DJ MARKET TALK: Options Players Appear Bullish On Cree
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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2:13 (Dow Jones) Cree's (CREE) stock and options are active, with investors
appearing to make bullish bets on the maker of semiconductor materials. It
isn't clear what drove these optimistic trades. Cree stock was up 9.7%, or
$3, to $33.78 on above-average trading volume, after rising 11.4% Thursday.
In the options market, at least one investor was buying near-month,
out-of-the-money calls and selling long-term options that expire in 2003 -
usually a sign the investor expects stock to appreciate in the near term.
(KT)
2:05 (Dow Jones) An Alcatel (ALA) merger with Lucent (LU) is a good
opportunity, especially in down market, says Euroeffect Stockbrokers.
Valuable and growing optronics division would be excellent and cheap
addition, and there is scope for massive synergies and ability to strip out
underperforming divisions. Lucent's U.S. contacts would also be big bonus,
but real benefits would only be apparent once the market turns around.
Lucent up 1.8% at $9.99, Alcatel off 8% at $29.43. (BRT)
1:55 (Dow Jones) Despite the sluggish economy and record gasoline prices,
travel during the Memorial Day holiday may slightly surpass last year's
record volume, AAA said. Some 34.2 million Americans plan to travel 50 miles
or more from home, a tad above last year's 34.1 million. About 28.5 million
people will travel by car, compared with 28.4 million a year ago. Another
5.7 million expect to fly or take a train or bus, flat from last year. (SON)
1:49 (Dow Jones) Fuel-cell names have been on fire, and are acting well
again Friday, no doubt running up on President Bush's energy proposals. But
Michael Sheldon, chief market strategist at Spencer Clark, says there may be
better opportunities to get into this group a couple of months down the
road. The technology and products of these companies are real, but many
won't have profits for some time, and Bush R&D proposals will take a while
to work through Congress, he says. (TG)
1:40 (Dow Jones) Currently trading at better than 38 times trailing
earnings, Gap Inc. (GPS) is typical of retailer stocks that may have gotten
ahead of themselves lately, says Stephanie Hoff, an analyst at Banc of
America Capital Management. "These valuations seem to be anticipating an
economic recovery by the fourth quarter," Hoff says, and the signs of that
recovery aren't yet definite. Hoff adds that since October, retailer stocks
have jumped higher in anticipation of the Fed's successive rate cuts - a
reversal from their historically reactive behavior. (JMC)
1:30 (Dow Jones) Sung Won Sohn, executive VP and chief economist at Wells
Fargo Banks, says the increasing slope of Tsy yield curve is a "good omen"
for stocks. He says in last 20 years, peaks in the slope have "heralded
sizable gains" in equity prices. Within a year of a peak, Nasdaq rose 21%,
S&P jumped 17%, and DJIA went up 13%, he says. (CMN)
1:22 (Dow Jones) Warrants for shares of Radyne ComStream (RADN), which trade
under the symbol RADNW, were up 28% Friday, as some investors apparently
gambled on the company's common stock moving up in the near future. Investor
relations representative Jennifer Pelczarski said generally the company's
common stock, up 5% Friday, and its warrants move more closely in tandem,
but noted that some investors "see the warrants as a way to get in and see
bigger (returns) should the common stock continue to rise." (AMR)
1:12 (Dow Jones) Declaring there's not a quick fix for cruise industry
supply woes, Bear Stearns analyst Jason Ader says high supply growth of
about 12% a year through 2004 for North American fleets should continue to
pressure yields - the money made on each passenger berth - even if the
current weak economy should recover. Less compelling growth prospects and
lower returns will stop shares of Carnival (CCL) and Royal Caribbean Cruises
(RCL) from trading at the high multiples of about two years ago, he says.
(DDO)
1:08 (Dow Jones) The Merrill Lynch 100 Technology Index is up 44% since
early April, which Merrill tech strategist Steve Milunovich says lends
support to April 4 being a bottom for tech stocks. But he says the surge is
probably a "sucker rally in a bear market." Still, the rally could lift the
Merrill tech index up another 20% in the near-term, he says. Milunovich says
tech stocks anticipate the "trough" in the profit cycle by zero to six
months. (PDL)
12:59 (Dow Jones) Economic Cycle Research Institute's weekly Leading Index
rose for the fifth straight time in the week ended May 11. This is a sign
the economy may be averting an outright recession, contrary to the earlier
readings the index had been flashing. (JM)
12:48 (Dow Jones) The Bush energy policy has already proven to be a catalyst
for many alternative power and power technology stocks. FAC/Equities analyst
Sanjay Shrestha doesn't expect the spotlight to fade soon. The group will
get a further charge from the public's heightened awareness of energy
issues, and from rolling blackouts in California and possibly in other parts
of the country, he said. (CCC)
12:39 (Dow Jones) Lehman's Dan Niles upgrades Marvell Technology (MRVL) to
buy, despite lowering the semiconductor company's fiscal 2002 EPS estimate
by a couple cents. "The decrease in EPS is due to lower gross margin
assumptions. Marvell is beginning to see stabilization from leading Gigabit
customers like Foundry (FDRY) and Extreme (EXTR). We believe that Marvell's
strong communications portfolio continues to see wins and is driving the
company through this inventory correction." (GS)
12:23 (Dow Jones) Fed Gov. Meyer is scheduled to testify next Tuesday before
a Senate Banking Subcommittee on "the stock market and its effect on the
economy." Also testifying will be ex-Fed Gov. Angell and Goldman Sachs'
McKelvey. (JC)
(END) DOW JONES NEWS 05-18-01
02:14 PM
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