers. The two positions featured in the video were just bought yesterday. I will follow them here in Daily Profit so you don't miss Jason's sell signal if you choose to enter either of these trades.
You can view the video HERE.
Russell 2000 Small Caps Lead the Indices
Leading small cap gainers today include U-Store-It Trust (NYSE:YSI), up 19.6%, which owns and operators self storage facilities in the United States on news of its establishment of a self storage network to include the company owned 386 facilities as well as 150 locations run with third-party partners, and plans for 250 more in the works to join the network.
Other small cap leaders include MarineMax (NYSE:HZO) up 22.64%; American Axle (NYSE:AXL) up 22.06%; Russ Berrie & Co (NYSE:RUS) up 19.6%, Celldex Therapeutics (Nasdaq:CLDX), up 32.1%; Green Plains Renewable Energy (Nasdaq:GPRE), up 32.7%.
Readers from Friday's edition will recall that GPRE was a market leader before the weekend as well. It closed on Friday at $4.40 after flirting with the $4.50 mark having opened at $3.41 in the morning. In Monday's open GPRE gapped up to start at $5.00 and as of press time is at $5.84, up 32.7% for the day.
Since the opening bell after Memorial Day, GPRE is up 107%. GPRE produces, distributes, and markets ethanol and related products in the United States. GPRE was founded in Omaha, Nebraska in 2006. GPRE recently purchased two ethanol plants previously owned by VeraSun Energy.
*****Both the Nasdaq and the S&P 500 are hitting new recovery rally highs today. Part of the reason for today's strength is the better than expected construction numbers released this morning.
The 0.8% gain in construction spending for April was the biggest gain in nearly a year. And it was far better than economists' expectations of a 1.5% drop.
This is how it will be during an economic recovery. There will be wild swings in data. Don't be surprised if construction contracts for May, and then picks up in June. Or vice versa. It really could go either way. And that won't necessarily be bad news.
Of course, it would be great to see the numbers continue to steadily improve. But that's not the way it works when an economy is recovering from the type of shocks the U.S. economy has received.
*****General Motors (NYSE:GM) ended the suspense. As expected, it filed for bankruptcy protection this morning. It's the 4th largest bankruptcy filing in US history. GM has $82 billion in assets and $172 billion in debt.
GM stock is up +20% in the early going today. I want to know why. My guess is that shorts are covering their positions. Still, I don't know why. It's expected that GM common stock will be cancelled as part of the bankruptcy proceedings.
That would mean that shorts don't have to cover their position. However, shorts may continue to incur borrowing fees from the shares they have sold. In order to be completely free of the trade, maybe covering is the way to go.
*****I've read that GM may resume trading as a new public company in 6-12 months. I don't see why it should take that long. A motivated bankruptcy judge ought to be able to deal with GMs debt faster than that.
But I will say that, depending on the terms of the bankruptcy, GM stock should be a good buy when it comes public again. GM will be stripped of one of its major stumbling blocks - pension benefits.
It's estimated that pension benefits add $1,500 in expenses for GM on each car it builds. Obviously, in today's competitive environment, that's insurmountable.
However, once these costs are gone, and GM can operate with leaner margins, the stock could be a good buy.
*****SmallCapInvestor PRO readers are enjoying their second +100% gain this year. The stock is Genco Shipping (NYSE:GNK) and it was recommended on April 9 at $14.20 a share. Please do not by the stock now. We will be taking our profits on it in the near future.
We're holding our other triple digit winner. This domestic oil and gas stock is up +130%. But the strength in oil prices means that there should be more gains coming. Look to this sector to continue providing winning small caps in the months to come.
I'm getting ready to increase our exposure to China in SmallCapInvestor PRO. The two Chinese stocks in the portfolio now are up, and China is the best growth story in the world right now (indeed, some analysts and economists are calling for China, not the U.S., to lead us to recovery). For more on SmallCapInvestor PRO, please please click HERE.
