Buzz Bits: Dow and Nasdaq Finish Down
Your daily Buzz & Banter highlights.
Jekyll and Hyde - Jason Roney - 2:46 PM
It is important to note that from here market will be much more two-sided and that (for traders) enormous opportunities are on both sides.
Longer term certainly can begin to add long-side exposure. Realize that since the S&P became an index of 500 stocks we've only had two months that finished worse than -12.5% (Oct 87 and Aug 98). And in the same period we've only had 8 months with -10% or worse monthly performances. Buying the close of these months produced excellent gains in the two worst periods and solid gains in all but one of the 8.
The point is that market should become much two sided through month end. The worst may not be over but tradable lows are upon us. Best intermediate term plays probably are not set up until month end
Historically a decline of this magnitude (and on the heels of 5 new low closes) we should expect the market to open up tomorrow. The true character of the market likely tested / show during that up open - as i suspect it will be met with selling - at least initially - but a sizeable up open would be in line with historicals
Nikkei futures traded in Chicago suggest that as well (as they are currently trading more than 600 points above the Nikkei cash close)
Things That Make Me Go Hmmm... - Todd Harrison - 2:08 PM
- The Art Carnage in pharma and consumer non-durables. If this were a "good" rally, I would think that the "slowing economy" stocks would do better than the "pay me now" plays.
- Carnies. Circus folk. Nomads, really. They've got small hands and smell like cabbage.
- That the VXO is only up 12%. The spike was nice (from a 'panic' standpoint) but I don't know if it lasted long enough.
- Redemptions. Forced selling. The kind of general malaise that only the genius possess and insane lament.
- Whatever that was that I ate for lunch. It was Indian and that's about all I know.
- The semis. From Novellus (NVLS) to Applied Materials (AMAT) to KLA-Tencor (KLAC), I would have thought that the beta plays would have more sway (in the context of "PAY ME NOW" plays).
- How many times the media has used the word capitulation. Were they around in 98? Or 2000? Or 1987 for that matter? True capitulation is when there are NO bids and the thought of owning anything makes you feel like you've eaten a bad clam sandwich. Ewwww...
DNA correction, SEC regrets? - David Miller - 10:02 AM
- I've been writing about a date for the FDA to make a decision on Genentech's (DNA) Avastin for breast cancer. That date isn't January 23rd like I wrote, but February 23rd. Still an important date, but one month later.
- Is today the day the SEC really regrets the silly move of abandoning the uptick rule for short selling? It's pretty interesting that the SEC and Congress have spent the last decade unwinding the systemic protections put in place after the Great Crash, and here we are with some of the same risks. Ah, progress...
Support? - Cody Tafel - 8:54 AM
As I stated in my 2008 outlook on Jan. 9th, the Dow Industrials head and shoulders top pattern projects down to 11,400, which happens to coincide with the 200 week moving average currently near 11,427.
No, I did not think we would get there this fast, but keep an eye on this level if we get a further probe on the downside. The S&P 500 200 week moving average is near 1290 which is currently providing resistance to this 75 bps Fed cut rally.
We are definitely not out of the woods yet, but a panic selloff of this magnitude certainly speeds up the corrective process! Be careful out there!
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