An evening taste of the daily buzz.
Vibes from Snoop Tone... - 3:07 PM
"As of yesterday's close, there have been 12 out of the last 15 days where absolute NET BREADTH on the NYSE was either +/- 1000 issues (27% of total issues). To put that into context, it is extraordinarily rare volatility, with the last occurrence of 12 days being 10/26/87.
In order to include more data points, we looked for instances (with the help of our stats dude) where there were 11 of 15 days since 1965 where breadth was greater than 27% of total issues. We found 10 unique occurrences of greater than 11 days that showed an average return of 6%, 9% and 11% over the following 3, 6 and 12 months, respectively.
It is also important to note that during the 1970's, there was follow through to the downside over the next month, which was more than reversed over the following month - other than the 1973 instance. No matter how you slice it you lost money in '73-'74 as Fed Funds reached into double digits - we view that as very unlikely over the next 12-18 months."
Mini-Minyan Mailbag: A big Tylenol - Todd Harrison - 2:49 PM
"Hey Toddo, What do you make of this reversal in the HUI?"
Well, we can make a broach, or a Pterodactyl, but that would prolly just be a waste of time.
While I'm closely watching the metals, I've loosened my grip with regard to the daily nuances. I see the "lower highs" in the HUI (Amex gold bugs index) and today's liftage failed directly at that trend line.
If they wax 'em lower, and as my horizon is longer-term, I'll view that as an opportunity. And no, Mr. Santoli, that's not advice.
(Position in silver equities)
Family Matters - Adam Warner - 1:46 PM
Will volatility pick up once Sir Alan takes his Greenspan Put to South Beach with him? No way to know for sure, but I suspect volatility sits here for myriad reasons, and the Fed is just one of them. Increased automation, multiple listing of options, and decimalization all play a bigger role in the low VIX/VXO/VXN, IMHO. The Fed "matters" of course in all this, but "Uncle Alan's Moral Hazard" (opening tonight at the Garden) is just one piece in the puzzle.
Gold Goes Mainstream - Kevin Depew - 1:43 PM
Interestingly, gold is making a comeback on the front pages of many major media outlets. The Independent Online is running this story today on "The Real Price of Gold," while The New York Times is in the middle of a series on "The Cost of Gold."
At issue in both pieces is increasing concern over the environmental costs of mining gold as well as greater scrutiny over where gold comes from.
Nerves That Peel - Todd Harrison - 12:21 PM
Making my calls around the Street, most folks I speak with aren't "buying this rally" (so to speak). So, while I "get" that alotta peeps have a vested interest in higher prices, I don't get the sense that an overt bullishness exists. At least, no more than usual.
As I watch Boo play "whack-a-mole" above S&P 1200, I find myself in an unfamiliar postiion. And, to be honest, I'm really not that limber to begin with.
Some observations from behind my eyes...
- Citi and the SOX (not to be confused with Bennie and the Jets) are key tells for afternoon directive.
- Yes, the pop & drop potential is still there.
- No, I haven't been drugged by the Matador City mafia. I'm simply tryin' to make (and take) some trades.
- Succo and I will be vibing with Minyan Matt Ford at Northern Kentucky University (near Cinci) on Monday, November 7th.
- Our final tally for the RP hurricane relief efforts for the NEA was $55,200. Thanks again, my friends, that's awesome stuff.
(Position in C)
Keen Eyes - Greg Collins - 11:58 AM
Keep in mind that the 2123 level on the Nasdaq Comp is where the 50 / 100 dma's stand as well as a 50% fibonacci retracement from the August high to October low. We got to within a point - something to watch...
"Et tu, Boo-tus"? - Jeff Macke - 11:57 AM
Prof. Fleck beat me to the "is everyone bullish?" buzz-punch. If we aren't careful we're going to lose our "perma-Bear-guys" rep! Not that I'm piling into shorts here, either; the market feels like it wants to go higher if it can find a good excuse (like, say, good earnings from someone other than Google (GOOG)).
