Trader Talk

Uptrend Remains Intact

With yesterday's move up, it's pretty clear that the uptrend is intact. Other widely watched indicators like the NYSE Operating Company Only Advance-Decline Line, a composite of advancing versus declining stocks, remain at new highs. The other piece of good news is that there has been a notable absence of selling pressure, one reason volume has been so anemic.

Germany reported an unexpected fall in unemployment in December (the sixth straight month), buying hopes that employment was clearly turning the corner in that country.


1) Shares of Cadbury fall 2 percent pre-open as the Swiss foodmaker Nestle revealed that it would not submit a competing bid for the British candy maker.

This comes as Kraft Foods raised the cash portion of its ongoing $16.4 billion bid for Cadbury.. Despite the revised terms, the U.K. candy maker once again rejects the "derisory" offer from the U.S. foodmaker.

Kraft sold its frozen pizza business in US & Canada to Nestle for $3.7 billion, raising cash, but Warren Buffett's Berkshire Hathaway, which has a 9.4 percent stake in Kraft, announced it would vote "no" on Kraft's proposal to issue 370 million in new shares to help support its bid for Cadbury.

Several upgrades and downgrades moving stocks this morning.

2) Tenet Healthcare jumps 9 percent after being added to the conviction buy list at Goldman Sachs. The move comes as Goldman expects Tenet to be the only hospital firm that will see higher margins in 2010.

3) RadioShack rises 6 percent pre-open after being upgraded to "buy" at Goldman Sachs. The brokerage sees the electronics retailer realizing increased wireless revenues in 2010, seizing on the strong growth in sophisticated smartphones as those devices continue to reach a broader market.

4) Utilities have had a great run recently; today Robert W. Baird downgraded Xcel Energy, Nicor, TECO Energy and Piedmont Natural Gas saying the price moves up had reduced expected total return. XEL has gone from $19 to $21 in less than two months, a fairly aggressive move for a utility company, reducing the dividend yield to 4.65 percent.

5) Continental Airlines reporting that its load factor last month - which measures how full its planes were - rose 3.1 percentage points to a December record of 83.5 percent from the year ago period.

Additionally, competitor UAL reported higher December passenger loads as its load factor increased 2.5 percentage points in the month.

Still, airlines have been plagued by lower average ticket prices and higher operational and fuel costs - pushing their bottom lines further into the red, with losses expected to continue into 2010.

Just take a look at Mesa Air, which announced today it was filing for Chapter 11 bankruptcy protection. The small regional airline hopes that it can restructure its business and sell excess aircraft it no longer needs, as 40 percent of its fleet has been out of service. 



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