Before The Bell: Fallen Financials; Google Recession-Proof?
Bank stocks may fall another 50 percent.
Morning Perspective: Fallen Financials
According to Bloomberg, Oppenheimer & Co.'s analyst Meredith Whitney said financial stocks may lose another 50% because Bear Stearns' (BSC) sale to JPMorgan Chase (JPM) for $2 per share may create a "major negative revaluation." Whitney, who was the first to accurately predict Citigroup (C) would cut its dividend, said the downside projection is based upon "1990/1991 multiples of tangible book values" and investors will likely focus more on tangible book value with stocks quickly revaluing as more banks reveal further goodwill writedowns in the first half of the year.
Read Todd's article, The Bear Scare.
From the Bull Pen: Bulls looking for financial exposure can look to MasterCard (MA); sell-stops below the 100-DMA. ($194)
From the Bear Cave: Bears can play the downside in Bank of America (BAC); buy-stops above $35. Deutsche Bank (DB) is another option; buy-stops above $108.
Google Recession Proof?
Bloomberg reports Google (GOOG) CEO Eric Schmidt said the world's most popular search engine is in a strong position to weather any U.S. recession. Schmidt, at a briefing in Beijing, said one of the key sources was the strong growth in Asia and added, "Historically, people tend to shift their money to the most 'highly measured' advertiser when there are 'economic difficulties.'" Google receives nearly all of its revenue from ads next to search results and half of its sales are outside of the U.S. In these volatile times, make sure to read Professor Greg Collins' article Technical Analysis of Choppy Markets.
From the Bull Pen: Those bullish on Google may play the upside with an entry at $400; sell-stops set below. Baidu (BIDU) is also another option; sell-stops below $250.
From the Bear Cave: Bears looking for downside plays in the tech sector can look to Research in Motion (RIMM); buy-stops above the 100-DMA ($105).
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
The new week arrives and brings with it a wave of red foreign markets.
Asian trading closed with the Hang Seng -5.18%, Nikkei -3.71%, Sensex -6.03%, Taiwan -1.91% and Shanghai -3.60%.
A quick check of Europe finds the CAC -3.16%, DAX -3.86%, FTSE -2.76%
As of 8:30 AM EST, S&P futures are down 30 points to 1262, and Nasdaq Futures are lower by 40 points to 1684.
A Look At Commodities
Commodities are higher. Crude oil is up +0.14 to 110.42. Gold is higher +22 points to 1021.80. Silver is up +0.486 to 21.060, and copper is lower +7.30 to 377.40.
The dollar index is lower -0.429 to 71.226.
On the Radar
Current Account Balance: -$172.9 vs. -$183.8 billion
Empire Manufacturing: -22.2 vs. -7.4 cons.
9:00 Net Long-term TIC Flows: $76.0 bln
9:00 Total Net TIC Flows: $85.0 bln
9:15 Industrial Production: -0.1% cons
9:15 Capacity Utilization: 81.3% cons
1:00 NAHB Housing Market Index: 20 cons
Click here for the full trading radar.
It's a wild one already. Good luck today!
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