Ghoulish Buzz Bitz
More fun than trick or treating!
Buzz. Just Buzz. - Todd Harrison 3:52 PM
- Adapt. Don't rationalize.
- Soup to nuts--with the exception of volume and perhaps the inability of Citigroup and General Electric to lead by example--this is a strong showing for the Matador Crowd.
- Eight hours left in Halloween and I've yet to ingest chocolate.
- S&P 1210 on the button. Uncanny.
- I'm fielding a ton of inquiries from friends looking for either business or new opps. It's very tough out there and, as a function of the overcapacity, I expect it to continue. Thank goodness for human capital.
- Fare ye well into the bell and enjoy your journey tonight.
Hibernation? - Kevin Depew's "Minyan Mailbag: Isn't Anyone Bearish Anymore?"
From your point of view, is there anyone left that thinks this market can go down from here?
Yes, but I don't think those people are talking to me anymore.
In all seriousness, I don't hear much chatter from bears right now, but that is natural. Bears are more vociferous when the market is going their way, as are bulls when the market is going their way... Read the full article.
Intensity - John Succo 3:48 PM
As the month-end, and in some cases year-end, mark-ups in stocks get more intense, we are using the demand to sell deltas.
We've been keeping our powder a little dry, not selling as much as normal to re-hedge our book as the market rallies.
We are now selling a little heavier here, fully expecting higher prices but not un-happy if we don't get them.
My bearish friends one by one are throwing in the towel. But I think Todd correctly raised his stop into his bullish call (I don't go there).
Harry Caray... - Greg Collins 2:56 PM
Does the fact Robert Stansky is stepping down at Magellan and being replaced by Harry Lange (who has a small / mid cap high turnover background) suggest we could see some big supply soon in large caps and therefore a bullish sign for MDY?
More than meets the eye - Adam Warner 2:45 PM
As for options, don't necessarily believe what you see in the VIX today. Traders lower bids ahead of weekend decay, particularly with a strong market as a backdrop. Boo walked in and bashed the VIX for a double digit (percentage) hit on Friday, so today's not much more than an evening out.
That being said, there's interesting option strength in a couple of recent breakout names, Google (GOOG) and F5 Networks (FFIV).
Fed heads and market threads... - Greg Collins 2:38 PM
If the futures don't go negative today, it will be the second consecutive day with a gap higher and no trade to the negative. That's only happened twice previously going into an FOMC meeting. With only 2 data points it's hard to draw any conclusion (next day both opened lower but close was mixed). What it may say is that there is some optimism going into this meeting.
Usually, the FOMC meetings have a pretty positive bias (especially the open). In fact we've seen a gap up open on the sp futures 12 out of the last 13 FOMC days with the lone negative coming on 5/3/2005.
There is also however a high tendency to reverse direction the following day so something to be aware of.
And as always (and related to the discussion above) we're keeping an eye on those banks (BKX) in light of their recent leadership baton (still off their earlier highs).
Cat fight - Kevin Depew 2:31 PM
Caterpiller (CAT) is up 2.7% today and is being mentioned positively at Lehman. The stock broke down earlier this month when it fell below 53 and that move changed the primary trend to negative. The move higher today does little to change the overall context. Resistance is the 53 area (former support) while the downtrend line is in the 55 area.
Spirits in the materials world - Kevin Depew 1:43 PM
With the drip in energy that Fil and others have noted, the Reuters-Jefferies CRB Index (CR/Y) is down more than 5 to 316.75. The move below 320 breaks a spread triple bottom on the chart and confirms the recent violation of the long-term trendline dating back to the 2001 lows.
The energy complex is where the focus is, but it is worth mentioning that when I review the components that make up the CRB Index, the vast majority of their charts are negative.
Also, the US Dollar Index (DX/Y) is nearing an important resistance level here in the 90.50 area. A move to 91 would be an important new positive breakout on a number of point and figure scales.
Randoms - Fil Zucchi 1:21 PM
Toddo mentioned the crude (2.5%) attitude adjustment. Natural gas is getting a (6%) lesson down to $12.70. Between $10 and $12 is where the gassy names start getting very interesting for me.
I don't know whether Barrick's (ABX) bid for Placer Dome (PDG) is good, bad or indifferent - time will tell - but we do know that if the deal happens ABX will jump ahead of Newmont Mining (NEM) in terms of reserves. Anyone think NEM gonna sit still and watch? Anyway, I do believe that even before this morning's activities, ABX's plans to unhedge its reserves were not being given the respect they deserve.
Keep an eye on the 13,800 level in the Nikkei.
