Feb 8 2011

The Dow Jones Industrial Average

advanced another 0.57% on Monday Dow 12,161.63 +69.48 0.57%
as geopolitical tensions eased in the
Middle East and in addition, a wave S&P 500 1,319.05 +8.18 0.62%
of M&As hit the market. Financial Nasdaq 2,783.99 +14.69 0.53%
stocks were benefited from the news
that US consumer credit expanded to $6 billion from $2 billion in December, giving the
impression that the economy is improving.

AOL Inc. announced its intent to acquire the Huffington Post for $315 million, while Danaher
Corp. planned to buy Beckman Coulter Inc. Perhaps the largest deal of the day was the
takeover plan of Pride International of Ensco PLC, which worth $7.31 billion. Berkshire
Hathaway has set to buy the remaining shares of Wesco Financial Inc. which would cost this
Warren Buffett’s company around $547.6 million.

Corporate News
BAC led the Dow 30 with 2.66% of gains. The company announced that it has set-up a unit
to deal with toxic mortgages. Also, BAC has decided to exit the reverse mortgage business
which was entered back in 2006. Reverse mortgages (a.k.a. Home Equity Conversion
Mortgages) enable homeowners aged 62 or above to cash out equity without selling their
property.
A jump in consumer credit from $2.00 billion to $6.10 billion in December had sparked the
rise of AXP as well as JPM. Both financial stocks ended up 2.28% and 2.04%,
respectively.
MSFT gained 1.55% on the day, pushing its MTD gains to 1.69% while pulling out its YTD
performance out of the red zone as it now recorded a 1.04% gains. Compared to a year
ago however, MSFT is still losing as much as 1.64%. Meanwhile, the news about
management reshuffles at MSFT also circulating in the market. While it’s probably too
early to measure the impact, it could improve sentiment towards the software giant.
Next top achiever on Monday was DD. Gaining another 1.52% on the day, the company
pushed its MTD gains to 5.23%, while upping up its impressive and steadily rising 12-
month gains to 58.16%. Trailing at the second spot behind CAT, DD is expected to
continue ascending higher. Its purchase of Danisco is seen as a positive move as the
chemical giant now aims at the agricultural market where China will be its key market.
HPQ booked 1.5% gains while it was being added to JP Morgan’s Focus List. The house
aimed HPQ to hit $57, up from its prior PT at $55. HPQ has been a decent performer so
far this February, gaining 5.36% while in terms of YTD performance, it has achieved
14.35% increase currently.
PG’s partnership with LS9, Inc. was announced on Monday. The second development and
commercialization will expand PG’s renewable chemicals portfolio to be used in PG’s
products. Morgan Stanley rated PG at OVERWEIGHT on Monday, sending the stock north
by 1.48%. YTD, PG only managed to gain 0.34%.
UTX’s board of directors declared quarterly dividend of $0.425 per common share to be
payable on March 10 with record date of Feb 18. Ex-dividend date will be Feb 16.
 Feb 8 2011
Elsewhere from California, UTC Power, a company of UTX formed a partnership with Cox
Communications to install fuel cells in California. UTX added 1.38% on Monday, firming its
12-month performance at +21.86%. MTD, UTX has gained 2.9%, and YTD the company
has increased by 6.28%.
El Al is set to buy 4 Boeing 737-900 ER from BA with an option to buy another two for
$215-320 million. BA tops the MTD performance chart with 6.85% gains so far. Monday it
saw 0.77% of gains, bringing its total 12-month gains to 13.89%. YTD, the company has
climbed 10.22%.
DIS will report its quarterly earnings on Tuesday. Market consensus lies at $0.56 per
share, against prior year’s profit of $0.47 per share. Caris recommended buying DIS with
PT at $45. Among the Dow 30 stocks, DIS has been a consistent performer, gaining 0.56%
on Monday, bringing its MTD tally to 5.33%. In YTD terms, DIS has been up 9.14% and it
is 31.05% higher than its year-ago level.
MRK was said to have ended its partnership with Galapagos, a biotech firm from Belgium.
The drug maker has been under pressure this February, losing 0.51% so far, but managed
to eke out 0.33% of gains although it still unable to shake off its 12-month performance as
it is currently 10.52% below year-ago level. Since the start of 2011, MRK has been down
8.44%. Cowen on Monday downgraded MRK from OUTPERFORM to NEUTRAL.

Upgrades & Downgrades

Rating PT
Code House Date
Prv Current Prv Current
CSCO Avian 7-Feb Neutral Positive $25.00 $25.00
CSCO Wunderlich 7-Feb - - $22.00 $24.00
DIS Caris 7-Feb - Buy $42.00 $45.00
HPQ JP Morgan 7-Feb - Focus List $55.00 $57.00
IBM Capstone Investments 7-Feb - Buy - $190.00
MRK Cowen 7-Feb Outperform Neutral - -
PG Morgan Stanley 7-Feb - Overweight - -
UTX Argus 7-Feb Hold Buy $96.00 $96.00
WMT Wells Fargo 7-Feb - Market Perform - $60-$63
WMT Argus 7-Feb Buy Buy - -

