Sector Investing

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From Briefing.com: 4:10 pm : Despite staging an afternoon rally, the S&P 500 was unable to log its first gain of 2014. The benchmark index registered its third consecutive loss, shedding 0.3% as six of ten sectors finished in the red.

Equities began the day on a modestly higher note, but the early gains evaporated during the opening hour as the broader market followed the Nasdaq Composite into the red. The tech-heavy index was hit with widespread selling pressure that weighed on many top components and biotechnology. Both Apple (AAPL 543.93, +2.95) and eBay (EBAY 51.78, -1.48) received downgrades, but Apple was able to stage an intraday reversal after dipping below its 50-day moving average. For its part, eBay settled lower by 2.8%.

Furthermore, biotechnology also pressured the Nasdaq after Goldman Sachs downgraded Celgene (CELG 162.62, -7.19) to 'Sell.' The stock tumbled 4.2% while the broader iShares Nasdaq Biotechnology ETF (IBB 223.82, -2.21) lost 1.0%.

Even though the tech-heavy Nasdaq paced the early weakness, the technology sector ended in-line with the broader market. Other cyclical groups were mixed with respect to the broader market as energy (+0.1%) and financials (+0.1%) outperformed while consumer discretionary (-0.6%), industrials (-0.6%) and materials (-0.6%) lagged.

Notably, the financial sector spent the entire session in the green as Bank of America (BAC 16.66, +0.25) posted its third consecutive gain. The stock jumped 1.5% to extend its 2014 price return to 7.0%.

On the downside, the industrial sector finished near its lows as transports weighed. The Dow Jones Transportation Average lost 1.3% as 19 of its 20 components ended lower. Delta Air Lines (DAL 29.29, +0.06) was the lone advancer, adding 0.2%.

Similar to cyclical groups, countercyclical sectors ended in mixed fashion. Telecom services (+0.5%) and utilities (+0.1%) outperformed while consumer staples (-0.4%) and health care (-0.4%) lagged.

Once again, participation was on the light side as only 656 million shares changed hands on the floor of the New York Stock Exchange.

Treasuries rallied throughout the trading day, sending the 10-yr yield lower by four basis points to 2.96%.

Today's economic data was limited to a pair of reports:

The ISM Non-manufacturing Index for December fell to 53.0 from 53.9 while the Briefing.com consensus expected the index to increase to 54.6. Business activities and production levels decelerated slightly as the respective index fell to 55.2 from November's 55.5.
November factory orders rose 1.8% after falling an upwardly revised -0.5% (from -0.9%). The Briefing.com consensus expected orders to increase 1.7%. As the advance report already hinted at, nearly the entire gain in factory orders resulted from strong demand for durable goods orders. Durable goods orders rose 3.4%, which was down slightly from the 3.5% gain reported in the advance report. Excluding transportation, durable goods orders rose a solid 1.2%.

Tomorrow's economic data will be limited to the November trade balance, which will be reported at 8:30 ET.

DJIA -0.9% YTD
S&P 500 -1.2% YTD
Russell 2000 -1.4% YTD
Nasdaq -1.5% YTD

DJ30 -44.89 NASDAQ -18.23 SP500 -4.60 NASDAQ Adv/Vol/Dec 945/2.14 bln/1636 NYSE Adv/Vol/Dec 1404/656.2 mln/1640

3:35 pm :

Commodities ended the day mixed with WTI crude oil ending below $94 and gold below $1240
Crude oil remained in the red all session and trading just above the LoD, finishing down -1.9% at $93.67/barrel
Feb natural gas futures slid lower in early morning trade and closed unchanged at $4.30/MMBtu
Gold lost $0.20 in today's session, closing at $1238.20/oz, while silver fell $0.09 to $20.11/oz. Mar copper gained one cent to $3.36/lb

5:13PM Silicon Image announces its dual-mode MHL 3.0/HDMI 2.0 receiver has been designed into Samsung's (SSNLF) latest Ultra High Definition TVs (SIMG) 5.95 -0.11 : Co also announced its 4K Ultra HD adaptive scaling video processor with VRS ClearView technology has been designed into OPPO Digital's new BDP-103D Blu-ray Disc player.

5:04PM Viacom unit Paramount and Samsung collaborate to bring Ultra High-Definition content to customers (VIAB) 85.73 -0.87 : Samsung (SSNLF) and Paramount Pictures announced an alliance that will invigorate a growing UHD market. Samsung is releasing a UHD Video Pack that will come pre-loaded with UHD-quality content, including handpicked feature films from Paramount Pictures. Paramount Pictures Corporation (PPC), a global producer and distributor of filmed entertainment, is a unit of Viacom (VIAB).

