Buzz Bits: Dow and Nasdaq End Mixed
Your daily Buzz & Banter highlights.
If this tape were surfing, it would be goofy! - Todd Harrison - 3:20 PM
The final hour has arrived as Boo's crew looks to unglue the dew. Will the furry freak succeed in his ursine efforts? Let's take a quick sniff:
- Breadth is balanced and, while this could quickly play downside ketchup in a futures led decline, it doesn't support the downside. Today.
- The technical toggle remains S&P 1405. Sell stops surely reside on the other side of that ride so keep your risk tight and your fingers light as we probe those lows. And remember that support (resistance) gets weaker with each subsequent test. Just ask S&P 1480.
- The dollar has held a bid all session which, while "bigger picture," is an asset class headwind (see the energy and metal equities today). The is a potential head and shoulders forming for the greenback so keep that on ye radar as well.
- The banks, which have been beaten with an ugly stick, are hanging tough (see the green BKX). Boo would argue that the weakness in the brokers (GS -$6) more than offsets the money center traction and, well, he would likely be right.
- Net/net? Sorta a push, from where I'm sitting, although I'm admittedly starting to feel the effects of jet lag. It's nutty how much one can look forward to some "time away" and, once back, how quickly it seemed to pass. The same, I suppose, can be said for life. Make it count, Minyans, and make it mindful!
For now, the word for today is "Feeble"... - Fil Zucchi - 2:22 PM
At this morning's lows it felt pukey, but this bounce oughta be giving the same feeling to Hoofy. After getting slammed last week and this morning, we should be ripping back to resistance; instead we are struggling to make it back to even. In this context:
- I've let go the rest of my Varian (VAR) long position. It's been a great trade and the stock is acting fabu, but it was only recently that this was considered the "red-headed stepchild" of this group, and I am still very long Hologic (HOLX) and Accuray (ARAY).
- It's do or dive for Whole Foods (WFMI). I'm sticking with it since I don't see why this is more than mid $20's stock, particularly in the context of bear market.
- I've flipped my put spread in F5 Networks (FFIV). I was long the 30's and short the 25's. I have bagged my profits in the 30's and now I am long 1.5x as many 22.50 puts. Yes this makes me quite a bit longer this one.
- Does it make sense to stay long Arris Corp. (ARRS) and Harmonic (HLIT) with Comcast (CMCSA), Time Warner (TWX), and Charter (CHTR) in free fall?
- I am not really pressing the short side here, despite what's looking more and more like a failure of this morning upside try. But when we get the inevitable mind-bending rip the Sell/Sell Short button is gonna get a workout.
- What if we don;t get the mind-bending rip?
- The only fresh money long-side temptation out there is FC Stone's (FCSX) big brother GFI Group (GFIG).
Instinct Trades - Ryan Krueger - 12:55 PM
Pepe has been more than helpful to Minyans with his consistent eyes on Financials and Discretion where supply has trumped demand regardless of short term headfakes.
Plenty of instincts over the past few months have led traders to anticipate which groups 'will be next' to be sold instead of instead noticing that weak got weaker.
I ran the data from the highs in October on the S&P: the worst two groups will not surprise you - Financials and Consumer Discretion. What may surprise you is that despite numerous calls (including an incorrect tradable bounce in Retail from yours truly) for oversold rallies that these two were also the worst for the next two months, and then again for the next month to where we sit today.
Good dog-eared notes in a trading diary are more valuable than good confirms - and for longer - and the lesson remains that most often the best day to buy strength was yesterday, the second best is today, and the third best probably tomorrow. Same goes for weakness.
Long Five Things Every Day
Lesson For Gold Bulls - Lance Lewis - 12:23 PM
The Fed will continue to ease when it shouldn't and it also looks like the federal government is going to issue even more debt in order to create a stimulus package. Also consider that the Fed is now growing its balance sheet as well (it's up 5% since December, or about $40 bln).
With the TAF going to $60 and basically being permanent since it's "as long as necessary," the Fed is not only "printing money" by lowering the Fed Funds rate and allowing Wall Street to create money and credit, it is now physically running the presses with these TAFs and injecting reserves into the banking system in exchange for mortgages, boat loans and other garbage. The ECB is also helping. Its balance sheet grew 30% last year. G7 central banks are throwing "whatever it takes" at the problem and that means more and more money and credit is going to be created.
The problem is it won't go where they want it to (US credit markets). It will however, go into gold and other hard assets, as it has been. The problem won't be solved by money printing but gold will benefit from the monetary and fiscal medicine. This is the same principle I talked about in August.
Regarding gold shares, some in the financial media don't seem to understand how these shares work. You have a gold miner that takes gold out of the ground for $450 and sells it for $700. He makes $250 an ounce on each ounce he sells.
If the price of gold rises 29% to $900, this same miner sells gold at $900 minus $450 costs for a profit of $450 an ounce, or an increase of 80%. That's why the shares went up so much last week relative to the metal. They have leverage to it!
Position in Gold, gold shares
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