Filed under: Apple Inc (AAPL), Whole Foods Market (WFMI), Coventry Health Care (CVH), Darden Restaurants (DRI), Options, Las Vegas Sands (LVS), Eaton Corp (ETN), DJIA

Sellers took control at the open and sent the market lower. The Dow Jones Industrial Average got with striking distance of the August 1st low — down 200 points — before rebounding to close down only 31 points.

The NYSE had volume of 4.3 billion shares with 1,279 shares advancing while 2,058 declined for a loss of 14.27 points to close at 9,435.04. On the NASDAQ, 3.2 billion shares traded, 1,309 advanced and 1,792 declined for a loss of 11.6 to 2,544.89.

Eaton Corporation (NYSE: ETN) rose $6.98 (8%) to $93.45. Las Vegas Sands Corp. (NYSE: LVS) fell $7.68 (-7%) to $100.47. Coventry Health Care, Inc. (NYSE: CVH) strengthened $3.26 (6%) to $54.38. Whole Foods Market, Inc. (NASDAQ: WFMI) fell $2.58 (-6%) to $42.27. Darden Restaurants, Inc. (NYSE: DRI) rose $2.15 (5%) to $42.94.

With the market plunging on the open, the options were active. There were 8.8 million puts and 8.3 million calls traded for a put/call open interest ratio of 1.07. Garmin Ltd. (NASDAQ: GRMN) saw heavy volume on the August 45 calls (GQRHI) with over 259,000 options trading. The August 75.0 Garmin calls (GQRHO) moved 121,000 options. Most of this option volume is dividend arbitration in anticipation of the 0.75 cent dividend Monday.

Apple Computer, Inc. (NASDAQ: AAPL) saw heavy volume on the August 130 calls (APVHF) with over 55,000 options trading. Financial Sector SPDR ETF (NYSE: XLF) saw heavy volume on the September 34 puts (XLFUH) with over 234,000 options trading. The other strikes were active as well and they investors were likely trying to protect investments capital. PowerShares QQQ Trust ETF (NASDAQ: QQQQ) saw heavy volume on the September 45 puts (QQQUS) moving 171,000. Put index options can work as an insurance policy against market falls.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.

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Filed under: Options

Echelon Corporation (NASDAQ: ELON) volatility elevated after a sharp 2-week rally:

ELON, a company that provides monitoring products and systems that can save energy and lower costs, was recently up $2.82 to $29.11. ELON was a $20 stock on 8/1. On 8/8 Nollenberger Capital downgraded ELON to Neutral from Buy based on valuation. ELON September call option implied volatility was at 83; puts are at 93, above its 26-week average of 51 according to Track Data, suggesting larger risk. Puts are bid higher than calls because ELON is difficult to borrow short.

Baker Hughes Incorporated (NYSE: BHI) put volume and volatility elevated:

BHI is engaged in the oilfield service sector. BHI was recently up 70 cents to $80.11. BHI has a market cap of $25.6 billion with long term debt of $1 billion. BHI call option volume of 3,488 contracts compares to put volume of 11,120 contracts. BHI August 80 straddle is at $6. BHI September option implied volatility of 43 is above its 26-week average of 29 according to Track Data, suggesting larger risk

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Filed under: Major movement, Rants and raves, Goldman Sachs Group (GS), Lockheed Martin (LMT), TXU Corp (TXU), Bargain stocks, Chasing Value, First Data (FDC)

Whenever I hear some market pundit who sounds like they’ve got all of the answers behind the current crisis in the world’s financial markets, the classic Frank Zappa line “Look here brother, who you jivin’ with your cozmic debris” echos in my head. Zappa’s point that people should avoid simple answers to complicated questions is especially relevant today..

The world’s major central banks today added more than $137 billion into the banking system, keeping today’s loss in the Dow Jones Industrial Average to 31.14 points following a turbulent trading session. This seems like a temporary, albeit expensive, Band-Aid on a very large wound. The bad news is far from over.