5:03PM Sigma Designs demonstrates 4k Ultra HD at CES (SIGM) 4.78 +0.18 : Co announced it would demonstrate 4K Ultra HD in conjunction with Harmonic, the worldwide leader in video delivery infrastructure, at 2014 CES International, Jan. 7-10, in Las Vegas. A critical feature of any high-end HDTV, Sigma and its industry partners have OEMs covered.

2:01PM VOXX Intl unveils organizational changes: announces formation of new subsidiary, VOXXHirschmann (VOXX) 16.81 +0.16 : Co unveiled organizational changes that are expected to position the Company for growth in the coming years. The Company announced today the formation of a new subsidiary, VOXXHirschmann, which combines all Original Equipment Automotive Groups into one single entity that includes Hirschmann Car Communications, Audiovox Incaar, Code Alarm OE and Invision. The combination of these assets is expected to significantly strengthen the Company's tier-one status as a global manufacturer, while leveraging shared resources for sales, product development and customer support.

As part of this realignment, Ludwig Geis, who previously served as Chief Executive Officer of Hirschmann, has been appointed President and Chief Executive of the new company.

The Company also announced today another significant development - the formation of VOXX Electronics Corp ("VEC"). This new group was formed to take advantage of emerging technology trends, for both mobile and consumer electronics product categories.
Audiovox Electronics Corporation has been consolidated into this new company and Tom Malone; previously President of that group has been named President of this newly formed venture.

Large Cap Gainers

SIRI (3.79 +6.02%): Received a proposal from Liberty Medica (LMCA) to make Sirius XM Holdings a wholly owned subsidiary of Liberty
STJ (63.46 +3.71%): Upgraded to Overweight from Equal-Weight at Morgan Stanley
BSX (12.28 +2.93%): Upgraded to Outperform from Perform at Oppenheimer; mentioned positively by Jim Cramer; co named Craig Thompson as new Chief Medical Officer, interventional cardiology

Large Cap Losers

TWTR (65.25 -5.43%): Downgraded to Underweight from Equal-Weight at Morgan Stanley; downgraded to Fair Value from Buy at CRT Capital on valuation
CELG (161.56 -4.86%): Downgraded to Sell from Neutral at Goldman; WSJ published story discussing dispute between co and hospitals over royalties for cancer drugs
BBY (38.9 -4.38%): Peer company hhgregg (HGG) provided downide Q3 guidance, raising concerns BBY could also miss

Mid Cap Gainers

P (30.46 +10.40%): Announced listener hours during the month of December 2013 were 1.58 bln, an increase of 13% year/year; share of total U.S. radio listening rose to 8.60% from $7.58%, active listeners increased to 76.2 mln from 67.1 mln
SCTY (64.93 +9.55%): Upgraded to Buy from Neutral at Goldman, added to Conviction Buy list
VRNT (45.28 +6.77%): Signed agreement to acquire KANA Software for $514 mln in cash, KANA provides on-premises and cloud solutions for large enterprises and mid-market organizations

Mid Cap Losers

FSLR (51.34 -9.52%): Downgraded to Sell from Buy at Goldman
TPX (51.59 -5.13%): Trading lower following weak preliminary Q4 results from peer Select Comfort (SCSS); MFRM also lower
PCL (44.11 -4.81%): Mentioned cautiously in Barron's article

SanDisk (SNDK) announced that the ASUS ZENBOOK UX301LA Ultrabook relies on the compact SanDisk X110 Solid State Drives for intelligent, blazing-fast flash storage.

Enbridge (ENB) has entered into an agreement with Renewable Energy Systems Americas for construction of the 110-megawatt Keechi Wind Project, located in Jack County, Texas, at a cost of ~$0.2 bln. The project will deliver electricity into the Electric Reliability Council of Texas market, under a 20-year Power Purchase Agreement with Microsoft (MSFT).

OmniVision Technologies (OVTI) launched the OV9762, a high-performance CameraChip sensor designed specifically for front-facing camera applications in smartphones and tablets.

9:02AM BlackBerry announced that Ron Louks will join the Company as President, Devices and Emerging Solutions (BBRY) 7.61 : Ron Louks joins BlackBerry from The OpenNMS Group, where he served as the Chief Executive Officer. Prior to that, Ron held many leadership positions over several decades in the technology industry, including as the Chief Strategy Officer of HTC America Inc. (HTCKF unit) and the Chief Technology Officer at Sony Ericsson (SNE, ERIC jv).

Silicon Labs (SLAB) announced that Magellan has chosen Silicon Labs' EFM32 Giant Gecko microcontroller as the energy-friendly processing platform for the Magellan Echo smart sports watch.

