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Buzz Bits: Monday November 14, 2005

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Case of the Mondays

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Bell Buzz - Todd Harrison - 3:56 PM

  • What's Hoofy's biggest winner today? Google? Georgia Peach? The energy patch? How about holding tight in the face of nosty internals and uber-twisty stochastics?
  • Have you printed out the weekly trading radar yet?
  • Is the fear of missing your dominant catalyst?
  • Where the heck is Franklin Raines?
  • The all-star guitar cometh soon!
  • And just like that, another day of another week of yet another year is ready to wrap. They won't all be exciting--this one wasn't-but they should all be mindful. If you're strugglin', take the time to be good to others and better to yourself. Tomorrow, as we know, is promised to no one.
  • May peace be with you.

    R.P.

Buzz in the final furlong - Kevin Depew - 3:36 PM

igroup (C): A move to 49 would be the first buy signal on the chart since last December.
Morgan Stanley Consumer Index (CMR) 592-595 resistance: Is there a lid at 596, or what? We've been here seven times in the past year without breaking through.
PHLX Housing Sector Index (HGX): Remains just below resistance at 496, on a sell signal, with additional resistance at 508.

Giggles and jiggles... - Sanjay Somaney - 3:30 PM

Google (GOOG) just filed their 10-Q this afternoon. Points to note and potential reasons for the sudden jig are as follows:

The company is expecting its effective tax rate to go down to 30% in 2005 versus 39% for 2004 due to their Irish sub recognizing a larger proportion of earnings in 2005. Tax rate there is lower than here in the US.

Cost of revenues (TAC) are declining as a percentage of revenues, 42.6% versus 46.5% 2005 versus 2004. R&D expenses were up 140 bips YOY. Sales and marketing expenses were down 80 bips YOY. Total costs and expenses declined by 18.7%. Net income was up to 25.9% versus 9.0% 2005 versus 2004. QOQ sequential revenues growth is also up very nicely.

Could explain the sudden jig, no?

position in goog

Flashback! - Bill Meehan - 3:16 PM

Nov 14, 2004 was a Sunday, so we'll take a peak at what occurred in the markets and MV in years past for the weekend...

In other news...

  • In 1969, Apollo 12 lifted off as the second manned mission to the moon from Cape Canaveral, FL.

Countrywide Financial (CFC) - Jon Doctor J Najarian - 2:20 PM

banking and diversified financial services player is getting some active speculation in its near term options! The buying is very intense and nearly all of the 13,000+ November 35 calls have paid the offer with CFC trading for $34.32.

Veteran option traders may say this is probably a covered writer covering ahead of expiration, but the open interest in this strike is only 2,056 contracts and the open interest in all expiring CFC November calls, 30s, 35, 40 & 45s is a total of 8,713!

In other words, this isn't short covering, this is robust speculation. I believe the catalyst is the Goldman Sachs Financial Services Group Housing Conference TODAY! Whoever bought these calls in these big numbers thinks, or has been tipped off that there will be positive comments, so we've got both barrels loaded and ready to go!

Positions in CFC

Collaboration station - Sanjay Somaney - 1:02 PM

Satyam Computer Services (SAY) announced in India that it has entered into a joint-venture with Hungary's top-class science institute, MTA SZTAKI, in areas of emerging technologies like data mining and grid computing.

The collaboration will focus on taking MTA's products to market, research collaboration on emerging technologies research and cutting edge joint offerings. This information is not out anywhere as far as I can tell.

Position in SAY and local shares

Mini-Minyan Mailbag - Kevin Depew - 12:51 PM

KD,

Looks like the Cyclicals (Morgan Stanley Cyclical Index (CYC))have broken the recent downtrend, but have a fair amount of resistance overhead. Not understanding (or fighting) this move.

Does the individual component analysis prove more useful, or is it just 'traders being traders'?

Minyan Ron

MR -

Yes, the CYC has broken the downtrend from the July high, but remains below downtrend resistance from the March high (would take a move through 765 to change that).

Meanwhile, taking the components of the CYC individually, only a little more than half (53%) are on point and figure buy signals and only 50% are in a positive trend. The move is momentum driven as the majority are showing positive weekly momentum, but... so far at least... the momentum has yet to translate into point and figure buy signals in a truly healthy move higher.

REIT 'em and weep

Today seeing a number of sell signals from Real Estate Investment Trusts and real estate-related issues. Maxus Realty Trust (MRTI), ordinarily a low volume REIT, today is down 7%. PMC Commercial Trust (PCC), also a relatively low volume trust is down 4%. (Both yield anywhere from 7-10%.)

