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Buzz Bits: Monday Nov. 7, 2005

By

Another green finish for Hoofy.

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A Prelude to Further Upside For the Homies? - Phil Erlanger 3:29 PM

Notice the jiggy action in Centex (CTX) as it continues to push through resistance. Could other homies be setting up for further upside action? Remember the shorts have much covering to do as we have been highlighting over the past few weeks. Centex sports short intensity of 67% with a short ratio of 4.87.

Bargain basement? Not yet - Vitaliy Katsenelson 2:36 PM

According to the Financial Times, 48% of VNU shareholders oppose the VNU / IMS Health (RX) deal - Halellujah!

As I mentioned in this article, we sold RX on the merger announcement, as merger of these loosely-related businesses made absolutely no sense.

Though I am happy that deal is unlikely to be consummated, I'll not be jumping into RX shares... unless RX visits a bargain basement price, and I have not determined what that may be yet. RX's management lost a lot of credibility in my eyes and, more importantly, in the eyes of investors.

Dude, those khaki's are sweet - Jeff Macke 1:59 PM

Not to meddle in another man's cooking, but buying a retailer, Abercrombie (ANF), because they open a Manhattan flagship store violates a basic, immutable law of successful retail investing: "Sell any retailer that builds a Manhattan flagship store."

The only more rewarding automatic trade of the type is shorting any non-retailer which opens a flagship store in Manhattan (see: NikeTown, which coincided with 7-years of NKE drubbing).

Under the hood - Kevin Depew 12:56 PM

There are more net new buy signals than sell signals so far today, with new buy signals leading by a count of 19 to 5.

Among sectors, Oil continues to feel the brunt of the negative action while select Technology (not Semis) continues to improve.

Full gas ahead!! - Fil Zucchi 12:09 PM

Looking at some of the primary natural gas equities, they seem to be discounting $10 on the commodity. I don't know if we will get there ($11.14 on the Dec. contract right now) but if we don't there could be a heck of a snap back in the equities. $10.75 on the commodity is a major area of support.

(Position in gas equities)

Vibes from Snoop Tony Dwyer of FTN Midwest Securities - 12:07 PM

"Why do we think investors will drive stocks higher over coming months? We have a precedent. In Q4 1994, the market was beginning to rally after a painful sideways pattern that brought the average stock into its own bear market masked by the neutral action by year end in the major market indices. This came as the Fed was raising rates despite a continued decline in core inflation (core CPI bottomed at end of 1994 and started rising as the Fed stopped raising rates in Feb of 1995). If this sounds familiar - it should.

We have been vocal this year that the current environment is similar to that of the economic and financial markets transition from a very difficult 1994 to a much more positive 1995. Frankly, we were early and certainly didn't expect the "perfect storm" - two category 5 hurricanes to spike energy prices and spook investors and the Fed to the degree that it has. We continue to believe the current economic and financial market environment is much more like a mid-1990's midcycle slowing rather than that of a pre-recession."

Vibes from John "If it ain't" Roque... - 11:39 AM

"The energy sector remains, in our opinion, in a secular uptrend. But we also believe, as we wrote on Sep. 13, that the sector is in the midst of a consolidation phase.

Given the construction of the patterns for the stocks in the energy sector, we believe a) investors do not have to chase anything and b) that it's a much better idea to be a buyer on pullbacks."

Mini-Minyan Mailbag: Electric Blue - Kevin Depew 11:09 AM

Kevin-

If Emerson Electric (EMR) breaks 72.10, looks like the highs of 2001 could be tested, ~77 or so. What are your thoughts on this chart?

Minyan MM

MM-

I agree with yout that EMR is a nice chart, overall positive context, and presently controlled by demand.

A move above 72 on a point and figure chart would raise the probabilities for somewhat higher prices down the road, but I would note some important DeMark indicator targets near the 73.50 area long before we see a retest of 2001 levels. Meanwhile, on the downside, a move below 67 would be problematic for the bullish case for this stock.

C'mon, baby. We were made for each other... - John Succo 9:33 AM

Guidant (GDT) opens down 5.5% at around $55.5 as GDT sues Johnson & Johnson (JNJ).

The company did not sue JNJ for damages, but sued to complete merger. This is very important.

Both companies still want to complete this deal. You may be surprised, but we are not changing our probabilities of 80% that this deal gets done.

The discrepancy is price. Ultimately that may break the deal, but the important fact is that the companies both benefit from a deal.

(Positions in GDT and JNJ)

Morning Dew - Todd Harrison 8:43 AM

  • Greetings from Succoville in the Cinci suburbs as I vibe some time with the good professor before our town hall chat at Northern Kentucky University.
  • Over steak and schnitzel last night, John and I briefly talked tape in between the incessant Bengal bravado that seemed to be sweeping the Street. I asked him what (all-time highs in) the brokers and trannies "meant" for the '06 Minx. "Negative real savings portends a potential tipping point for the consumer," he said, "and I maintain that higher interest rates will be the ultimate catalyst."
  • After the kinda-sorta consolidation on Friday, the Minx rolls up her sleeves to find S&P 1210 (1200) support below, NDX 1635 acne above and all kinds of performance anxiety waiting in the wings.
  • The piggies, up sharply and overbought into BKX 100, should provide a good "tell" for the broader tape. Hoofy would like to see a rolling rotation (as the recent runners rest and relative laggers run).

Say What? - Kevin Depew 8:15 AM

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

  • Commenting in the Wall Street Journal on the French Riots, Theodore Dalrymple says, "No one should gloat over riots in other countries." Then, he gloats... for 15 consecutive paragraphs.
  • Arkady Ostrovsky in the Financial Times looks at the "Winners and losers in Kremlin's grab for oil."
  • Also in the Financial Times, Minxin Pei writes about the other remarkable Chinese growth story: social unrest.
  • Kevin Hassett writes on Bloomberg that the "Bush Tax Panel Changes Wouldn't Slam Home Prices." This is because the price of inexpensive homes would increase and the price of expensive ones would decrease. Therefore, "The net effect on the average home could be positive or negative." Seriously.
  • Adam Summers discusses the "myth of energy deregulation" over at the Mises.org blog as it relates to California.
  • Remember back in the day when you could watch songs on TV? What were those things called? Oh yeah, music videos. Whatever happened to those? David Carr wonders the same thing in The New York Times. Now that MTV does everything, what does it do next?
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