Buzz Bits: Dow and Nasdaq Finish in the Green
Your daily Buzz & Banter highlights.
Engine Room, More Scream! - Todd Harrison - 3:18 PM
- BofA for CFC? Could happen, I suppose, although it's not like BofA needs more consumer exposure (think MBNA). If Countrywide was a compelling value here, Mr. Buffett woulda already scooped it.
- Hey, didn't Big Ben catch flack for not 'warning' the market that he was gonna cut last time? Along those lines, was today's text an official heads up?
- For years, Succo and I talked about how mutual funds would buy--not sell--large holdings when they reported bad news because they were bigger than the market. I'm not sure why I thought of that as I heard the BofA-CFC chatter.
- I'm still holding my select homies and Yahoo calls, which are Todd-lots but better than a sharp stick in the eye. For what it's worth, and it may not be much.
- I'm fatter, er, flattered!
- CFC IS UP 55%! CFC IS UP 55%! Keep it in perspective, Minyans, as it's still 82% off its high.
- Look at me, the S&P? The S-car can go up to 1480 and still be in a distinctive pattern of lower highs. Not saying it does, just providing another lens.
- There's nothing wrong with a little Stevie Ray on our time!
Position in YHOO.
The $140 Bln Clue - Ryan Krueger - 12:30 PM
Exxon (XOM) is now worth half a trillion dollars in market cap, the largest in the S&P 500, and second place is not even close. General Electric (GE) is a $140 bln hop, skip and jump or so away. That's staggering.
Is Exxon crowded?
The fundamentals on the energy trade from the long side remain intact from my perch. As crude "craters" all the way down to the $90s, the bears will have a hard time slowing demand for the $2,500 cars being unveiled for the first time today in India from Tata (TTM). I remain confident that the sector warrants a heavier weighting in the S&P and will get it. However, I started writing that when it was 6% and that has now more than doubled to 13%+.
The data - Rob Arnott has done fabulous work in this area - on the largest stock based on market cap actually under-performing the index is consistent and fairly dramatic. Maybe not today, or this month or next, but the trade makes pretty good sense considering XOM didn't get to be #1 because of how much money it is about to make. Rather, the stock has risen because of how many people wanted to bid up its shares, then determine if there are enough left who don't own the stock and want to. That moves the stock, not oil.
Recall that Citigroup (C) was near the top of that list a short while back, leading the most owned sector. They've lost right at about $140 bln in market share since.
Ready? Steady! - Quint Tatro - 11:56 AM
I sure do get the feeling that this market wants to go higher, but traders aren't yet sure where to pile in. We're bouncing around and the stocks that saw strong hammers yesterday: Apple (AAPL), Baidu (BIDU), Research in Motion (RIMM), First Solar (FSLR), Sunpower (SPWR) etc. are not following through, which I suspect have many scratching their heads.
Random action like this is typically the case when you have a trendless market with no leadership. Pockets of strength emerge but it is tough to trust for longer than a few hours and even harder to play with any sized capital.
The only group that looks to be really catching a bid are the airlines, which I am definitely not ready to re-enter yet after my last attempt into that mess.
China may be the place to go and I am watching for late day strength from names like China Life Insurance (LFC), Chinadex International (CHDX), China Mobile (CHL), China Natural Resources (CHNR), Fuqi International (FUQI) and Perfect World (PWRD).
These stocks are all approaching break points and if they did so on volume, I would be inclined to buy. Time will tell.
Positions in LFC, PWRD, RIMM, BIDU
Mini Minyan Mailbag: Crossing Currents - Kevin Depew - 10:51 AM
Minyan Guerry writes:
"You likely have noticed already that SPY signals a DeMark Buy Setup with a close below 141.31. Several other indexes are in the same boat."
I have. The Nasdaq-100 is even more advanced in its buy positioning, and will record a 9-13-9 buy signal today.
Given the oversold nature of the indices I expect these signals will produce tradable rallies. However, I am concerned about the weekly charts because the indices are now at very significant DeMark indicator levels that could signal a longer-term trend change and downward continuation after the daily oversold conditions are worked off.
This is where the battle for competing time frames plays out. Short-term buy signals in longer-term negative contexts produce sharper, and more dangerous, rallies with high failure rates.
For the Nasdaq-100 1874.27 is a very important long-term level on the weekly chart. For the S&P 500 that corresponding level on the weekly chart is 1408.90. Again, those levels are probably not this week's business, but file them away for future reference.
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