*****Graham Corp (AMEX:GHM) reported earnings on Friday. And they were not very good. The stock has lost nearly $3 over the past few days. That's plenty for me. If you bought Graham on my recommendation in Daily Profit, it is now time to take your profits. I hope you did well.
Small Cap Movers: FREE, EXEL, and DYII
Leading today's rally in small cap stocks is FreeSeas, Inc. (Nasdaq:FREE), a Greek based operator in international dry bulk shipping, on news that Q1 earnings of $0.29 per share beat analysts estimates by $0.04 or $0.24 per share. The company attributes much of this to the upward pricing in the Dry Bulk Index. Further statements from the company indicate management's expectation to achieve profitability throughout 2009. Shares are up 26% through morning and early afternoon trading to $2.76.
Other small caps in the shipping sector posting gains today include Hornbeck Offshore Services (NYSE:HOS) up 5.6%, Diana Shipping (NYSE:DSX) up 5.75%, and Genco Shipping (NYSE:GNK) up 6.7% for the day.
(Note: for more information about profitable shipping plays check out my new report, "3 Value Play Shipping Stocks to Navigate to Calmer Waters". You can find it HERE.)
Other small caps over 20% today (as of 1:30 P.M. Eastern) are from the healthcare sector with Exelixis (Nasdaq:EXEL) posting a 21.9% gain on news of it development partnership with heavyweight drugmaker Sanofi-Aventis to work on a cancer drug. The deal is expected to be worth $140 million upfront and eventually up to $1 billion. The other health sector leader, and in third place today, is Dynacq Healthcare (Nasdaq:DYII) currently trading at $3.37 on today's gains of 21%.
As of 1:30 P.M. Eastern the DJIA is up 0.90% to 8,374.73, the Nasdaq trails it just slightly bringing in a gain of 0.82% at 1,745.20, and the S&P 500 leads both with a 1.25% gain for trading to bring it to 904.20.
*****Yesterday, it was reported that median home prices fell to $209,700 from $246,400 in April 2008. That's a steep year-over-year correction, even though prices were up from March 2009.
Today, we hear that that new home sales posted a gain, though not as big as expected.
The housing market is bottoming. How long will the bottoming process take? Common sense would say it will take a while, probably a couple years, to work off the inventory and get current delinquent loans back on track.
Persistently high unemployment rates will not help speed the recovery in housing. But at least we're seeing signs that the housing market is stabilizing. We should expect to see swings in the data, one good month could easily be followed by a bad month. It will be interesting to see how much the stock market moves on housing data going forward. I would suspect that only extreme readings would move stocks significantly.
*****The Mortgage Bankers Association reported that 9% of mortgages are delinquent. Throw in mortgage holders that are in foreclosure and it's 12%. That's a huge percentage. It's also the highest since data was tracked, starting in 1972.
It's easy to see why the numbers are so ugly - as the unemployment rate rises, fewer can afford their mortgages. And in some areas of the country the unemployed can't move to find a job because they can't sell their home. So it's no wonder that more and more economists expect a "double-dip" of recession.
74 percent of economists responding to a National Association for Business Economics survey believe the U.S. economy will grow in the 3rd Quarter. But the growth won't be strong or lasting.
A growing number of economists, including Dr. "Doom" Nouriel Roubini, believe it's likely that the U.S. economy will go back into recession in the second half of 2010, when government stimulus wears off.
*****The economic recovery is facing two major speed bumps - rising energy prices and rising interest rates. As the economy recovers, energy prices will rise, soaking up excess household funds and leaving less for discretionary spending. We've seen oil prices practically double so far this year and OPEC has announced that it feels that RIGHT NOW oil should be valued at $80 a barrel: meaning another 27% from today's $63. That's going to hurt at the pump even more. Here at the Washington, D.C. offices we're already up 40% since December with a regional average of about $2.39.
