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Buzz Bits: Thursday, November 17, 2005

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Looking back on the daily buzz...

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Evening Earnings - MV News - 4:04 PM

  • Gap (GPS) Gap (GPS) reported Q3 EPS of $0.24 (in-line) on revs of $3.9 bln vs $3.88 bln cons. Comps were (4%) at Gap North America, (7%) at Banana Republic NA, (8%) at Old Navy NA and (10%) for GPS Int'l. The company guided '05 ESP to $1.12-1.17 vs $1.25 cons.
  • BEA Systems (BEAS) reported Q3 EPS of $0.11 vs $0.10 cons on revs of $291.5 mln vs $290.4 mln cons. License revs were $121.3 mln while service revs were $170.2 mln.
  • Nordstrom (JWN) reported Q3 EPS of $0.39 vs $0.35 cons on revs of $1.67 bln. The company guided Q4 EPS to $0.60-0.65 vs $0.61 cons and '05 EPS to $1.90-1.95 vs $1.88 cons.
  • Starbucks (SBUX) reported Q4 EPS of $0.16 vs $0.15 cons on revs of $1.70 bln vs $1.66 bln cons. The company guided '06 EPS to $0.63-0.65, including stock comp expense, which may not be comparable to $0.74 cons.
  • Disney (DIS) reported Q4 EPS of $0.20 vs $0.18 cons on revs of $7.73 bln vs $7.87 bln cons.
  • Hewlett-Packard (HPQ) reported Q4 EPS of $0.51 vs $0.46 cons on revs of $22.91 bln vs $22.78 bln cons. The company guided Q1 EPS to $0.46-0.48 vs $0.44 cons and '06 EPS to $1.88-1.95 vs $1.82 cons.

Wheel, keep on turning - Kevin Depew - 2:54 PM

Interesting, as the recent theme of Ns over Ss continues, the SOX on a 5x3 point and figure chart is testing downtrend resistance from the August highs. A move through 470 would break the downtrend line. And the Russell 2000 (RUT), after breaking down yesterday, has now rallied back to test important resistance as well. Seems to be a lot of things rallying into resistance here.

Also, per David Miller's follow-up 'net post, looks like the Cogent network is back up and running!

Yo, Homes - Kevin Depew - 2:40 PM

The PHLX Housing Sector Index (HGX) is up a little more than 3% here, having scooted through the 504 resistance level, now testing more important resistance in 512-516.

Kudos to Prof. Erlanger for pointing out a few weeks ago the short intensity in the homebuilder Centex (CTX), among others.

Mini-Minyan Mailbag - John Succo - 2:33 PM

Prof. Succo -

Seems like EVERYBODY is on the "year end ramp" bandwagon. The law of ever-changing cycles says that isn't going to last forever. It may work, but if it starts not to work................

Minyan JK

MJK -

Yes, but when are they not? It is only a matter of degree. This is the definition of herd behavior, an almost irresistible urge to do what everyone else is doing. This is why markets move, and then reverse when the trade is too crowded. The only question is when does it reverse?

We have various techniques, but in general don't try to outguess. This is why we defer to volatility trading, abandoning the game of picking direction.

Flashback! - Bill Meehan - 1:30 PM

This day in market history...

  • Closing levels 10 years ago today found:
    DJIA: 4989.95
    S&P 500: 600.07
    Naz: 1042.23
    Crude: 18.56 (a lil cheaper)
    Gold: 386.25
    Me: not yet 15

This day in Minyanville history...

In other news...

  • In 1994, Sony (SNE) decided to take a $2.7 bln write-off and dump Columbia Pictures. I thought the Governator's performance in The Last Action Hero would've saved it, but alas...

Debbie Downers Abound - Todd Harrison - 1:18 PM

The acrimony around the Street is permeating. I hear it in the voices of my sell-side contacts, I see it in the faces of my hedgie brethren and I read it daily in my inbox. Folks are uptight and signs of crackage are starting to appear.

We've been talking about the long hard road for quite a while so I suppose we shouldn't be surprised. Still, there is a massive difference between opining and observing. Partiuclarly when you witness friends who were once happy now mired in muck and confusion.

Why do I share this vibe? To ask ye faithful to take a deep breath and focus on the solutions rather than the problems. Emotional decisions, whether in trading or life, rarely turn out to be long-term winners.

R.P.

Trends... - Jason Roney - 1:04 PM

Today's action in the Nasdaq is bullish for tomorrow. Looking back 10 years, there were just 5 occurrences where the NDX left a gap from the prior day's close and made at least a 2 week high on the day before expiry. The close on expiry Friday was positive 5 of 5 by an average +.68%. Note that today's action is far from over and the above is contingent on NDX gap remaining intact.

