July 18, 2019

Daily Wrap

DJIA +106.29 (+0.69%) to 15,409.39;S&P 500 +10.46 (+0.63%) to 1,660.06;NASDAQ +20.92 (+0.70%) to 3,011.94

There were stocks moving today but the story was about the broad rally and especially gap higher in the market.  At the highs the S&P 500 was up over 20 points from Friday’s close and while not necessarily attributable to one event seemed moe to be a snap back rally which started overseas in response to the previous week’s sell off.  The market looks to be in a form of price discovery which at this juncture seems predominantly bullish but it is yet to be seen if the that will be the case and also if so will be consolidate in a more of a triangle or if we will sell of one more time and then market the bottom.  Regardless of the pattern, I would still be looking at the market as cautiously positive with the potential for another move higher which would likely then provide a more intermediate selling opportunity.

In the news today was a name from Friday, Valeant (VRX) which added 8.68% today after announcing a deal to acquire Bausch + Lomb.  This is after VRX gained over 13% Friday on the rumor reported by the Wall Street Journal that a deal was close.  While a strong day, VRX closed off the highs and if tomorrow opens down I might be very cautious of a potential sell off even if just quick.

We didn’t get a chance to have Merger Monday with the holiday so Tuesday will have to suffice.  Omthera Pharmaceuticals (OMTH) nearly doubled today after agreeing to be acquired by AstraZeneca (AZN) for $12.70 per share.  OMTH closed at $13.51 and often a premium set by Wall Street above an offer price alludes to a bidding war or likely increase but in this case it is that, as outlined in a press release, AZN included a provision for shareholders to receive an additional “approximately $4.70 in contingent value rights if certain benchmarks are met”.  Also in merger news was CapLease (LSE) which closed up 20.42% after agreeing to be acquired by American Realty Capital Properties (ARCP) for $8.50 per share.   Lastly, Aurizon Mines (AZK) closed down 14.87% after receiving approval from the Minister of Industry and Minister of State to be taken over by Hecla Mining (HL).  According to the press release, the Arrangement is anticipated to occur on June 1, 2013.  While AZK closed down, I might watch HL especially above $3.50 with volume as a potential long candidate.

The following noteworthy companies are scheduled to report earnings before tomorrow’s open: KORS, DSW, CHS, TFM, ROLL, MOV

In analyst notes today, Merck (MRK) was upgraded to Buy at Jefferies with a $54 price target.  Trulia (TRLA) was upgraded to Buy at Goldman with a $38 price target and Deutsche Bank (DB) was upgraded to Buy at Societe Generale.  Notable names on the downside included, St. Jude Medical (STJ) which was downgraded to Sell at Canaccord with a $35 price target and Royal Bank of Scotland (RBS) which was downgraded to Sell at Citigroup.   Some of these and other upgrades and downgrades for the day can be found each morning when I post my 9 @ 9 in the Upgrades/Downgrades section.

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