Hot Article ------ Favorites this page


Forex Trading: AUDUSD Testing 100 Day MA Again At 0.9068. Key Level. Look For Momentum On A Break.


The AUDUSD is testing the 100 day MA at the 0.9068 level . The price has been testing this key level over the last 4 trading days, moving above briefly but not able to close above the key level.   The fundamentals for the AUDUSD should be positive on global recovery and also benefits from being a supplier of resources to China. Yesterday, the Australian trade balance showed improvement largely on the back of increased exports of iron ore to emerging countries like China. 

A break of the 100 day moving average and the 0.9091 level, should lead to further upside momentum with 0.9171 a next upside target level for the pair.  These levels were key support and resistance levels in January and will continue to be key levels on a break higher. 


Mutual Funds: Top 5 Legg Mason Funds

With assets under management of $682 billion, Legg Mason is one of the world's largest asset managers. It uses a multi-affiliate business model to provide a wide range of financial services to individual and institutional investors in 190 countries across six continents. Legg Mason affiliates are among the industry leaders in their respective areas of specialization. They operate with a high degree of autonomy each utilizing its own unique approach and processes which it believes are best suited to its clients. Legg Mason complements the operations of its affiliates by providing distribution and client services as well as support in areas such as operations, technology and accounting.
Below we will share with you 5 top rated Legg Mason funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future. To view the Zacks Rank and past performance of all Legg Mason funds, then click here.

Legg Mason Lifestyle Allocation 50% A (SBBAX) seeks both capital appreciation and income. It is non-diversified and invests in Legg Mason-affiliated mutual funds. It invests half of its assets in equity funds and the other half in fixed-income funds. The fund returned 34.37% over the last one year period.

This Legg Mason fund has a minimum initial investment of $1,000 and an expense ratio of 1.24% compared to a category average of 0.86%.

Legg Mason ClearBridge Small Cap Value A (SBVAX) invests the majority of its assets in small-cap domestic companies. Up to 20% of its net assets may be used to purchase equities in companies with larger market capitalizations. It may invest not more than 10% of its assets in foreign securities. The fund returned 45.33% in 2009 and has a ten year annualized return of 8.27%.

Peter J. Hable is the fund manager and he has managed this Legg Mason fund since 1999.

Legg Mason Western Asset High Income A (SHIAX) seeks high levels of current income. It invests heavily in corporate bonds, notes, debentures and related instruments. Up to 40% of its assets may be used to purchase foreign fixed-income securities. The fund returned 54.32% over the last one year period.

The Legg Mason fund has an expense ratio of 1.02% compared to a category average of 1.21%.

Legg Mason Western Asset Government Securities A (SGVAX) invests at least 80% of its assets in debt securities issued or guaranteed by the U.S. government. These debt securities include U.S. Treasury and mortgage-related securities. The fund has a five year annualized return of 7.75%.

As of December 2009, this fund held 576 issues, with 10.76% of its total assets invested in FNMA 6%.

Legg Mason Western Asset Strategic Income A (SDSAX) seeks high current income by investing in a wide range of domestic and foreign fixed-income securities. Up to 50% of its assets may be invested in securities rated below investment grade. The fund returned 29.28% over the last one year period.

Keith J. Gardner is the fund manager and he has managed this Legg Mason fund since 2006.

To view the Zacks Rank and past performance of all Legg Mason funds, then click here.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at

Repsol YPF Downgraded

We have recently downgraded Repsol YPF S.A. (REP: 24.21 +0.89 +3.82%) ADRs to Underperform from Neutral. We see little reason for investors to hold Repsol, as we believe that the long list of challenges facing the company will further weigh on its valuation. These include weak reserves, low reserve lives and poor refining margins.
While the company's production volumes are increasing, refining margins were significantly lower during the last year, especially in the fourth quarter, dropping more than 80% as a result of narrower spreads on crude oil and oil products due to supply and demand forces. We believe that this imbalance between supply and demand will remain in place in the near term and negatively impact the bottom line.
Though Repsol's reserve replacement ratio showed signs of improvement (94% in 2009 vs. 65% in 2008), it is one of the lowest in the entire group. Repsol's reserve replacement track record is also one of the weakest in its peer group, with proved reserves declining 8% each during 2007 and 2008. 