For example, Goldman Sachs Group Inc.’s (NYSE: GS) Alpha Fund may be the next hedge fund to implode. So far this year, it has dropped 26%, according to Bloomberg News. The Wall Street Journal (subscription required) points out that many hedge funds will see increased redemptions during August. Bloomberg also reported that many of the big buyout deals that have been announced over the past few months including TXU Corp. (NYSE: TXU) and First Data Corp. (NYSE: FDC) will have to be renegotiated.

Are there bargains to be had? Of course, markets act on irrational fear and irrational exuberance. But be careful, sometimes stocks are cheap for very good reason, such as exposure to subprime mortgage securities. It will pay to be selective in your bargain hunting.

Some investors also might want to consider shifting some of their assets into more conservative investments such as municipal bonds, utility stocks such as Exelon Corp. (NYSE: EXC) and defense companies such as Lockheed Martin Corp. (NYSE: LMT).

Don’t overdo it, though. Over time, the market will right itself.

Meanwhile, people need to take a deep breath and exhale.

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Filed under: Consumer experience, Television, Walt Disney (DIS)

You’re probably wondering why that name sounds so familiar. Well, it’s because Miley Cyrus is the daughter of country singer Billy Ray Cyrus, best known for his top 40 hit “Achy Breaky Heart.” Not only are both father and daughter singers, but they are also actors and show off both of their talents, together, on Disney Channel’s new hit show Hannah Montana. The show premiered with 5.5 million viewers and 2.3 million tweens (kids 9-14) and became basic cable’s top series in the tween demo in its first seven weeks. On the show, Miley plays a teenager trying to lead a normal life while hiding her secret, alter-ego rock star persona Hannah Montana from her classmates. Billy Ray plays her father (you can’t get anymore true-to-life than that).

How are Miley and Hannah doing? According to Fortune, “The Disney Channel Hannah Montana series hasn’t just been a huge hit with kids and ‘tweens; it’s become a ubiquitous franchise.” The 2006 Hannah Montana soundtrack entered the Billboard 200 at No. 1 and has gone double platinum, with 2.2 million copies sold since October. Hannah clothes are already the No. 1 tween brand at Macy’s, and her new double-CD set that serves as a soundtrack and showcase for the actress, Hannah Montana 2: Meet Miley Cyrus, has outsold American Idol winner Kelly Clarkson’s new album, both released June 26, by 34,000 copies.

As if that isn’t enough for a 14-year-old, Miley’s The Best of Both Worlds tour kicks off October 18 and features songs that showcase Miley Cyrus as an artist as well as Hannah Montana. This best of both worlds concept seems to be a smart move for a budding star, since she is establishing her career as a solo artist (Miley Cyrus) as well as a Disney star (Hannah Montana). In a few years, she may be able to drop the whole Hannah persona and continue a singer/actress career as Miley. But for the time being, It makes you wonder if there will be any room in toy and department stores for anything without the Hannah brand-stamp come holidays. Looks like Disney Channel has become nothing more than Miley’s kingdom.

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Filed under: Earnings reports, Conventions and conferences, Hewlett-Packard (HPQ), Home Depot (HD), Penney (J.C.) (JCP), QUALCOMM Inc (QCOM), Broadcom Corp’A’ (BRCM)

Monday August 13

• Sysco Corporation (NYSE: SYY) to report Q4 earnings; conference call at 9:45am.
• PDUFA date for Indevus Pharmaceuticals Inc’s (NASDAQ: IDEV) Sanctura XR, an overactive bladder drug.

Tuesday August 14

• The Home Depot Inc (NYSE: HD) to report Q2 earnings; conference call at 9am. Home Depot is expected to post substantial Q2 revenue/EPS declines, but equally important will be the company’s comments: with the housing sector expected to remain sluggish through at least late 2007, analysts will evaluate whether HD can overcome that headwind with a new focus on customer service, demographic trends that suggest increased home repair/remodeling, and 20-year high homeownership rates that suggest steady house goods demand.
• District Court California: Broadcom Corporation (NASDAQ: BRCM) to request an injunction related to Qualcom Incorporated’s (Nasdaq: QCOM) infringement of 3 Broadcom cellular baseband patents.