As the government continuer to sell Treasury bonds to fund the budget shortfall (over $1 trillion for 2009, and counting) and pay for stimulus initiatives, bond yields will rise, making it more expensive for consumers to get a loan. That will affect the market for big-ticket items like cars and new appliances, not to mention homes.
*****All this will have important consequences for your investments for the foreseeable future. First and foremost, it will be important to follow sector trends. Energy will remain strong, but sectors like retail, housing and consumer goods will probably remain volatile. There will be some quick, isolated opportunities here and there in those sectors, but the broader trend is not positive.
Also, risk management will be critical to success. Investors should have exit strategies in place for their investments. This is not a time to be thinking "buy and hold." Rather, if you have gains, don't be afraid to take the money and run.
*****Speaking of taking your money…just this morning I advised my Top Stock Insights advisory service members to take their 19% gains on BlackRock, Inc. (NYSE:BLK) today. BlackRock was my feature recommendation for profiting from the Treasury's Public-Private Investment Program (PPIP) to remove toxic assets from banks' balance sheet.
Several important aspects of the plan have been removed, and I suspect Treasury Secretary Geithner will abandon it altogether soon. The PPIP is simply not going to work, and for many of the reasons I've stated here in Daily Profit.
First and foremost, banks simply don't want to sell. And Geithner blew his opportunity to gain some leverage over the banks through his "stress tests." And all the bailout money didn't exactly convince banks they were in danger of failure and needed to sell.
At least Top Stock Insights readers managed to turn a profit on Geithner's failed plan. Now, we're setting our sights on India. The recent election there has set the stage for massive economic reform and jumpstart to growth.
Despite a huge jump for Indian stocks in the wake of the election results, not many investors are considering India right now. But I think that gives us a distinct advantage as India could be one of the great growth stories this year and going into the next several years. If you're interested, you can find out how to get my Special Report 3 India Stocks Set to Soar in 2009 by clicking HERE.
DryShips, Landrys Restaurants and Zumiez lead small-cap percentage gainers
Also included among the results: GMX Resources Inc. (Nasdaq:GMXR), Danaos Corp. (Nasdaq:DAC), Tempur Pedic International Inc. (Nasdaq:TPX), Rubicon Technology Inc. (Nasdaq:RBCN), Eagle Bulk Shipping Inc. (Nasdaq:EGLE) and Genco Shipping & Trading Ltd. (Nasdaq:GNK).
DryShips, Focus Media Holding and Ener1 lead small-cap percentage gainers
Also included among the results: Innophos Holdings Inc. (Nasdaq:IPHS), China Biotics Inc. (Nasdaq:CHBT), Micrus Endovascular Corp. (Nasdaq:MEND), HADERA PAPER Ltd. (Nasdaq:AIP), Beacon Federal Bancorp Inc. (Nasdaq:BFED) and Genco Shipping & Trading Ltd. (Nasdaq:GNK).
Consolidated Graphics, Macerich and First Busey lead small-cap percentage losers
Also included among the results: Vocus Inc. (Nasdaq:VOCS), Western Alliance Bancorp (Nasdaq:WAL), Cabot Corp. (Nasdaq:CBT), Genco Shipping & Trading Ltd. (Nasdaq:GNK), First United Corp Maryland (Nasdaq:FUNC) and Heritage Crystal Clean Inc (Nasdaq:HCCI).
TBS International, Collective Brands and Speedway Motorsports lead small-cap percentage losers
Also included among the results: Agree Realty Corp. (Nasdaq:ADC), Penn Virginia Corp. (Nasdaq:PVA), Korn/Ferry International Inc. (Nasdaq:KFY), Dorman Products Inc. (Nasdaq:DORM), SunPower (Nasdaq:SPWRA) and Genco Shipping & Trading Ltd. (Nasdaq:GNK).
