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Earnings Report - MV News 4:07 PM

  • Rambus (RMBS) reported Q4 EPS of $0.09 vs $0.08 cons on revs of $41.6 mln vs $40.50 mln cons.
  • Motorola (MOT) reported Q4 EPS of $0.34 (in-line) on revs of $10.43 bln vs $10.46 bln cons.

Freescale Semiconductor (FSL) - Jon 'Doctor J' Najarian - 4:00 PM

The Motorola spin-off is right up against all-time highs ahead of tonight's earnings report and given the action we're tracking, I'd hazard a guess that the results will best the Street consensus of $.38 for Q4!

Our Heat Seeker tagged FSL for the unusually heavy buying of the out-the-money February 30 calls, which are up $.25 to $.50 on turnover of nearly 8,000 contracts. Here are four reasons we like today's action in FSL:

1) The open interest was 573 contracts, so we've traded 14 times the open interest without so much as a peep from the January calls or puts.
2) The previous session's volume at this strike was just 3 contracts!
3) Only 78 of the 8,000 plus contracts that traded were sold on the bid. This shows how badly the buyers wanted into FSL.
4) Today's imbalance of trade versus the open interest is 720% in the bulls favor!

Not giving advice, but watching with interest!

Positions in FSL

Say What? - Kevin Depew - 3:35 PM

A look at commentary, opinion and analysis from around the world:

  • Today everyone is an economic freedom fighter, according to the media. That is why Americans are working hard to "liberate equity in their homes and get cash and spend it."
  • Meanwhile, in the one area of the country were there is universal agreement on an overheated housing market, home prices in the San Francisco Bay Area have fallen $16,000 from the previous month.

Bio News - David Miller - 2:08 PM

Biotech continues to be a bright spot in this very young year. Thus far the NBI has had more positive-breadth day than not. Breadth yesterday ended positive and is at 103 up, 6 flat, 51 down today. The NBI had an outside day yesterday, closing very near the top of its intraday range. The IBB, the best-fit trading vehicle for the NBI, had a less impressive chart performance yesterday but gapped up today.

I'd prefer to see a string of days where the smaller-cap biotech outperformed their bigger-cap bretheren, but we all have to work with what we've been dealt.

Flashback! - Bill Meehan - 1:51 PM

This day in market history...

  • Closing levels 5 years ago found
    • DJIA: 10,587.59
    • S&P 500: 1342.54
    • Naz: 2770.38
    • Crude: 32.12
    • Gold: 265.00

This day in Minyanville history...

In other news...

  • In 1937, Howard Hughes set a transcontinental record, flying from L.A. to New York in 7hr 28min 25sec. I don't know why he didn't just take the red eye.

You will be graded on participation - Kevin Depew - 1:20 PM

As we exit the primetime East Coast lunch hour, see the Russell 2000 (RUT) one of our earlier "tells" smoking to the upside now, hitting a new high. And hey, what do you know? April Gold is up 13 too.

Been discussing the outperformance of small caps vs. large caps this year with another trader. The IWM (the Russell 2000) ETF is so far this year up 4.7% (excluding today) versus 2.4% for the SPX. Also, after a double digit 2005 in which midcaps were up 11.2% compared to just 3% for the IWM, this year the S&P 400 Midcap Index is up just 3.2%, trailing the IWM.

Another contact pinged me to ask if the diminished participation this morning's column pointed out was the same across the board in small and midcaps. It is. Exactly the same.

Nice comeback in the Indian markets today... - Sanjay Somaney - 11:52 AM

The good guys came ripping back into the Indian markets taking the Sensex higher by 212 points to end the day at 9475 and the Nifty up 62 points to end the day at 2871.

Broadbased buying was seen in banking, technology, cement, engineering and metals. The BSE 100, BSE 500, BSE MidCap, and BSE Small cap indices all closed higher than 2% on the day. The consumer goods, IT and metal indices were up over 3% on the day.

Domestic mutal fund selling was more than offset by strong FII buying. Wipro (WIT) made a new 52-week high in India. WIT and Satyam Computer Services (SAY) have touched new 52-week highs here today as well.

