The train is leaving the station for a few value-based investors. Elsewhere though, catalysts and a waning oversold platform is finding bullish patronage hard to come by. As of 11:00 ET the SP-500 (SPY) is off 0.12% in volatile and temperamental conditions which belie the daily chart's muted inside candlestick.
"All the #@!%!! Aboard!!" It looks like Ozzy Ozborne has taken the controls at Burlington Northern (BNI) as shares of the rail-roader steam ahead by more than 28% to 97.50. The 'crazy train' motion follows a pre-market buyout announcement from famed value hunter-gather Warren Buffet and Berkshire Hathaway.
The investment holding company and its Oracle at the helm have decided to improve upon its commitment in Burlington as the name's largest shareholder with its intention to take the company private for $100 in a mix of cash and stock.
Elsewhere and with the majors showing little locomotion of their own, but plenty of track changes intraday; it turns out it's not all about the dollar (UUP). The troubling bid of late in the US Greenback is once again showing strength Tuesday by gapping to one month highs in front of Wednesday's FOMC meeting.
A firming dollar and associated unwinding of the carry trade may further dampen tied at the hip green shoots beneficiaries in the commodity complex. However, Comex Gold (GLD) is trading aggressively higher, up 1.70% at 105.70. The price action in GLD has the listed proxy striking all-time-highs.
The bid in gold is likely linked to increasing worries of a shift in monetary policy by the Fed. With Wednesday afternoon's rate decision, Wall & Main are facing the possibility that an era of tighter rates to fend off potential inflation hazards as the economy looks to pick up steam in the months ahead, is in the offing.
For the bears, a couple negative analyst calls in the semiconductor names (SMH, ALTR, SNDK, XLNX, KLAC and ARMH) are weighing in on the sector. Shares of the world's largest chip manufacturer, Intel (INTC), are showing particular weakness, down by 3.00% at 18.45 after Morgan Stanley cut the group to "Cautious" while reducing INTC shares from "Overweight" to "Equal Weight."
Technically, Tuesday's pressure finds shares of INTC in the rare position of being outside its lower Bollinger Band and sporting a mirror-like "sell-e-bration" relative to its Mid October celebratory toast of the company's better-than-expected earnings report.
On the corporate confessional side, bulls are enjoying some foreign aid from India-based IT Services and NASDAQ component, Cognizant Technology (CTSH). Shares are up about 7% near 41.50 and hitting fresh year-to-date highs.
Cognizant managed a four cent profit beat on earnings of $0.45 per share, bested revenue estimates easily on sales growth of 16.2% and also issued upside profit and sales guidance above Street views. An additional and rare confidence booster of "we experienced strong organic growth across all industry sectors, geographies and service lines" certainly sounds like inspiration enough to boot.
And in passing, bears or simply bulls are willing to "sell the news" of a headline profit beat from credit card issuer MasterCard (MA). On call the company put on its best game face by stating the now obvious and equally token "worst is behind" and "recent data are encouraging" according to Briefing. Shares are off 4.25% near 213.
Separately, Dow component J&J (JNJ) reaffirmed its in-line outlook for FY2009 and announced a round of cuts of 7,000 to 8,000 to its global workforce. JNJ is off 0.70% after failing to hold its early "buy the news" financial favor in a market made up stocks still largely disconnected from an economy merely clunking along.
Chris Tyler
Senior Staff Writer & Options Strategist
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