ainv

This post was written by Minyanville contributor Smita Sadana.

Apollo Group (Nasdaq: APOL) was enjoying a bump in price after reporting earnings that were well above estimates, based in increased enrollments. Of course, one can argue that people would go back to school for skill enhancement in these tough recessionary times.

However, two days after that stunning gain, APOL is off 4.9% to $82.55, on a cautious research note from Citron Research, who argue that "this growth is a one time bump."

While I do not endorse any such research or base my trading primarily on it, I am taking note of the negative reaction on double the average volume.

The stock can certainly come in a little and reduce the distance from its 200-day moving average, which is 38% at the current levels. While not at an extreme, it is unusual in this market to find stocks which are trading so far out.

I'm seeing various levels of support on the APOL chart and they range from $75 to $79.

TheStreet.com's Jim Cramer says the only action in the sector is that the rumor mill is spinning overtime.

There are tons of ridiculous stories that can be written in the Naked City. Notice that every day we are blessed with a story about how there are three private-equity firms examining Lehman Brothers (NYSE: LEH) (Cramer's Take) and Neuberger Berman (NYSE: NEU) (Cramer's Take). I think I have read that story a dozen times now.

You can list them, too: Blackstone (NYSE: BX) (Cramer's Take), KKR (NYSE: KFN) (Cramer's Take), Apollo (NASDAQ: AINV) (Cramer's Take), maybe Cerberus. What are they going to do, deny it? "No, we are not looking at it?" Their investors would love that: "Well what the heck are they doing with our money?" would be the reaction of investors if they issued denials. I predict weeks more of phantom tire-kicking of Lehman by nonexistent private-equity firms.

How about private equity about to swarm over collateralized debt obligations? Usual cast of characters there. Right? Come on, those stories are a penny a dozen. Every day I read about them. But nobody, other than Lone Star, is doing anything, anything at all on this front. If there were buyers, you can bet that Lehman and AIG (NYSE: AIG) (Cramer's Take) wouldn't be in the woods, lost, hopeless, with tons of bad European paper.

Foundry Networks (NASDAQ:FDRY) is up over 30% on a buy-out by Brocade (NASAQ:BRCD). Brocade is off nearly 20% on the same news.

Apple (NASDAQ:AAPL) is off 10% on a weak forecast for the next quarter.

Wachovia (NYSE:WB) is off 12% on poor earnings and a dividend cut.

American Express (NYSE:AXP) is down over 10% after reporting a weak quarter.

Texas Instrument (NYSE:TXN) is off over 10% on poor numbers.

Shares may trade differently in the pre-market than they do in the regular session.

Douglas A. McIntyre is an editor at 247wallst.com

Wal-Mart (NYSE: WMT) is cutting exclusive deals with major artists in a play to improve traffic to its stores and online operations.

According to The New York Times, "Wal-Mart was the largest music retailer in the country last year, so musicians (and their labels) are eager to maintain good relationships, appearing in the special concerts for the chain, which are also open to the public."

But The Wall Street Journal had a much better picture of what is going on. Rock band AC/DC is about to announce a partnership with Wal-Mart in which it will sell its new album only in the largest retailer's stores. The paper writes, "The AC/DC deal, however, comes at a time when the retail giant -- the largest seller of compact discs in the nation -- is signaling it may rock the music world by stocking fewer CDs."

Both papers point out that the deal will hurt music labels that count on CD sales, but neither shows the extent to which Wal-Mart is becoming the unlikely largest competitor to Apple (NASDAQ: AAPL)'s iTunes. AC/DC's music will not be found there.

Media companies can't stand up to Apple, but in an odd twist, the world's largest retailer can.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

Wal-Mart (NYSE: WMT) was early to the video download service, beginning to offer movies over a year ago. Now that service has been shut down, according to Reuters. The company says that Hewlett-Packard (NYSE:HPQ) is no longer offering the technology needed to run the operation, but that seems pretty thin.

Wal-Mart probably figured out that having a lot of customers online does not translate into successfully offering them new services. Most online research numbers show walmart.com as one of the top two or three e-commerce sites. But Wal-Mart customers are often not affluent and may not be ideal targets for a video download operation.

There is also the question of competition. Apple (NASDAQ: AAPL) has its iTunes service, which is growing. Netflix (NASDAQ: NFLX) has another, similar operation, and there are a dozen others.

People may buy clothes and household goods from a retail website, but that does not mean that the customers can be moved to digital downloads. "Would you like a movie with that shirt?" does not necessarily work.

Douglas A. McIntyre is an editor at 247wallst.com.

Dow Jones(NYSE:DJ) volatility collapses on expectations of a deal. Dow Jones is recently up $7.76 to $61.12 on speculation Rupert Murdoch's News Corp(NYSE: NWS) will raise his $60 cash bid made on 5/1/07. Dow Jones controlling shareholders, the Bancroft family, agreed to meet with Murdoch. General Electric Company (NYSE:GE)has been speculated as submitting a stock for stock bid for Dow Jones. GE's stock for stock bid could be attractive to the Bancroft family because of GE's low beta of 0.85 compared to News Corp's beta of 1.54 if Murdoch would add a stock component to his bid. Dow Jones June option implied volatility has collapsed to 45 from 70 according to Track Data, suggesting decreasing risk.

