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Buzz Bits: Dow and Nasdaq End Down


Your daily Buzz & Banter highlights.

Editor's Note: This is a small sample of the content available on the Buzz & Banter.

The Rope-a-Dope! - Todd Harrison - 3:02 PM

Wow, are we dizzy yet? Alotta things are competing for mindshare these days as we attempt to tie together the disparate pieces of this fakakta world. I'll tell ya, for better or for worse, I often feel like I'm a conduit of the collective energy as I sit atop Mount Minyan and channel vibes to the 'Ville. Sorta like a cross between a tired antennae and Andy Dufresne when he emerges on the other side of the muck.

Why do I share this? Because my internal tension has been heightened of late, although I'm not sure how to extrapolate that. Maybe its a function of change (deflation vs. stagflation) or perhaps it's elevated risk. Or maybe, just maybe, it precedes a trading cusp of sorts. If I knew the way, I would take you home but either way, I'm conscious enough (know thyself) to communicate the vibe to ye faithful.

As it stands, Hoofy has wrestled today's wrangle as the piggies and homies both poke higher. I can't say with confidence if it's perception of the stimulus package proposal, expectations of a surprise cut (tomorrow), a matter of expiration, a trading thang (it got pressy) or a combination of all of the above. I simply know that, while our destination seems to be crystallizing, the path that we take to get there is entirely more important.

A few quick thoughts as I juggle the struggle and peer within:

  • This is contra-hour.

  • Lower crude and the higher dollar does not bode well for equities, despite (or perhaps due to) conventional wisdom.

  • Chatta on the Street is that Fannie and Freddie loan limits will be upped by as much as 50%. I can't find that anywhere but as I got "hit up," the tape caught a bid. For what it's worth.

  • DJIA 12,800, if and when, is newbie resistance.

  • It's crazy that it's this tense and we're 12% from an all-time high, eh?

  • If you're bearish lower and bullish higher, frustration is simply a matter of time. Trade sans emotion and use price to your advantage. And always trade to win. As soon as you trade "not to lose," you're conditioning yourself to do just that.

  • Good luck, friends--we're in the eye of the storm.


Minyan Mailbag: Point and Figure Levels - Kevin Depew - 2:55 PM

Prof. Depew,

Since these are levels we haven't seen in many of the point and figure indicators since '02, do you think that the market could in fact continue to move lower? What's the lowest you can remember in either? In your experience, does the high-Low Index usually reverse first? Or vice-versa?

- Minyan Elliot


Yes, the High-Lows typically move higher first.

Apart from 2002, the lowest level in modern history for the NYSE Bullish Percent, currently at 28%, was 18% in 1990. For the Nasdaq Bullish Percent, currently at 21%, the 1990 equivalent level was 16%. In April 2000 this indicator reached 20%.

My personal view is that unlike 2002, which marked a concluding move lower for these indicators, this is more likely a kickoff, marking the beginning of something prolonged. But in the meantime there is certainly room for a tradable rally.

- Prof. Depew

Position in S&P 500, Nasdaq-100

Commodity Carnage - Fil Zucchi - 11:47 AM

  • They've gotten to the untouchables today. For my part I am shorting the Mosaic (MOS) and Potash (POT) companies of the world, and buying Quintana Marine (QMAR) in pretty hefty size. I am also selling puts in scale against my Oil Services Trust (OIH) short.

  • I am shedding puts on specific tech names which I am long, Akamai (AKAM) and F5 Networks (FFIV) especially.

  • I think there's danger for a very large crack in gold in the context of the secular bull.

  • Look-out for Snapper. It feels like he is foaming at the mouth. If he shows up, use prices to your advantage, which for me means shorting into it.

Tighten your belts, Minyans - I don't think that Volatility Index (VIX) reading is gonna last too long.

Positions in QMAR, MOS, OIH, AKAM, FFIV

Energized - Adam Michael - 10:54 AM

A couple of thoughts on energy:

  • Today's crude oil inventory report was bearish. The Commitment of Traders reports are now fully bearish for crude.
  • Chinese imports of crude oil appear to have peaked in July 2007, and have since rolled over. This could be an important fundamental shift and needs to be closely watched.
  • The forward curve on crude has flattened somewhat, but there remains a fair amount of backwardization where crude is cheaper several months out than spot crude.
  • The OIH and XLE look terrible technically.
  • Crude oil could find some support in the upper $80's, but I believe we have further downside over the coming weeks/months and would be looking to sell strength.

I'm thinking a trip back to the $70's is not out of the question.


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