Buzz Bits: Dow and Nasdaq End in the Red
Your daily Buzz & Banter highlights.
Random Rumble Storms - Todd Harrison - 3:18 PM
- It feels as if the market is much lower than it is, doesn't it? As it stands, we're still above Thursday's close and the S&P is flat for the year.
- Want more perspective? The VXO is still trading with a 2-handle, which is roughly half of what it was during previous pain fulcrums.
- I was thisclose to flipping my posture and shorting the tape into earlier mini-Snapper (near DJIA 13k). I didn't, choosing instead to move to the sidelines (after I got stopped out) to recalibrate my bearings. I'm left with a few tertiary positions, albeit nothing with meat or potatoes.
- Vehicles, so you know, included energy and metals. I didn't pull the trigger but again, just want you to get a sense of the thought process.
- If you Google "downside reversal," you would prolly find a picture of....Google (GOOG).
- Remember, if DJIA 12,800 doesn't hold, DJIA 12K is an express elevator.
- What happened to all the "Don't fight the Fed" chants?
- Opportunities are made up easier than losses. At least that's what I continue to tell myself as I eyeball the unsent orders that litter today's desk.
- Hey, it could be worse. It could be raining! Oh...
BioTech Bull - David Miller - 2:37 PM
Editor's Note: We asked Prof. Miller about his thoughts on Schering-Plough (SGP) and Merck (MRK).
SGP and MRK are burdened by an increasing worry: important Phase III trials for Zetia/Vytorin are being delayed by MRK/GlaxoSmithKline (GSK) because the data are not positive.
What Does It Mean? - Data was supposed to be out already, and they just announced delays. This has the medical community buzzing and the FDA concerned.
On the Sector Itself - More generally, I think the pharma space should be avoided long term. Money can be made short term by following herds, but investors must recognize that is what they are doing and make sure they are nimble.
Where To Look? - I want to be invested in the companies being acquired (dev-stage biotech) and not the companies doing the acquiring (pharma). I like Biomarin Pharmaceuticals (BMRN), Seattle Genetics (SGEN), Par Pharmaceuticals (PRX), and Medarex (MEDX).
Positions in: BMRN, SGEN, PRX
Frustration Station - Quint Tatro - 12:54 PM
Once again we're seeing some subtle strength that if you blink you may miss. We're off day lows, but breadth is still negative and sector action is mixed as we see a dead cat bounce in the Transports.
As I run through my charts and navigate my day there are two things I continue to find: a tremendous amount of short opportunities, as well as traders who have already counted this market for dead.
While I cannot argue with the technicals, the negative bias surrounding the action seems a bit extreme to me and I wouldn't at all be surprised to see another bounce attempt very soon. Mr. Market loves to pursue the path to maximum frustration and just about everyone I know is sitting with heavy cash and no plans of doing anything should we see further strength.
This recipe continues to have me scratching my head and asking 'What if?' Because I too can find hardly any good charts out there aside from my Evergreen Solar (ESLR) which is seeing a decent move today, I have decided to wade back into some more SPY and QQQQ's with a stop at day lows. If we see a move I will participate and not have to scramble finding charts. If we fade, my nick will be small and my existing shorts will pick up the slack.
Positions in: ESLR, SPY, QQQQ
A Lift for Cree - Sean Udall - 10:36 AM
Cree Inc (CREE) which has taken a terrible beating as a mid-cap high beta name of late could get a big lift off the Phillips (PHG) buy of Genlyte (GLYT). Shares are up strongly this AM but still well below the 50 day MA around $27. CREE has been a whispered buyout target throughout much of this year and on any confirmed merger the stock would be worth a lot more than current levels.
Even without a buyout, one could probably say CREE is at worst fairly valued, while CREE bulls would probably argue they are cheaply valued at current levels. Personally, I have thought for the last two years anything at or below $20 is pretty good value for the shares.
I added CREE near the open. Not sure how long I'll be in the name, but it's right back at the 200 day MA and a move back above the 200 day would put the next resistance level in the $27's.
I should also note that CREE has a large short interest, as covering on strength could be another bullish catalyst.
Position in CREE.
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