BARCHART MORNING CALL 7/28

BARCHART MORNING CALL

Monday, July 28th, 2014View Older Reports

Everything you need to know about the markets in one free daily newsletter.

E-mail:

You will also receive a free subscription to the Barchart family of newsletters.

OVERNIGHT MARKETS AND NEWS

September E-mini S&Ps (ESU14 -0.14%) this morning are down -0.08% and European stocks are up +0.14%. Goldman Sachs cut its rating on global stocks to neutral for the next 3 months, saying stocks are at risk of a brief selloff as rising inflation boosts government bond yields. Stocks received a boost on increased M&A activity after Dollar Tree agreed to buy rival Family Dollar Stores in a cash-and-stock deal valued at about $8.5 billion. Russia's Micex fell nearly 2% to a 2-month low and the ruble slid as the U.S. and Europe consider more sanctions against Russia after the U.S. said it had satellite photos showing Russia firing across the border at Ukraine forces. Asian stocks closed mostly higher: Japan +0.46%, Hong Kong +0.88%, China +2.81%, Taiwan -0.20%, Australia -0.11%, Singapore closed for holiday, South Korea +0.78%, India -0.52%. Japan's Nikkei Stock Index rallied to a 6-month high on speculation Q2 Japanese company earnings results will be positive. China's Shanghai Stock Index jumped to a 7-month high on signs of increased company profits after China Jun industrial profits rose by the most in 9 months. Commodity prices are mixed. Sep crude oil (CLU14 -0.44%) is down -0.60%. Sep gasoline (RBU14 -0.44%) is down -0.43%. Aug gold (GCQ14 +0.11%) is up +0.07%. Sep copper (HGU14 +0.02%) is up +0.23%. Agriculture prices are mixed. The dollar index (DXY00 -0.02%) is down -0.03%. EUR/USD (^EURUSD) is up +0.07%. USD/JPY (^USDJPY) is up +0.01%. Sep T-note prices (ZNU14 -0.06%) are down -4 ticks.
ECB Vice President Constancio said that the Eurozone and the global economy "still face challenges" and that inflation rates in the Eurozone "remained too low" in the second quarter.
China Jun industrial profits rose +17.9% y/y, the largest increase in 9 months.

U.S. STOCK PREVIEW

Today’s June pending home sales report is expected to show an increase of +0.5% m/m, adding to the sharp gain of +6.1% seen in May.  The Treasury today will sell $29 billion of 2-year T-notes.  There are 10 of the S&P 500 companies that report earnings today with notable reports including:  Tyson Foods (consensus $0.78), Cummins (2.39), Roper Industries (1.50), Plum Creek Timber (0.30), and Eastman Chemical (1.84).  Equity conferences this week include the following:  Institute of Validation technology on Tue-Thu, and Marcus Evans 13th Annual Outage Management for Power Plants Conference on Tue-Thu.

OVERNIGHT U.S. STOCK MOVERS

Tyson Foods (TSN -0.58%) reported Q3 EPS of 75 cents, weaker than consensus of 78 cents.
PG&E (PCG -0.57%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs.
Pfizer (PFE -0.49%) was downgraded to 'Market Perform' from 'Outperform' at BMO Capital.
Time Warner Cable (TWC -1.09%) was upgraded to 'Buy' from 'Hold' at Wunderlich.
Semtech (SMTC -4.26%) was upgraded to 'Strong Buy' from 'Outperform' at Raymond James.
Reynolds American (RAI -0.75%) was upgraded to 'Top Pick' from 'Outperform' at RBC Capital.
Cal-Maine Foods (CALM +0.66%) reported Q4 EPS $1.30, better than consensus of $1.15.
Citigroup raised its price target for Chipotle (CMG +2.03%) to $793 from $648 and keeps its 'Buy' ratng on the stock.
Dollar Tree (DLTR -1.33%) agreed to buy Family Dollar (FDO -0.79%) for $74.50 per share in cash and stock.
Cisco (CSCO +0.54%) was downgraded to 'Sector Perform' from 'Outperform' at Pacific Crest.
CIT Group (CIT +0.59%) was upgraded to 'Overweight' from 'Equal Weight' at Morgan Stanley who also raised their price target on the stock to $57 from $46.
Cummins (CMI -0.43%) reported Q2 EPS of $2.43, higher than consensus of $2.39.
Roper Industries (ROP -0.14%) reported Q2 EPS of $1.56, better than consensus of $1.50.
The U.S Commerce Department proposed expanded duties on some Chinese solar-energy imports, according to Bloomberg, potentially affecting Chinese solar companies such as Trina (TSL +0.71%), Yingli (YGE +0.57%) and JinkoSolar (JKS +2.17%), among others.
Amazon.com (AMZN -9.65%) is likely to remain range-bound as costs escalate, according to Barron's.

