Thursday's Brew - Oct 26

Enjoy your fresh morning coffee with our summary of the market outlook for the day and a medley of important information you should find useful. Equity futures are up across the board, as the market looks to extend the rally after the pause decision by the Fed supported by less than hawkish commentary. We would start looking at semiconductor stocks now that have already reported this quarter's results.

OVERSEAS NEWS & MARKET ACTIVITY

The Hang Seng was up over 1% while the NIKKEI was up about 0.7%, aided by the positive news out of the FOMC meeting. The cheer spread to Europe, with the DAX up about a half a percent and indices up across the board throughout Europe.

ECONOMIC NEWS & DATA

Thursday, the government releases September data on orders for durable goods. Also, the latest data on new home sales will be released. However, the information seems to pose no threat to move markets, as it follows the FOMC. New York Fed President Timothy Geithner will speak at a conference on the Japanese economy at the Columbia Business School Center. He is expected to address central banking in the global economy. Finally, the WTO is expected to approve Vietnam's entry.

COMMODITY NEWS & DATA

Oil shot higher yesterday, for no other reason than Iran again intensifying the heat on the global scene. We have heard many different reasons from talking heads on the news wires and business television, but make no mistake, the move coincides with new rhetoric from the Persian nation. As we stated previously, oil prices cannot drop convincingly until the Iranian issue is resolved.

STOCK NEWS

Headlining the earnings reporting day will be NII Holdings (formerly Nextel), which is seen by the consensus as making $0.41 a share. VCA Antech (WOOF) posted EPS $0.02 ahead of analysts' consensus and raised its full year guidance by two cents, in its conservative fashion. The shares traded lower after hours, as we believe the market incorrectly interpreted the guidance as implying a weak Q4, since the raised guidance still falls a penny below consensus. VCA Antech does not concern itself with the views of analysts; it merely sets reachable goals and then goes out and executes in a stellar fashion, providing value adding gains for shareholders, in our opinion. Our impression from the Q3 report and conference call were that the fourth quarter was running up to stellar trend, and we expect the company to meet or exceed estimates next quarter as usual, and exceed its guidance by a greater degree.

We believe the FOMC meeting has provided impetus for semiconductor and semi-equipment names to take flight. But we warn investors to be selective. Avoid names that are anticipated to report earnings in the next two weeks and which have EPS estimate momentum implying a negative trend, or which have disappointed recently. I would focus on names that have either reported so so quarters already, or are set to report so so quarters two weeks out. The company specific disappointment can ruin the cyclical run. We note that we closed out the long end of our strangle option position in Websense (WBSN) yesterday. We will provide an update later today on this and a new name for investment, so stay tuned. We hope you enjoyed "Today's Morning Coffee" and wish you a good day trading. (disclosure)