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Adobe, Alcoa, Genzyme and Other Market Movers

The traders spent Thursday gaming a slew of stocks likely to make sharp moves in the days ahead. What must you know?

DEVELOPING STORY: MICROSOFT FOR ADOBE?

Shares of Adobe skyrocketed on Thursday after the New York Times reported that Microsoft Chief Executive Steve Ballmer had met secretly with Adobe CEO Shantanu Narayen at Adobe's San Francisco offices "recently".

The two discussed Apple dominance in mobile phones and considered several options to counteract that, including Microsoft acquiring Adobe, the newspaper reported, citing employees and consultants involved in the discussions.

Adobe and Microsoft declined comment.

Such a deal could be worth $15 billion or more based on Adobe's current market value. It would mark a major offensive in Microsoft's bid for a larger share of Internet media and mobile platforms by getting hold of Adobe's popular Flash player, used by many websites for video and graphics.

It could also mean an alliance against Microsoft's arch rival Apple Inc, which has been at odds with Adobe over its policy not to allow Flash-based applications on its iPhones and iPads.

What should you make of it?

Instant Insights with the Fast Money traders

We hear a lot of acquisition rumors every day, reminds Piper Jaffray analyst Michael Olson. Some are ridiculous but this one makes sense. Adobe will probably be a beneficiary of the on-going transition of media onto the Internet so it gives Microsoft a better position. And it would allow both of these companies to better battle their biggest rival, Apple.

It doesn’t surprise me that Microsoft is looking for growth, says Pete Najarian. But I think a number of companies are in play. Along with Adobe I’m also watching BMC software , adds Pete Najarian.

Acquiring Adobe would be a real statement, adds Jon Najarian – Pete’s brother. The question becomes would it be a smart acquisition. I think so.

I agree that the Street would look at the move favorably, adds Joe Terranova. Microsoft can’t grow organically so they have to grow through acquisition.

I’m long Microsoft, says Karen Finerman, I was a buyer on the Goldman downgrade. At 10 times earnings I find the risk/reward compelling. But I wouldn’t buy the stock on hopes of an Adobe acquisition. Microsoft doesn’t have a great track record for acquisitions.

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AFTER HOURS ACTION: ALCOA

Shares of Alcoa popped in extended trade Thursday after the firm reported a profit that easily outstripped Wall Street estimates.

Looking at the numbers, the aluminum giant reported a third-quarter profit excluding one-time items of 9 cents a share, up from 4 cents a share during the same period last year.

Sales for the most recent period rose to $5.29 billion, up from $4.615 billion last year.

Equity analysts who follow Alcoa saw the company earning 5 cents a share on sales of $4.96 billion, according to a consensus estimate compiled by Thomson Reuters.

What’s the trade?

I don’t think the Street was expecting guidance to be as good as it was, says Jon Najarian. It was a nice beat. I suspect a lot of shorts get squeezed on Friday.

I get that this is a good report, says Joe Terranova, but China is now a net exporter of aluminum. If you’re looking for a metals play, I think copper makes much more sense.

Strength in the metals makes me bullish the rails, which move metals, adds Pete Najarian. Take a look at CNI .

> Click here for more coverage of Alcoa earnings

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AFTER HOURS ACTION: GENZYME

The traders recommend keeping a close eye on Genzyme after published reports suggested the firm’s board authorized a review of its strategic options, including reaching out to other companies, in an effort to fight off the hostile bid from Sanofi-Aventis for $18.5 billion.

According to the WSJ, Genzyme has met with Pfizer , GlaxoSmithKline , and Johnson & Johnson earlier this year, and received indications of interest in the company.

However, as of this writing, no white knight has emerged.

What should you make of it?

This is deal-making 101, says Karen Finerman. They need to make Sanofi think there’s another bidder for Genzyme to get a higher offer. However, I think at the end of the day Sanofi is the best buyer.

Action in the options market suggest some investors think if there is a competing bid it come in around $75.

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MARKETS ON HOLD AHEAD OF BIG JOBS REPORT

Looking at the major averages, investors appear cautiously bullish ahead of Friday’s jobs report.

Although the S&P traded lower, it held above 1150. That's technically significant because 1150 had once been a level of resistance. It suggests a level that was once a ceiling may have now become a floor.

What’s the trade?


If the market can closes above 1160 for a couple days in a row I expect we’ll see a rotation into equities, says Jon Najarian.

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BULL MARKET OR BS?

Should you chalk up Thursday’s dip to jobs-report jitters, or is this rally about to be derailed for good?

Strategic investor Simon Baker clearly remains in the bullish camp.

He expects the S&P will test 1200 as money mangers chase performance through the end of the year. And he brought a handful of trades to the desk. They follow:

Simon Baker’s Picks For A Big 4th Quarter

Silver Wheaton
IGate

Hear more about these trades including why Baker thinks the action in Q4 will be robust. Watch the video now!











