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Buzz Bits: Markets Inch Up



Earnings Report - MV News - 4:39 PM

  • Texas Instruments (TXN) reported Q4 EPS of $0.43 vs $0.42 cons on revs of $3.59 bln vs $3.63 bln cons. Inventory climbed $115 mln to $1.27 bln and orders rose $27 mln to $3.77 bln.

Say what? - Kevin Depew - 3:41 PM

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

Hold me closer tiny dancer
Count the headlights on the highway - Todd Harrison - 3:36 PM

The Minx slinks towards the bell as traders trade and critters dwell. Today's tug-o-war is anticlimactic on a few fronts but, like last week, something tells me to be careful for what we wish. Volatility is the #1 supporter of The Hair Club for Traders and my sense is that we've simply seen the tip of the iceberg.

As it stands, NYSE internals remain sticky green and the financials hold their bid. That's a recipe for further Snappage into the close (now that contra-hour is behind us) but how you play--and if you play--is a function of your particular approach. Some traders live for ten handle moves while others will count to ten and lay into 'em. To each their own as we toggle through another day but, either way, don't forget that newfound resistance looms above.

For my part, and on the heels of Friday's coverage, I balanced a bit in the trading tranche of my portfolio. I remain of the view that tech and financials (on the aggregate) have serious headwinds while energy and metals are long-term winners. Be that as it may (and it may be wrong), both sides of the ride seem a bit stretched in the near-term.

I'm gonna hop into a mindmeld with President Fish before jugglin' a few after-the-bell affairs. I sincerely hope you're having a fine case of the Mondays and, either way, that your night puts it to shame.

Fare ye well into the bell.


Flashback! - Bill Meehan - 2:36 PM

This day in market history...

  • Closing levels 3 year ago today found
    • DJIA: 8369.47
    • S&P 500: 887.34
    • Naz: 1388.27
    • Crude: 33.90
    • Gold: 364.20

This day in Minyanville history...

In other news...

  • In 1789, Georgetown College was established as the first Catholic college in the U.S. On a more important note, great game by the Hoyas on Saturday against the Dookies.

Mother's Index belies EMH - Scott Reamer - 1:57 PM

The action of the Mother's Index in the last 7 days in Japan or natural gas over the past few weeks DEFINES the very behavior of asset price changes we have been talking about for the last few years. It IS complexity: manifest in real time right on your screen. Such moves belie the entire notion of an efficient market, but the literature is rife with peer reviewed studies for the last decade at least suggesting EMH is bunk.

I recently read a quote that sums up nicely the entire matter that came from a reviewer of the book Fortune's Formula: "No one who has made a legitimate fortune in the markets believe the efficient markets hypothesis. And conversely, no one who believes the efficient market hypothesis has ever made a large fortune investing in the financial markets."

Did someone say "Bankruptcy?" - Fill Zucchi - 11:36 AM

  • On the issue of consumer bankruptcies, the Washington Post recently reported that the number of consumers filing has remained pretty much at pre-amendment levels. The number of potential filers changing their minds after going through the mandatory counseling process is minimal. Anecdotally , the two bankruptcy Trustees I used to work with are seeing no meaningful changes in the number of Chapter 7 filings. This is what I (and they) thought would happen. In a typical batch of cases I'd review (about 130-160 every 6 weeks) I'd guess maybe 5-10 debtors would have fallen into a Chapter 13 (payment plan) after applying the "means testing" of the current law.
  • Last week I pondered whether Apollo Group got cold feet with regard to an L.A. mega project. This, a large project in Las Vegas, bites the dust. You can read a more comprehensive commentary here.
  • Has anyone mentioned that the interest rates on HELOC have increased about 2% since last year? That's an extra $8.7b dollars out of consumer's pockets.

I'll tell you what I want, what I really, really want... - Jeff Macke - 11:14 AM

(F) is announcing they will no longer give quarterly OR annual guidance as part of their new, "trust us, we honestly have a plan" turnaround effort.

CEO Bill Ford seems an affable sort but he took the top job in 2001 vowing to turn things around with innovative, "Green" cars (I believe 2004 was to be "The Year of the Car" at one point) and a halt to "business as usual." Taking a page from the guide to leadership I ghostwrote for Walt Disney last year, Bill says the company needs to start "telling the customers what they want."

Look for the "Princetonian: a 400 horse-power, entirely hand-made roadster which harkens back to racing home to Grosse Point after mid-terms for a spot of quail hunting, sipping Gin Fizzie's with some of the sports from your supper club!" in Ford showrooms next year.

Keeping our noses to the old fundamental grindstone - David Miller - 10:29 AM

In the 30 minutes since I wrote the last Buzz post, biotech has gone south. I have more red on my screen than at almost any time during Friday's broader market selloff.

In previous unsettled markets, we saw a phenomenon where people sold stuff that was up to avoid taking losses on stuff of lesser quality that was down. Is that what's going on in biotech? Or is the drop related to the increase in short interest we saw in the IBB (+24%) during the last measurement period? Hard telling. We'll keep our nose buried in the sector fundamentals, which remain attractive, while admittedly keeping an eye on the broader tape.

Once again, Ben is right on top of things... - John Succo - 8:53 AM

Bank of America (BAC) disappointing earnings are a reflection of higher than expected consumer bankruptcies, as were JP Morgan (JPM) and Citigroup (C), the other large credit card issuers.

Going forward this will likely continue to pressure performance. If these banks respond by trying to increase trading risk to compensate, we could see some real surprises. These are not the sleepy institutions people think.

Combine that with a flat yield curve and these behemoths, which will try to continue to buy smaller institutions for "growth," have little place to turn.

Positions in BAC, C, JPM

Comments from Katie Townshend, CMT, chief market technician for MKM Partners: - MV Respect - 8:18 AM

"Now that the SPX and COMP are back below their breakout points, we would expect a test of the bottom boundary of the December 2005 consolidation phase. This level approximates former resistance at the August 2005 highs, adding to its importance. We expect the SPX to stabilize temporarily near the SPX 1245-1246 area, and the COMP to find interim support near COMP 2200. A breakdown below these initial support levels would open the charts up for a return to the October 2005 lows in our opinion.

The VXO has a high negative correlation with the SPX. Volatility is on the rise, and we expect this to continue over the short-term. The VXO has positive divergences in place from a momentum standpoint, and has maintained an upward bias since confirming a TD Sequential "buy" signal in mid-December."

What do they know that we don't know???????

A couple of weeks ago, commercial accounts or 'smart money hedgers' were VERY long the 10 year note. Well, boy oh boy do things change fast. According to CFTC data released late Friday, they are now SHORT 4000 or so 10 year futures.

We have been talking lately about how the Fed can't possibly want a totally inverted yield curve when they raise the Fed Funds rate to 4.5% next Tuesday and have done quite a bit of selling in the long-end as a result. We may speed up that selling a bit now.

One other thing. Not meant to be advice, but have you noticed (like with BAC this morning) that there seems to be some strain on the banks as a result of the new bankruptcy/credit card laws? We are also keeping the quality of our bond holdings at the highest possible and will look to avoid all financial company debt. Like we have said, if those spreads widen, corporate bond holders could be in for quite a shock.....

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