Buzz Bits: Dow, Nasdaq Take a Spill
Your daily Buzz & Banter highlights.
Hey, it could be worse... you could be forced to wear one of those silly Pilgrim hats - Todd Harrison - 3:41 PM
"The Pilgrims made seven times more graves than huts. No Americans have been more impoverished than these who, nevertheless, set aside a day of thanksgiving."
Just when you thought it was top button time, Boo's crew stepped up and stuffed the contra-hour turkey. Indeed, while it looked like someone pushed a button somewhere and officially started the Thanksgiving week rally, supply filled in and traders followed along. I'll tell ya, this tape might be the thinnest thing in three states!
With the bad news is being broadcast loudly from the rooftops (and the Economist, and BusinessWeek, and...), the, er, my natural inclination has been to take the other side of conventional wisdom for a trade. I've fought that good fight for the last two days and, while the tape is lower, I've managed to trade around my positions in a (thus far) non-harmful way.
Be that as it may, the potential reality is that the cumulative balances will come home to roost. With the VXO trading at 27 and the averages higher for the year, the upside may be the cute side given everything that's hit the wires. The tricky aspect is that it has hit the wires and, as the market is forward looking, some of the fun is baked in the cake.
So what to do? Depends on your risk profile and time horizon, which is why it's impossible to offer a blanket view. For my part, I bought the opening and fed the ducks (read: make some sales) into the Snapper (for the second day in the row) and I've got a manageable position with define risk on the downside. Not the sexiest of statements, I know, but a disciplined one as we find our way and look to get paid.
As time is slippin' into the future, lemme take a moment to thank ye faithful for your continued Minyanship. Our community is growing by leaps and bounds and it's truly humbling to be a part of such a fantastic mission. To you and yours, the happiest and healthiest of holidays and I'll see YOU on Friday.
Fare ye well.
Beware some sharp currency moves over the holiday... - Cody Tafel - 3:33 PM
Last year over Thanksgiving we had some significant moves in the currency market. Most involved the dollar falling out of bed.
As we head into extremely thin markets the next two days, the currency that looks poised for a sharp move is the Japanese Yen. Notice in the chart below how the Japanese Yen future broke out to new 20 and 50 day highs this month and so far is following through strongly.
Click here to enlarge.
Also notice the GBP/JPY cross, which looks to me like one of the biggest and most perfectly shaped head and shoulders tops I have seen in a long time, and we just so happen to be breaking below the neckline range near 225 today. We all know a Yen rally would not be good for most other markets.
Click here to enlarge.
I wish everyone a very Happy Thanksgiving! Eat well and more importantly, travel safely. See you next week!
Thankful Snappy Randoms - Jeff Macke - 1:28 PM
Hello from the NASDAQ Market site where I'm getting ready to do a Macke's Mark-up, and episode of Fast Money and hit the road for Turkey Day! After a night with Todd-O on Monday and a formal shin-dig last night, it somehow already feels like Friday as opposed to a shortened week. Which doesn't reduce my gratitude or desire to get home to the wee ones ASAP. Here's what I'm watching, other than the clock:
- The Rally Chatter is picking up steam. We hit the Magic 10% Correction Level, all hope has been abandoned for the consumer and we've seen some massive mark-downs in almost every sector. The ingredients for a heck of a Holiday Snapper are all there.
- Who would I try? How about Gap (GPS), which is getting beaten up a bit today but is still the same turnaround story it was last night? Or Costco (COST), which hasn't done anything wrong? Or, away from retail, how about generic pull-back ideas like Microsoft (MSFT) which hasn't done anything during the sell-off except work off some overbought-ness?
- Yahoo! (YHOO)? ... it might be time to add a little more long there.
- The caveat for a rally call? Well... the fundamentals remain rather grim. Just having a pile of ingredients isn't the same thing as having the meal done. Don't believe me? Try telling your spouse that your going to the grocery store constitutes "doing the hard work" in preparing tomorrow's feast.
- Thank you, Minyans, for another wonderful year on the 'Ville!
Position in YHOO.
CVS Caremark (CVS) caught an upgrade and raised numbers this morning from Citi. Some stocks are not listening to concerns about how bad the economy is because they are too busy creating their own.
The S&P doesn't classify it – as I do – as a health care stock, which is an interesting clue to its success, lumping it instead with Consumer Staples. The stock trades at less than 1x sales despite the run-up in shares, which is cheaper than either sector and the S&P as a whole, despite the fact that earnings and revenues are growing considerably faster than all three.
I think it's a hybrid capturing some of the best of each: 1) a smart retailer with margins that are rising unlike many of its next door neighbors in the strip center, and 2) poised to sit in the middle of the political war on health care. Whether you argue it should be an entitlement or a consumer-driven choice, CVS is selling bullets to both sides of this battle as volume simply grows.
Position in CVS.
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