The end of the year rally has become a bear killing tradition, of sorts, but can/could a rally be so obvious?
Scant Ballast for Bulls' Forecast - William Fleckenstein - 11:05 AM
I know a lot of folks seem to think we're going to get a tech rally, but I just don't see how it's going to materialize. For that matter, I don't see how we're going to put together much of a rally in financials, homebuilders, or retailers. In other words, I don't see where the leadership to the upside will come. Perhaps the oil patch can lead the way, as I suggested the other day, though I would expect that to happen further down the road. But it's hard to have any kind of serious stock-market rally if it's led by energy and/or commodities.
For more excellent vibes, check out Fleck's Daily Rap.
Earnings Check - Fil Zucchi - 10:49 AM
No great surprises from Akamai (AKAM). The quarter was good all the way around if uneventful. The number of new customer additions was exceptionally strong (and not sustainable IMHO) even factoring in the Speedera effect. ARPU's were -5%, at the low end of guidance, with 3% attributed to Speedera customers and 2% to the high number of new customers, which tend to sign on with basic service packages which carry lower ARPU's. The nice suprise was guidance of flat ARPU's for the next couple of quarters, despite what AKAM continues seeing as strong customer adds.
Initial guidance for next year was for at least consensus estimates on revenues and net income, i.e. +25% and +40%. With cash from operations well in excess of EPS and tax losses that will shelter net income for several quarters to come the story, in my eyes, is only getting better.
(Position in AKAM)
Look out honey 'cause I'm using technology - Kevin Depew - 10:21 AM
The S&P 500 December futures show a potential new buy signal at 1205... if/when, and that works to the 1210 area. The primary trend remains negative, however.
Meanwhile the Russell 2000 Index (RUT) has reversed up and will give a potential new buy signal at 647.50. Though here too the primary trend is negative for RUT. See the chart, courtesy Dorsey Wright.
(Position in ES)
Here Piggy Piggy Piggy... - Todd Harrison - 9:58 AM
If you poll 100 random money guys, I would prolly rank in the top 1% in terms of "hating" these names from a big picture risk-reward standpoint. So why, you ask, did I recently nibble in this space for a pure trade? Simple, they've been laggy, I'm hangin' with Hoofs and I can't shake this image of Dr. Bernanke, needle in hand, ready to roid 'em up.
As you might guess, my risk is tighter than President Fish's wallet. But, as I'm playing, you're reading so I wanna keep you in the loop.
Watch Citigroup (C) as she's startin' to creep towards resistance at $46ish (200-day). And note the balanced breadth as we once again knock, knock, knock on S&P 1200.
(Position in C)
Bio Dome - David Miller - 9:57 AM
Biosite (BSTE) has been a beneficiary of investors wanting to invest in companies with diagnostic tests. (Think of the 1999 desire to by internet "pick and shovel" companies and you'll understand the concept.) BSTE's earnings and sales were seasonally light and they lowballed forward guidance. Some investors were also disappointed the regulatory progress on a stroke test will not be made until 1H-2006. FWIW, short interest in BSTE only climbed 1.72% last period, hardly a blip in comparison to other NBI members, though with short interest at 22% of the float it is one of the most heavily shorted stocks in the NBI as measured by % float short.
Say What? - 7:59 AM - Kevin Depew
A look at opinion and analysis from around the world:
- Arthur Laffer, whom many refer to as the "Father of Supply-Side Economics," writes in today's Wall Street Journal that Ben Bernanke is "the right person at the right time" to replace Alan Greenspan.
- James Grant of Grant's Interest Rate Observer, says in the New York Times that it will be the world's dollar holders, not Ben Bernanke, who will be changing the way the Fed operates.
- Bloomberg columnist John Berry says "Japan's Deficit Medicine Wouldn't Fly in U.S."
- "Will gold pause as inflation turns to deflation," asks David DesLauriers in BusinessDay Online of South Africa.
- Over on the Mises.org blog, Frank Shostak asks if the Fed is an "inflation fighter or creator?"
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