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Germany Governs Guidance

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The US markets appear to be headed towards a lower opening once again, pressured by weakness in Germany and indication from the ECB that no further rate cuts are planned.

Barron's Article

Shares of EMC could come under pressure on Monday, following a negative mention in Barrons over the weekend. The article discusses the long-term threat Cisco's storage products might have on EMC. One company that got positive coverage was Stelmar Shipping (SJH), noted due to its P/E of 4.5 and fact shares are trading underneath book value.

Futures, Fair Value, and Program Trading Forecasting

September S&P futures on Globex are currently 4.80 points lower to 889.70, while Nasdaq futures predict the tech-laden index will fall 6.50 points during Monday's opening. Turning to the September Dow contract, indications are for a weaker opening by 35 points.

According to HL Camp and Company, FairValue for the S&P 500 today is $.13. That price will not change during the day. Program buying is set at $1.51 with program selling set at $-1.64. FairValue for the NDX 100 today is $1.18.

Speaking of Program Trading, such programs averaged 39.0 Percent of the NYSE Volume during the period of August 26 to August 30. Buy programs were 49.44% of the total program trading volume. Sell programs were 50.55%.

Across the Pond

Getting back to Europe, market losses were partly tied to news that the ECB plans no further rate cuts and nervousness ahead of the September 11th anniversary. Moreover, a bellwether in Europe, France Telecom, traded significantly lower following a report that the company plans to sell 10 billion euros of new shares.

You've Got Mail

Softness in advertising revenue appears to be the reason shares of AOL are lower in pre-market trading. AOL Time Warner stated full year ad and commerce revenue are on pace for 1.7 billion, with an additional downside risk of five percent. Additionally, Q3 revenue growth is expected in mid-single digits with EBITDA growth in low-single digits.

Continuing the company specific theme, Nextel reaffirms guidance for Q3 due to two million net subscriber additions and 3 billion in operating cash flow. Staying in Telecom, Nokia is upgraded by Morgan Stanley to "overweight" due to short-term bullish momentum. Note: The investment house still remains cautious on Telecom Equipment industry.

Feeling Nauseous?

Merrill Lynch has downgraded food companies IMC, HSY, SLE, HRL and MKC to "neutral" from a "buy" rating. DLM was also downgraded to "sell" from a previous "neutral" coverage.

Speaking of sickness, The Financial Times is reporting 250 companies will petition the US Supreme Court in an attempt to halt a new asbestos compensation crisis that will result in a record number of bankruptcies.

John Seckinger
Option Investor


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