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Buzz Bits: Dow And Nasdaq Close Lower

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Your Daily Buzz Highlights!

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Editor 's Note: This is a small sample of the content available on the Buzz and Banter.



Crude COT Update – Kevin Depew-3:15 PM

  • New PnF sell signals are leading new PnF buy signals in a very active day for both sides by a slim 17 to 16 margin.
  • Overall sell signals are leading buy signals by a 27 to 25 margin.
  • There's no real standout among sector movements as the activity is very mixed.
  • The S&P bullish percent is actually flat on the day while the NYSE is up slightly and the Nasdaq is down slightly.
  • What's the CB code for "yikes!"?



Crude COT Update – Adam Michael -2:38 PM

Commercials increased their position in crude by about 4,000 contracts, but are just barely "net long". I expect commercials to go much more "net long" before a good bottom in crude is in.
Last year, when crude bottomed in mid to late November, commercials we net long 70,000 contracts and open interest was about 800,000 contracts. Today commercials are flat and open interest is near all-time highs at 1,148,838 contracts.

As I said last week, I would like to see crude consolidate in the high 50's low 60's area while commercials build a larger net long position and open interest declines to feel a good bottom is in. See chart here.


NDX: How Low Can it Go?- Jason Roney- 2:21 PM

The NDX is finally showing some weakness. But the prior week's low could still be the ultimate target this week.

Here's interesting fact: The NDX has now gone 10 weeks without trading more than 3 points below the prior week's low. This has not happened in the last 10 years.

The last time the NDX went 10 weeks without trading even 5 pts below the prior week's low was 1997. The last time the NDX even went 9 weeks without trading
5 pts below the prior week's low was Dec. 2005 and Dec. 2004.


Slow and Slower Randoms – Fil Zucchi - 1:46 PM

  • Despite the seemingly benign headline on construction spending, 3-month annualized private residential construction spending is falling at a 16.5% clip. Commercial construction on the other hand keeps on ticking, consistent with what the other side of our office sees. Prof. Bennett and I have written about the over-valuation of commercial real estate, but that game and the flow of funds into it do not seem to be abating yet.
  • Harrah's Ent. (HET) is the centerfold of the risks involved in shorting individual names. I have a very defined short in it, which is going to end up costing me not much more than dinner money. Do I think that, outside of financial engineering (i.e. a headline making IPO of HET in a couple of years), the private equity money will get a decent cash return from HET's business? Not a chance. Does it matter? Not as long as financial engineering is alive and well.
  • Get ready for Congressional hearings where the resident windbags will showcase their best "outraged" faces and promise tough new laws for problems that will no longer exist. (Thanks Minyan CS). Never mind that Fleck was harping on this 3 years ago. Preventing the problem would not have called for a 3-ring televised congressional circus.
  • Now that we can see the froth in private equity deals up close and personal, any ideas as to the next asset / asset class to bubble up?
  • Are we ever going to see a set of financials from Aunt Fannie (FNM)?



Mini-Minyan Mailbag – Bennet Sedacca - 12:40 PM

Bennet,

I noticed your comments on the 10-year bond. There is definitely a dichotomy between the Bonds and Notes as it relates to the Commitment with Traders positions. The Bond Non-commercials and specs together are net short 43,000 contracts. While the 10 year commercials continues its monster short position at 466.250. It seems that the 10 year Notes are definitely overbought but the 30-year bond, interestingly enough is fairly neutral. It's tough for the bears to get an upper hand here with the bonds seemingly not cooperating.

Minyan Joe


MJ,

Yes, but the direction of their position in 30's has gone from monstrously long to mildly long, so I would call that the same directional movement. In any event they are definitely positioned overly bearish versus overall bullish when yields were 60 basis points higher. See chart here.


Wal-Mart, Santayana & Eddie Vedder- Jeff Macke - 9:39 AM

"Those who forget the past are destined to remember" - Eddie Vedder

The wierd thing about Wal-Mart (WMT) blaming 1.8% SSS last month on the absence of an '06 Killer Hurricaine, I mean beyond WMT implicitly pining for more sales-driving human misery, is that it assumes no one can remember WMT results from 2005. To paraphrase Mr. Vedder, who was ripping off Santayana, "those who cannot remember have the option of reading the Retail Round-Up archives". Minyans clicking HERE will see that Wal-Mart only posted a 3.8% SSS gain a year ago.

In the interest of being extra helpful to both Wal-Mart and those taking their excuses at face value I'll add that Wal-Mart forgot to mention the fact that gas prices have fallen some 25-odd-percent in the last 12 months. Who says gas prices directly impact Wal-Mart sales, you ask? Wal-Mart themselves, actually.


State of the Markets: To new highs? – Phil Erlanger - 9:19 AM

The Dow Jones Industrial Average, S&P 100 and NASDAQ 100 moved higher last week. The Daily Squeezeometer signals for the NASDAQ 100 Index and the S&P 100 Index remain at buy.

Our 14-day choppiness index for the NASDAQ 100 Index moved from 46 to 49. This index ranges from 0 to 100, and the lower it goes the more a trend is evolving. The S&P 100 choppiness index moved from 43 to 38; it appears to be nearing completion of the recent run. The NASDAQ 100 and the S&P 100 remain above their respective weekly DMA channels.


What you need to know... - Jon Doctor J Najarian - 8:13 AM

Harrah's LBO On The Way! According to published reports, private equity suitors are close to inking a deal to purchase the casino giant. Given HET's market capitalization ($12.3bn) and debt ($10.2bn) this would be among the largest LBOs in History. See our blog from Sept 21, in which we cited the 10,500+ October 70 calls trading on the offer!

Playboy Opens 1st New Club in 25 yearsPlayboy (PLA) has teamed up with the Maloof's of The Palms, the hottest casino hotel in Las Vegas to launch what will be one of the hottest clubs in the country, a retro-hip and extremely exclusive club. "The Moon" will have a retractable roof and "Sky Villa" will run you a cool $40,000 per night.

Citigroup Reduces Apple (AAPL) To Hold – Citi said it sees little potential for revenue upside for the iPod maker and said they don't believe Apple will introduce a new video iPod with a larger screen and "virtual click wheel" before the peak holiday season.

J.P. Morgan Cuts Credit Card Processor - JPM reduced its rating to neutral from overweight for First Data Corp (FDC), saying it believes Q3 results will likely be "messy and disappointing". OUCH! That's gonna leave a mark!

Stock to watch:

F5 Networks (FFIV) Why?

Because shares have been upgraded over the past few sessions and after the hoopla died down, they are back down to reasonable levels to buy in! I agree with the hypothesis that increased investment in corporate data centers and new products will be significant drivers.

I am buying in up to $54.25 with a $59 target. I will set a $.50 stop loss.

Position in HET & FFIV

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No positions in stocks mentioned.

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