Clearwater Paper, TBS International and Kronos Worldwide lead small-cap percentage gainers
Also included among the results: Genco Shipping & Trading Ltd. (Nasdaq:GNK), RehabCare Group, Inc. (Nasdaq:RHB), AK Steel Holding Corp. (Nasdaq:AKS), Chart Industries Inc. (Nasdaq:GTLS), Rockwood Holdings Inc. (Nasdaq:ROC) and Citi Trends Inc. (Nasdaq:CTRN).
Russell sinks back lower on Wednesday's closing; ALTH, TGY, and EGLE lead gainers
Other Market Watch highlights today included:
• Insurance firms, packaged foods companies, entertainment firms, breweries and tobacco stocks were on the slide.
• Looking at sector activity so far, metals and mining stocks were doing well, as were semiconductors, forest products and investment banks.
• Ahead of the opening today, the ADP Employment survey pegged a decline in non-farm payrolls of 522,000.
• The ISM Non-Manufacturing Report came in at 42.9, which was better than the consensus forecast of 39.1
Small Cap Gainers:
• Allos Therapeutics Inc. rose 4.8% on brisk turnover following news Tuesday afternoon that the company plans to submit a new drug application to the FDA in the next few months. See (Nasdaq:ALTH).
• Tremisis Energy Acquisition Corp. was up just 0.8% at midday, but generating quite a spike in volume while approaching the highest point since mid-September. See (NYSE:TGY).
• Bulk shippers wehe percentage mover boards today; Eagle Bulk Shipping Inc. was up nearly 15%, Genco Shipping & Trading Ltd. was up 11%. See (Nasdaq:EGLE) and (NYSE:GNK).
Small Cap Losers:
• Sports Properties Acquisition Corp. was off 0.3% on heavy volume. See (NYSE:HMR).
• Littlefuse Inc. gapped lower and was off 13% as the industrial component maker took an earnings-related hit. See (Nasdaq:LFUS).
• Computer network company Jack Henry & Associates posts 4% Q2 decline, sending shares down 10% in pre-market. See (Nasdaq:JKHY).
Small-caps edge higher during mid-day; ALTH, TGY, and EGLE lead gainers
Other Market Watch highlights today included:
• Insurance firms, packaged foods companies, entertainment firms, breweries and tobacco stocks were on the slide.
• Looking at sector activity so far, metals and mining stocks were doing well, as were semiconductors, forest products and investment banks.
• Ahead of the opening today, the ADP Employment survey pegged a decline in non-farm payrolls of 522,000.
• The ISM Non-Manufacturing Report came in at 42.9, which was better than the consensus forecast of 39.1
Small Cap Gainers:
• Allos Therapeutics Inc. rose 4.8% on brisk turnover following news Tuesday afternoon that the company plans to submit a new drug application to the FDA in the next few months. See (Nasdaq:ALTH).
• Tremisis Energy Acquisition Corp. was up just 0.8% at midday, but generating quite a spike in volume while approaching the highest point since mid-September. See (NYSE:TGY).
• Bulk shippers wehe percentage mover boards today; Eagle Bulk Shipping Inc. was up nearly 15%, Genco Shipping & Trading Ltd. was up 11%. See (Nasdaq:EGLE) and (NYSE:GNK).
Small Cap Losers:
• Sports Properties Acquisition Corp. was off 0.3% on heavy volume. See (NYSE:HMR).
• Littlefuse Inc. gapped lower and was off 13% as the industrial component maker took an earnings-related hit. See (Nasdaq:LFUS).
• Computer network company Jack Henry & Associates posts 4% Q2 decline, sending shares down 10% in pre-market. See (Nasdaq:JKHY).
RadiSys, Eagle Bulk Shipping and Travelzoo lead small-cap percentage gainers
Also included among the results: MWI Veterinary Supply Inc. (Nasdaq:MWIV), Excel Maritime Carriers Ltd. (Nasdaq:EXM), Genco Shipping & Trading Ltd. (Nasdaq:GNK), Middleburg Financial Corp. (Nasdaq:MBRG), Thomas & Betts Corp. (Nasdaq:TNB) and TBS International Ltd. (Nasdaq:TBSI).
