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Minyanville's Before The Bell: A Weakened Euro, CEO Sprints, Futures Point Higher


The Euro is at its weakest level in two weeks. Sprint CEO has stepped down. Futures are pointing higher.

Morning Perspective: A Weakening Euro

The Euro traded near its lowest levels in a two weeks versus the dollar on speculation that European finance ministers will reiterate concerns that the currency is appreciating too rapidly. The euro fell to $1.4015, the lowest since September 20 and was trading at $1.4033 as of this morning. (From Bloomberg) Just yesterday Professor Limantour mentioned on the Buzz that IMF Managing Director Rodrigo Rato stated the dollar was undervalued on many measures and warned against a "new scenario of global imbalances" as well as currency volatility. For more context, see Professor Depew's daily column Five Things You Need To Know.

The Bull Pen: If you believe in the same scenario, a position in the US Dollar Bullish Fund (UUP) may be in your playbook.

The Bear Cave:A weak dollar does benefit U.S. stocks with large international exposure. If the dollar increases, look for lagging performances in stocks with a majority of its revenues coming in from overseas. Some stocks that come to mind include Boeing (BA) (with a sell-stop below $100), United Technologies (UTX) (with a sell-stop below $79.50), Honeywell (HON) (with a sell-stop below $59.50), and IBM (IBM) (with a sell-stop below $114.50).

As well, there is the US Dollar Bearish ETF (UDN) that may be considered.

A Run Out Of Sprint Nextel

Sprint Nextel's (S) Gary Forsee stepped down as chairman and CEO a day after the company reported a third quarter net loss of 337,000 high value subscribers. The company also revised guidance to the downside and adjusted operating profit in 2007. (From WSJ) In the past year, Sprint Nextel has trailed all other major competitors in adding subscribers. AT&T (T),the largest wireless company, added 900,000 subscribers; Verizon (VZ) the second largest, added 1.5 mln subscribers; T-mobile, a unit of Deutsche Telekom added 857,000 subscribers; while Sprint Nextel added just 16,000 subscribers. (From Bloomberg)

The Bull Pen: The worst may be over for Sprint Nextel. Forsee's departure may be the final purge in the company's turnaround. Yet, price targets on the stock were cut by both Baird and Soleil this morning. Top management departures often are shortly followed by confessional moves; that is, get all the bad news and then some out on the table. This can provide potential catalysts for upside movement, but it might be a tad early.

The Bear Cave: Bears live below the 200 day moving average which in S's case is at 19.72. Problems with Sprint Nextel may lie with more than just a change in CEO as shown by the paltry 16,000 subscribers added this year. If you're considering the dark side, then 19.72 may be reasonable stop.

A Quick Check Around the World

India's Sensitive Index surged +4.5% rising above the 18,000 mark as overseas funds continued to flow into the region. Japan's Nikkei rose +0.56%, Shanghai rose +0.32%, Taiwan lost -0.80%, and Hong Kong's Hang Seng rose +1.65%.

Markets are trading higher and Europe and the U.S. equity futures are pointing to a higher open.

A Look At Commodities

Commodities are materially weaker again for the second straight day. Crude oil is trading -0.41 to 78.61. Gold is lower by -4.2 to 734.5. Other metals are weaker as well with silver down -0.5 to 13.31 and copper lower by -0.20 to 361.10. When asked about the weakness in gold, Professor Lance Lewis reaffirmed his bullish stance stating he believed it was just resting near its May 2006 peak before another leg up. Read his article What Will Gold Do Next?

On The Radar

The all-important FOMC minutes will be released at 2:00 PM EST. Transcript of the Fed's September 18th meeting will be released to the public. Look for that information to move the markets as market participants will get insight into what troubled the Fed to cut interest rates by 50 basis points. Also Alcoa (AA) kicks off earnings season this afternoon as it reports after the bell. Click here for the full trading radar.

The Mondaaay's are over. Easy-sailin' until the weekend. Good luck and happy trading!
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