An evening taste of the daily Buzz.
Bell Buzz - Todd Harrison - 3:52 PM
- Milestones R' Us? T-minus two days till the all-star guitar auction, T-minus nine days till December option funerals and T-minus 25 days till we can put this performance anxiety stuff behind us.
- There was one? What was a lazy and hazy Monday session has morphed into the world's busiest housekeeping afternoon. I don' t have much to add on the minxy pad other than bids remain below despite the fire in the semis and breadth.
- Google (GOOG) has gotten gaggled for a quiet 3% today. I know it's relative, but it's worth a mention.
- Hey look! It's Minyan Michael Thompson from Thomson financial! He was at MiM2 and, if all goes well, the good folks from Thomson will be joining us again for MiM3.
- And just like that, another day has steadily slipped by. I've done more watching than trading today but something tells me that we'll see some movement in the sessions ahead. Get your rest and please, Minyans, steer clear of this "thing" that seems to be going around.
- May peace be with you.
I Think Not... - David Miller - 3:03 PM
I've received a couple of pings on ID Biomedical (IDBE) about whether the price jump and news today indicate maybe a new suitor.
It would be extraordinarily unlikely. The court in BC is likely to pass muster on the merger, which should close before year end. The jump in price is merely closing the arbitrage gap between the currency value of $35 Canadian ($30.25) and the 50-cent discount from the deal value the stock has been trading at for a few weeks.
long IDBE common, short IDBE calls
Drip Dry - Todd Harrison - 2:44 PM
The Minx slinks to session lows as Mondays come and Mondays go. While there are obvious flags--breadth has been bunk all day, the NDX is back below 1700 (false acne?), retail is sluggo, the semis have burped back a deuce (2%) and the homies don't play--the ability of the financials to gang green has quelled the Red Dye warm and fuzzies.
Late last week, when I slipped two legs into the fur, my ursine effort was predicated on an advantageous risk/reward profile (tight stop). I had a hard time seeing a moon shot (through resistance) without the requisite "work" and perhaps that's what we're seeing now. But while the screens are (thus far) pink, the selling still feels obligatory to these old eyes.
Deep breaths as we balance the brew with a slew of chicken soup. I can't blame Minyan Sal for the MVHQ blahs (he's part of the solution, not the problem) but the mercury seems to be rising en masse.
Engine room, more fluids!
Mini-Minyan Mailbag: XAU and Gold - Jason Roney - 2:14 PM
Could you query Jason to see if there is any historical precedence between spot price strength and XAU underperformance. Do we get ketchup, or treated like one of Neidermeyer's Omega pledges?
I must admit I don't run too many gold queries -- so I've no prior work to reference. So here's the angle I took: Over the last five days, Gold is up more than 2% while the XAU is down more than 2%.
I'll note this may have as much to do with end of month / first of month flows as anything since the two are both up more than 15% year to date and at or near the highs. But looking back 20 years for a 5 day period where front month Gold futures were up 2% and XAU was down 2%, I could find just 12 occurrences. I looked at the return 3,5, and 10 days later and results were very mixed. The only occurrence over the last few years was June 9, 2005 (also corresponding to a new month / flows?).
Flashback! - Bill Meehan - 1:37 PM
This day in market history...
- Closing levels 3 years ago today found:
- DJIA: 8623.28
- S&P 500: 906.55
- Naz: 1410.75
- Crude: 27.27
- Gold: 324.50
This day in Minyanville history...
- In '03, Prof. Succo discussed Capitalism and Consumerism.
In other news...
In 1933, it was a day of celebration as it marked the end of Prohibition. Phew!
Answers I Really Wanna Know... - Todd Harrison - 1:34 PM
How come you never hear father-in-law jokes?
How did December expiry creep up so quickly (next week)?
Do you see the stealth Snapper emerging in the financials?
When will debt levels become less "elastic?"
Was that a pick or a scratch?
What if this is as good as it gets?
Making things a bit more... difficult - Jason Roney - 1:04 PM
I have very little for today. I think the early weakness makes the week's trade a bit more difficult, actually, as I was looking to sell more aggressively at higher prices.
That being said, this week is likely the best chance for Boo to push below a prior week's low, and that may be the objective; to fill the monthly gap and take out last week's low.
The December expiry is next week and over the last 25 years the Dec expiry week finished higher 75% of the time. The SPX had a DeMark TD-Sequential 10 count (overly simplified, a count of 13 suggests upside exhaustion) to start today, for what it's worth.
