Buzz Bits: Dow Rallies, Nasdaq Climbs
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Earnings Report - MV News
How important are REIT's to bonds? - Bennet Sedacca - 2:44 PM
See the chart here (yes all the arrows made my head hurt too...). It is a chart of IYR overlayed on 10 year yields. The negative correlation is fairly obvious.
I mentioned the other day that I thought IYR is undergoing a 'change in character.' Funny thing is that my son needed some long and short ideas for a college Econ class and I gave him IYR and UTH as shorts on Thursday. then I got to thinking (uh-oh) if there was some sort of correlation between them and bonds.
And although it is far from perfect, there IS a correlation. The bounce off the 50 day MA for IYR was not unexpected and a rally to 80-81 is possible, but it looks like curtains for them to me.
Maybe it is just a shift out of an overpriced (7x book!) sector and maybe it foretells a move in bonds. In any event, it has my attention and my firm will likely sell some or all of our 10 year note position right around break even. Better safe than sorry.
Position in 10's
Bears on the Barbie - Jeff Macke - 2:21 pm
Earlier this morning I alluded to the challenges associated with shorting in a bubblicious M&A market, particularly in the consumer names. While I was speaking of the Gap (GPS), the M&A Boo-Killer dujour is clearly Outback Steakhouse (OSI).
Until the $40 per share bid announced this morning, OSI had been serving the bulls nothing but steaming hot-plates of pain, dropping over and 25% and lowering guidance for 2006 twice, once in February and again in July. Most recently, the company delayed its 3Q earnings release due to previously unreported gift card-related liabilities it ball-parked to be "somewhere between $20 and $40 million," an enormous ball-park for a company which earned under $150 million (um... give or take) in 2005.
In a world without M&A, a restaurant chain with declining earnings, shrinking margins and accounting woes could be considered a relatively safe place to do your shorting. In the world of today the bears are getting skewered and grilled (in that order) to the tune of over 20%. Boo can gripe that the buyout group is going to be next on the menu as they try to turn this thing around but, for the purposes of stock traders, the point is moot. The bottom line is simply that it remains very hard to make money, or at least feel comfortable, on the short side.
Context Shift Continuing? - Kevin Depew - 1:21 PM
With October in the books we can now update the total monthly buy/sell signals in DeMark TD-Sequential terms.
S&P 500: Buy/Sell
The Nasdaq shows increases in sell signals for the third consecutive month and the lowest monthly total of buy signals since April, though we remain well below the monthly total of April and May sell signals.
The S&P 500 for the past two months has shown more total sell signals than in the prior six months combined.
If this morning's rally snoozes, it loozes. - Rod David - 12:51 PM
S&Ps made a new trend low intraday Friday and recovered to close above the prior session's low, forming a semi-Gotcha! setup (lacking only a close above the prior low close). Thursday did the same thing, but couldn't prevent a rejection of Friday's opening surge. Maybe two Gotchas make a whole, since today's opening surge has held up through noon.
Maybe not. S&Ps are scaling the proverbial "Wall of Worry" that thrives on pessimism. The futures' premium to underlying cash has expanded at least 1-tick today, when it would have been normal to contract at least as much.
Halfway through the noon hour, the Dow's gain above 11:30am's high is a 100% swing of the post-open consolidation, while S&Ps have only swung 61.8%. NDX hasn't made higher highs, at all, and is instead challenging the consolidation's lows. These relationships are inverse to the open's behavior, which was bullish, so this first divergence can still be considered as its correction. But time is now of the essence.
Meanwhile, MACD and RSI diverged negatively into the noon hour's higher high. If a stealth correction has completed, S&Ps can't afford more than a short and shallow pullback. And the rally can't afford to hesitate resuming.
What you need to know... - Jon Doctor J Najarian - 8:12 AM
Bill Gates & Prince Alwaleed Buy Four Seasons (FS) For $3.7 Billion! There aren't too many groups that can say no to this pair, or to $20 over the price your stock closed at on Friday. Therefore, I'd say Prince Alwaleed's Kingdom Hotels just got their crown jewel(s) and became the premier global player luxury hotelier.
Midnight Madness - Forget about getting up at 4 am the Friday after Thanksgiving to get a head start and some deals on your holiday shopping. That's because dozens of malls and standalone retailers will open their doors at 12:01 am November 24th to get an extra 6 hours of holiday spending.
Merrill (MER) Gets Justice Inquiry – The private-equity arm of MER has received a request for information from the Justice Department as part of its informal inquiry into anticompetitive behavior in the private-equity world. Thus Merrill joins the Carlyle Group; Clayton, Dubilier & Rice; Kohlberg Kravis Roberts & Co.; and Silver Lake Partners in this widening investigation.
El Paso (EP) Beats Street – The Houston-based company earned $135 million, or 18 cents a share. In the year-ago period it lost $312 million, or 50 cents a share. Operating revenue rose to $1.06 billion from $752 million. Analysts, on average, expected it to earn 16 cents a share, according to Thomson First Call.
Position in EP, FS
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