Russell keeps it steady Wednesday morning; RSYS, EGLE, and GNK lead gainers
Other Market Watch highlights today included:
• In overnight trading, commodity and mining stocks were on the defensive, possibly reflecting a nice rally in the U.S. dollar, which was up 1.4% against the euro this morning.
• Crude oil prices were up modestly into the stock market open, pulled higher by talk of further production cuts out of OPEC.
• Tech stocks, electronics makers and auto stocks were among the better performers in Asian trading overnight
• In overseas trading, European shares pushed higher despite disappointing December retail sales.
Small Cap Gainers:
• RadiSys Corp. gapped higher and jumped 23% as the communications networking firm got an earnings boost. See (Nasdaq:RSYS).
• Bulk shippers were the percentage mover boards today; Eagle Bulk Shipping Inc. was up nearly 15%, Genco Shipping & Trading Ltd. was up 11%. See (Nasdaq:EGLE) and (NYSE:GNK).
• Riverbed Technology Q4 profit beats Street; shares rise over 14% in pre-market. See (Nasdaq:RVBD).
• Illumina Q4 results beats Street, strong Q1, 2009 view. Shares climb 13% in pre-market. See (Nasdaq:ILMN).
Small Cap Losers:
• Small-cap chip designer Rambus Inc. fell some 20% in extended trading Tuesday on news that a judge postponed a patent trial dispute. See (Nasdaq:RMBS).
• Littlefuse Inc. gapped lower and was off 13% as the industrial component maker took an earnings-related hit. See (Nasdaq:LFUS).
• Computer network company Jack Henry & Associates posts 4% Q2 decline, sending shares down 10% in pre-market. See (Nasdaq:JKHY).
Flat amid competing cross-currents
The ADP Employment Survey reflected a loss of 522,000 jobs from non-farm payrolls and projected the Labor Department report Friday would show a decline in jobs of 525,000, which was slightly above the median forecast of 500,000. That said, the market took the ADP figures in stride, with a “it could have been much worse” mentality in play. It’s worth noting that the ADP report was veering way offline for many months before they shifted methodology last month and got back on a tighter track with the Labor Department survey.
In overseas trading, European shares pushed higher despite disappointing December retail sales. The gains were a little dynamic in Asia, where Chinese shares climbed 2.7% as the government started to release funds for stimulus programs and Indonesia cut interest rates. Tech stocks, electronics makers and auto stocks were among the better performers in Asian trading overnight.
Here in the United States, much of the individual corporate profit news was gloomy this morning, including disappointments from The Walt Disney Co. (NYSE:DIS), Costco Wholesale Corp. (Nasdaq:COST) and Time Warner Inc. (NYSE:TWX). Shortly . . .
Russell remains high into midday; LOPE, CHG, and GNK lead gainers
Other Market Watch highlights included:
• Advancers are leading decliners on the Russell 2000 by 1,261 to 496. Nearly 60 companies are unchanged. Dec 31, 2008 11:17am
• Small-caps edged higher in early trading, lifted in very light pre-holiday activity by the bullish surprise on weekly claims and mild support from gains in overseas trading. Dec 31, 2008 10:02am
• The Russell 2000 chart reflects a market stuck in a consolidation range, but the quick bounce off key short-term support near 461 was a promising development. Dec 31, 2008 8:45am
• Stock index futures had a brief, mild upside pop on the claims report, but the move seemed muted relative to the surprise element of the news.