MARKET COMMENTS

Sep E-mini S&Ps (ESU14 -0.14%) this morning are down -1.50 points (-0.08%). The S&P 500 index on Friday closed moderately lower: S&P 500 -0.48%, Dow Jones -0.72%, Nasdaq -0.50%. The durable goods orders report was generally favorable, but stocks lost ground on (1) pre-weekend long liquidation pressure, (2) nervousness as the U.S. and Europe consider further sanctions against Russia, and (3) the surprise 50 bp rate hike to 8.00% by the Russian central bank along with the -1.45% sell-off in the Russian Micex stock index on Friday.
Sep 10-year T-notes (ZNU14 -0.06%) this morning are down -4 ticks. Sep 10-year T-note futures prices on Friday closed moderately higher on weak global stocks and on increased safe-haven demand with impending new sanctions on Russia and the Russian rate hike. Closes: TYU4 +8.5, FVU4 +3.75.
The dollar index (DXY00 -0.02%) this morning is down -0.023 (-0.03%). EUR/USD (^EURUSD) is up +0.0010 (+0.07%). USD/JPY (^USDJPY) is up +0.01 (+0.01%). The dollar index on Friday extended the 3-week rally to a new 5-1/2 month high with bullish factors including generally strong U.S. economic data and continued safe-haven demand. EUR/USD fell to a new 8-month low on the ECB’s recent monetary policy easing and on concerns about new sanctions on Russia. Closes: Dollar index +0.16 (+0.19%), EUR/USD -0.0034 (-0.25%), USD/JPY +0.02 (+0.02%).
Sep WTI crude oil (CLU14 -0.44%) this morning is down -61 cents (-0.60%). and Sep gasoline (RBU14 -0.44%) is down -0.0122 (-0.43%). Aug crude and gasoline prices on Friday closed steady to higher: CLU4 +0.02 (+0.02%), RBU4 +0.0272 (+0.97%). Crude oil and gasoline prices received a boost on Friday from Ukraine-Russian turmoil, but continued to see some downward pressure from rising U.S. gasoline inventories and concerns about a near-term rise in Libyan exports.

GLOBAL EVENT CALENDAR07/28/2014

US	0945 ET	Jul Markit services PMI expected -0.2 to 59.8, Jun +2.9 to 61.0.
	1000 ET	Jun pending home sales expected +0.5% m/m and -5.2% y/y, May +6.1% m/m and -6.9% y/y.
	1030 ET	Jul Dallas Fed manufacturing activity expected +0.6 to 12.0, Jun +3.4 to 11.4.
	1100 ET	USDA weekly grain export inspections.
	1300 ET	Treasury auctions $29 billion of 2-year T-notes.
	1600 ET	USDA weekly crop progress.
JPN	1930 ET	Japan Jun jobless rate expected unch at 3.5%, May 3.5%. Jun job-to-applicant ratio expected unch at 1.09, May 1.09.
	1930 ET	Japan Jun overall household spending expected -3.9% y/y, May -8.0% y/y.
	1950 ET	Japan Jun retail sales expected +0.8% y/y and -0.5% y/y, May +4.6% m/m and -0.4% y/y.

U.S. STOCK CALENDAR07/28/2014

Company Name	Ticker	Time	Event Description	Period	Estimate
Roper Industries Inc	ROP US	Bef-mkt	Q2 2014 Earnings Release	Q2 2014	1.503
Tyson Foods Inc	TSN US	Bef-mkt	Q3 2014 Earnings Release	Q3 2014	0.784
Cummins Inc	CMI US	7:30	Q2 2014 Earnings Release	Q2 2014	2.385
Tyson Foods Inc	TSN US	8:00	Q3 2014 Earnings Call	Q3 2014
Roper Industries Inc	ROP US	8:30	Q2 2014 Earnings Call	Q2 2014
Cummins Inc	CMI US	10:00	Q2 2014 Earnings Call	Q2 2014
Plum Creek Timber Co Inc	PCL US	17:00	Q2 2014 Earnings Call	Q2 2014
XL Group PLC	XL US	17:00	Q2 2014 Earnings Call	Q2 2014
Eastman Chemical Co	EMN US	17:00	Q2 2014 Earnings Release	Q2 2014	1.837
Plum Creek Timber Co Inc	PCL US	Aft-mkt	Q2 2014 Earnings Release	Q2 2014	0.299
General Growth Properties Inc	GGP US	Aft-mkt	Q2 2014 Earnings Release	Q2 2014	0.305
XL Group PLC	XL US	Aft-mkt	Q2 2014 Earnings Release	Q2 2014	0.837
Masco Corp	MAS US	Aft-mkt	Q2 2014 Earnings Release	Q2 2014	0.281
Range Resources Corp	RRC US	Aft-mkt	Q2 2014 Earnings Release	Q2 2014	0.398
Jacobs Engineering Group Inc	JEC US	21:30	Q3 2014 Earnings Release	Q3 2014	0.864

Are projections for the solar industry too bright?

Am I the only one who is having butterflies about the solar industry?  Is there a market for this renewable energy resource or is it all just smoke and mirrors? Using Barchart I found 4 solar stocks that on average are up over 20% in the last month alone.  The brokerages have fantastic projections, there is very high investor sentiment but my intuition is holding me back from making a recommendation.  Here's what others think, let me hear your opinions.

