An evening taste of the daily buzz...
Earnings - MV News
Jabil Circuit (JBL) reported Q1 EPS of $0.44 vs $0.42 cons on revs of $2.40 bln vs $2.30 bln cons.
Nike (NKE) reported Q2 EPS of $1.14 vs $1.04 cons on revs of $3.47 bln vs $3.44 bln cons. Worldwide futures orders were +7%, in constant currency, and US futures orders were +9%. Gross margin was 43.5% vs 44.5% exp.
Electronic Arts (ERTS) said it expects EPS and revs for Q3 and Q4 to be, "well below," guidance and cons. It said holiday sales are not meeting expectations and that, "it is likely the industry will be down double digits on a percentage basis."
This is a test, this is only a test - Kevin Depew - 3:26 PM
Feb. Gold has now broken a double bottom, its first sell signal since October. Meanwhile, the PHLX Gold & Silver Index (XAU) has also given its first sell signal since October. These two now join the Dow Jones Industrial Average, Nasdaq-100, S&P 100, and Russell 2000 on sell signals, all having recently given PnF sell signals for the first time since October.
As mentioned earlier, the short-term indicators are flashing caution now after turning up from a low level in October. As I wrote at that time, "those who are short term and very active have actionable levels to operate long based on point & figure charts, but since my style is a bit longer-term I still view higher levels in the SPX as levels to sell with probabilities favoring a larger move lower."
My choice then was to pay the price (literally) for taking a longer view, knowing that I will likely have to live through pain (true), and ignore the improvements in the short-term indicators. Those who chose to play the SPX bullish shakeout pattern were able to capture 5% from the entry point to where we are trading right now. There is no one right answer, which is one of the many reasons Minyanville is not an advice site.
Position in gold, GC/G6
Flashback! - Bill Meehan - 1:53 PM
This day in market history...
- Closing levels 9 years ago today found:
- DJIA: 6484.40
- S&P 500: 748.87
- Naz: 1288.56
- Crude: 26.10
- Gold: 369.00
This day in Minyanville history...
- In '02, Snoop Tone put the current tape into perspective with surrounding issues in, I Got THAT Look
In other news...
Happy 39th Birthday to Chris Robinson of The Black Crowes, aka Mr. Kate Hudson.
Down on the Pharma - David MIller - 1:23 PM
Onyx Pharma (ONXX) got its NDA for sorafenib approved three weeks early by the FDA. The indication is renal cell carcinoma (RCC, kidney cancer). The race is now on between them and Bayer (BAY) to see if they can beat Pfizer's (PFE) Sutent.
Sutent's first approval will be in gastro-intestinal stromal tumors (GISTs), but they have already published data in RCC and the pivotal trial for RCC has already been enrolled. Onyx's low share price (relative to recent highs) is due to skepticism they can out-market Pfizer.
Onyx is seen as an acquisition candidate by Bayer since they share all profits for the drug 50-50. My guess is both parties are inclined to wait to see early results from the Sutent/sorafenib sales battle.
Is Yield Curve Inversion Imminent??? - Bennet Sedacca - 11:55 AM
The 2's to 10's spread has now reached a cyclical low of roughly 0.05% (5 basis points). Additionally, 1 year Treasury bills are quickly close to inverting above the entire front end of the yield curve (the bond equivalent yield of the year-bill is only 3 basis points below the 5 year note!).
It is clearly just a matter of time until the inversions occur. What does it all mean? Usually, economic weakness and even recessions (I realize this is not a popular concept) follow inversions, at least during my 26 year career. Fed officials are hinting that it is 'different this time' and inversions won't necessarily signal a recession or nasty slowdown.
As I have stated before, investing in the 'it's different this time' mantra has never worked very well. At least not for me. So we continue to play defense in our asset allocation process. And by the way, long-term municipals still look cheap to us relative to Treasuries, but we have already had a 3-4 point rally. So absolute yields now become a concern.
Positions in various long term municipal bonds
Here in My Car... - Adam Warner - 11:53 AM
General Motors (GM) continues its descent towards an MTV demographic, but no one cares much option-wise today. Volume is unexceptional, and volatility has not budged. It is almost as if this move was pre-priced in, as the March puts went off the shelves faster than an XBOX 360.
GM is a perfect example of why you should never use put/call stats in an individual name to make directional predictions. GM puts trade way heavier than calls on a daily basis, and the put open interest dwarfs that of the calls. Yet the stock makes a new low every day.
Of course there are so many moving parts in GM (no pun intended), that maybe this is a bad example. Or maybe it is the perfect example, in that the motivations for a put trade may vary from stock to stock, and transaction to transaction and we have to be careful in what we read in them.
Position in GM
You got a bad reputation, that's the word out on the town, it gives a certain fascination, but it can only bring you down - Kevin Depew - 11:42 AM
New sell signals are far outnumbering new buy signals this morning.
The 67 level is very important for the Internet HOLDRs (HHH). A move below 67 breaks a triple bottom and would be the first sell signal since October.
The 37 level is similar for the Semiconductor HOLDRs (SMH); would be the first sell signal since October.
If T. Boone Pickens is right, and $100 oil is inevitable, a good business idea would be to start a company that buys used and unsold SUVs, salvages the shells, and turns them into micro compact modular housing units for the homeless. That is not a joke.
Juggles and Struggles - Todd Harrison - 10:32 AM
I've gotta 10:30 'view to do but I wanted to quickly chime in on the tape. As the piggies poked into Red Dye, NYSE internals bled red in a hurrry (2:1). Not a shocker, as per our earlier Buzz, but certainly something to watch.
There are still spates of optimism (the semis and brokers remain sticky green) but please keep your risk tight (both ways) as we head towards the Hump. Emotion is the enemy when trading and there is a whole lotta angst out there.
If the chips blip through SOX 485, Hoofy will try to build on that mojo. One step at a time, Minyans, we'll get there.
Gotta hop--good luck!
DeVibe from DeScribe - MV Respect - 9:17 AM
"The NDX undercut short-term support levels, as the index suffered a 1.7 volatility move to the downside. Overall, negative volatility alerts did not expand, and therefore no distribution signals were generated.
One bright spot in the mix was the pharmaceutical space, where 38% of the issues had positive volatility alerts out of an oversold condition. Even though the European pharmaceutical names are leading, we are seeing more bullish price action for the domestic names, and are warming up to most stocks within the space.
We can't find a portfolio manager who thinks these names are worth holding on to, and that thinking is represented in our money flow work showing the bulk of liquidation took place a year ago."
Jeff DeGraaf of Lehman Brothers
position in pharma
Say what? - Kevin Depew - 8:49 AM
A look at commentary, opinion and analysis from around the world:
Bloomberg's Chet Currier notes the average mutual fund was up 10% during 2005, compared to just 6.4%, including dividends, for the S&P 500. Just a fluke, he says, as big stocks have lagged.
The Boston Globe's Michelle Singletary looks at the shifting rules on credit. Among other things, we have new bankruptcy rules, across-the-board increases in credit card payments, and a personal savings rate that has now officially fallen below zero.
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