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Random Thoughts

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Keep your head on a swivel ahead of tomorrow's double witching

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  • New Jersey-the New York Exit Strategy?

  • The brokers and trannies continue to paint a constructive market picture. I may not "agree" with it, but I most certainly respect it.

  • Keep in mind that alotta today's flow will be expiration related (and difficult to game). The mainstay indices will expire tomorrow morning while single stocks say their prayers on the final bell of the week.

  • NYSE breadth didn't budge (2:1 positive) during that, "is that the best you got?" probe this morning. Still, I'm not sure that Boo doesn't have another swipe in him.

  • I'm hearing that two very popular third party investment surveys are showing hedge fund sentiment is at the highest bullish level in three years.

  • I opined last year that Schlumberger (SLB) and Newmont (NEM) were the next iteration of Citigroup (C) and Microsoft (MSFT). I still feel that transition has legs on a longer-term basis.

  • "Our trend work is modestly positive, but our momentum work rolled over yesterday creating a sell signal in equities. The signal is not a function of yesterday's market's behavior, but rather a function of the decay feature of our model. Since it has been several weeks since the last sign of accumulation, our model adjusts for this by slowly decaying the score. In the current overbought condition, this incremental move has generated the current sell signal." -- Lehman technician Jeff DeGraaf

  • I'm watching my new big three-Citigroup (C), JP Morgan (JPM) and BankAmerica (BAC)-as my tri-fecta tell.

  • The homies, having filled the post-Toll (TOL) gap, are hangin' at HGX 500.

  • The biggest feather in the bovine cap? That they've absorbed, General Motors (GM), American Express (AXP), Target (TGT), Cisco (CSCO), Dell (DELL), Applied Materials (AMAT) and a host of other overt negatives. We know that the ability to absorb bad news is traditionally characteristic of a strong tape and that thought is permeating through Matador City this morning.

  • Professor Succo's Buzz Vibe:

    "It is painfully obvious to me that the thing driving this last rally in U.S. stocks is foreign buying. There are three pieces of evidence:

    1) The dollar has been steady to strong into this rally. The large cyclical rally in stocks from the end of 2002 was accompanied by almost a mirror image of a fall in the dollar (cheaper dollar and higher nominal stock prices mean zero net wealth gain), so that rally was driven by the unabashed printing of dollars. This rally is much different. It is being driven by the unloading of those dollars as foreign reserves into year end.

    2) It is being driven mostly by big cap names. That is what foreigners buy.

    3) Almost always the buying is being done by VWAP, so most of the buying is done in the morning and toward the close. Brokers tell me they take orders in the mornings and their day is pretty much done. It is very insensitive to news during the day, like when American Express (AXP) warned yesterday. A small hiccup, then onward and upward. This has foreign buying all over it.

    Of course our own mutual funds are along for the ride and doing their part with their inflows. In my experience I see foreign buying usually as late. Foreigners are buying stocks toward the end of the year in a subconscious attempt to reduce their brimming dollar reserves."


  • The precious metals are putting the lotion on their skin again. Gold is gigglin' near an 18 year high, silver is approaching multi-year highs and the bling thing is getting generally more expensive to sport.

  • Balance is one of the hardest dynamics in this business. I know, as I've been guilty of immersion throughout my career. It's a never-ending process that takes conscious awareness to achieve.

  • "The market has run up to what we think might be the top of a Terminal pattern, an unusual formation that in our experience has almost always been a top. The Terminal is formed by a 5-wave move where the 3rd leg is related to the 1st leg by a Fibonacci ratio, .618 in this instance. The 5th leg is then .618 of the 3rd leg, creating the rapid deceleration that is typical of a Terminating pattern. It can be a wedge but isn't this time at least in the context of the entire move up from the 8/13/04 lows." -- Richard Williams, Garban International



    R.P.
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