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Before The Bell: AMAT Shines; Concerns In Asia


Solar plays and China daze.

Morning Perspective: AMAT Shines!

According to the WSJ, Applied Materials (AMAT) is strengthening its position in the solar space. The company announced a $1.9 billion deal, its largest in history, with an unidentified buyer outside of the U.S. to help outfit factories in solar panel production. The factories are expected to produce solar photovoltaic modules that are capable of generating electricity on a scale of a gigawatt. The deal highlights the company's recent efforts in expanding beyond the chip-manufacturing business. AMAT shares gained nearly 8% on the news yesterday. Todd mentioned this in his Random Thoughts.

From the Bull Pen: Bulls happy with the AMAT story can play the upside; sell-stops below the 200 DMA ($19.50). Other alternatives include MEMC Electronics (WFR); sell-stops below $75.

From the Bear Cave: Bears can see a downside play in Suntech Power (STP); entry at $40 should the stock rally to that level with buy-stops set above.

Concerns For China

According to Bloomberg, Chinese stocks fell after China's Premier Wen Jaibao gave hints that the country's central bank will raise interest rates for the seventh time in a year. Wen said in a two-hour report in front of the National People's Congress that the government had to do more to slow lending and curb inflation. "Financial controls need to be strengthened, and the excessively fast growth in money supply and lending should be curbed," Wen said reiterating his belief that the government's biggest challenge was an overheating economy. Read Todd's column last week, Answers I Really Wanna Know: China Gearing Up For Olympic Run?

From the Bull Pen: Bulls may play the upside in the China 25 ETF (FXI); sell-stops below $134. China Mobile (CHL) is another play; near-term sell-stops below $70.

From the Bear Cave: Bears can use the inverse ETF, the Ultrashort China 25 (FXP). The fund seeks the performance that corresponds to 200% the inverse of the China 25 index. Sell-stops below $90.

For more ideas, see Minyanville's Spotlight Stocks.

Quick Check Around the World

Asian trading closed with the Hang Seng -0.02%, Nikkei -0.16%, Sensex +1.24%, Taiwan +0.16% and Shanghai -0.99%.

A quick check of Europe finds the CAC +1.34%, DAX +1.37%, FTSE +0.72%, ATX +1.00%, Swiss Mkt. +1.42% and Stockholm +1.99%.

A Look At Commodities

Commodities are mixed. Crude oil is higher +0.84 to 100.36. Gold is up +0.70 to 967.00. Silver is lower -0.248 to 19.490, and copper is lower -1.70 to 381.00.

The dollar index is higher +0.105 to 73.770.

As of 8:45 AM EST, S&P futures are up +3.3 points to 1330, and Nasdaq futures are higher by 10 points to 1752.

On the Radar

MBA Mortgage Applications: 3.0% vs. -19.2% last week.
ADP Employment Change: -23k vs. 18k cons.
Nonfarm Productivity: 1.9% vs. 1.8% cons.
Unit Labor Costs: 2.6% vs. 2.1% cons.

10:00 Factory Orders: -2.5% cons
10:00 ISM Non-mfg composite: 48.0 cons
2:00 Fed's Beige Book

Click here for Minyanville's full trading radar.

We're on the hump! Good luck and have a great day!
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