Buzz Bits: Dow Moves Down, Nasdaq Creeps Up
Your daily Buzz & Banter highlights...
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Bell Buzz - Todd Harrison - 3:46 PM
- In like a lamb, out like a chop? Yep, that's how this particular Freaky Friday is playing out, encapsulating Wednesday's jig and Thursday's pig in one fell swoop (note: a free Critter tee to the first Minyan who can tell me what the heck "one fell swoop" means).
- I continue to hear positive chatter surrounding Freeport (FCX), including the size insider buying we recently highlighted. As a purveyor of a small (don't blink) organization, I can tell you that you always wanna see 'those in the know' putting their money where their mouth is. It's not absolute (what is?) but it's a helpful guide.
- I don't know about you but I, for one, am looking forward to our requisite respite. I often say that we "work to live rather than live to work" but I'm a part-time hypocrite (full disclosure). This weekend, I will make a concerted effort to be mindful of that mantra.
- On that note, I wanna wish ye faithful a fantastic weekend. I'm on my 12th conference call of the day (no foolin') and already eyeing the Friday night faceplant. Fare ye well into the bell and may peace be with you.
The Big Chill - Jeff Macke 2:13 PM
Greetings from New Jersey where Jeffmacke's Dog just happily brought home a bird-sicle. I'd like to scold the beast but he's just acting on instinct. Punishing him for hunting would be like rebuking Todd-O for dressing like a bad dinner theater version of Stanley Kowalski.
In less frozen, chewed-up news...
* How 'bout Activision (ATVI) beating the top and bottom lines by over 30% then getting smacked because first quarter revenue guidance was $10 million below estimates. For perspective, ATVI just beat for the holiday season by over $200 million. I like them on dips but the stock obviously isn't acting well.
* Speaking of acting, I've never actually seen Grey's Anatomy (which Todd-O The Metro loves and Red no longer watches). Katherine Heigl is invited on my show any time, however.
* Caffeinated donuts? Seems flat-out unfair.
* To answer today's most frequently asked, TV-related emails: (1) No, Strazzini (our own Dr. McDreamy) didn't leave Fast Money, he just had the night off. (2) I agree, Dr. J was great. (3) I've got no insights on anything involving co-workers and their travel plans.
Some Thoughts On JNJ and Abbott - Vitaliy Katsenelson - 12:51 PM
- It seems that 2007 should be a brighter year for Johnson & Johnson (JNJ). In 2006 the company faced major drug expirations which dampened revenue growth.
- I really like the Pfizer's (PFE) consumer business acquisition. Despite having a fairly good product line, Pfizer was a pharmaceutical company that happened to have consumer products which came with the Warner Lambert acquisition. JNJ on the other hand has a culture of running diverse healthcare and consumer businesses.
- It reminds me of 3M (MMM), as there is a synergy between different operating units as they share their R&D findings.
- JNJ has a greater global consumer distribution network than Pfizer, therefore, it will be able to increase sales of PFE's consumer unit by taking the products to places that they've not gone before (sounds Star Treckish, doesn't it?).
- Abbott Labs received an incredible price (34 times operating earnings) for its diagnostic unit that was sold to General Electric (GE) (great job!).
- I always looked at ABT as a mini-JNJ; it is a diversified healthcare company which is not heavily dependent on blockbusters. The company had a good quarter and should have a good next year. It is trading at about 18x earnings, higher valuation than JNJ's 15x earnings, but it should have a bit higher growth rate.
- Finally, on an unrelated issue, my wife has become an addict of Jeff Macke's Fast Money show. She skipped watching Grey's Anatomy yesterday just to catch another episode.
Positions in JNJ, ABT
Morning Breadth - Tom Alexander - 8:36
NYSE breadth got crushed in Thursday's trading. True, NYSE breadth includes a lot of interest rate proxies and 10-Yr. Notes, 30-Yr. Bonds and the entire interest rate sector was hit hard, which no doubt effected NYSE breadth. However, Nasdaq breadth was similarly negative and the Russell 2000 also sold off sharply today, confirming the equity sell-off was deep and wide. Each time since the July low that breadth has registered readings near Thursday's levels, the S&P and Dow have formed important pivot lows and have begun strong rallies within a day or two. See the chart here. I have pointed this pattern out several times and have always given an important caveat. When the inevitable "real" correction begins, the extreme negative breadth readings will mark the kickoff to the downtrend as opposed to a low, as occurred last May. See the chart.
Strong resistance at 1433-1437, coupled with today's extremely negative breadth reading, makes the only thing less likely than the ES trading above 1437 before first taking out Thursday's 1427.50 low is the Bears defeating the Colts (Chicago: please send respectfully phrased disagreements here). What occurs following a trade below Thursday's low will be critical in determining how much, if anything, is left in the bull market. The ideal scenario from a bullish perspective is for a low to form not much below 1423, then an attempt to trade above 1433-1437.
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