Buzz Bits: Dow, Nasdaq Crawl Forward
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Editor's Note: This is a small sample of the content available on the Buzz and Banter.
Earnings Report - MV News
- J Crew (JCG) reports 3Q adjusted EPS of $0.27 vs. $0.21 on revs of $275.6 mln vs. $264.7 mln cons.
- Dell reports 3Q EPS of $0.30 vs. $0.24 cons on revs of $14.38 bln vs. $14.47 bln cons.
- Brocade (BRCD) reported 4Q EPS of $0.14 vs $0.12 cons on revs of $208.8 mln vs $203.5 mln cons. Non-GAAP gross margin was 62.1%.
- Payless Shoe (PSS) reported $0.43 vs $0.42 cons on revs of $703.4 mln vs $688.5 mln cons
Bell Buzz - Todd Harrison - 3:53 PM
- I arrive back at my turret just in time to find...yeah. Internals are mixed, energy and metals are outperforming (thank you Turnaround Tuesday!) and there's a general malaise that only the genius possess and insane lament.
- The homies also warrant attention as they're gigglin' above previous resistance. If you ask me whether this sector is attractive, I'd say it's got man hands and an Adam's apple (not that there's anything wrong with that). If you asked me the merits of this group as a trade, I would suggest using uber-tight stops (such as HGX 220) to mitigate risk.
- Wanna hear the definition of "pretty cool?" Today's answer to trivia answered the trivia simply by saying "me." Somebody send that Dolphin a tee-shirt!
- Note to self: In the future, do not schedule a ten city road show, a high profile charity benefit conference and several large business initiatives in the same month. And certainly don't do it while fighting a flu! (Yes, I hear the world's smallest violin playing as well.)
- It's just you and me kid! Tomorrow promises to make today look like a hay maker but fear not. We'll be front and center in the 'Ville to share the fare with ye faithful. For those traveling to see thy fam, have a safe journey. For the rest of you lucky ducks, I'll see you bright and early in the ayem. Fare ye well.
Position in metals
The level of speculation... - John Succo - 3:28 PM
Here is one example of the level of speculative fever in the market.
Continental Airlines (CAL) as reported by Reuters is "concerned about being dwarfed by larger competitors and would consider a merger if necessary to maintain its competitiveness."
The CEO said, "If the landscape does indeed change, we'll do what we need to do to act in the best interests of the company..."
I guess if any statement has the word "merger" in it then it has to be positive. But if we actually use our brains about what the company said, does it sound to you like it is dealing from a position of strength or does it sound like they may be forced to do something they do not want to (like pay up for another airline) in order to stay competitive?
The stock is up almost $2 on that comment.
I remember in August of 1989 when a certain LBO for an airline couldn't find financing because the deal was so stretched that it caused a major correction in the overall market. Speculation was rampant then.
Position in CAL
Show Me the VIX! - Adam Warner - 10:19 AM
Guess what? Someone literally alerted the media that the VIX has gotten a tad cheap. We may have gone over that here about 5000 times, but hey, glad it's going mainstream.
Again, the glaring failure in mentioning it is they do nothing but quote the simplistic "Low VIX=Complacency=Bad" plot line. Yes, the market will top someday (probably, I'm not guaranteeing that, lol) and yes, the VIX will look very cheap when it tops. And yes, some bobblehead will get on and say "I told you that low VIX was worrisome."
But that leaves out some inconvenient facts such as that the VIX has been objectively low for 11 of the last 13 months (all but the May-June pop). And we are in a holiday week, which can yield misleading readings as traders start pricing options as if the calender says it is is already next Monday.
Not to mention that there is no particular correlation between specific VIX readings and market tops. Low-low VIX levels in the early and mid 90's did not exactly hold the bull in its tracks.
Not trying to be a VIX apologist here. I am absurdly complacent. Just warning against drawing erroneous conclusions.
Balance Area - Tom Alexander - 9:00 AM
The Naz 100, Russell 2000, Dow and the S&P are trading at or near new highs for the rally. The much ballyhooed seasonal tendency is for this week to have a bullish resolution.
The Russell, Naz and S&P are forming Balance Areas near their respective recent highs. When a market is in balance, the key reference areas (potential support and resistance) of the balance area are the low volume areas near and including its extremes, and the high volume node of the balance area. We also know that as long as a market remains in balance, volume acts as an attractor. This implies the market will be dominated by rotation away from its extremes, on tests of the extremes, back to near the high volume node. As a balance area matures, my firm begins to be alert for the break of one of the extremes as opposed to regression back to the high volume node.
If the positive seasonal tendencies are going to hold sway this week, retracements in the indices should not trade much below the low extreme of their respective balance areas (see the charts below), and the sustained break out of balance should be to the upside.
The Dow remains in Vertical Development to the upside, as opposed to the pause we are seeing in the other indices. You know those commercials on television that warn if you are using Viagra and get an erection that lasts for more than four hours or so you (not to mention your significant other), you might need to call the doctor? That pretty much sums up the extended (pardon the pun) position of the Dow, as well as that of the significant others who have been attempting to short it.
See the charts of the S&P, Russell, Naz, Dow.
Buyers aren't winning battles, just the war... - Rod David - 8:13 AM
"Ineffectual optimism" isn't necessarily pessimism by default. Not unless or until sellers were to step into the vacuum created by limp buying efforts.
It started at Thursday's open when S&Ps gapped up to test Wednesday's high. Despite probing higher highs intraday and spending the entire session in positive territory, Thursday's close was under Wednesday's high. It continued Friday when S&Ps recovered from the open's gap down trend up through the close, only to end flat on the day.
And we saw it again yesterday when S&Ps recovered an opening dip - itself a recovery from much lower lows overnight. Despite once again probing higher highs intraday, an afternoon drop once again closed flat.
A seasonal bullishness tends to surround holidays, as sponsorship for a trend reversal - and the traders doing the sponsoring - hit the road early for Grandmother's house. "Ineffectual optimism" or not, time is running out for sellers to try regaining control. But buyers sure don't have it. And even if S&Ps were to simply float higher, the gain's durability would be very suspicious.
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