Wednesday August 15

• Macy’s Inc (NYSE: M) to report Q2 earnings; conference call at 10:30am.
• PDUFA date for GPC Biotech’s (NASDAQ: GPCB) Satraplatin for treatment of hormone refractory prostate cancer.

Thursday August 16

• JC Penney Co Inc (NYSE: JCP) to report Q2 earnings; conference call at 9:30am.
• Hewlett Packard Company (NYSE: HPQ) to report Q3 earnings; conference call at 5pm. Analysts will evaluate HPQ’s ability to maintain momentum in its innovative imaging/printing group, which is expected to help HPQ post solid Q3 revenue gains.

Friday August 17

• Quantum Corporation (NYSE: QTM) to hold annual shareholder meeting at 12pm.
• PDUFA Date for Endo Pharmaceuticals Holdings Inc’s (NASDAQ: ENDP) and Vernalis PLC’s (OTC: VNLSY) Frova, for menstrually-related migraine headaches.

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Filed under: Major movement, International markets, Other issues, Bad news, Countrywide Financial (CFC), Goldman Sachs Group (GS), Bear Stearns Cos (BSC), Housing

Time was, back in the go-go days of 2005, nobody would listen to the housing bears. Anyone who pointed to shaky fundamentals, or questioned the wisdom of the don’t ask, don’t tell mortgage vehicles being given to any Tom, Dick or Harry, were quickly shouted down. Fools, they said. Bitter renters.

Real estate, after all, only goes up. And not only real estate. Investors loved all things mortgage. Those sexy CDOs were snapped up like hotcakes.

So we watched. And we waited. And we read blogs like Ben’s Bubble Blog daily, and talked amongst ourselves while waiting for the inevitable to happen.

And now here it is. The Wall Street Journal’s A1. (subscription required). I’m sure I’m not the first to say this. But we told you so.
Now the Fed, in what experts agree is highly unusual, is intervening in the market to keep things from really getting ugly. Isn’t the open market supposed to take care of these things by itself? Is the Fed action helping or hurting?

It didn’t help the situation when even the vaunted Countrywide Financial Corp. (NYSE: CFS) the country’s largest mortgage lender in terms of volume, went on record as saying the situation is rapidly evolving and that the impact on the company is “unknown.” That doesn’t sound like happy news to me. Shares plunged as much as 13.7% when this acknowledgment came to light.

Bear Stearns (NYSE: BSC) is is still in trouble. Even the mighty Goldman Sachs Group, Inc. (NYSE: GS) is trying to quell panic over two hedge funds that are hemorrhaging money.

None of this, in fact, sounds like the situation is “contained,” as our leaders have been telling us.

Thank God it’s Friday, huh?

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Filed under: Major movement, Analyst upgrades and downgrades, Forecasts, Rumors, Industry, Rants and raves, Microsoft (MSFT), Apple Inc (AAPL), Amazon.com (AMZN), Countrywide Financial (CFC), Washington Mutual (WM), Bargain stocks, IndyMac Bancorp (IMB), Bear Stearns Cos (BSC), Intuitive Surgical Inc (ISRG)

Plenty of investment guru’s have suggested buying on fear and selling when greed reaches its pinnacle. Well I think the fear side is self evident but I’m not hearing about many analysts who are brave enough to buy right now. As a matter of fact I only hear that this would be a very foolish time to invest in the financial sector, in particular, any stocks with sub-prime or “Alt-A” mortgage exposure.

For this reason, contrarian that I am, I thought I would speak out about my recent BAD CALLS, or at least very premature calls, and start tracking them for all to see — accepting the ribbing, tomato-throwing and blunt comments about the error of my ways.

