Thursday, July 1, 2010

At Least We Have Low Expectations For Tomorrow's Unemployment Statistics.....

Is anyone optimistic about tomorrow's jobs report? You are more likely to find someone who believes that the Washington Generals are going to beat the Harlem Globetrotters the next time they hit the hard wood. The lower the expectations, the better, at this point. That doesn't mean tomorrow is an automatic up day regardless of the number, but the combination of today's action along with low expectation may soften the blow. I won't even talk about the concept on the numbers being stronger than expectations. At the moment, we call that Fantasy Land.

I've been looking at small biotechs lately, and they have just been absolutely smashed lately. Many names, such as DCTH and POZN, are trading as if they had no product to sell. Delcath is the more controversial of the two, but Pozen seems downright oversold. Even Wall Street's most pessimistic analyst has a $10 price target on the stock. We still view Pozen as a takeover candidate. Delcath is off by 63% since the beginning of June. Short interest is almost 15%, and current buying interest is zero. Analysts disagree with the price action, but that matters little right now.

Small biotechs have almost all been caught in the wave of selling over the last two months. High-beta names get hit harder, and these have been hit the hardest. We continue to pick up shares but have been marrying them with puts until the overall mood of the market changes.

I've put CME and ICE back on my radar. ICE looks to be the stronger of the two, as it is sitting right on support with an uptrend in place. CME is sitting on the downside support of a longer downtrend currently in place, but both should look to move higher from these levels, if for nothing more than a bounce. I prefer the strength in ICE, but CME is one of those names that can pick up $20 in the blink of an eye. I've done nothing with either yet, but I have my eye on them.

I anticipate Asian markets to build a bit off today's recovery from the lows. If Asia breaks down tonight, then I will be more concerned heading into the jobs numbers tomorrow....

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