Earnings Calendar
Date Code Company Period Est Prv Time
8-Feb DIS Walt Disney Co. Q1 2011 0.56 0.47 4:01 PM
9-Feb CSCO Cisco Systems, Inc. Q2 2011 0.35 0.40 AMC
9-Feb KO Coca-Cola Co. Q4 2010 0.72 0.66 BMO
10-Feb KFT Kraft Foods Inc. Q4 2010 0.46 0.48 4:00 PM
 Feb 8 2011
Stock focus: BAC
BAC Scorecard
Feb 7th MTD

Resistances 14.74 14.83 15.28 15.35 16.06 16.39 ↑ 2.66% ↑ 3.53%

YTD 12-Month
Supports 14.42 14.22 14.06 13.90 13.70 13.38
↑ 9.97% ↓ 11.94%
Outlook Positive Last
Strategy Buy +/- $14.42, PT $15.35, risk < $14.06 $14.67
 Feb 8 2011

Dow 30 - Feb 7th 2011

BAC 2.66% 1 CAT 0.88% 11 INTC 0.05% 21
AXP 2.28% 2 XOM 0.78% 12 T -0.04% 22
JPM 2.04% 3 BA 0.77% 13 KO -0.06% 23
MSFT 1.55% 4 CVX 0.57% 14 CSCO -0.09% 24
DD 1.52% 5 MMM 0.57% 15 TRV -0.40% 25
GE 1.51% 6 DIS 0.56% 16 HD -0.54% 26
HPQ 1.50% 7 IBM 0.50% 17 VZ -0.80% 27
PG 1.48% 8 MRK 0.33% 18 MCD -0.81% 28
UTX 1.38% 9 WMT 0.07% 19 KFT -1.03% 29
AA 1.05% 10 JNJ 0.05% 20 PFE -1.35% 30

Dow 30 - Month-to-Date - Feb 7th 2011

BA 6.85% 1 BAC 3.53% 11 JPM 1.25% 21
HPQ 5.36% 2 AXP 3.32% 12 VZ 1.12% 22
DIS 5.33% 3 UTX 2.90% 13 INTC 1.07% 23
DD 5.23% 4 CVX 2.88% 14 MMM 0.99% 24
AA 4.53% 5 PG 2.25% 15 KFT 0.98% 25
PFE 4.50% 6 JNJ 1.84% 16 WMT 0.00% 26
CSCO 4.16% 7 IBM 1.74% 17 MCD -0.30% 27
XOM 4.03% 8 MSFT 1.69% 18 HD -0.46% 28
GE 3.62% 9 TRV 1.64% 19 MRK -0.51% 29
CAT 3.57% 10 T 1.60% 20 KO -0.53% 30

Dow 30 - YTD Feb 7th 2011

XOM 14.78% 1 CAT 7.27% 11 TRV 2.64% 21
HPQ 14.35% 2 JPM 7.26% 12 MSFT 1.04% 22
GE 14.11% 3 CVX 7.02% 13 VZ 0.67% 23
AA 12.54% 4 DD 6.92% 14 PG 0.34% 24
IBM 12.31% 5 UTX 6.28% 15 JNJ -1.58% 25
BA 10.22% 6 AXP 4.43% 16 KFT -2.03% 26
BAC 9.97% 7 HD 4.39% 17 MCD -4.31% 27
DIS 9.14% 8 WMT 3.97% 18 T -4.83% 28
CSCO 8.90% 9 INTC 3.14% 19 KO -4.94% 29
PFE 8.74% 10 MMM 2.89% 20 MRK -8.44% 30
 Feb 8 2011

Dow 30 - Trailing Twelve Months (TTM) - Feb 7th 2011

CAT 76.11% 1 KO 18.59% 11 JPM 8.41% 21
DD 58.16% 2 AXP 17.36% 12 INTC 5.65% 22
CVX 35.08% 3 HD 17.31% 13 WMT 3.70% 23
DIS 31.05% 4 MCD 15.04% 14 PG 2.01% 24
AA 30.23% 5 BA 13.89% 15 MSFT -1.64% 25
GE 29.95% 6 T 12.70% 16 JNJ -3.38% 26
IBM 29.62% 7 MMM 10.78% 17 HPQ -5.22% 27
XOM 29.12% 8 TRV 8.73% 18 CSCO -9.45% 28
VZ 24.51% 9 KFT 8.58% 19 MRK -10.52% 29
UTX 21.86% 10 PFE 8.49% 20 BAC -11.94% 30

US Economic Calendar
Date Time Report Period Actual Forecast Previous
7-Feb 3:00 PM Consumer credit Dec $6.1 bln - $2.0 bln
8-Feb 10:00 AM Job openings Dec - - 3.25 mln
10-Feb 8:30 AM Jobless claims 5-Feb - 420K 415K
10-Feb 10:00 AM Wholesale inventories Dec - - -0.2%
10-Feb 2:00 PM Federal budget Jan - - -$43 bln
11-Feb 8:30 AM Trade balance Dec - -$42 bln -$38.3 bln
11-Feb 9:55 AM Consumer sentiment Feb - 75.5 74.2

Disclaimer: This report is provided for information purposes only. It is not an offer to sell or to buy any
securities. This report has been prepared based on sources believed to be reliable, but there is no
assurance or guarantee regarding its completeness & and accuracy. The author accepts no responsibility or
liability arising from any use of the report.