Mellanox Technologies (MLNX) announced that Zenovia Exchange selected Mellanox's end-to-end FDR 56Gb/s InfiniBand solutions to further improve transaction speed and bid decisioning for ad buyers.

Analyst comments: SRPT -7% (downgraded to Sell from Neutral at Citigroup), ATHM -6.7% (initiated with a Sell at Goldman), TWTR -5.2% ( downgraded to Underweight from Equal-Weight at Morgan Stanley), FSLR -4.1% (downgraded to Sell from Buy at Goldman), ARIA -3.5% (downgraded to Sell from Neutral at Citigroup), EBAY -1.6% (downgraded to Equal-Weight from Overweight at Morgan Stanley), HOLX -1.6% ( downgraded to Equal-Weight from Overweight at Morgan Stanley), ALXN -1.5% (downgraded to Neutral from Buy at Goldman), PETM -1.4% (downgraded to Sell from Hold at Deutsche Bank), ARRS -1.3% (downgraded to Equal Weight from Overweight at Barclays), RVBD -1.2% (downgraded to Hold from Strong Buy at Needham), AAPL -1.1% (downgraded to Sell at Standpoint Research), NMM -0.8% (downgraded to Neutral from Buy at Global Hunter Securities), PM -0.6% ( initiated with a Sell at Standpoint Research), AFL -0.4% (downgraded to Neutral from Outperform at Credit Suisse)

8:10AM Silicon Motion sees Q4 sequential revenue to be near the midpoint of the original guidance range that it issued on Oct 25, 2013, of down 6-12% sequentially, which equates to ~$50.3-53.7 mln vs $51.9 mln Capital IQ Consensus Est (SIMO) 14.15 : Co announces that based upon its preliminary financial results, sequential revenue growth for the fourth quarter is expected to be near the midpoint of the original guidance range that the co issued on October 25, 2013, of down 6% to 12% sequentially. Gross margin (non-GAAP) is expected to be within the upper half of the co's guidance range of 47 to 49%.

Qualcomm (QCOM) has expanded its automotive product offerings by introducing an automotive-grade infotainment chipset, the Qualcomm Snapdragon 602A applications processor with a quad-core Krait CPU, Adreno 320 GPU, Hexagon DSP, integrated GNSS baseband processing and additional high-performance audio, video and communication cores.

3:44AM ReneSola panels to power 420 MW solar project in Japan (SOL) 4.07 : Co announces it has been awarded a contract to supply 420MW of solar panels to a leading solar project developer based in Japan. ReneSola's Virtus II 300W 72-cell high-efficiency polycrystalline PV panels will be installed in over ten ground-mounted power plants in the mountain regions of Japan, and will provide power to the surrounding residential homes

Samsung Electronics (SSNLF) and Rambus Inc. (RMBS) announced the companies have signed a comprehensive 10-year license agreement. The agreement extends the existing relationship between the companies, providing Samsung with access to Rambus' innovative technologies for inclusion in Samsung ICs. The agreement requires quarterly royalty payments to Rambus of $15 million per quarter for the first five years, with an initial payment of $22 million for the fourth quarter of 2013. Payments in the second five-year period are variable and subject to market-related factors. The agreement further provides Samsung access to Rambus' security technologies in system devices such as smart phones, tablets, and set-top boxes. The agreement is set to terminate in 2023. Other terms and details are confidential.
Verint Systems (VRNT) announced the signing of a definitive agreement to acquire KANA Software. The acquisition would form a unique and revolutionary combination that would extend Verint's Actionable Intelligence strategy. The collective solutions from Verint and KANA would enable organizations worldwide to implement a single-vendor suite to help transform customer engagement. The acquisition of KANA, a portfolio company of Accel-KKR, is expected to be completed in Verint's first fiscal quarter ending April 30, 2014.Verint has agreed to acquire KANA for ~ $514 million in cash, subject to certain closing adjustments. The acquisition is expected to be financed through a combination of cash on hand and debt, using ~ $100 million of Verint's cash, ~ $300 million from incremental term loans (on terms similar to Verint's existing term loans), and the balance from Verint's un-drawn revolving credit facility.
Radware (RDWR) issued upside guidance for the fourth quarter with EPS of $0.21-0.22 and revenues of $53 million which are both above estimates. Co states: "The strong sales results are the outcome of continued growth in the Americas coupled with solid performance from EMEA."
RBC Capital Mkts upgrades Zillow (Z) to Outperform from Sector Perform and raises their tgt to $100 from $90 with increased confidence given their 2014 sector outlook, and with more reasonable current valuation. They have developed an increasingly positive outlook on Zillow's ability to execute in a secular growth industry. They view Zillow as the leader in Online Real Estate (with Trulia a close follower).