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Buzz Bits: Dow, Nasdaq Edge Lower

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Your daily Buzz highlights...

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Editor's Note: This is a small sample of the content available on the Buzz and Banter.



Earnings Report - MV News

  • Bed Bath & Beyond (BBBY) reports 3Q of $0.50 vs. $0.52 on revs inline of $1.62 bln.
  • Nike (NKE) reported 2Q EPS of $1.15 vs $1.13 cons on revs of $3.80 bln vs $3.76 bln cons. Gross margin was 43.4%. Inventories were +14.5% y/y to $2.2 bln at quarter-end.
  • Jabil Circuit (JBL) reports 1Q revs of $3.20 bln vs. $3.17 bln cons. JBL guides 2Q revs to $2.75-$2.85 bln vs. $2.92 bln cons.
  • Paychex (PAYX) reports 2Q EPS of $0.35 vs. $0.34 cons on revs of $454.9 mln vs. $456.3 mln cons.
  • Accenture (ACN) reports 1Q EPS of $0.46 vs. $0.42 cons on revs of $4.75 bln vs. $4.52 bln cons.



"You wanna play tetherball?" Napoleon Dynamite - Todd Harrison - 3:23 PM

Bennet made a good point with his previous Buzz. "We all see the liquidity pump and the debate now seems to be whether that's necessarily bearish." I think his assimilation was spot on and it warrants a deeper dive.

As mentioned this morning, we spend countless hours debating the "whats, whys and ifs." At the end of the day (month, year), we're judged by the ultimate arbiter: Our P&L.

Hoofy would correctly argue that it doesn't matter how we got here, it just matters that we did. Putting our differences aside, you can't argue with that.

One of the things that jazzes me about the 'Ville is that we don't take things at face value. That, for every action, there is an equal and opposite reaction. When I started this company five years ago, I wanted to build a community where we could collectively learn how to make better financial decisions We've done that, in my view, but it carries with it a tremendous responsibility.

We caught some moves and trends and secular stories in 2006 and missed others. It happens--there is no magic formula--and we ready to tie a bow around another year with our lessons in tow. To Bennet's point, I will offer this nugget: The mechanics of the swing are more important than the results of the at-bat.

I don't know what inning we're in on this tide of rising liquidity. But I do know that making blind bets because everyone else does is a recipe for disaster.

Manage your risk, respect your tells, do your work, remain patient and remember that capital preservation is the first step towards wealth accumulation.

Follow those guides and we'll prosper on the journey rather than focus on the destination.

R.P.


January volatility... - John Succo - 11:22 AM

January options in most series of stocks is the lowest I have seen. Period.

Option sellers have used this series all year long to sell options. Option open interest is staggering.

They continue to sell aggressively. All I see is January option sellers. Even when you count the holidays in they are dirt cheap. As they get cheaper, option sellers are encouraged by profits to continue to sell. Gamma traders are desperately trying to buy and sell stock around their convexity to capture any volatility. Thus they mitigate actual volatility.

Further mitigating volatility is extreme liquidity as supplied by new credit from central banks. Our own Fed has done several coupon passes to provide new cheap credit to our consumers to buy stuff. When U.S. consumers buy stuff from Asia, their central banks print their money to sterilize this credit. They then take the dollars and, it seems to me, are buying U.S. stocks now with it. So The U.S. prints money to buy stuff and they print money to lend to the U.S. to buy their stuff.

This is all creating massive compression. If and when stocks break out it will be more volatile than normal.

Based on the laws of probability, there should be some volatility event by January (doesn't mean it should happen, but just due to the cheapness of options it should).


Level Watch - Kevin Depew - 8:35 AM

These are the technical support and resistance levels for the major indices based on DeMark TD-Lines supply/demand lines.

  • DJIA:
    Support: 12,275
    Resistance: 12,475
  • SPX:
    Support: 1408
    Resistance: 1427
  • NDX:
    Support: 1755
    Resistance: 1822
  • Russell 2000:
    Support: 775
    Resistance: 787


What are TD-Lines?

TD-Lines are mechanically and objectively constructed. They are drawn by connecting TD Points. What are TD Points? A TD Point high is formed once a high is immediately preceded and succeeded by bars with lower highs. This is called a "level one" high since it is the simplest mechanical TD Line requiring the fewest number of surrounding price bars. A level one high requires only three bars to make this determination.

TD Point highs vary in "magnitude" based on the number of immediately preceding and succeeding bars that have lower highs. For example, level two has two bars preceding, two bars succeeding, and so on through level nine. Just reverse the procedure for TD Point lows.



What you need to know... - Jon Doctor J Najarian - 8:12 AM

Thailand Exempts Equities & Capital Goods From Restriction List – The reversal is responsible for their leading share index rising more than 10% after yesterday's dramatic 15% plunge. Curbs will remain on foreign investment in bonds and other debt instruments.

Ericsson (ERIC) Buying Redback for $2.1 Billion – The Swedish telecommunications equipment maker is buying data networking equipment vendor Redback Networks (RBAK) for $2.1 billion. This purchase represents an 18 percent premium to Redback's closing stock price of $21.17 on Nasdaq last night. My firm last had RBAK on our Heat Seeker December 7th.

Hybrid Demand & Prices Fall - Demand for hybrids has fallen as fuel prices have eased as a year ago about 30 percent of car shoppers considered buying a hybrid and this year hybrid consideration is at 12 percent.

Northfield Labs Bleeding! NFLD said that "discrepancies and other testing problems will necessitate a reanalysis of key clinical trial." Translation; back to the drawing board! Shares were down 20% yesterday to $11.42 and fell another 60% in after hours!

Position in NFLD

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