(Position in ABX, NEM, JPK)
Mini-Minyan Mailbag: Delicious Apple - Kevin Depew 1:12 PM
I've had Apple (AAPL) on my radar since you mentioned it Point & Go Figure some time ago. Would you update its DeMark/PnF "field position" if it is still relevant?
No real change since I last mentioned the stock following daily DeMark 9 and 13s. The only change on the chart is that a move to 58 would now be a new buy signal... if that occurs.
The achilles heel of hedge fund managers-group think - Phil Erlanger 12:53 PM
The New York Times article this morning entitled, "Hedge Funds May Be Stung By Losses in October," mentioned earlier this morning in MV News, Rocktobermess 7:33 a.m., should be read by all that care about the influence of hedge funds. Why? The article highlights that often managers will replicate or "piggyback" trades put on by other managers perceived to be saavy investors.
The article highlights that this can show up in long positions. As an example, buy Kerr-McGee (KMG) because Carl Icahn owns a large stake or buy Sears (SHLD) because Eddie Lampert has a large percentage of the outstanding shares.
The same situation can occur with short positions. Although a hedge fund manager does not have to report publicly what his short positions are on an individual basis for the public to see, the aggregate number can be tracked on a stock, group and sector level. We will never know the individual positions of say Rocker Partners until the S.E.C. were to require managers to disclose their short positions. Interesting idea but unlikely to occur.
The next best thing is to track the aggregate changes of stocks, groups and sectors.We note that many groups and sectors have seen increased short selling as the fall unfolded and bad news has hit the airwaves. Could the recent group-think be a prelude to a short squeeze?
As Good As it Gets - 12:24 PM
"Most of the major indices have rallied back to resistance levels. Consequently, an upside break-out would be of some significance, as well as in keeping with the strongest seasonality of the year (10/27-11/2).
Yet we are not looking for any mircacles because while the seasonality is right, and our short-term indicators are as oversold as they were at the March/April lows, a number of our intermediate-term indicators have broken down."
Jeff Saut of Raymond James
A long-term look at CPI - Scott Reamer 12:05 PM
For a bit of a Halloween shocker, check out this long-term chart of the Consumer Price Index based on data from the Federal Reserve, courtesy of a friend I correspond with at ernharth.com.
Show me the money!!! - Fil Zucchi 11:35 PM
I read through the Cypress Semi (CY) conference call transcript over the weekend and later told Hoofy I'm tempted to start riding T.J.'s (as in CEO T.J. Rodgers) train in a big way. Forgetting the SunPower spin-off for a second, the crowd seems to be yawning over Rodgers' decision to start managing the company for maximum profitability rather than technological prowess. This is a drastic change for him, and one that could result in some surprising bottom line results. It won't happen over night, and CY will continue being subject to the fortunes of the broader semis market, but for my money there is no better technology CEO out there.
For the tech-head Minyans out there, the new TouchWake wireless USB chip smells like a very intriguing new product.
Ok, the second is now over, and let's keep in mind the SunPower spin-off.
(Position in CY)
Trans Am - Kevin Depew 10:05 AM
Watching the Dow Transports here - 3800 is an important level. The index will give another point and figure buy signal with a move above 3800, while 3825 exceeds the July peak. The equivalent level in the Dow Industrials is 10,750.
At least until the FOMC meeting, there's an upside bias based on Friday's gap and go and seasonal patterns. - Jason Roney 8:14 AM
On Friday, the SP futures gapped higher, never traded negative, and closed up more than 1%. On Thursday, the futes gapped lower, never traded positive, and closed down more than 1%. This two day pattern occurred 27 times and the next day closed higher 71% of the time by an average .5%(closed higher 3 of 3 by avg more than 1% when next day was a Monday).
The SP futures gapped higher, never traded negative, and closed up more than 1% on the day before FOMC. This happened 12 times and the futes closed higher 9 of 12 by an average .55%.
Finally, I'll note the generally positive bias associated with the first of November. Over the last 20 years, the SPX finished the first day higher 75% of the time by an average .61%. When the month of October finished lower, the bias was equally positive. Here's some more detail on the first three days of November.
Say What? - Kevin Depew 7:54 AM
A look at opinion and analysis from around the world:
"Spend and Save Don't Go Together," writes Michelle Singletary in the Washington Post.
Prepare now for a Sino-Indian trade boom, says Niraj Dawar in the Financial Times.
The Wall Street Journal editorial team writes that the US economy is a Category 5 hurricane of resilience and success.
EC Berkeley economics professor J. Bradford DeLong writes in the Taipei Times that there is no such thing as a "savings glut" - only an investment deficit and reckless fiscal policy.
Bloomberg columnist Caroline Baum looks at Alan Greenspan's pointers for Ben Bernanke.
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