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Buzz Bits: Dow, Nasdaq Push Higher

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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.



Bell Buzz - Todd Harrison - 3:58 PM

  • Brazil up 3.5%? Take that, risk aversion!

  • Is the 'Ville too bearish? Cookie, on days (months) like this, I gotta say it is. We try to map both sides of the brush, however, and sometimes we'll mis-swipe.

  • On a slightly more positive note, at least from where I sit, the XAU and OSX (metals and energy) are all-of-a-sudden outperforming. Thanks, broken clock!

  • BKX 114 is underfoot. While extended, it's hard to paint that anything other than Matador friendly.

  • Minyan Jack Skiba (Las Vegas) just waltzed into MVHQ for a little afternoon mindmeld. If there's a finer gentleman on Wall Street (ret.), I've yet to meet him. Seeing old friends is good for the soul so, with that, I'll going soul searching.

  • Fare ye well Minyans and I'll see YOU in the ayem.

    R.P.


position in metals, energy, financials



Narrow Escape - Kevin Depew - 2:46 PM

In the article I posted a bit ago on narrowing breadth in PnF terms for the S&P 500, it's interesting to take that a step further and consider what the consequences of that narrowing are in terms of portfolio management and equity allocations and strategies.

The last time we saw this kind of narrowing taking place for the S&P 500 in bullish percent index terms was between April 1998 (when the bullish percent index for the SPX peaked at 84%) and April 2000 when it "broke out" suggesting an expansion in breadth.
  • From April 1998 to April 2000 the S&P 500 capitalization-weighted index returned 35%.
    The S&P 500 Equal-Weight Index gained a miserly 6.6%.


The breadth on the S&P 500 as measured by the S&P 500 bullish percent index expanded dramatically from April 2000, reaching a new peak of 88% in January 2004.

  • From April 2000 to January 2004 the S&P 500 Equal-Weight Index gained 19.2%.
    The S&P 500 lost 25.8%.


What is interesting is that accompanying this increasing narrowness of breadth for the market is a narrowing of the spread between the outperformance of the S&P Equal-Weight Index and the S&P 500. Year-to-date the SPX is up 6.8% while the SPXEWI is up 6.6%. Since May 5 the SPX is up 2.2% while the SPXEWI is flat.

The 1998-2000 period was grim for many managers and especially for investors with diversified portfolios. Those using the S&P 500 as a benchmark found they simply could not keep pace with that index's performance as a consequence of the narrowing breadth. The same thing may be happening once again.



Rumor Mill - John Succo - 12:05 PM

The news that GM and Nissan-Renault have terminated alliance talks is not surprising to my firm, but it should have hit the stock more (unless someone can give me a reason why it is not).

It is likely Capt. Kirk is in the market buying more shares on the news.

We hear rumors that he is now arranging for the company to enter discussions with Schwinn to do a strategic alliance to sell cars and bikes.

Position in GM


Mirror mirror on the wall. What is the newest bubble to fall? - Bennet Sedacca - 10:49 AM

See the chart here. It is the Goldman Sachs Industrials metal Index versus the NDX. Keep in mind this is a weekly chart so it actually looks worse on a daily basis.

Thanks to Citigroup (C) for the concept. Deflation or non-reflation winds continue to build. Thanks to Minyan Steve for his eyes on the ISM prices paid index, which fell about 20 points this month.

Fed Fund futures are likely to start pricing in an ease as my firm has been saying all year. I just wonder if the market will embrace it, or hate it. The $64 question.


Mini Minyan Mailbag: Put/Call Ratio - Jason Goepfert - 9:44 AM

"Jason, you ever seen a put/call ratio as high as yesterday on a day a major index hits even a new yearly high? Incredible disbelief in this rally!" Minyan Jon.

Jon, that would be unusual, but I think it's important to look at one factor. Halliburton (HAL) broke to a new yearly low yesterday on huge volume - not just in the stock, but also in the options.

I show that if you back just HAL's volume out of the equity-only put/call ratio, it would have gone from 0.98 to 0.66. But for one stock, hardly a show of excessive pessimism...


What you need to know... - Jon Doctor J Najarian - 8:12 AM

Icahn Nixed $36 Bid for ImClone (IMCL)? – According to a filing with the SEC, Carl Icahn, who owns a significant portion of IMCL, rejected a $36 takeover from an unnamed suitor. Shares are up over $3 in the pre market today on this news, trading over $30 per share.

Wolverine (WWW) Profits Up 6.1% - The sneaker and work shoe company WWW said 3Q profits were $0.46 per share, which beat Wall Street estimates by $0.02. The only segment of its biz that was down was the military biz.

Toyota (TM) Sales up 25% - Sales rose to 1.35 million, which solidifies their position in the US versus the Big Three. General Motor's (GM) sales fell 3.1% and the company has announced it will cut production by 13.3%.

Tivo (TIVO) Loses Injunction Against EchoStar (DISH) - A federal appeals court stayed a permanent injunction that prevented DISH from selling its digital-video-recorder models in the US. The stay blocks the injunction, pending appeal of a patent-litigation dispute between EchoStar and TIVO. Shares of Tivo are down 6% in the pre on this news.

Position in DISH, WWW

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No positions in stocks mentioned.

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