I own four of the five stocks I will be following for the next year, Bear Stearns (NYSE: BSC), IndyMac Bancorp Inc. (NYSE: IMB), Popular Inc. (NASDAQ: BPOP), and Washington Mutual (NYSE: WM). I wrote favorable comments on each and in the case of WM, more than once. Needless to say, I am under water on all of them. I do not own Countrywide Financial (NYSE: CFC) but it will make for a fine pace car in the middle of this storm.

I have no crystal ball and clearly blundered here, at least in the short term, but if I had to wager, I’d say this group will be higher in 12 months’ time rather than lower. And I have put my money where my mouth is. I am not for one moment suggesting that small investors, or those without the emotional (or financial) wherewithal to take losses follow my lead. This will simply be a test of the fear/greed scenario and my belief that both good news and bad overshoot the mark frequently.

Yesterday I wrote Dow down 387 - still preaching calm and change and the following were the closing prices for the five stocks discussed here and in earlier stories.

• Bear Sterns: $114.05
• Countrywide Financial: $28.66
• IndyMac: $20.58
• Popular: $12.50
• Washington Mutual: $36.76

It is not easy to expose yourself to public ridicule and watch the stock value of your most recent portfolio be in the red. Perhaps I am still too arrogant because all my others are firmly in the black and beating the market. In any event one of my partners suggested to me that I may have to eat humble pie sooner rather than later. A large slice has been duly served up.

For comparison, I am going to add yesterday’s closing of some market darlings (and those of my colleagues) as well as the DJIA. All are NASDAQ stocks in contrast to most of the NYSE financials. These four companies have very strong stocks, so the comparison might not be particularly fair, but I like a challenge.

• My favorite stock is Intuitive Surgical (NASDAQ: ISRG): $201.30
• Douglas McIntyre likes Microsoft Inc. (NASDAQ: MSFT): $29.30
• Georges Yared has favored Apple Inc. for years (NASDAQ: AAPL): $126.39
• Brian White has been enamored by Amazon.com (NASDAQ: AMZN): $74.11
• Dow Jones Industrial Average: 13,270.68

As I write this piece I can’t help but be reminded how often bravery and foolishness go hand in hand. Stay tuned each month and let’s see how this story plays out.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well — INCLUDING ANY BAD CALLS.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

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Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), eBay (EBAY), Amazon.com (AMZN), Initial public offerings

It’s been a mixed bag for IPOs this week. But, as for the MercadoLibre (NASDAQ: MELI)’s offering, things were certainly upbeat.

The IPO priced at $18 (at the top of the $16-$18 range) and raised a cool $332.8 million. So far, shares are trading up 38% to $25.

MercadoLibre operates the largest online trading platform in Latin America (which has about 550 million or so people). In fact, the region is experiencing high rates of internet penetration.

MercadoLibre has an assortment of services: product listings, which are based on either a fixed-price or auction-based format; classifieds; and secure payment solutions. There are more than 2,000 product categories, and the sites attract about 2.9 million listings per month.

The top-line growth has been impressive. From 2004 to 2006, revenues surged from $12.7 million to $52.1 million. During this time, operating expenses increased at a slower rate, going from $16 million to $46.7 million. In other words, the company is realizing operating leverage.

There is competition, such as from DeRemate and MasOportunidades.com. There is also pressure from large online communities like Google (NASDAQ: GOOG), Amazon.com (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Yahoo (NASDAQ: YHOO).

Also, eBay (NASDAQ: EBAY) owns roughly 19% of MercadoLibre. However, the strategic alliance has expired and eBay is now able to become a competitor as well.

The lead underwriters on the deal include J.P. Morgan Securities Inc. (NYSE: JPM) and Merrill Lynch (NYSE: MER).

You can find the prospectus at the SEC website. Also, if you want to check out more IPO pricings, click here.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

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Filed under: Technical Analysis, Stocks to Buy

Yesterday was a stinger with the markets down 2%+ all around. But that doesn’t mean there isn’t money to be made, even on the long side! After going through many charts Thursday night, I’ve come up with two ideas that should work in this volatile environment. For my current take on how to play the market please see this recent post.