Only five occurrences so the statistical relevance is minimal. But the last occurrence was just four months ago (July 15, 2005), so I thought it was worth mentioning. On the Monday after expiry in July, the NDX gapped down and closed lower on the Monday after expiry (typically negative bias) but then rallied another 3% over the next 3 weeks.

Here, eat this - David Miller - 12:58 PM

Gilead (GILD) and Roche (RHHBY) are pressured after a FDA briefing document discloses deaths and other side effects of Tamiflu in pediatric populations. Two thoughts:

  • Drugs are not safe. That does not mean they should be pulled from the market.
  • Briefing papers are always negative. Keep that in mind if a company you follow has a drug in front of an FDA advisory panel.

Pulse of the Planet... - Jonathan Schwartz - 12:12 PM

News, laughs and ideas beyond borders...

Middle East

Asia

Europe

Americas

Pin Jamming - Adam Warner - 11:59 AM

Google (GOOG) is about the last name I'd expect to see pin at a strike on expiration, but the open interest numbers are compelling. There were roughly 43,000 combined contracts on the 400 line, a big figure for GOOG especially considering the stock hadn't touched this level until today.

Position in GOOG

Acting Up - David Miller - 11:18 AM

Biotech has been behaving badly the last few days. Even when the NASDAQ Biotech Index manages to be positive, breadth has been negative. Friday's close was green, but breadth was just beyond flat. Breadth the last three days has been upside down.

As a reminder, Monday sees a shuffle in the NBI. For details, look here. The NBI is also down to 151 stocks with the acquisition of EyeTech (EYET).

Settle down children - Sanjay Somaney - 10:51 AM

The good thing about Research In Motion's (RIMM) software workaround is that even if NTP gets an injunction against RIMM, service to existing customers will not be disrupted. That is a huge issue put to rest. If indeed the software patch is able to be deployed without infringing on NTP technology, RIMM might have found the Holy Grail in their fight against NTP.

The bad news about that workaround is that it might lead management into not wanting to settle with NTP, keeping that overhang an ongoing problem with the stock.

I think RIMM should deploy the software solution and use that as leverage in their dispute against NTP, and thus settle for less than what the Street is thinking at the moment: A billion dollars.

Although, RIMM's legal team has to be one of the worst I have seen in a long time. I doubt the lawyers are in a hurry to settle.

position in RIMM

Morning Randoms - Fil Zucchi - 9:27 AM

The Chips In The Sun play is being born today, as Sunpower (SPWR) goes public at $18. I see a pre-market bid of $29.50, which would create a cool $1.5 billion balance sheet item for Mama Cypress (CY). At $20 SPWR's buyers are paying about 5x '06 sales for the company.

Kulicke & Soffa (KLIC) is not the sexiest semi play on earth, but they are the canary in coalmine. The message from this morning's report is that if everything isn't good in semi-land, not everything is bad either. Keep an eye on Teradyne (TER) as well.

The most interesting item from this morning's homies numbers? Units under construction, which have hardly budged. In my eyes that means that there's a good trail of buyers who will either walk from the deposit or buy an overpriced home. Either way the bag of 3 years of manic speculation is being passed around.

I demoed the prime brokerage interfaces of our friends at MS Howells. Noice!

Positions in CY, KLIC, TER, homies

Mini-Minyan Mailbag - John Succo - 9:14 AM

"Professor Succo, What is VWAP? Thanks, Minyan Steve"

MS,

Value weighted average price. They enter an order into computer system that spreads it out during the day and systematically adjusts buying/selling so as to attempt to get the average price of the day.

This results in most of the buying being done early and late.

Say what? - Kevin Depew - 8:17 AM

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

  • Two staff reporters for the Wall Street Journal asked the question, "Is getting a home loan too easy?" Considering that I got a second mortgage just from reading the story - and that I don't even have a first mortgage - the answer might be yes.
  • Hal Varian surveys the Economic Scene for The New York Times and wonders if homeowners get too many breaks.
  • Robert Murphy at Mises.org, looks at how the free market might have handled Hurricane Katrina. "Is the laissez-faire economist really advocating the Dickensian caricature of companies selling bottles of water and first aid kits to the highest bidder? No, they are not," he says.
  • Hmmm, China might not be reporting every Avian Flu outbreak, AsiaNews it says. Of course, over the past two days officials say they've vaccinated more than 3 million birds, so it's possible a couple of flu cases might have fallen through the cracks.
  • Fed Chairman nominee Ben Bernanke told Congress Tuesday that he supports "inflation targeting." But what exactly is inflation targeting? Financial Markets Center offers a helpful overview.
  • It is said that China's 131 million youth hold the future of the world in their hands as China emerges as an economic force. But who are these future economic leaders, really? Simple, according to this article, Chinese youth flock to McDonald's and KFC in droves, consider China-made GM Buicks to be the coolest cars, and admire NBA basketball players. In other words, we are totally screwed.
No positions in stocks mentioned.
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