Buzz Bits: Dow and Nasdaq Gain Ground
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Hurry up and Wait! - Todd Harrison - 2:42 PM
The minxy meander continues as investors posture in front of the first earnings avalanche of our new year. With Citigroup, Intel, JP Morgan, Merrill and Washington Mutual all slated to deliver state of the unions, the proof will soon be in the pudding as to whether the market has adequately discounted the negative news.
It's interesting to note that the tenor of the commentary I've read has become entirely more constructive. I see it in the 'Ville, hear it on the Street and, truth be told, I'm feeling it myself. I'm left to wonder if conventional wisdom has shifted towards the expectation of a near-term bounce (in the context of a broader malaise) I'll also ask the question as to whether the "easy" trade is into earnings.
Over the weekend, I spoke to a savvy seer who offered that the Countrywide (and rumored WM) deals are akin to cutting out the cancer but earnings, when they arrive, will serve as chemotherapy. In other words, what ails the financials, in particular, and the market, in general, are not open to quick fixes. That doesn't mean we won't see trading rallies, it simply infers that we should trade them with caution and discipline.
I don't profess to have the answers but, as I've got some long side exposure, I'm inclined to stay tight as we fit the pieces together. This market has significant two-sided risk which, in my opinion, is a disconnect versus current levels of volatility.
Upgrading - Fil Zucci - 2:28 PM
Despite the arguably good news from Big Blue (IBM) the market is in a state of suspended animation, with the A/D line totally inadequate for a +150 Dow, and the S&P 500 (SPX) meandering in the green. I don't want to press the short side here, but with many "blue chips" beaten into submission, I do want to trade up in quality and/or business performance. Therefore,
- With cable carriers in the dog house, I can't be too optimistic about their capex budgets. Cable-tech suppliers Arris (ARRS) and Big Band Networks (BBND) have been shown the door, in favor of more Cisco (CSCO) and EMC (EMC). I am staying in the cable-tech space through Harmonic (HLIT).
- I was going to let me get assigned some NYSE Euronext (NYX) Jan puts, but after the numbers out of FCStone (FCSX), I decided to add some to the latter, and cover the former.
- Lastly, I am eyeing a pair trade of long Costco (COST) and short Amazon (AMZN), although I have not quite gotten comfortable on what tools to use there (stocks, options, both?).
Position in FCSX, HLIT, EMC, CSCO, SPX
Intraday Gleanings - Jeff Cooper - 1:11 PM
- Note the behavior in Blue Nile (NILE) when it turned the daily swing chart up this morning: It defined a high immediately.
- Likewise, since the end of December each time the S&P has turned its daily swing chart up it has defined a high. This is a sign of a fast move, in this case down in both NILE and the S&P.
- I suspect the behavior when the weekly swing chart turns up will be telling.
- Will the S&P be able to carve out two to three weeks against the downtrend from current levels?
- Vis-à-vis my post from Friday, I am initiating a short in some gold stocks including Agnico-Eagle Mines (AEM) and may go short of the GLD prior to the close.
- Methinks the behavior of Apple (AAPL), the heart and soul of speculation, on earnings later this month will seal the deal as the the psychology of the broad market in the first half.
Lunchtime with Q - 12:21 PM
I continue to give the Bulls the benefit of the doubt to make something out of today's move, but it is still too early to try and play it. The moons are aligned for a hefty squeeze however make no mistake about it, that any squeeze at this point, would merely be a counter trend rally and while we could play it, we would have to be ready to step aside and book gains as the move progressed.
In addition to being very oversold, the IBM (IBM) news adds a little fuel to the fire. The bulls have to know be curious as to who else has some global growth to report and may just want to lighten up before getting caught in the likes of an Intel (INTC) squeeze, should they not tell us they are going out of business.
I continue to like the Ag plays as they seem to have already told us how they did this quarter. With today's solid move from FCStone (FCSX) on the heels of their earnings, I suspect many other sympathy plays will start to perk up as traders try and position themselves for more good news.
Solars are struggling and at least for now, seem to be last year's story. Don't get too hung up on watching them, if they start to move we'll find them and play them.
As per my last alert, I added some Lindsay Manufacturing (LNN) on the break and will look to peel off into strength as the day unfolds. While I like these MOOves out of these plays, I am not yet ready to wed them.
Position in FCSX, LNN
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