Buzz Bits: Strong Like Bull
Highlights from today's action.
Randoms - Fil Zucchi - 2:45 PM
- You know what they say when stocks don't behave like the should? PAY ATTENTION! In the wake of decent new homes sales the homies are paying a visit to Red Dye. This and this is what I am looking at. The daily stochastics are hooking up on both charts.
- Talk of a slowdown in wireless infrastructure spending started percolating sometime back, with Verizon (VZ) being the primary culprit. A good contact of mine suggests that it is in fact happening. Most at risk: Ericsson (ERICY). I have non-advisingly nibbled.
- Video game mavens care to opine about Shanda Interactive (SNDA)? Looks cheap and the chart has that "I-am-trying-to-get-off-the-mat" feel to it.
- I agree with Prof. Miller that Amgen (AMGN) needs to fill its pipeline. I am not sure I agree that now is not the time to nibble. When they paid a good chunk of money for Abgenix (ABGX) both stocks went up.
Positions in AMGN, FNM, ERICY, BZH, HGX
Flashback! - Bill Meehan - 2:10 PM
This day in market history...
- Closing levels 7 years ago today
- DJIA: 9200.23
- S&P 500: 1243.17
- Naz: 2407.14
- Crude: 12.40
- Gold: 283.80
This day in Minyanville history...
- In '04, Toddo chatted with Hoofy in Bedtime for Bozo?
In other news...
- In 1968, Otis Redding's The Dock of the Bay was released, seven days after his death.
Say What? - Kevin Depew - 12:46 PM
A look at commentary, opinion and analysis from around the world:
- Sharon Stone, Richard Gere, Brad Pitt, Angelina Jolie, Bono, Lionel Richie, Michael Douglas, Peter Gabriel, and many other pop culture stars and starlets are all on hand for the World Economic forum in Davos, Switzerland. No worries, probably it's just the unprecedented merging of pop culture and global financial markets marking the very top of the mania in all financial assets.
"North Carolina House leaders on Wednesday began forming a study committee to attack the growing problem of home foreclosures in Charlotte and across the state," says the Charlotte Observer. Housing bubble? Nah, just your every-day, typical, run-of-the-mill state-appointed study commitee in a normalized housing market well away from the isolated, regional bubbles in parts of CA, FL, and NV.
So was the GDP number a headfake or the real deal???? - Bennet Sedacca - 11:41 AM
What strikes me is not that economists missed the initial GDP report, but by the amount that they missed. Which of course makes you question the integrity of the number in the first place. But one thing is for sure--the economy IS slowing. It's just a question of by how much.
Which leads me to how do we get positioned for the future in terms of sectors and to another degree, what sectors in bonds. First, my take on bonds--stick to quality. Municipals, particularly in the long run look sickeningly cheap. Secondly, corporates, both high grade and junk, remain sickeningly expensive as the insatiable quest for yield goes on. If you didn't see my piece yesterday check it out--basically do not stretch for yield. You will usually pay for that.
What about sectors in the stock market? If the slowdown is for real (and I believe that it is as the consumer is tapped and housing is clearly slowing) then the Fed, whether Elmer or Big Ben are close to done. The groups that have done well after the last rate cut? Health care, consumer staples, big pharma and diversified financials. I presume this is due to the fact that the Fed stops raising rates because the slowdown they wanted has occurred, slowing growth and earnings. This is making a bunch of folks scratch their head on this rally today. When does it usually pay to own beta? On the second rate cut. I am personally banking on that to occur by early 2007.
Positions in pharma, financials, health care and staples
Well I used to love her
But it's all over now? - Todd Harrison - 9:47 AM
Sing it Jerry, but sing it carefully. While it looked like an all-out gigglefest this morning, the tough-to-stomach GDP stuck a fly in the eye of the try. While select tech is standing tall (SOX and MSFT +3%), some sloppiness in the money center banks is offering cause for pause.
Perhaps it's a simple rotation from S's to N's (motion over movement would be apropos) but with the S&P (1275) and NDX (1705) both circlin' resistance--and a spate of bad news floating around--critters are keeping their right hands up as they play with this pup.
Market breadth is 3:2 positive, metals and energy remain well bid, MVHQ is chewing on bagels and lox and there's only nine days left until the Super Bowl.
Hey, it could be a lot worse.
position in financials, energy, metals.
Mini-Minyan Mailbag - John Succo - 9:43 AM
Guidant is down $2 because BSX is down $1.5 due to getting serious FDA warning letter which prevents new product introductions like the Taxus launch in 3Q06, and may impact Guidant product line introduction after acquistion by BSX.
BSX stock price down $1.5 creates a bid price of $79 for GDT.
GDT has the same letter, so this is not new news to BSX. They knew of this letter when they made the bid; the company knew of the letter in May.
Position in GDT
Morning comments from Katie Townshend, CMT, chief market technician for MKM Partners: - MV Respect - 7:56 AM
"Consumer staples stocks have been unable to get traction on a relative basis. Theoretically, the consumer staples sector becomes more attractive to investors when they fear a decline in the market. The sector's defensive nature insulates it from the cyclical fluctuations that tend to hurt consumer discretionary stocks. Even though market sentiment has become less bullish, the Consumer Staples SPDR (XLP) remains in a long-term downtrend relative to the S&P 500 Index (SPX). We think the trend of under-performance will come to an end if the market sees a deeper correction.
The long-term posture of the XLPs improved when the trading range was resolved to the upside in December 2005. The breakout has not seen positive follow-through, although we continue to believe that downside risk is limited due to the proximity of support. Despite having lagged the broader market, the XLPs have managed to hold up above their 40-week (200-day) moving average and important support near XLP 23.25. Secondary support is at the September/ October 2005 lows. The posture of our momentum and overbought/oversold indicators is neutral, so we believe the most likely course is sideways for the XLPs. This could be bullish if the market continues lower as we expect; sideways action in a declining market would translate into an improving relative strength outlook for the XLPs."
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