The first idea is Hoku Scientific (NASDAQ: HOKU):

As you can see from the chart above, Hoku is certainly a very volatile stock. You can also see that the stock has recently run from the $8 per share level to about $10.50 per share. While many would argue that the stock’s run is over because a regression is due, I beg to differ. I’ve found that volatile stocks like Hoku can run 50-100% when the market regains optimism for the stock.

As a result, I think a buy here makes sense. Stochastics are turning up — indicating that the stock was very oversold and is nowhere near overbought as of now. The stock’s recent breakout made perfect sense (bounced back above the 50 day moving average and confirmed the move on increasing volume).

I think the stock could very well reach and even break through its prior 52-week high of roughly $14.50 per share. The “profit window” can be seen on the chart as a blue rectange.

Next up is JA Solar Holdings (NASDAQ: JASO):

JA Solar Holdings IPO’d about eight months ago and since then has been on fire. Since April, the stock has seen prices as low as $17.50 per share and as high as $42.50 per share. This stock is like Hoku in that it’s very volatile.

As you can see from my chart, the last time the stock was on the 50-day moving average, it served as a support line for the stock and allowed the stock to base before nearly doubling. Now the stock is again hovering over its 50-day moving average — a positive sign.

Interestingly, the stock has recently been showing a “bounce” from the trendline and 50-day moving average (both seen on the chart). This is positive because it indicates that, in fact, the stock is bottoming off of these important figures.

In my opinion, the stock is a buy if it can break the downtrend line which now resides around $36 per share. Why? Most importantly, because a move about this downtrend line would “confirm” a reversal in the stock and prevent you from becoming involved in the story too early.

Good luck out there and I hope you’re finding my ideas useful.

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Filed under: Major movement, Bad news, Newsletters, Housing

One advisor who was not surprised by the recent troubles in the mortgage markets has been Gary Shilling, who has been voicing concerns on both his weekly appearances with Larry Kudlow on CNBC and his newsletter, Gary Shilling’s Insight.

The advisor notes, “The consensus for economic forecasters remains convinced that the housing meltdown will not spread to the rest of the economy.”

Silling, however, disagrees. He notes, “The bulls believe the recent financial market problems will be contained. Of course, those folks have a strong optimistic bias. And the vast majority of investors only hold long stock positions, and perennially hope for an ever-rising economy and stock market.”

The bulls’ argument, he suggests, boils down to this: The collapsing housing sector hasn’t sunk the overall economy yet, so it won’t as robust domestic job growth and strength abroad keep the economy humming.

He continues, “We believe the subprime slime is oozing throughout the U.S. housing sector and spreading to consumer spending as the supporting house appreciation disappears. Inventories look like they’re being liquidated, not poised for rebuilding.”

Further, he contends, economic growth abroad will not keep the American expansion afloat, but rather succumb as U.S. consumers retrench. He asserts, “With the usual lags, the faltering U.S. housing sector will drag the economy into recession, probably by year’s end, and it will spread abroad in 2008.”

The advisor states, “Housing is not the only area of heavy risk-taking, but just the most vulnerable. A great disconnect between the real economy and the speculative financial world has existed since the late 1990s.”

This “disconnect” he adds, has been fed by mountains of liquidity, expectations of and demands for oversized investment returns, and low market volatility, all of which he says have encouraged risk taking as ample financing and loose lending kept corporate defaults at record lows.

He explains, “The huge gap between speculative financial markets and economic reality has persisted for a decade. It probably is in the process of closing, with many attendant tears.”

Overall, he now forecasts, “We continue to expect a 25% fall in house prices and a 60% decline in sales. Along with this, a stock bear market and recession lie ahead.”

What will benefit in this environment? He notes, “We believe that a faltering economy will turn low inflation into deflation, to the benefit of U.S. Treasurys. Rates are likely to decline further as deflation again becomes a widespread concern. Longer run, our forecast of mild deflation implies Treasury bond yields will decline to 3%.”

Each day, Steven Halpern’s TheStockAdvisors.com features the latest investment ideas and market commentary from the financial newsletter community.

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