Buzz Bits: Dow, Nasdaq Close in Green
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Whiplash! - Jason Goepfert - 2:54 PM
If the Nasdaq 100 (NDX) stays on its current trajectory, it will have carved out an intraday move of more than 50 points with a negative close, which is more than twice its average true range during the past quarter.
The last time it suffered such a volatile move lower was during January 2006. The time before that was January 2005.
I noted in late December that the NDX has this kind of habit, and it looks like we're on track to see it again...though honestly I thought we'd see a bit more of a rally in the first few days before the annual kick in the teeth.
Rubbers and Road - Todd Harrison - 1:45 PM
Alrightee then, as we edge towards today's contra-hour, let's summerize the main points of today's session.
- The tape opened stronger than a mule's breath as the combination of strong overseas action (yesterday) and the perception of monthly inflows emboldened the bulls.
- The dollar was firm and firmer out of the gate, a dynamic that continues to unfold as the day progresses.
- Commodities took that cue and sold off sharply (CRB -2.6%). The drillers (OSX -4%) and metals are playing downside ketchup (XAU -3%).
- You're familiar with our thesis of "asset class deflation or dollar devaluation." Through that lens, equities equal metal equal gold equal the emerging markets.
- We've been eyeing two key tells to ascertain if equities would follow suit today. Thus far, breadth has moderated (NYSE now 3:2) and the financials, while up, are well off their best levels (please note Citigroup as it dances in Red Dye).
I have done more manicuring than trading today, nibbling on some Weatherford defined risk calls (when the stock was off 7%) and adding a schnitzel of HRB puts. This isn't advice, of course--my risk profile and time horizon is unique to me--but it's consistent with my stated view of the market dew.
And I will say this--IF, in fact, our two main tells continue to deteriorate (watch Bear Stearns as it just flipped the switch), this could catch alotta bovine leaning the long way. I'm not pressing--that would be inconceivable--I'm just sharing with hopes that my process adds value to yours.
As always, I hope this finds you well.
Position in wft, hrb, metals
WAG No Dog - Jeff Macke - 12:19 PM
Walgreens (WAG), which reported soft Same Store Sales earlier this morning, is shaking off the news and gaining 1.5%, more than holding its own vs. the tape. Among the thoughts catalyzed by this price action:
- When trading, the important thing isn't the actual "news," it's the reaction of the market. What WAG is telling us today is that some soft scrip numbers (from Wal-Mart's (WMT) $4 drug plan, warm weather, etc) is already In WAG's stock at this point.
- Being the first day of the trading year, today's price action may be "noisy," but Walgreen's bodes well for the retailers reporting same store sales tomorrow. To reiterate, I think the numbers will be uninspiring (not horrible) but the stocks will be fine.
- The fact that I don't own a single share of Walgreens isn't becoming any less annoying today...
ADP vs. Non Farm Payroll? - Bennet Sedacca - 9:45 AM
Should we use ADP or NFP data? ADP numbers are notoriously different than non-farm payrolls. Obviously, they both have similar data. However, both are measuring jobs but have different seasonality components. I am hearing that the ADP number in December is always way off.
So, I guess, don't draw too many conclusions about this number. But see the chart here of ADP vs NFP. Directionally, they are very similar. And directionally, we are headed down. Granted, they are not similar in magnitude, just direction. Not that the NFP number is that trustworthy anyway.
But note the muted reaction to the number. 108-00 to 108-08 still a brick wall for 10's as we head to the weakest time of year for bonds.
FWIW, I am hearing rumors of a stronger than expected ISM number. I will be flat going into the number but my hunch is if it strong, bonds sell off.
What you need to know... - Jon Doctor J Najarian - 8:13 AM
Goodyear (GT) Strike Settled - The United Steelworkers signed an agreement with the tire maker ending a three-month strike and allowing the company to save on healthcare and production costs. The deal covers 14,000 employees and includes plans to close the Tyler, Texas tire factory and creates a $1 billion health care fund for retirees.
Starbucks (SBUX) Says Get The Trans Fat Out! Pastries and other foods sold at half of Starbucks' outlets (including right here in Chicago) will be free of artery-clogging trans fats starting today. A Starbucks spokesman said the foods at all of its stores would be free of trans fats by later this year.
Wal-Mart (WMT) Sale Nearly Double Estimates – The World's #1 retailer expects to post 1.6% gain versus just 1%. Additionally, the nation's biggest private employer is about to revamp the way it schedules its work force. WMT has begun using a new computerized scheduling system to match workers with the number of customers in stores at any given time.
Nucor (NUE) Buying Harris Steel for $1.1 Billion – The Charlotte-based steelmaker announced the deal yesterday morning to buy Harris at a 6.3% premium to Harris Steel's price at Friday's close.
Positions in GT, SBUX, WMT
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