Thursday, February 18, 2010

The Rate Hike Cycle Begins

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Just yesterday in the FOMC meeting minutes from January, it was becoming painfully clear that the FOMC was getting closer and closer to hiking rates.  Most notable was that the discussions had been revolving around whether changing the “extended period” and more importantly that the FOMC was considering a hike in the discount rate.

It is unusual to see the FOMC hike or cut the discount rate and not move the Fed Funds rate…. but that is what we are getting.  The Fed has raised the discount rate by 0.25%.

The FOMC raised the discount rate to 0.75% from 0.50%, effective tomorrow.  The FOMC noted that the policy outlook is effectively the same as during the January meeting.  But it also noted that it will assess whether further discount rate hikes are needed.

The discount window borrowings as of last night were $87.77 billion and foreign central bank custody holdings were listed as $2.957 trillion.  More important than that is that the Fed’s Mortgage-backed securities holdings crossed the $1 trillion mark.

The discount rate is the interest rate that depository institutions are charged to borrow short term funds directly from the Federal Reserve.   Today is not a full rate hike.  But this is the beginning of the end of all that free money.


SIRIUS Takes Leaderboard (SIRI)

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SIRIUS XM Radio Inc. (NASDAQ: SIRI) has suddenly become everyone’s buddy again.  After shares cracked through the $1.00 mark they just kept running.  At 2:28 PM EST we have seen a whopping 161 million shares trade hands and the stock is up 8.5% more at $1.14 for a new 52-week high (intraday high $1.18).  If today holds up then we will have seen 5 consecutive up-days for SIRIUS XM.

Yesterday’s volume including after-hours came in at 184.75 million shares.  We saw 153 million shares the day before that.  Before this last run this week, there have been five prior days when we saw 100+ million shares trade hands.  Before that, well you have to go to the end of August to find 100+ million shares in a day…. and shares were down in the $0.66 range then.

SIRIUS shares closed out 2009 at $0.60…. That makes for a 90% move so far in 2010.  Wunderlich Securities raised gave the stock a Buy-rating and $1.00 stock.  I have put in a call and email to the analyst there but not heard anything back yet over the $1.00 breach.

Of the major stocks, SIRIUS XM is the second most active stock in number of shares traded.


Top Day Trader Alerts (XNPT, GSK, NVDA, LVS, WYNN, DSCO, NTAP, VLNC)

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These are this Thursday’s top pre-market day trader and active trader alert stocks with a brief explanation and color on each:

Xenoport, Inc. (NASDAQ: XNPT) is the worst we have seen in a while…. Shares are down about 64% at $7.05 on almost 4 million shares as of 8:48 AM EST.  Average volume is under 300,000 so we are over 10-X volume and the market isn’t even open.  The old 52-week trading range WAS $13.36 to $27.18.  The FDA has denied approval of its Restless Leg Syndrome drug with GlaxoSmithkline (NYSE: GSK).

NVIDIA Corporation (NASDAQ: NVDA) is down over 4% at $17.00 on more than 300,000 shares as of 8:48 AM EST.  The company beat its earnings numbers but revenue was light.  After the huge run we have seen, the only surprise is that there is not even more profit taking seen.

Las Vegas Sands Corp. (NYSE: LVS) is down almost 6% at $16.46 on over 200,000 shares as of 8:52 AM EST.  Yesterday afternoon’s earnings report failed to impress.  The loss narrowed here to $113.9 million.  This was boring enough that after the huge run from last year’s lows it could see more selling.  It is also lackluster enough that we’d look for some related weakness at Wynn Resorts Ltd. (NASDAQ: WYNN).

Discovery Laboratories Inc. (NASDAQ: DSCO) is getting its wings clipped today with shares down 22% at $0.55 on almost 500,000 shares as of 8:52 AM EST.  The 52-week range is $0.33 to $2.40 and average volume is almost 1.5 million shares.  The company priced $16.5 Million in a public offering of Common Stock and warrants versus a prior market cap of $89.5 million at yesterday’s close.

NetApp, inc. (NASDAQ: NTAP) is down despite beating earnings expectations last night.  We have seen two downgrades on the stock and the shares are down 1.4% at $31.64 on almost 500,000 shares as of 8:48 AM EST.

Valence Technology Inc. (NASDAQ: VLNC) is a screamer this morning.  Too bad it is just a penny stock.  Shares are up 22% at $1.00 on about 130,000 shares as of 8:50 AM EST.  The 52-week trading range is $0.74 to $2.50 and the average volume is about 1.1 million shares.  Bénéteau Group signed an exclusive multi-year supply agreement worth as much as $45 million if all options are used.  Valence makes high-energy power systems.

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FEBRUARY 18, 2010