Before The Bell: Bad Health and Scary Bear
Analysts concerned of a cyclical correction in healthcare.
Morning Perspective: Bad Health?
Humana (HUM) and WellPoint (WLP) put a damper on the healthcare sector yesterday. According to The WSJ, Humana, the second largest seller of Medicare plans, said its 1Q and full-year earnings outlooks would be hurt due to flawed drug-cost projections. The cut follows WellPoint's decision earlier this week to slash its 2008 forecasts because of similar unexpected medical costs. Analysts are concerned that these moves are pointing to a cyclical correction and the earnings forecasts caused a number of analyst downgrades. For context in the healthcare space, read Jeff Saut's column Wait For Your Pitch.
From the Bull Pen: Professor Fil Zucchi suggested yesterday on the Buzz that the selling in HUM may have been overdone. Those attempting the upside can set sell-stops below $38.
From the Bear Cave: Bears can attempt the downside in the healthcare ETF (XLV); buy-stops above $32 or $33 for those with a higher risk profile.
According to The WSJ, signs are pointing in a negative direction for Bear Stearns (BSC). Although company executives have tried to dispel rumors that the company is insolvent, traders have been cautious to do business with BSC with some seeking approval from higher-ups before entering into some long-term transactions. Further, clients have asked rivals such as Goldman Sachs (GS) and Morgan Stanley (MS) to be counterparties to BSC should the company be unable to cover its obligations. Also, hedge funds who use BSC as a prime broker have shifted their business to other firms in recent weeks. Toddo mentioned to key Bear Stearns yesterday in Random Thoughts.
From the Bull Pen: Bulls can attempt the upside in Goldman Sachs (GS); sell-stops below $155.
From the Bear Cave: Bears are reluctant to press the downside in BSC because the stock has lost over 20% in a matter of days. Instead, those bearish can use the Proshares Ultrashort Financial ETF (SKF) which tracks the twice the inverse of the Dow Jones Financials index; near-term sell-stops set below $125.
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
Asian trading closed with the Hang Seng -4.79%, Nikkei -3.33%, Sensex -4.85%, Taiwan -2.66% and Shanghai -2.43%.
A quick look towards Europe finds the CAC -2.28%, DAX -2.48%, FTSE -1.90%.
As of 8:30 AM EST, S&P futures are down -18.50 points to 1291 and Nasdaq futures are lower -23.5 points to 1711.
A Look At Commodities
Commodities are higher. Crude oil is up +0.51 to 110.43. Gold is higher +16.10 to 996.60. Silver is up +0.799 to 20.710 and copper is lower -2.75 to 382.40.
The dollar index is down -0.433 to 71.969.
On the Radar
Import Price Index (m/m): 0.2% vs. 0.8% cons.
Import Price Index (y/y): 13.6% vs. 13.7% prior.
Advance Retail Sales: -0.6% vs. 0.2% cons.
Retail Sales Less Autos: -0.2% vs. 0.2% cons.
Initial Jobless Claims: 353 k vs. 351 k prior.
Continuing Claims: 2835 k inline.
10:00 Business Inventories: 0.4% cons
Click here for the full trading radar.
Good luck today! Have a great day!
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter