Buzz Bits: Dow and Nasdaq End Higher
Your daily Buzz & Banter highlights.
Bell Buzz - Todd Harrison - 3:41 PM
- What am I thinking as I watch Pulte Homes (PHM) tack on another 10%? Two things: trailing stops, for one, and never lament a profitable trade, for deux. I've found through the years that as soon as I beat myself up after making money, real losses often follow.
- The oddest action thus far this year? The action in consumer non-durables and pharma, both of which should do "better" in a slowing economy. The good news, I s'pose, is that entry levels are now more advantageous for those looking to play that theme.
- Minyans know I'll put it out there when I've got a feel, as I did last week when guns and butter were the only things bid. I'm not gonna force one now, other than to say that anything less than "fitty and fitty" tomorrow will likely be a bovine bummer.
- In the meantime, I've got select situations and a lotta dry powder. Powder is good.
- I should have some fresh thoughts after tonight's tête-à-tête with the savvy soothsaying sommelier. Hey, if nothing less, seeing old friends is very good for the soul!
- I'm juggling a few struts so lemme hop. Fare ye well into the bell and have a mindful Tuesday night.
Is Gold Expecting a Rate Cut? - Quint Tatro - 12:17 PM
I might be overthinking it, but it sure does look and feel like Gold has priced in tomorrow's rate cut and more. I am still long some financials, which may take a hit either way on a sell the news reaction or a disappointing Fed move. However, I have scaled back or sold the rest of my favorites: Washington Mutual (WM), JP Morgan (JPM), and Bear Stearns (BSC) and feel good hanging over the next couple days.
Rather than scale back any more of my long side financial inventory, I have started a short in the gold ETF (GLD). If tomorrow's rate cut has been priced in, I suspect some profit taking will hit the ETF, but on the other hand if the FOMC throws participants a disappointing curve ball, a tumble may also be in the cards.
I am never one for fighting a trend but with all that is coming up, it feels like the right play for me and my portfolio. I won't be stubborn and should the ETF break to new highs on a closing basis, I'll be gone.
Positions in WM, BSC, GLD
VMWare from the fundies' point of view... - Fil Zucchi - 11:21 AM
The only thing surprising about VMWare's (VMW) pasting is that it is happening in the context of a gargantuan short position. There were exactly ZERO fundamental reasons for VMW to be trading where it was, and this comes from someone who views their business as one of a handful of long term high growth opportunities.
But that was then. At $56 I still don't think there is any reason to be long VMW. Current '08 estimates of about $1 for 45% growth = a fair value of about $45 in my book, which means $40 is about my buy price point.
I have bought Mar 50 puts and sold 2x Mar 45's for a small credit. If I get assigned on both I'll own VMW at $40, and in the meantime I get to be short it from $50 to $45; all for no cost.
Position in VMW
Looking back at a month that caused hugs, tears, smiles and screams - I felt like Dick Vermeil with a Bloomberg – if there is one quote that is most conspicuous on my screen it is the DJ-AIG Commodity Index.
If I had told you that the S&P would go down more than 10%, how much would you have guessed the more extended commodity contracts be offered down? If I spotted you one big clue and told you Crude (the biggest component) would go from $100 to $90, you would have been rather lonely predicting the index would hold up. It has not only held up, it is up, +2% for the month.
I remain long almost across the board (with the exception of Crude) while getting stopped out of some positions, an expensive discipline sometimes. To give you an idea of just how tight and potentially scary supply can be, I quote from the agricultural minister in Saudi Arabia: "The Grain Silos and Flour Mills Organization will buy wheat from abroad."
They are doing this while cutting purchases from local farmers by 12%. Why on earth would they do this? They don't have enough water.
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