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Trader disclosure: On Oct. 7, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns (APA), (AAPL), (IBM), (EOG), (HES), (OIH), (OXY), (ORCL), (RSH), (UPL), (SU), (VRTS), (XBI), (RIG), (VRTS), (FTO), (PEP), (JOYG), (C); Terranova Is Long (GLD) Puts; Terranova Is Long (FCX) Puts; Terranova Is Long (JOYG) Puts; Terranova Is Long (OIH) Puts; Terranova Is Long (FFIV) Puts; Karen Finerman owns (JCG); Karen Finerman owns (GYMB); Karen Finerman owns (AEO); Karen Finerman is short (ANF); Karen Finerman's firm is long (BP); Karen Finerman's firm is long (YUM); Karen Finerman's firm is long (GENZ); Karen Finerman's firm is long S&P 500 Puts; Karen Finerman's firm is long Russel 2000 Puts; Karen Finerman's firm is short (JR); Karen Finerman's firm is short (MDY); Karen Finerman's firm is short (IWM); Karen Finerman's firm is short (SPY); Cortes Is Short (XLF); Cortes Is Short (BAC); Cortes Is Short (BIDU); Cortes Is Short Euro; Cortes Is Short Mexican Peso; Cortes Is Long German Bonds; Pete Najarian is long (AA) Calls; Pete Najarian is long (MAR) Calls; Pete Najarian is long (YUM) Calls; Pete Najarian is long (AKAM) Calls; Pete Najarian is long (BP) Calls; Pete Najarian is long (BEXP) Calls; Pete Najarian owns (BRCD); Jon Najarian Owns (BKE); Jon Najarian Owns (ZUMZ); Jon Najarian Owns (ADBE), Is long (ADBE) Call Spreads; Jon Najarian Owns (DCTH), Is long (DCTH) Call Spreads; Jon Najarian Owns (ANF), Is Short (ANF) Calls; Jon Najarian Owns (LTD), Is Short (LTD) Calls; Jon Najarian Owns (AEO), Is Short (AEO) Calls; Jon Najarian Owns (AA) Call Spreads; Jon Najarian Owns (SVNT) Call Spreads; Jon Najarian Owns (BEXP) Calls; Jon Najarian Owns (JCP) Calls

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)


For Deborah Weinswig
An Employee Of Citigroup Global Markets Or Affiliates Is A Trustee Of (TGT)
Citi Employees Own (WMT), (JCP)
Citigroup Global Markets or Affiliates Owns 1% Or More Of (SKS)
Citigroup Global Markets Or Affiliates Has Managed Or Co-Managed An Offering Of (DG), (HD), (TGT), (WMT) In Past 12 Months
Citigroup Global Markets Or Affiliates Received Investment Banking Compensation For Services Provided In Past 12 Months From (DG), (KR), (SKS), (TGT), (WMT)
Citigroup Global Markets Or Affiliates Expects To Receive/Seek Investment Banking Compensation From (HD), (KR), (WMT) In Next 3 Months
Citigroup Global Markets Or Affiliate Received Non-Investment Banking Compensation From (HD), (JCP), (KSS), (KR), (M), (SWY), (SVU), (TGT), (WAG), (WMT), (COST) In Past 12 Months
(DG), (HD), (KR), (SKS), (TGT), (WMT) Are Or In Past 12 Months Were Investment Banking Clients Of Citigroup Global Markets
(CVS), (DG), (HD), (JCP), (KSS), (KR), (M), (SWY), (SKS), (SVU), (TGT), (WAG), (WMT), (COST) Are Or In Past 12 Months Were Non-Investment Banking Clients Of Citigroup Global Markets (Securities-Related Serices)
(HD), (JCP), (KSS), (KR), (M), (SWY), (SVU), (TGT), (WAG), (WMT), (COST) Are Or In Past 12 Months Were Non-Investment Banking Clients Of Citigroup Global Markets (Non-Securitites-Related Services)
Citigroup Global Markets Or Affiliate Received Compensation From (DG) In Past 12 Months
Citigroup Global Markets Is A Market Maker In (CVS), (M), (COST)
Citigroup Global markets And/or Affiliates Has A Significant Financial Interest In Relation To (CVS), (HD), (KSS), (KR), (LOW), (M), (JWN), (SWY), (SKS), (SVU), (TGT), (WMT)
Citigroup Global Markets Or Affiliates Owns 5% Or More Of (SKS)

For Mike Olson
(ROVI) has been an investment banking client of Piper Jaffray during the past 12 months
Piper Jaffray is a market maker in (AAPL)
Piper Jaffray is a market maker in (ADBE)
Piper Jaffray is a market maker in (ADSK)
Piper Jaffray is a market maker in (AKAM)
Piper Jaffray is a market maker in (AVID)
Piper Jaffray is a market maker in (CSTR)
Piper Jaffray is a market maker in (CTRP)
Piper Jaffray is a market maker in (DTSI)
Piper Jaffray is a market maker in (EXPE)
Piper Jaffray is a market maker in (LNW)
Piper Jaffray is a market maker in (NFLX)
Piper Jaffray is a market maker in (PCLN)
Piper Jaffray is a market maker in (PMTC)
Piper Jaffray is a market maker in (RNWK)
Piper Jaffray is a market maker in (ROVI)
Piper Jaffray is a market maker in (SFLY)
Piper Jaffray is an occassional market maker in (DLB)
Piper Jaffray is an occassional market maker in (OWW)
Piper Jaffray is an occassional market maker in (STV)

For Simon Baker
Simon Baker Owns (SLW)
Simon Baker Owns (IGTE)
Simon Baker's Firm Owns (SLW)



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