Although this year's Argentine plan could boost its development of reserves, these may not be able to adequately replenish the poor reserves position due to rate imbalance between production and new discovery. 

While success on the exploration front and strategic moves to reduce its Argentine exposure are welcome steps, fairly little has changed with respect to Repsol's overall long-term visibility. Since the beginning of this year, price of Repsol ADRs has gone down more than 14% to $23.32 at yesterday's closing.

Petrobras Buys Brazil Block Stake

Petroleo Brasileiro S.A. (PBR: 44.95 +1.09 +2.49%) or Petrobras S.A. � the largest integrated energy firm in Brazil and one of the largest in Latin America � bought a 30% stake in an offshore oil block from Repsol YPF (REP: 24.21 +0.89 +3.82%) and Statoil ASA (STO: 23.50 +0.74 +3.25%), Brazil's oil regulator said.
The offshore block, known as BM-C-33 block, is located in the Campos Basin off the Brazilian coast. Repsol and Statoil each hold a 50% interest in the block. The companies have each agreed to sell a 15% stake to Petrobras. Additionally, Petrobras also agreed to purchase a 20% stake in the BM-S-51 block from Repsol.
We continue to have a positive medium- to long-term outlook on Petrobras for its encouraging portfolio of investments, particularly in Brazil's so-called "pre-salt reservoirs" that lie below the Espírito Santo, Santos and Campos basins in deep and ultra-deep water.
Petrobras is the operator in most of these exploration areas, with stakes ranging from 20% to 100%. Considering Brazil's huge pre-salt oil reserves (estimated at 9.5 to 14 billion barrels of oil equivalent), widely thought to be the most important oil find in recent years, we believe Petrobras is poised to maintain an impressive production growth profile for years to come.
Petrobras has also been stepping into various international regions with significant investment for upstream projects. The company is successfully utilizing its Brazilian deepwater expertise into exploring upstream opportunities abroad, particularly in areas where many other international companies find it difficult to compete.
Our Outperform rating for Petrobras ADRs reflects its solid investments, strong pipeline of development projects, impressive recent exploration successes and compelling long-term outlook. In the last four weeks, the price of Petrobras ADRs has jumped nearly 13% to close at $43.86 yesterday.

Micromet Misses Expectations

Micromet's (MITI: 7.87 -0.15 -1.87%) fourth quarter loss per share came in at 34 cents, wider than the Zacks Consensus Estimate of 18 cents and a loss of 12 cents reported in the prior-year period. For 2009, the company reported a loss per share of 98 cents compared to a loss of 77 cents in 2008.
Micromet reported revenues of $4.6 million compared to $5.8 million in the fourth quarter of 2008. The company records revenues primarily in the form of reimbursement of expenses incurred by it under different collaborative agreements. For the full year, revenues came in at $21 million, down 23% from $27.3 million in 2008.

Operating expenses during the reported quarter increased 130% year-over-year to $28.3 million primarily due to $13.3 million as one-time charges. The charges relate to the reacquisition of the North American rights of blinatumomab and settlement of certain other issues.

Micromet exited 2009 with $113.4 million in cash and cash equivalents, up from $46 million at the end of December 2008.

There were many significant developments during the quarter. Micromet presented encouraging data from a phase II trial of blinatumomab, its lead candidate, in patients with acute lymphoblastic leukemia (ALL). About 80% of the patients achieved primary endpoint of the trial within the first treatment cycle. Additionally, blinatumomab is also being studied in patients with B-cell non-Hodgkin lymphoma (NHL).
Micromet entered into a collaboration agreement during the quarter with Sanofi-Aventis (SNY: 38.14 +0.91 +2.44%) to develop a new solid tumor bispecific T-cell engager (BiTE) antibody against an undisclosed target. In addition, Bayer (BAYRY: 0.00 N/A N/A) exercised its option to develop a new BiTE antibody for the treatment of solid tumors with Micromet. Bayer has exercised its option under the terms of the collaboration and license agreement entered in January 2009.

We are encouraged to see the development of the product portfolio at Micromet. However, we remain concerned since the pipeline is yet to deliver. The company is heavily dependent on blinatumomab � any hiccup in any of its clinical development programs will weigh heavily on the stock. We have an "Underperform" recommendation on the stock.