Position in WIT, SAY

Rumor control - Herb Greenberg - 10:53 AM

I'm hearing rumors that "you" as in I, Herb Greenberg, have "turned positive" on Novastar (NFI) after more than three years of writing negative stuff. Truth: I wrote a piece today in RealityCheck quoting Sy Jacobs, who was quoted in Barron's last summer as being bearish, as turning temporarily bullish. He says his research shows that contrary to his firm's prior belief -- and that of the bears in general -- the subprime lender does earn its dividend. He says the shorts' argument that it doesn't is flawed, and that following the next earnings report the stock will rise.

The shorts say his argument is flawed. From that point on it's like two dogs chasing each other's tails. In the end, however, both believe that credit-related issues will do in Novastar and its shares.

I view this as two bears walking in the woods. They come to a fork in the road. The road on the right is higher than the one on the left. The one bear, who turns bullish, takes the one on the right, thinking he's smarter. The true bear takes the one on the left, thinking he's smarter. Imagine their surprise when they meet each other again as the roads converge, at which point the bear-turned-bull once again turns bearish. (Which is why it remains red-flagged on my RealityCheck watch list.)

I'm always intrigued when two very smart people disagree over the analysis of the very fine points of the same set of numbers and circumstances. That, of course, is what makes markets.

Humbly yours.

DeVibe from DeScribe - MV Respect - 8:31 AM

"NDX value traded surged to its highest levels in more than 2 years as INTC and YHOO disappointed and options expiration neared. Price action and volume was enough to generate a day of distribution on the NASDAQ, but not on the SPX.

Given the overall attitude and positioning within Technology, we believe the problems that develop in the space are more likely to be company specific, rather than pandemic. Sentiment data doesn't suggest that tech is a crowded trade, and as such, a mass exodus becomes a difficult scenario.
"

Lehman Technician Jeff DeGraaf

Evidence of Broke Greenback Mounting - Greg Weldon - 8:02 AM

Observe the evidence on display within this morning's news, supporting our main-macro-theme as relates to the tsunami of excess USD liquidity, flooding the globe:

  • Colombia sold Inflation-Linked TES this morning, with the 5-Year paper placed at a price to yield just 2.18% ... ten basis points below the W/I price, and a decline of (-) 32 bp from the previous sale conducted in November.
  • Colombia sold 10-Year Inflation-Linked TES paper at a price to yield 2.99%, a decline of more than (-) 50 bp from November, for a 'curve' spread over the 5-Year paper of just +80 bp ... flattening from nearly +100 bp in November.

Indeed,Colombia, once considered the 'drug-cartel-capital' of the world, is selling debt at SKY HIGH prices, carrying razor thin yields ... and backed by one of the strongest currencies in the world. Yes, the Colombian Peso, COP, has been among the world's strongest currencies over the last 6-12 months ... strong enough to draw a 'cover' in excess of 3:1 at this morning's auction of COP-denominated debt.

GEE, no wonder Gold in COP made a new all-time high on Monday, at 'only' 1,279,179 pesos per ounce !!!

Position in gold

Days and Differences - Todd Harrison - 7:56 AM

One of the first lessons I learned in trading is that the reaction to news--rather than the news itself--holds valuable clues to the underlying supply/demand equation.

Whereas the Intel (INTC), Yahoo (YHOO) and IBM trifecta pummeled the post-market futures on Tuesday, similarly sour news from eBay (EBAY) and Apple (AAPL) failed to dent the demand last night.

Something to keep in mind as we waffle above oft-mentioned support (S&P 1275 and NDX 1705) and toggle near outsized open interest (S&P 1275 and QQQQ 42) in front of tomorrow's expiration.

R.P.

There's Something Happening... - John Succo - 9:34 AM

With so much leverage in the world's financial system I believe several things are going on.

Ever higher asset prices are a must. If asset prices are allowed to fall, the slowing credit expansion will turn to bust quickly. Notice how when the market is down merely 1.3% over six days (a perfectly normal 8% volatility), sentiment becomes shrill: no one can stand even a little pain). Central banks from Japan to the U.S. respond as they always do: pump money overnight. Notice how gold spurts on days like today after equity losses the prior days. Central banks know they cannot even let go for a minute.

The amount of liquidity that has been injected into the system over just the last few weeks is unprecedented.

In trading gold stocks I see indiscriminate buying. For example, they take a fundamentally challenged company like Harmony Gold Mining (HMY) up just as much as other companies that are better run and positioned.

I am a long term gold bull, but the indiscriminate buying leads me to believe that retail is jumping in with both feet.

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No positions in stocks mentioned.
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