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Buzz Bits: Thursday Oct. 27, 2005

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Sharpen your skills with some game film...

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Final Vibes - Todd Harrison 4:11 PM

  • An interview with President Fish.
  • The All-Star Guitar Auction will begin on December 7th which is, fittingly enough, Ruby's birthday.
  • Succo's vibes on volatility jibe nicely with the "feel" we've shared over the past month regarding an overall uptick. Note the volatility sisters (VXO, VXN, QQV) all ended the session +12%+.
  • The long sales in the financials eased a bit of the pain today (in the context of being wrong on the broader tape).
  • I'm out of the 'Ville and away from the screens tomorrow. I told the Minyanville tailor to use a S&P 1175 "stop loss" in my absence. No questions asked.
  • Fare ye well, Minyans, and kick some arse tomorrow.

This Quarter's Theme: Consumer Weakening - Vitaliy Katsenelson 3:43 PM

I am getting the feeling that this holiday season is going to be ugly, or at least disappointing. Listening to earnings calls of companies I follow (don't necessarily own their stock) I keep hearing this "consumer weakening" justification to their poor results.

Arguably, their management may be hiding their poor execution behind the "weakening consumer" theme, but I am getting the sense that this theme is less an excuse and more a reality.

These are the precious moments - Jeff Macke's "3 O'Clock High"

Remember Monday's rally and the one that took place last Friday?

Sure, those rallies seemed a little hard to trade at the time. I'm not sure anyone really made money (or at least kept what they made, at this point) in the rally but, hey, that "The Street Likes Bernanke Monday" was a special day... Read the full article.

Red Sox or White Sox? - Kevin Depew 2:41 PM

The PHLX Semiconductor Index (SOX) is at a dicey juncture. While certain tech, Internet most notably, has been outperforming of late, the drag in the semi space has been a blight.

A move below 425 would be a new sell signal for the SOX and violate the trendline from the April lows. If... or when.

Double Whammy ! - Sanjay Somaney 2:27 PM

The Indian BPO/IT companies are being dealt a double whammy today. The Indian markets slid 177 points lower today with the IT stocks getting hit for about 1% on average. Factor in the terrible numbers from a fringe BPO player Kanbay (KBAY) and you have a recipe for a tough day.

My take is that the fringe players are having a hard time and losing market share to the big boys. The pie is growing larger but is being eaten mainly by the biggies. There's no room for fringe players who are being shoved out of the way.

Phil My Pockets! - Todd Harrison 1:40 PM

One week from today, on November 3rd, the venerable Phil "my pockets" Erlanger will be featured on the Hamzei Analytics chat. Phil's a smart cookie--he was a two-time Prez of the Market Technicians Association--and I have tremendous respect for his vibe.

He has some very important observations to share and the implications for the tape are massive. Click here to secure your spot and I'll see you there!

Mini-Minyan Mailbag: Research and Destroy - Sanjay Somaney 12:31 PM

Sanjay,

This fiasco isn't about litigation or pie in the sky numbers; ultimately it is about the pending technology that will render Research in Motion (RIMM) irrelevant. Microsoft (MSFT), Palm (PALM), etc., are gunning for RIMM, and you can bet they will be successful. The Street is looking at the future; the litigation is just a smokescreen.

Minyan Dave

Hi Dave,

Good point, but MSFT has always made a lot of noise about entering this space or the other, and 99 times out of 100 it has been handed its heads on a platter. In addition, as the incumbent in the space, the market share is RIMM's to lose. If RIMM management is as boneheaded about competition as they have been about the litigation, it could get hairy. My bet is that they have a crappy legal team and they will not make the same mistakes as they have made on the legal side of things. Thanks for your email.

-Sanjay

(Position in RIMM)

"Hey, Beavis... this is cool." - Adam Warner 12:14 PM

As much as CNBC tries to dumbify everything, it's humanly impossible to know what's fully discounted in the market and what's not. I strongly doubt that the Miers unsurprising withdrawal, for example, has much to do with today's downdraft.

More likely there's some nervousness abounding in regards to tomorrow's potential indictments. Volatility has held up reasonably well this week, in a post-expiration stretch when sellers generally rule. The "whisper number" says that Rove and Libby do the Walk (cue up Judas Priests' "Breaking the Law") and in fact, tradesports gives Libby an 85% chance, with Rove about 62%. But what if it beats The Number? I've seen speculation that Rove may plea to a lesser charge, or get a pass altogether in return for cooperation, so will Hoofy take a "relief" romp tomorrow?

Break out the blankets and sweaters... - MV News 11:56 AM

Ameren (AEE) alerted customers about natural gas rate increases in Nov, saying that AEE's Illinois customers will pay more for natural gas, with an estimated $20 increase for the average residential customer, compared to last Nov. The increase could be more if temperatures are colder than normal.

For the complete press release, click here. The bottom of the release lists energy conservation tips. We at MVHQ will stick to our own plans though.