Small Cap Gainers:
•In-theater advertising seller National CineMedia Inc. is up 12% to $10.11. (See Nasdaq:NCMI)
•Synta Pharma continued to rise after Tuesday's announcement that it entered into a pact with Roche. Shares are up 13% to $6.45. (See Nasdaq:SNTA)
• Genco Shipping & Trading Ltd. is up 16.4% to $14.72. On Tuesday the company said it has taken delivery of a new ship chartered by Cargill International. (See NYSE:GNK)
Small Cap Losers:
• Nalco Holding Co. is down 20% to $11.21 after topping the list of biggest percentage gainers on the NYSE at the close Tuesday. (See NYSE:NLC)
• VeriFone Holdings is down 10% to $5.02. After Tuesday's close, the company said it will file its annual report with the SEC late as it assesses changes. (See NYSE:PAY)
• Peapack-Gladstone Financial Corp. is down 8% to $26.27 after reporting late Tuesday it is likely to take a material impairment charge in Q4. (See NYSE:PGC)
• Ceradyne Inc. is down 5.7% to $19.43 after Morgan Joseph downgraded the technical ceramics products maker to "Hold" from "Buy." (See NYSE:CRDN)
Maxwell Technologies, Genco Shipping & Trading and DryShips lead small-cap percentage gainers
Also included among the results: National CineMedia Inc. (Nasdaq:NCMI), Formula Systems Depository Receipt (Nasdaq:FORTY), WHX Corp. (Nasdaq:WXCO), Eagle Bulk Shipping Inc. (Nasdaq:EGLE), InterOil Corp. (Nasdaq:IOC) and Jones Apparel Group Inc. (Nasdaq:JNY).
Arthrocare, Eagle Bulk Shipping and PDL BioPharma lead small-cap percentage losers
Also included among the results: Ceradyne Inc (Nasdaq:CRDN), Safe Bulkers Inc (Nasdaq:SB), Citi Trends Inc (Nasdaq:CTRN), Home Inns & Hotels Management Inc (Nasdaq:HMIN), CNB Financial Corp (Nasdaq:CCNE) and Genco Shipping & Trading Ltd (Nasdaq:GNK).
Safe Bulkers, Oneida Financial and Coleman Cable lead small-cap percentage gainers
Also included among the results: Genco Shipping & Trading Ltd. (Nasdaq:GNK), Cutera Inc. (Nasdaq:CUTR), First Defiance Financial Corp. (Nasdaq:FDEF), Answers Corp. (Nasdaq:ANSW), Danaos Corp (Nasdaq:DAC) and Vitran Corp Inc. (Nasdaq:VTNC).
Small-cap stocks steady into midday; DRYS, EXM, and EGLE lead gainers
Other Market Watch highlights today included:
• Poorest performers so far today: real estate investment trusts, air freight couriers, food retail firms and railroads.
• Physical commodity markets turned up from a morning slide, bolstered by a pullback in the U.S. dollar.
• Top performers so far today: aluminum, steel, coal, oil and gas drillers, semiconductors, life insurers and automotive retailers.
• Small-cap stocks were hovering near steady levels into midday trading, drafting off a surprising show of strength in the technology arena.
Small Cap Gainers:
• Ocean shippers have been a recurring source of strength this week: Dryships is up 45%, Excel Maritime up 41%, Eagle Bulk up 40% and Genco up 27%. See (Nasdaq:DRYS), (NYSE:EXM), (Nasdaq:EGLE) and (NYSE:GNK).
• Exco Resources Inc. jumped 40% as the oil and natural gas company announced results on the completion of a Louisiana well. See (NYSE:XCO).
• International Assets reports Q4 results; shares pop 23%. See (Nasdaq:IAAC).
• KMG Chemicals up 22% after reporting Q1 results with 145% increase in revenues, reaffirming FY 2009 guidance. See (Nasdaq:KMGB).
Small Cap Losers:
• Pep Boys falls 23% after company posts unexpected Q3 loss. See (NYSE:PBY).
• Buckeye Technologies lowers guidance, cuts production in Florida. Shares tumble 22%. See (NYSE:BKI).
• Universal Stainless & Alloy Products slumped 15% as some steel companies saw a correction off the big rally Monday. See (Nasdaq:USAP).
