Two Ways To Play: Cisco Inferno
Strengthen your portfolio in good times and bad.
Cisco (CSCO) beat analyst expectations last night. The largest maker of networking equipment reported profits of $0.38 per share, 2 cents better than consensus estimates of $0.36 per share. Revenues rose 10.1% year-over-year to $9.8 billion vs. $9.75 billion cons. Yet, according to Bloomberg, shares failed to rally after CEO John Chambers gave an uncertain outlook for the overall economy. Although guidance was inline with expectations, Chambers said the U.S. market has softened describing conditions as being "a little bit in uncharted waters." See Professor Charles Payne's Economy Not As Weak As Some Think.
From the Bull Pen: Bulls like CSCO and may use any weakness as a buying opportunity. Sell-stops can be set below the 50-DMA ($24.70).
From the Bear Cave: Bears can play the downside in the tech ETF (XLK); buy-stops can be set above the 200-DMA near $25.75.
Fannie Mae Surviving
Fannie Mae (FNM) posted a wider than expected loss yesterday for the first quarter. The government sponsored entity reported a net loss of $2.57 per share compared with analyst expectations of a loss of $0.64 per share. The stock dropped in the opening but fully recovered for a gain after the Office of Federal Housing Enterprise Oversight (OFHEO) said it would lower surplus capital requirements to 15% from 20%. According to Bloomberg, this would allow Fannie to buy and guarantee more mortgages, Fannie's biggest source of profit, in an effort to turn around the worst housing slump since the Great Depression. For more read Professor Kevin Depew's Five Things You Need To Know.
From the Bull Pen: Bulls see this as positive news for the real estate sector and can scale into the DJ Real Estate iShares (IYR); sell-stops can be set near $65.
From the Bear Cave: Bears looking for a related downside play can find one in Home Depot (HD); buy-stops can be set above $30.30.
For more ideas, check out Minyanville's Spotlight Stocks.
Quick Check Around the World
Asian trading closed with the Hang Seng -2.48%, Nikkei +0.38%, Sensex -0.19%, Taiwan +0.78% and Shanghai -4.13%.
Looking over at Europe, we see the CAC +0.87%, DAX +0.81%, FTSE +0.46%
As of 8:25 AM EST S&P futures are down by -3.4 points to 1417, and Nasdaq Futures are lower by -9.0 points to 1990.
A Look At Commodities
Commodities are mixed. Crude oil is up +0.24 to 122.08. Gold is lower -6.10 to 871.70. Silver is lower -0.75 to 16.705, and copper is lower -3.20 to 388.05.
The dollar index is up +0.40 to 73.396.
On the Radar
MBA Mortgage Applications: 15.6% vs. -11.1% prior.
Nonfarm Productivity: 2.2% vs.1.5% cons.
Unit Labor Costs: 2.2 vs. 2.6% cons.
10:00 Pending Home Sales (m/m): -0.8% cons.
3:00 Consumer Credit: $6.5 bln cons.
Click here for the full trading radar.
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