Train wrecks - Fil Zucchi 11:39 AM

There are a whole bunch of blow ups this morning that are bringing some names back in sniffing range - after a long wait on my part:

  • First is Duratek (DRTK): they do the dirty work - literally - of cleaning up and managing nuclear waste. They kicked the quarter, as often happens when dealing with the Feds, and there is very little appealing in the numbers for today, tomorrow, or the next months or quarter. But based on input from a close friend who advises electric utilities on power source alternatives, at current crude prices new nuclear plants would be comfortably in the money; the latest energy bill did not resolve fully the liability issues, but it was more than very friendly to the development of new nuclear plants. I am taking the approach of "buying them when I can".
  • ITT Industries (ITT): got on the radar screen when I was digging for water plays. I had initially ignored it because is not really a "pure" water play. But many Minyans showed me the "light", and ITT does look a lot more exposed to the critical aspects of water infrastructure than I originally thought.
  • Sirf Technology (SIRF): they are the semiconductor guts of Global Positioning Systems. I kept my eye on it as a potential "pairs" with Garmin (GRMN), whose margin issues seemed to have been recognized as of yesterday. SIRF is still expensive, and pricing pressures at the top tend to flow down hill, but it is a lot cheaper than it was yesterday. Navteq (NVT) has also made its way on my watch list.
  • Homies: I appear to have over analyzed the situation leading to a potential short term pop. "Katie" does not seem to be able to find the doors.

(Positions in DRTK, GRMN)

Drug Culture - Todd Harrison 11:14 AM

Having picked up some potential LBO chatter in the big cap pharma space--and looking at the washed out nature of some of these charts--I've made some nibbles on out-month upside cheapie calls in this complex.

So you know...now pass the peanut M&M's!

Alternate Transportion - Kevin Depew 10:57 AM

One thing that has been troubling me over the past few days has been the Dow Transports Index. The index broke out above the October highs recently. As a result, I have been having a hard time evaluating this given the overall negative context of the market indicators. Today, however, with the move below 3700, the Transports have given a high-pole warning, a bearish retracement of more than 50% of a point & figure column breakout.

Remember, with the overall context negative, surprises tend to occur to the downside. This pattern increases the probabilities that the recent "breakout" by the Transports is failing. Only a move above the 3790 level would change this intepretation.

Say what you will about seasonality... - Jason Goepfert 10:40 AM

We're now headed into what has traditionally been one of the more consistently strong periods based on the calendar.

Buying the S&P cash index at the close four days prior to the end of October and holding through the first three days of November would have resulted in 73% winning trades since 1950, with an average return of +1.6% (avg drawdown -1.2%, avg max gain +2.6%). 10 out of the last 11 would have been winners, with the one loss being -0.2%.

Using the NDX, you would have had 17 out of 20 winning trades with an average of +3.4%. Using the SOX, 11 out of 11 winners with an average of +6.6%.

Seasonality is very rarely a solid basis for a trade in and of itself, but it does make one wonder if today's weakness is setting us up for a re-test of the recent highs over the coming week.

Green River - John Succo 10:35 AM

Bowater (BOW) was upgraded by CSFB this morning from "underperform to outperform" citing cost cutting. These cuts were announced weeks ago.

This after Goldman Sachs lowered their rating from "market perform to underperform/cautious" in August and recently they along with Lehman Bros and Citi reduced their stock price targets.

This is all folly in my mind as these analysts try to guess each other to death, but this is a troubled company in a tough business.

It looks like CSFB is trying to catch a falling knife.

(Position in BOW, GS, LEH, C)

Say what? - Kevin Depew 8:04 AM

A look at opinion and analysis from around the world:

  • Ross Terrill writes in the Wall Street Journal that "China Is No Superpower," pointing out that the US economy remains seven times as large as China's, while Japan's is three times as large.
  • Frank Shostak marvels at the "ascension into the clouds" of Ben Bernananke and takes a look at what exactly the future Fed chief has done to earn such respectability.
  • Iran's most lethal threat? Drugs. According to Mail & Guardian Online.
  • So far, everyone gets to put a view out on Bernanke except for Bernanke. Read some Berananke for yourself from his March 10 speech on "The Global Savings Glut and the US Current Account Deficit."

Friday Radar

Economics

8:30 GDP annualized (Q3): 3.6% exp
GDP price index (Q3): 2.8% exp
Personal consumption (Q3): 3.3% exp
Employment cost index (Q3): 0.8% exp
9:45 University of Michigan Confidence (Oct): 76.0 exp

Earnings

Before: ABB, ADM, AFR, ALE, AMCS, APC, ATG, AVP, BC, BEC, BHI, BMY, CEG, CHKP, COCO, CSAR, CVX , DAIO, DB, DIO, FPO, FSS, GLGC, HSII, ITRI, LANC, LQI, MGLN, NOV, NSANY, NST, OSTK, PEG, PFS, PGL, PGS, PQUE, RDWR, SCG, TGI, VVI, ZOOM

During: CTC, MNC

After: ARI, BHS, CHU, IRC

Events

American Society of Human Genetics Annual Meeting
American College of Gastroenterology Scientific Meeting
Intel (INTC) Developer Forum

Click here for the full radar.

No positions in stocks mentioned.
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