Minyanville's Before The Bell: Treasury's Guiding Hand, Danaher M&A, Futures Mixed
The Treasury held a big gathering over the weekend, and we have a little M&A activity with Danaher. Futures are mixed.
The Treasury hosted talks over the weekend with Citigroup (C), JPMorgan Chase (JPM), and Bank Of America (BAC) to set up a $100 billion fund to buy distressed assets in exchange for new short-term debt. The fund or "superconduit" will act as a buyer of last resort paying market prices for structured investment vehicle (SIV) assets in an effort to prevent dumping. The banks hope to have this fund up and running within 90 days. Although the Treasury made clear that it was not proposing a bailout by the government, the goal is to facilitate a movement within the private sector. (From WSJ) Read Professor Shedlock's Problems For Banks, Problems For You? Also have a look at Professor Sedacca's Third Quarter In Review: You Have Got To Be Kidding Me.
The Bull Pen: Citigroup last week announced it beat third quarter estimates and this morning is bid higher in the premarket. Traders who are bullish and believe the worst may be behind these financials in the near term may wish to use the trend-line from the August lows ($47.00) as a near-term sell-stop for C. On JPM, one could use the near-term trend-line ($46.65) or the 50-DMA ($45.60) as a prudent sell-stop. Those who wish to play BAC from the long side could place sell-stop below $52, a key level of short-term support.
The Bear Cave: With the bank index still trading below resistance (BKX 111.50), traders who wish to play the downside may define their risk on Citigroup with a buy-stop above $49 (recent resistance) or $50 (broader resistance). JPM faces significant resistance at $48 and BAC players could use a move above February highs ($54) as a defined risk level.
Danaher's Shopping List
In some M&A news this morning, Danaher (DHR) agreed to buy electronic test and measurement company Tektronix (TEK) for $2.8 billion. TEK shareholders will receive $38 per share in a cash tender offer, representing a 34% premium to its closing price from Friday. Danaher's president and CEO H. Lawrence Culp Jr said the acquisition "provides an excellent complement to our existing Electronic Test business." (From WSJ) Professor Guy Adami first mentioned this company in early August in Gone Fishin' With Danaher.
The Bull Pen: DHR closed at $82.47 on Friday. Traders note the gap higher on Sep. 18 that has now been filled as the stock pulls back on light volume. The 50-DMA at 79.43 should provide support for this pullback; a move below that could act as a stop. Tertiary plays include Adtran (ADTN), Agilent (A), and JDS Uniphase (JDSU).
The Bear Cave: Those looking to fade (read: sell) Danaher may use a trade above the recent highs ($84.35) as tight and defined risk.
Have a look at Minyanville's Stocks To Watch for more company-specific ideas.
A Quick Check Around the World
Asian markets all closed in the green. Japan's Nikkei gained +0.16%, Hong Kong's Hang Seng gained +2.44%, Taiwan's TAIEX gained +0.23%, India's Sensex added +3.47%, and China's Shanghai Composite finished with a +2.15%.
As of 9:00 AM EST, stocks in Europe are mixed. The DAX is lower by -0.21%, the CAC is higher by +0.22%, and the FTSE is lower by -0.12%. S&P futures are are lower by -0..4 points and Nasdaq futures are up by 1.75 points.
A Look At Commodities
Crude is up +0.97 to 84.66. Gold is higher +6.70 to 760.50. Silver is up +0.15 to 14.06, and copper is up +7.25 to 372.50.
The NY Empire State Index came in at 28.8 versus 13.1 consensus estimates.
Citigroup (C) already released third quarter results. Quarterly EPS came in at $0.47 per share versus estimates of $0.43. Revenues rose 5.8% year-over-year to $22.66 billion versus $20.81 billion.
Biotech giant Genentech (DNA) is set to report after the bell. Click here for Minyanville's trading radar.
Happy Monday, Everyone! Good luck and have a great day!
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