Daily Stock Pick of the Day - Thurs., Oct 21, 2010

Stocks tumbled yesterday in response to several factors.  An interest rate hike in China, the dollar rose off of recent lows and growing concerns surrounding the foreclosure debacle all led to the broad decline in yesterday's market.  Today, however, it seems investors are putting aside their concerns after several corporations posted positive earnings reports.  Wells Fargo beat the street when it reported 3.34 billion in net income for the third quarter.  US Bancorp saw its shares rise after it reported an increase in corporate loan demand -- the first increase in about two years.  The Fed also reported that they are seeing "modest signs of growth" in the economy. 

The Dow rose 128 points today, 1.1%, to close at 11,107. The S&P 500 and the Nasdaq also gained. The S&P 500 rose 12 points, 1% to close at 1,178.  The Nasdaq gained 18 points, .76% to close at 2,455.  The CBOE Volatility Index, fell back to below 20.  The dollar dropped among a basket of currencies and gold rose off of yesterday's lows.  Stocks in the news today included Novo Nordisk (NVO), which rose 9 points, or 10% on news that the FDA will not approve Bydureon, a competitive diabetes product made by Amylin Pharmaceuticals.  This decision has put a lot of interest in Novo Nordisk's drug, Victoza, which received FDA approval in January.  NVO closed today at $100.48.


Profit-taking in this environment is completely expected.  At the same time, the pullback gave many investors a chance to enter some long positions at prices not seen in recent weeks and it's good to see.  Today's bounce off yesterday's lows may be quite encouraging to some.  However, this does feel like sort of a "dead cat bounce".  The concerns that were so prevalent yesterday haven't completely dissipated, so I'm in the camp that says this market remains vulnerable to further declines.  China's decision to rase their interest rates signals a slowdown in their economy -- and that translates to declines in the companies that do business there.  Couple this with the ongoing concern about banks' exposure to foreclosure issues (where there's smoke, there's fire), I just don't see a catalyst that could take stocks higher.  Money will continue to sit on the sidelines until some of these issues are resolved.

Today's stock pick of the day is Albermarle (ALB).  Albermarle manufactures polymer additives, catalysts and fine chemicals for the refining, consumer electronics, and chemical markets.  They are scheduled to report earnings tomorrow (Oct 21st) and analyst expect them to report earnings of $0.84 per share on sales of 610 million.  Compare this to their report from the same period one year ago:  $0.57 per share on sales $515 million.  ALB rose 2.5% today and closed at $48.51.  I think this stock still has some steam left in it and could climb to $50.  Yesterday, it fell below it's 10-day moving average, but rebounded above today (a bullish sign indeed). 

Stay cautious and happy trading.  Check out Wall Street Survivor below -- it's free and it's fun!  Compete for cash (who doesn't need a little of that these days?). 

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