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Buzz Bits: Dow and Nasdaq End Lower


Your daily Buzz & Banter highlights.

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

A Quickie from Kenicke - Todd Harrison - 3:47 PM

  • I don't know nuttin' but I find it interesting that Abby Joseph Cohen is rootin' tootin' bullish while Goldman, as a firm, is on the books negative. Just sayin'.

  • Quick funny story: My grandmother Dorothy is coming to Gotham for Friday's Festivus and was slated to stay at a Starwood Hotel. Evidently, they're picketing in front of the hotel and she refused to cross the line. Talk about old school, Ruby is smiling from above.

  • Speaking of which, T-minus 12 minutes left for registration. Thank you kindly to all ye faithful who have supported my grandfather's foundation.

  • Net/net after all this noise? Still migrating under resistance (S&P 1490) following a sharp rally in the context of lowr highs. That, coupled with continued credit spread widening and nosty breadth, warrants two-sided risk definition.


Diamond in the Rough? - Ryan Krueger - 2:43 PM

I slice and dice the S&P 1500 quite a bit as one measure of "crowd control" as I like to say, considering the index is market cap weighted and represents a very clean measurement of the voting process.

Most of the time my firm sends our "tournament" of candidates for stock selections through this last bracket to measure what is over-owned and stay away from certain trades even if they look good. Today something stood out that I thought worth sharing, about what potentially may be under-owned instead.

I separated the top 10 largest market cap weighted stocks in the S&P 500 and calculated that based on the latest filings, each of them was held by an average of 3733 mutual funds. There was one stock that stood out at the bottom of that list as being held by the fewest funds, after only recently emerging into the list for the first time.

There was also one stock that stood out fundamentally because its earnings grew +60% over the past 4 quarters versus the other nine which averaged +10%. This stock trades at 1.4x 08 expected growth rate (which has been getting raised), versus the other nine at 1.5x.

Those two stocks share the same name: Google (GOOG).

Since I shared my firm's feelings about Technology, the sector has pulled way back, yet surprising to some is still out-performing the S&P since that day, which I think is what can happen when an entire group may be attracting new shareholders for the first time and pulling some of those dollars from other sectors.

Position in GOOG.

Something to Watch - Bennet Sedacca - 12:30 PM

While some parts of the stock market, like homies and piggies have experienced some pain, the overall market has not. One thing is for sure, though, and that is the fact that the credit market has taken note. Spreads are exploding wider.

What to watch now? I think the 200 level or so in the XBD. Since we are in an asset-based, levered economy, the group to watch, I would imagine are the brokers themselves.

So far they are holding, but it sure looks like a major top has formed.

If this breaks, I would imagine that the rest of the market goes with it.

So it bears watching.

Click to enlarge.

Crude Update - Adam Michael - 11:32 AM

Crude oil has sold off more than 10% from its highs over the past week or so, and is now below key support of $90. I want to be on the watch out for a false breakdown here and am not pressing the short side here. Why?
  • I like the way the oil stocks have been acting. The XLE and OIH have hardly budged during this decline.
  • The COT reports for net commercial position and open interest are still on the bearish side of neutral, but not nearly as bad as a few weeks ago.
  • We are about to enter winter season where demand can pick up 5-10%
  • Chinese imports of crude have dipped for three months in a row, but now I see Brent crude firming up (Brent actually held support so far). We won't see the latest import numbers from China for a few more weeks, but am thinking imports may have picked up again.

So what am I doing? A whole lot of watching. I know a lot of traders are leaning short against $90. Should we take out $87 (yesterday's lows), I may join them, but I can't help get the thought of a false breakdown out of my head.

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No positions in stocks mentioned.

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