Two Ways To Play: Money in the Banks?
Strengthen your portfolio in good times and bad.
Bloomberg reports billionaire investor Michael Price is betting that some of the nation's largest banks will continue to fall and even after the industry has been hit with half a trillion dollars in losses from subprime mortgages, he's still found few companies worthy of his investment.
Price, who manages MFP Investors and made his name as a value investor of beaten-down lenders, is shorting banks like Citigroup (C) and Wachovia (WB) because the companies have "more pain coming." Price also said a lot of banks will be raising capital in the next six months with dividend cuts being "inevitable." See Professor Bennet Sedacca's A Tale of Two Markets.
From the Bull Pen: If those bullish think the financials have more room to run, then the ETF (XLF) may be the play. Sell-stops below $21.50 as trades below would signal a break in the two-month uptrend.
From the Bear Cave: The Ultrashort Financials (SKF) may be an option as the stock approaches $100. Sell-stops can be set below that level.
Icahn Ups His Stake in Biogen
The Wall Street Journal reports billionaire activist Carl Icahn has boosted his investment in Biogen (BIIB), taking his stake in the biotech company's shares from about 4.3% to 6% after the stock's most recent plunge. Icahn's purchase amounts to nearly $260 million signaling that he isn't ready to drop his efforts to prompt a sale of the company. BIIB shares were recently hurt after two new occurrences of a deadly brain infection were linked to the company's multiple sclerosis drug. The news sent BIIB shares down 28% on August 1. To date, Ichan has lost roughly $28 million on his investment in BIIB.
From the Bull Pen: The best bet may be diversification through the biotech ETF (IBB). Is the stock basing for another leg up? Near-term sell-stops can be set below $86-85 level.
From the Bear Cave: Merck (MRK) could be a downside opportunity. A rally into the $37-38 range could get fresh bears interested.
For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.
Quick Check Around the World
Asian trading closed with the Hang Seng -1.00%, Nikkei -0.95%, Sensex -1.88%, Taiwan -0.43% and Shanghai -0.52%.
Glancing across the pond, we see the CAC -0.02%, DAX -0.05%, FTSE +0.25%
As of 8:20 AM EST, S&P futures are lower 2.6 points to 1302, and Nasdaq futures are higher +4 points to 1947.
A Look At Commodities
Commodities are lower. Crude oil is off -0.49 to 114. Gold is down -0.30 to 827. Silver is lower -0.105 to 14.520, and copper is off -4.15 to 335.90.
The dollar index is up +0.152 to 76.277.
On the Radar.
8:30 Trade Balance: -$61.5 bln
2:00 Monthly Budget Statement: -$82.7 bln
5:00 ABC Consumer confidence
Happy Tuesday. Good luck!
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