As expected, the market is trading in a tight range today and the sentiment is slightly lower despite the bulls making a brief trip into positive territory. There have been a few notable upgrades in the Tech sector which seems to be the strongest of the three indexes as M&A rumors have also provided a pop.
Radware (RDWR, $39.23, up $6.47) is up nearly 20% and has set a 52-week high of $40.24 following news Riverbed Technology (RVBD, $35.01, up $0.19) has made a $47 a share offer for the company. This is $2 more than Hewlett-Packard’s (HPQ, $42.95, down $0.08) recent offer.
We aren’t sure if Radware is going to become the next 3Par bidding war but the company is a hot commodity right now. We are also hearing Juniper Networks (JNPR, $34.10, down $0.22) and Cisco Systems (CSCO, $19.50, up $0.43) could also get into the mix and open their cash coffers.
Also worth mentioning, Riverbed was upgraded from “Outperform” from “Sector Perform” with a price target of $42 by one brokerage firm on the belief that IT (information technology) budgets will increase next year. Obviously, they have been following us as we recommended a call option trade on Riverbed that is up 150% since mid-November.
Riverbed has played out exactly like we thought it would, following its recent 2-for-1 stock split. We cover stock splits and how to play them in our trading manual, “How to Trade Options on Momentum Stocks”. We still have half of the trade open.
Cisco also got upgraded based on valuation after touching new 52-week lows last week. Shares bottomed at $19 last Friday but are up over 2% on the rebound today.
Turning to earnings, Dollar General (DG, $30.99, down $2.44) is down 7% after reporting a profit of $128 million, or $0.37 a share. Revenue rose 10% to $3.22 billion. Wall Street was looking for a profit of $0.35 a share on sales of $3.23 billion. These numbers were a little mixed versus expectations but what hammered the stock was the fact same-store sales increased only 4.2% which was behind the last two quarters of 6%-7%.
As we head to press, the Dow is down 19 points to 11,363 while the S&P is lower by 3 points to 1,222. The Nasdaq is off by 3 points and is currently at 2,588.]]>