• Baird downgrades diversified industrial manufacturer Actuant Corp. to "neutral" from "outperform," halves its price target on the stock. Shares fall over 14%. See (NYSE:ATU).
Small caps near steady levels; techs, energy offset financials
Small-cap stocks were hovering near steady levels into midday trading, drafting off a surprising show of strength in the technology arena and another solid performance from energy and commodity stocks, which helped offset weakness in financial shares. At 12:31 p.m. ET, the Russell 2000 (NYSE:IWM) was up 0.79, or 0.16%, at 482.17, easily outperforming the large-cap Dow and S&P 500, both of which were in negative territory.
Coming into today’s action, technology stocks were supposed to be a sore spot for investors after Japan’s Sony announced massive layoffs and Texas Instruments Inc. (NYSE:TXN) projected soft forward sales. However, investors once again showed a desire to cast aside bad news as part of a bottoming process that has already been priced into stock market declines this year. Instead of being a weak point, techs were leading the rally today, with the tech-laden Nasdaq 100 Index up 0.8% at mid-session.
Commodity stocks also were a bright spot for small caps so far today. Looking at S&P sector activity, the top performers included aluminum, steel, coal, oil and gas drillers (as well as semiconductors, life insurers and automotive retailers).
Crude oil prices actually slipped slightly into the red following a gloomy report on energy demand, but it didn’t take too much starch out of energy stocks, which were up some 2.7% at midday, among the better overall groups. Physical commodity markets turned up from a morning slide, bolstered by a pullback in the U.S. dollar, which went from a strong rise against the euro to a modest decline by midday.
Despite the resilient tone so far today for small caps, there are some noticeable points of weakness. Among S&P sectors, the poorest performers are real . . .
DryShips, Excel Maritime Carriers and Eagle Bulk Shipping lead small-cap percentage gainers
Also included among the results: Genco Shipping & Trading Ltd (Nasdaq:GNK), Safe Bulkers Inc (Nasdaq:SB), KMG Chemicals Inc (Nasdaq:KMGB), ATP Oil & Gas Corporation (Nasdaq:ATPG), Hi-Tech Pharmacal Inc (Nasdaq:HITK) and TBS International Ltd (Nasdaq:TBSI).
DryShips, Hallwood Group and TBS International lead small-cap percentage gainers
Also included among the results: Polypore International Inc (Nasdaq:PPO), James River Coal Co (Nasdaq:JRCC), Gencor Industries Inc (Nasdaq:GENC), Textainer Group Holdings Ltd (Nasdaq:TGH), 012 Smile Communications Ltd (Nasdaq:SMLC) and Genco Shipping & Trading Ltd (Nasdaq:GNK).
Hiland Partners, Atlas America and Apollo Investment lead small-cap percentage losers
Also included among the results: Amedisys Inc (Nasdaq:AMED), Tesco Corp (Nasdaq:TESO), National Western Life Insurance Co (Nasdaq:NWLI), Genco Shipping & Trading Ltd (Nasdaq:GNK), Regency Energy Partners LP (Nasdaq:RGNC) and Brady Corp (Nasdaq:BRC).
Small-cap stocks continue low; BXC, VQ, and MHS lead gainers
Other Market Watch highlights included:
• Commodities (a big plus for the market on Tuesday) were struggling today. Crude oil prices were off 7% after soaring 10% Tuesday.
• The best performers are homebuilders, health care services, managed health care and office supplies.
• Forest products, tire and rubber stocks, health care facilities, coal, Internet retail and broadcast TV companies are the worst performers.
• The jobs issue is now on the front burner ahead of Friday’s big employment report, which is expected to show a nasty decline.
• Drug, technology and financial shares paced today’s decline, fueled by worries that a recession in the U.S., global slowdown would dampen corporate profitability and deepen jobs losses.
Small Cap Gainers:
• BlueLinx Holdings up 20% after appointing George Judd CEO today. See (NYSE:BXC).
