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Monday, July 31, 2006

Market Wrap (July 31, 2006)


DJIA 11,185.68; Down 34.02 (0.30%)
NASDAQ 2,091.47; Down 2.67 (0.13%)
S&P 500 1,276.66; Down 1.89 (0.15%)
10YR-Bond 4.988%

Today we had Chicago Purchasing Managers show a stronger than expected 57.9 reading, although we ended up down on the day. We also had duelling Fed Governors with Poole saying there was a 50-50 chance of a rate hike in the August 8th meeting and another stating that the jury was still out.

In a move that had been discussed previously, SanDisk (SNDK) did confirm it would acquire M-Systems (FLSH) in an all stock trasaction valued at $1.55 billion. SNDK fell 1% to $46.60 and FLSH rose $4.18 to $35.97.

UAL (UAUA) fell 4.8% to close at $26.18 as traders "sold the news" of it finally posting an operating profit, mainly because it looked like the numbers were shy of estimates after you backed everything out properly.

Agco (AG) missed current estimates, but it said it would not miss for the entire year. AG shares fell 10.8% to $22.92. Deere (DE) fell in conjunction and closed down 1.8% at $72.60.

Scottish RE Group (SCT) fell a massive 76% to close down at $3.83 after its CEO announced he was leaving AND after the company company forecast a very wide loss. It is also suspending its dividend, its board has essentially stepped down, and it has hired bankers for Strategic Alternatives.

Apple (AAPL) rose 3.5% to close at $67.94 after Bank of America lifted its target and rating a BUY, and that was the call of the day.

Audible (ADBL) closed Flat at $7.42 after disclosing an audio book pact with Apple, although ADBL had traded up over 3% earlier in the day.

Imclone (IMCL) fell over 4% to close at $32.48 after a court rejected the argument that Repligen's patent had expired on its Erbitux. Relpigen (RGEN) is the direct beneficiary of this and its shares rose a lofty 24% to close at $2.99.

Cephalon (CEPH) shares fell 0.3% to $65.83, but had been down as much as 5% in sympathey with Bristol-Myers (BMY) adverse ruling over its Apotex settlement. It was not directly involved, but it was in similar circumstances.

Barr Labs (BRL) rose 2% to close at $49.83 after the new FDA head said he move to make Barr's "Plan B" pill, otherwise known as "the morning after" pill, available on an over-the-counter status for girls 18 years and older.

Wyndam (WYN-WI) and Realogy (H-WI) both rose as the companies were going into the S&P 500 ahead of the Cendant (CD) spin-off and dissolution from parent trading. WYN rose 0.4% to $33.13 and H rose 3.3% to $24.95. Both will trade as normal tickers tomorrow without the "WI" status.

With natural gas prices so much higher on the Midwest and Northeast heatwaves, the two most leveraged names to natural gas rose substantially. Cheniere (LNG) rose 2% to $35.14 and NGAS Resources (NGAS) rose 11.5% to $8.90.

Foot Locker (FL) rose 3.5% to close at $27.16; Women's Wear Daily ran an article saying they were clearing out inventory ahead of 2 private equity buyout firm's were preparing a formal bid.

Tribune (TRB) rose almost 1% to close at $29.75 after some billionaire private investors were interested in the LA Times and other individual papers.

Tyson (TSN) fell about 3% to $14.15 after disclosing its first loss in years.

Avon Products (AVP) fell about 11% to close at $28.99 after the company missed earnings on further restructuring; Cramer said the woman CEo should be canned.

Pfizer (PFE) closed down 0.5% at $25.97 but had been up most of the day. The company got rid of Hank McKinnel about 18 months ahead of time and replaced him with the Chief Legal Counsel.

XM Satellite Radio (XMSR) fell 8% to $11.63 after reporting NO NEWS to account for the mystery run-up on Friday.

We should have another earnings barrage this week, so get ready for that. And, another month is done as July ended. Where does the time go?

Jon C. Ogg
July 31, 2006

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