Buzz Bits: Dow and Nasdaq End in the Green
Your daily Buzz & Banter highlights.
Bell Buzz! - Todd Harrison - 3:19 PM
- As go the piggies, so goes the poke? This, we know and along those lines, keep an eye peeled to BKX 90-92, which is a zone of resistance. Particularly into 2:15 EST on Wednesday.
- Is O-Dog on the juice? Seems that way as these names are jacked anew. Beazers (BZH) up 17%, Centex (CTX) and KB Homes (KBH) up 7% and others screaming drizzam in synch. Unlike last week's jig, however, I'm watching this particular street fight from the sidelines.
- Remember those higher lows in the dollar? They're being put to the test as we speak. The softer side of the dollar is no guarantor of higher asset class prices but a higher dollar, in my view, will squash 'em like a bug.
- But you're not a bug, are you gnat?
- Beta continues to weigh on the fray as Research in Motion (RIMM) and Apple (AAPL) join their beta brethren in Red Dye. S's over N's? Or N's under S's? Things that make me go oy!
Insider Buying Behavior - Sean Udall - 2:37 PM
Insider buying behavior is strong even in toughest sectors, as seen in this Bloomberg article Insider Buying of Retailers, Led by Dillard's, Climbs. Retail-industry executives are buying back stock very aggressively.
"Dillard's Inc. (DDS) director Warren Stephens made the biggest insider purchase ever as shares of the Little Rock, Arkansas-based department store chain headed for the steepest decline since at least 1980...
Limited's (LTD) Wexner, bought 1 million shares from Nov. 23 to Dec. 7 at prices ranging from $17.74 to $20.87, according to filings with the U.S. Securities and Exchange Commission...
Foot Locker Inc. (FL) CEO Matthew Serra, 63, snapped up a record number of shares in the New York-based operator of retail shoe stores last month after the stock traded at the cheapest versus net assets since 2000. Serra, named CEO in 2001, bought 100,000 shares for $1.27 million on Nov. 29, boosting his stake in the company to 683,107 shares...
Chico's FAS Inc. (CHS) CEO Scott Edmonds, 50, acquired 100,000 shares for $1.02 million on Dec. 7, bringing his stake to 291,131 shares. He bought the stock a day after it dropped to a four-year low on a fourth-quarter earnings forecast that was below analysts' estimates."
Bottom line: either these retail insiders think their stocks have gotten cheap enough even given the weakening econ backdrop or they see evidence that the market is has over- reacted to many factors currently.
I wanted to point this out as many have wanted to attribute much of the weakness in tech to a weakening consumer. First, a good portion of the total tech spend is related to pure corporate spending. Second, the consumer, while cooling, is far from dead with respect to spending on many items unrelated to the housing complex.
Leaning Too Far? - Quint Tatro - 2:13 PM
As we head into the afternoon it is tough to confidently call this action. Hoofy will point to the simple fact that we're higher despite some poor housing news and an international fall, while Boo will point to the lackluster volume. I tend to lean towards the Hoofy camp as I eye the continued relative strength in the financials, but I suspect many are simply repositioning ahead of the Fed on Wednesday. However, I am well aware that another big shake sure is possible and would be perfect for taking down those that have remained sidelined and are just now starting to put capital to work.
Either way, it is my opinion that the strategy remains the same as it has the last several weeks. If you have done a few things today, don't hesitate to take most of them off into the bell. You can always remount tomorrow. On the other hand, if you are starting to rebuild be very aware of your position sizing and make sure you leave room.
I felt like I was leaning a little too far in the financials camp so I sold down a little Legg Mason (LM) into today's strength. I still like the stock quite a bit, but it seems to be going through a battle to break out of this base and I'll wait to see which side wins before I jump back in with size. Other than that, I am keeping the other names on the sheets and will look to add to my Washington Mutual (WM), Merrill Lynch (MER) Bear Stearns (BSC) and JP Morgan (JPM) in due time. Patience Minyans, patience.
Position in LM, WM, MER, JPM
Looking Ahead - Ryan Krueger - 1:48 PM
To quote one of the great traders of the 2030s, my five-year old daughter asked me this weekend, "Why don't you buy more of the super duper stocks and not the other ones?" Thank goodness she's not a brokerage firm client because that might qualify as a formal complaint.
But she is a great reminder for me of many things, not the least of which is that it often is worthwhile to simply look at groups on pullbacks to support in uptrends on the long side, and rallies into resistance in downtrends on the short side.
Click to enlarge
The average "rally" over the past six months in Financials as shown in this chart of the XLF has been just over 7.6%, which we have now exceeded in the past few sessions. Is this a set-up? A break-out?
Plenty of good opinions are on both sides of this sector long term, but with tight stops and put spreads we are legging into a short. I remain on the lookout for "super duper" stocks instead.
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