• Independent energy company Venoco, Inc. up 16% on higher-than-average volume. See (NYSE:VQ).
• Medco Health shares up 13% after seeing 38% rise in Q3 profit. See (NYSE:MHS).
• Natural Gas Services Group announces a 43% increase in Diluted EPS for Q3; shares climb over 11%. See (NYSE:NGS).
• Genco Shipping cancels agreement to acquire six drybulk newbuildings; shares up over 8%. See (NYSE:GNK).
Small Cap Losers:
• NeuStar reports Q3 results, downgraded to "buy" from "strong buy." Shares dive 20%. See (NYSE:NSR).
• Ashford Hospitality Trust down 20% after naming interim CFO. See (NYSE:AHT).
• Reports say Advance America, Cash Advance could take $42M hit if forced to close Ohio centers. Shares careen 15%. See (NYSE:AEA).
• Fitch downgraded Colonial BancGroup's ratings last week; shares dive over 22% today. See (NYSE:CNB).
• Simcere Pharmaceutical Group down 25% on heavier-than-average volume. See (NYSE:SCR)
Conceptus, OfficeMax and Federal Mogul lead small-cap percentage gainers
Also included among the results: DSP Group Inc. (Nasdaq:DSPG), Genco Shipping & Trading Ltd. (Nasdaq:GNK), CAI International Inc. (Nasdaq:CAP), LHC Group Inc. (Nasdaq:LHCG), TierOne Corp. (Nasdaq:TONE) and RehabCare Group, Inc. (Nasdaq:RHB).
Here are the biggest percentage gainers among small caps:
Fortress Investment Group LLC, Century Aluminum and Jones Apparel Group lead small-cap percentage losers
Also included among the results: Eagle Bulk Shipping Inc. (Nasdaq:EGLE), Genco Shipping & Trading Ltd. (Nasdaq:GNK), Excel Maritime Carriers Ltd. (Nasdaq:EXM), Interoil Corp. (Nasdaq:IOC), Ardea Biosciences Inc. (Nasdaq:RDEA) and Aegean Marine Petroleum Network Inc. (Nasdaq:ANW).
Here are the biggest percentage losers among small caps:
Star Bulk Carriers: Sailing ahead on a comparative advantage
Comparative advantage can be readily witnessed in specific country output: Germany, beer; France, wine; Switzerland, watches; United States, media; Colombia, coffee. And then there's Greece, which has long demonstrated a persistent comparative advantage in bulk-ocean shipping. It's an advantage we expect Athens-based Star Bulk Carriers Corp. (Nasdaq: SBLK), a major transporter of iron ore, coal, grains, bauxite, fertilizers and steel products, to perpetuate well into the relevant future.
Star Bulk is a newbie to both the world's shipping lanes and the U.S. equity markets. The company, incorporated in the Marshall Islands on Dec. 13, 2006, and is the product of its Nov. 30, 2007, merger with Star Maritime Acquisition Corp., a special-purpose acquisition company, leaving Star Bulk as the stand-alone entity. It subsequently received Nasdaq-listing approval, with trading commencing Dec. 3, 2007.
In its new form, Star Bulk operates a fleet of eight dry bulk carriers, and has a definitive agreement to acquire two dry bulk carriers. The fleet consists of three capesize, one panama and six supramax dry bulk vessels, with an average age of 11 years and a combined cargo carrying capacity of 927,800 deadweight tons. Vessels are classified into four categories based on their carrying capacity in deadweight tons: handysize (10,000-39,999 DWT), handymax/supramax (40,000-59,999 DWT), panamax (60,000-99,999 DWT) and capesize (higher than 100,000 DWT).
Last week, Star Bulk reported its first public financial statements. Net income posted at $1.61 million, or $0.05 per share for the fourth quarter, compared with $620,000, or $0.02 per share, in the same quarter last year, on reported total revenue of $3.69 million. But since Star Bulk is such a different animal compared to last year, the numbers are essentially meaningless.