New York Times(NYSE:NYT) implied volatility suggests non-directional Risk. NYT is recently up .71 to $25.82. NYT over all option implied volatility of 24 is near its 26-week average according to Track Data, suggesting non-directional price risk.

Option volume leaders today are: Dendreon (NASDAQ-DNDN), Apple, Inc.(NASDAQ:AAPL), Dell (NASDAQ:DELL) and Cisco (NASDAQ:CSCO).

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

MOST NOTEWORTHY: CheckFree Corp (CKFR), Sprint Nextel Corp (S) and the semiconductor capital equipment sector were some of today's more noteworthy downgrades:

• Piper Jaffray downgraded Checkfree Corp (NASDAQ: CKFR) to Market Perform from Outperform after transferring coverage of the payment processor company.
• Sprint Nextel Corp (NYSE: S) was cut to Outperform from Strong Buy at Raymond James.
• Lehman cut the semiconductor capital equipment sector to Neutral from Positive, downgrading Cascade Microtech, Inc (NASDAQ: CSCD), Novellus Systems, Inc (NASDAQ: NVLS) and Teradyne, Inc (NYSE: TER) to Equal Weight from Overweight and cut Electroglas, Inc (NASDAQ: EGLS) to Underweight from Equal Weight.

OTHER DOWNGRADES:

• ThinkEquity cut Jones Soda Co (NASDAQ: JSDA) to Source of Funds from Buy based on valuation.
• Goldman is now cautious on the biofuel sector, downgrading the group to Cautious from Neutral.
• William Blair downgraded shares of Medimmune, Inc (NASDAQ: MEDI) to Market Perform from Outperform.
• Credit Suisse downgraded shares of Big 5 Sporting Goods Corp (NASDAQ: BGFV) to Underperform from Neutral citing valuation.
• Wachovia dropped Inkeepers USA Trust (NYSE: KPA) to Underperform from Outperform based on the acquisition from Apollo Investment Corp (AINV). Citigroup cut Inkeepers to Hold from Buy.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

The folks at Apollo Management have been loading up on real estate lately. One deal that closed last week was the buyout of Realogy, which has an assortment of residential real estate brokerages such as Century 21, Coldwell Banker, and ERA.

Another part of Apollo -- Apollo Investment Corporation (NASDAQ: AINV) -- is also making a play at real estate. Today, the firm agreed to pay $17.75 for Innkeepers USA Trust (NYSE: KPA). The valuation comes to roughly $1.5 billion.

Innkeepers is a REIT and operates a variety of hotel brands, like Residence Inns, Summerfield Suites and Hampton Inns. While the firm generates consistent cash flows, the deal is not cheap at its 14X EBITDA multiple. Then again, the company probably has expansion possibilities.

On today's announcement, Innkeepers' stock is trading up 8% to $17.77.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Since the story of private equity firm The Blackstone Group's potential initial public offering has been out only a couple hours, it is still very much developing. With so few details out, the implications are as yet unknown. Here is Tom Taulli's earlier piece on the subject.

From CNBC's Faber (you can watch the video here, partial transcript's here) we know that the Goldman Sachs Group Inc. (NYSE:GS) and Blackstone attorneys are preparing a prospectus. Preparing is one thing and filing is another, and yet Faber is quite adamant in his belief Blackstone will file within two weeks or by the end of March. Also, the decision to go public rests on Chairman and Chief Executive Stephen Schwarzman. Once again, an adamant Faber says "the decision has been all but made."

While Faber said that Blackstone's market value could be easily in excess of $20 billion according to bankers, MarketWatch points out that it isn't clear yet what kind of an IPO this would be. The shares could represent

Wall Street's equity offering season resumes this week with a light schedule, as only 5 deals are on the docket. IPOs and Secondaries tentatively scheduled to price during the week of January 8, 2007 include:

IPOs:

• Legacy Reserves (LGCY), an independent oil/gas company focused on the acquisition and exploration of oil & natural gas properties primarily in West Texas; LGCY has a $18.50-$20.50 filing range.

Secondaries:

• American Capital Strategies (ACAS), a 6M share Secondary designed to reduce borrowing and to fund investment. ACAS priced Monday night at $45.83 per share, and the stock was trading at $46.66 late Tuesday afternoon.
• Apollo Investment (AINV), a 16M share Secondary that follows a strong IPO in 2004 and last year's successful secondary.
• Pinnacle Entertainment (PNK), a 10M share Secondary to fund facilities expansion and development projects.
• Syntel (SYNT), a 3M share Secondary for general corporate purposes.

For the latest market intelligence on IPOs, Syndicate, and after-market trades, check out TheFLY Syndicate at www.theflyonthewall.com. [Subscription required.]