JKS - Jinkosolar -- a solar product manufacturer with operations based in Jiangxi Province and Zhejiang Province in China. JinkoSolar has built a vertically integrated solar product value chain from recovered silicon materials to solar modules. JinkoSolar's principal products are silicon wafers, solar cells and solar modules which are all along the photovoltaic value chain, with a global network spanning across Europe, North America and Asia.

• Barchart Trend Spotter (tm) technical buy signal
• 9 new highs and up 29.13% in the last month
• Relative Strength Index 64.33% and rising
• Trades around 28.16 with a 50 day moving average of 24.63
• Wall Street brokerages have 4 buy, 1 hold and 2 under perform recommendations
• Revenue projected to increase 177.40% this year and 43.10% next year
• EPS estimated to increase 1,302.30 this year and increase annually 15.00% for at least 5 years
• Motley Fool CAPS members vote 75 to 22 and All Stars vote 14 to 8 that the stock will beat the market

SOL - Rensola --   RENESOLA and its subsidiaries are engaged in manufacturing solar wafers in the People's Republic of China. The company's solar wafers are sold to both Chinese and international photovoltaic cell and module manufacturers. The company's customers include some of the leading manufacturers of solar cells and modules, such as JA Solar Co., Ltd., Motech Industries Inc., Solarfun Power Holding Ltd., Suntech Power Co. Ltd. and Topco Technologies Corp.

• Barchart Trend Spotter (tm) technical buy signal
• 8 new highs and up 23.40% in the last month
• Relative Strength Index 55.18%
• Trades around 10.23 with a 50 day moving average of 9.42
• Wall Street brokerages have 8 buy and 2 hold recommendations published
• Revenue projected to increase 131.50% this year, 16.80% next year
• EPS estimated to increase 324.40% this year, 11.90% next year and 11.67% annually for at least 5 years
• Motley Fool CAPS members vote 1,103 to 29 and the All Stars vote 297 to 4 that the stock will beat the market

LDK - LDK Solar -- a manufacturer of multicrystalline solar wafers, which are the principal raw material used to produce solar cells. LDK sells multicrystalline wafers globally to manufacturers of photovoltaic products, including solar cells and solar modules. In addition, the company provides wafer processing services to monocrystalline and multicrystalline solar cell and module manufacturers. LDK's headquarters and manufacturing facilities are located in Hi-Tech Industrial Park, Xinyu City, Jiangxi province in the People's Republic of China. The company's office in the United States is located in Sunnyvale, California.

• 88% Barchart technical buy signal
• 5 new highs and up 21.09% in the last month
• Relative Strength Index 62.40% and rising
• Trades around 12.72 with a 50 dy moving average of 11.11
• Wall Street brokerages have published 10 buy, 6 hold and 5 under perform recommendations
• Revenue projected to increase 111.60% this year and 27.60% next year
• EPS estimated to increase by 188.10% this year, 19.90% next year and 23.35% annually for the next 5 years
• Investor sentiment on Motley Fool is high with the CAPS members voting 1,372 to 94 and the All Stars 320 to 33 that the stock will bet the market

TSL - Trina Solar --  currently one of the few private manufactures who has developed a vertically integrated business model from the production of monocrystalline ingots, wafers and cells to the assembly of high quality modules.They are led by an international management team from over 6 different countries with deep solar private industry experience.They has reached long term partnerships with leading technology suppliers in Switzerland, Italy and Germany, which provide the latest technology for Their production facilities in China. These partnerships are another quality guarantee for Their end customers and enable Them to work jointly towards a brighter future.

• 80% Barchart short term technical buy signal
• 13 new highs and up 18.66% in the last month
• Relative Strength Index 65.16% and rising
• Trades around 27.37 with a 50 day average of 24.35
• Wall Street brokerages have published 25 buy, 3 hold and 2 under perform recommendations
• Revenue projected to increase by 104.10% this year and 18.10% next year
• EPS estimated to increase 100.00% this year, 8.00% next year and 18.98% annually for the next 5 years
• Investor sentiment on Motley Fool high with the CAPS members voting 1,034 to 186 and the All Stars 267 to 64 that the stock will beat the market.

As I write this post this song keeps ringing in my head:

Everybody's wrong everybody's right
Someone must be wrong when someone else is right
Everybody's wrong everybody's right
You tell me that I'm wrong
Then you tell me that I'm right

Are too many people expecting too much from the solar industry?  Is the industry already over valued?  Should I get on board or hop off?    IS everybody wrong or is everybody right?

Comments please!!!!

Jim Van Meerten is a professional investor with over 40 year experience in investing in stocks, mutual funds and ETFs.  He shares his knowledge on Barchart in his daily blogs -- Barchart Portfolio Blogs.

Through Marketocracy Capital Management you can have a Separately Managed Account that mirrors his Barchart Van Meerten New High portfolio.