This continues the exit from this group that first began to show up in August. Others that have broken down recently include Anthracite Capital (AHR), CKX Lands, Inc. (CKX), Glenborough Realty Trust Incorporated (GLB), Parkway Properties Inc. (PKY) and Ziprealty (ZIPR).

Don't Worry - John Succo - 10:46 AM

In the past I have written about implied correlation concerning index option pricing.

When people become concerned about the market, they bid up index option prices. This causes stocks to move together more; correlation between stocks increases. This makes sense: if people are worried about the market they are selling Johnson & Johnson (JNJ) just because International Business Machines Corp. (IBM) is down. When they are not concerned about the market they don't.

So we don't just look at VIX or even option prices soley when we are determing what options are telling us about complacency.

The implied correlation of index options for December just broke .2 (maximum is 1) from .24 last week. A .3 reading or lower shows complacency.

Investors are becoming less and less concerned with a market break-down into year end.

position in ibm, jnj

How about dinner? l know a place that serves great Viking food. - Adam Warner - 10:41 AM

How do the Giants give up a TD on a punt return, a kickoff return and an interception return TD in the same game? At least I can't drop a Fantasy game to JeffMacke two weeks in a row.

It's Expiration Week, which according to the TV means we'll see some volatility. Given we're up small every day for 2 straight weeks, and the under 12 VIX hasn't even started Bar Mitzvah lessons yet, I hope they're correct. But I suspect the month-long options snooze will continue, particularly with Thanksgiving looming ahead as well.

November's not one of the bigger cycles in the options realm, but if we do see some motion, expect it midweek, not Friday.

Buzz-ettes... - David Miller - 10:13 AM

This New York Times article is part of the death of the blockbuster drug and key to the overall trend of big pharma moving from general practice drugs to specialty drugs. Big pharma outlicensed many promising specialty drugs and will spend most of 2006 acquiring drugs in this niche.

Onyx Pharma (ONXX) is selling 5M shares as it needs cash to pay for the roll out next year of sorafenib. Take one look at Onyx's chart and I bet you can guess when the road show for this deal started.

Would you pay money for sell-side research?

Anyone else aghast they are only doing this now???

Street Vibes - MV Respect - 10:06 AM

"The SPX surprised us with the strength of its rally phase from the Bernanke lows, a month ago. The reasons behind the PR spin may have more to do with the Fed's behavior behind the scenes than to any other reason. The growth of the Money Supply has accelerated very sharply over the last 10 weeks. The greatest part of this occurred over the storm season, naturally.

The growth of MZM, the broadest measure of Money Supply has gone from virtually flat in July to up over 10% annualized in the fall. The last two weeks of data show a downturn that represents a trend break. That could mean tighter liquidity will now follow for the weeks up to Xmas when the yr-end float normally begins to assist banks' closing of their annual books."

Richard Williams, Garban Trading Plan

A look at 2/10 spreads - Scott Reamer - 9:48 AM

With the break of the August pre-Katrina low of 11.8 bps in 2/10 spreads today, the secular flattening in the yield curve that has been underway since summer 2003 has re-started. (See the chart here).

Our liquidity and complexity work continues to point to an inversion before year-end, and that this inversion strongly increases the probabilities of a negative GDP quarter next year and a, perhaps serious, decline in certain industries' economic activity (specifically those that arose on the back of the reflationary yield curve steepener from 2001 to 2003).

Notwithstanding Fed chairman Alan Greenspan's furtive attempts to make us believe that the yield curve doesn't matter anymore, our indicators strongly suggest it does. Of course, by the time we see the results of this real-time experiment (2H:06), Greenspan will already be in retirement.

Say What? - Kevin Depew - 8:29 AM

A look at commentary, opinion and analysis from around the world:

  • In the Wall Street Journal, Susan Pulliam and Karen Richardson pull the curtain back on Wizard of Wall Street, Warren Buffett.
  • Gautam Chikermane, writing for IndiaExpress, remembers business, management, societal and economic thinker Peter Drucker, who passed away on Nov. 11 at age 95.
  • If you're rich and powerful in China, there's no better accessory than a bevy of bodyguards, according to Susan Jakes in Time Asia.
  • The Cuban Trade Embargo is going out of fashion, writes Fang Zhous in China Daily.
  • Over at Mises.org, William Anderson has written a small primer on prices and profits for those (namely in Congress, he suggests) who need an understanding of basic economic concepts.
  • Matthew Lynn for Bloomberg discusses why women are better investors, based on a Merrill survey of 1000 people.











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