Buzz Bits: Dow, Nasdaq Close in the Red
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Five Things You Need to Know From Steve Shobin - Kevin Depew - 1:57 PM
Uber-Minyan Steve Shobin just popped in for a visit in the 'Ville and I was fortunate enough to sit down with him and find out five things he says we should know about the market:
1) In the very short-term this market is moderately vulnerable because the VIX did not make a new low when the S&P made a new high. This divergence can precede small, medium-term corrections.
2) We may be near a short term peak because rallies tend to end with bangs, not whimpers. The coverage of the new high in the Dow was typical of this kind of bang.
3) I doubt very much if the market will be overly vulnerable unless high-yield/junk bonds fall sharply in price.
4) The technical sentiment numbers that I use reflect enough skepticism to suggest that the recent peak will not be a major one. Overall, I look for a choppy/corrective market into the election, then resumption of the bull market.*
5) Don't listen to anyone who says you should deny your emotions. We're human. Emotions are a part of being human. But, if we can better understand our emotions we can better prepare ourselves for dealing with their consequences.
*"My opinion is subject to change at a moment's notice!"
This afternoon might be interesting. - Rod David - 11:54 PM
Thursday's last-hour surge was suspicious, if not foolish just ahead of a weighty event such as the Employment reports. After the cash session close, S&P futures retraced the breakout. Before the report's release, S&Ps had retraced all of the gain from Wednesday's close. And after this morning's open, S&Ps fell under Thursday's lows.
So, was Tuesday's breakout as false as Wednesday's higher high? That's kind of important because this being a Friday, rejections can unwind pretty quickly. By the same token, NOT rejecting more gains today would make this morning's dump look corrective, and more attractive.
MACD and RSI had diverged negatively into yesterday's last-hour highs, and they're diverging negatively again into this morning's bounce. S&Ps are struggling to recover above yesterday's lows, which wouldn't be bearish if recovered through the noon hour. Otherwise, a long lunch is not recommended.
Back to the Future - Adam Warner - 11:05 AM
From what I can gather, the NYSE can now match orders electronically. Wow. Just two stocks now, but tomorrow, who knows?
Oddly enough, you have been able to do this on ECN's since... they began. What was that, 15 years ago? Whatever happened to SOES bandits? Lol.
So anyway, I'm not sure what is so breathtaking about this news other than an acknowledgment that yes, an electronic matchup often works better for all but the largest orders.
Everyone has different needs as far as order entry/execution goes. But for me, timing is very important. I want fills when I am entitled to fills. Radical concept, but there is nothing more frustrating than taking an offer or hitting a bid and never getting a fill. If it is on an ECN, that can't happen, either you got it or not. On the NYSE, they can still take the offer/hit the bid ahead of you, even though you got the order in fast enough. Nothing more annoying than that.
So all sarcasm aside, I am glad the NYSE is FINALLY going this route.
Denial Means Only Needing an "I'm Sorry" - William Fleckenstein - 9:34 AM
Press "1" If You Wish to Leave an Apology
After the close Wednesday night, we received another data point about the state of acceptable business practices in corporate America and on Wall Street. Apple (AAPL) announced that it would have to restate earnings, due to backdated options, and that former longtime CFO Fred Anderson would resign from its board of directors. In addition, according to the announcement, CEO Steve Jobs knew about the backdated stock grants "in some cases," though he himself did not "knowingly" benefit. For which he apologized, and that appeared to be the end of it.
Press "2" If You'd Like Your Options Backdated
These days, an "I'm sorry" appears to be good enough. Indeed, I was stunned to see AAPL initially up that night and again yesterday on its wonderful news. I suppose that every other CFO involved in an options-backdating scheme will now be able to offer regrets and be on his merry way. However, there ought to be some ramifications for which an apology would not cut it. To me, the matter seems to be a violation of Sarbanes-Oxley, in that management signed off on the financials as accurate, when they were obviously wrong.
Stephanie Pomboy's Payroll Comments... - MV Respect - 8:58 AM
The headline Payroll number was, once again, MUCH weaker than expected at 51k, versus expectations for 125k. Take away the 28k jobs that the BLS imputes were created by small business in the month (aka birth/death adjustment) and yer looking at 23k this month. Eek!
Even the 'good news' doesn't look so good. The drop in the Unemployment Rate to 4.6%... owed much more to a dramatic decline in the labor force of -430k (bad news) than the creation of new jobs (271k).
Finally, and most importantly… wages. We are in the midst of an inflation scare, after all! The rise in Average Hourly Earnings to 4% y/y is being ballyhooed in the media as the strongest wage growth since March of 2001. If that date sounds familiar, it should! It marked the official onset of the last recession.
Which brings us to the nub of the issue… It has long been our view here at MacroMavens that the Fed shift to easing sooner and more aggressively than the markets presently expect. And this morning's report serves to solidify that view. At a time when commodity prices are in sharp retreat, home values are deflating and income growth is tepid at best, the Fed's inflation chimera is rapidly being destroyed. And it won't be long before markets begin to price in a normal Fed easing cycle. This would find the Fed Funds Rate shedding 18bp a month. Or, assuming the Fed starts easing in December (a little Christmas gift for the markets?), Fed Funds would be 125bp lower by next summer… a far cry from the 25bp the markets presently expect!!
What you need to know... - Jon Doctor J Najarian - 8:21 AM
Crude Still Can't Hold $60 – Even with the cartel known as OPEC cutting production by 1 million barrels, Texas Tea couldn't hold $60, which should delight both consumers and markets.
Tribune (TRB) Forces Out LA Times Publisher - Jeffrey M. Johnson is no longer the publisher of the Times, forced out a little more than a month after he defied the media conglomerate's demands for staff cuts that he suggested could damage the newspaper.
Citigroup Upgrades El Paso (EP), Downgrades American Eagle Outffitters (AEOS_ – Citi said the recent sell-off that has seen EP fall around 18% has been overdone. Conversely, the bank said the 18% rise since the end of August for AEOS make the shares more than fully valued.
American Electric Power Upgraded at Goldman Sachs – Goldman upped the power company saying they expect rate increases, especially at the Ohio Power unit. Shares closed at $37.26.
Position in EP
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