Blithe Danaher - Kevin Depew - 12:47 PM
Minyan WR asked me to take a look at Danaher (DHR) on a point and figure basis as the stock tests the top of its 52-week range in the 57-58 area. The stock is on a point and figure buy signal and in a positive trend but extended above trend line support in the 50-51 area. Interestingly, and not intended as advice, but the price projection based on counts using the 1x3 chart and .5x3 chart are to 73.50 - 74.
Crude Commitment - Kevin Depew - 11:03 AM
Over the past six months, Minyan Adam has frequently shared with us the following charts:
Crude Oil Continuous
COT net commercial positions vs. crude
The charts linked above suggest we are again at a point where Crude may attract some upside interest.
I like it when his charts coincide with the point & figure view. Based on a 1x3 point & figure chart, NYMEX Crude recently tested a spread triple bottom support area at 57 and will reverse up with a print of 60, which should take place today. Meanwhile, the 1x3 Crude continuous chart suggests near-term potential to 64-65.
Mini-Minyan Mailbag - John Succo - 10:41 AM
How does this update of the Guidant (GDT) story affect your positions that you have been writing about over the past couple of months?
This was a pleasant surprise.
Boston Scientific (BSX) is most likely just trying to cause some problems like getting Johnson & Johnson (JNJ) to pay up. BSX would have to do some serious divestures for anti-trust purposes.
Highest probabilities is a $65-67 price for GDT with JNJ buying them. That is unless someone does something stupid.
position in gdt, jnj
Homie-Come-Lately - Fil Zucchi - 10:31 AM
Comstock Homes (CHCI) is getting wacked today after taking down guidance. I urge you to read the press release, as it'll likely serve as the future blueprint for many other homies forced to juggle share count to prop up EPS, as the operating income number heads south. CHCI is a newly public company of marginal quality at best. Not only they have most of their eggs in the Washington DC market, but many of their developments consist of relatively low-price, and yet wildly over-priced, cookie cutter townhouses, in some of the most traffic jammed areas of Washington. Back in March they plunked down $100M to buy land in the DC area, at what may well prove to be THE top of this market mania.
Today's press release announced also plans for an expansion outside of the DC market. I wonder why. Stay tuned for more homies news from Toll Bros (TOL) and Hovnanian (HOV) later this week.
Position in TOL
Shattered Glass - Greg Collins - 10:22 AM
Also keep an eye on Corning (GLW) as the stock tests resistance near 22 (a close above 21.95 would confirm the breakout). We're still looking for volume to pick up before getting more constructive technically but note the rate recently picked up from 70% to 220%.
Click here for a look at the chart courtesy of www.stockcharts.com
Say what? - Kevin Depew - 8:36 AM
A look at commentary, opinion and analysis from around the world:
The FT's Vincent Boland takes a look at Turkey's obstacles on the road to the European Union. The chief worry after recent events is that the war between the state and Kurdish separatists that killed at least 35,000 people and disfigured the country's political, economic and moral life from 1984 to 1999 may not, after all, be over.
Bloomberg's Kevin Hassett says, "Let's stamp out the money roaches in Congress." Minyanville's Kevin Depew says, "Let's stamp out headlines that use the word 'roaches.'"
Toshihiko Fukui, Japan's equivalent of Alan Greenspan, has been getting advice from virtually everyone in government on whether to end quantitative easing. The consequences are far-reaching, according to the Wall Street Journal.
Watching the T-bill to S&P 500 Yield ratio like a HAWK - Bennet Sedacca - 8:30 AM
We have all been taught 'don't fight the Fed' over the years. Then there was the 'Fed model' that compares the forward P/E of the SPX versus the inverse of the 10 year Treasury yield (note the Fed model totally breaks down prior to 1982 and post-2000).
One useful tool that has worked well since 1970 or so is the ratio of T-bill yields as a percentage of the yield of the S&P 500. Note that as stocks rise and dividend yields fall while T-bill yields rise, risks to stock prices increase dramatically. In 1973, the ratio touched 2.7x, in 1981 it hit 3.2x, in 1987 it peaked at 2.5x, 2.7x in 1990 and is currently close to 2.4x. I do not lend much credence to the 5x reached in the silly season of the bubble peak of 1999-2000.
What does this mean? Either stock dividends need to increase dramatically soon, T-bill yields need to stop rising or we need to put those battle helmets on-particularly with the universal giddiness that has returned to the Street. These sorts of relationships really are what make markets, over and over and over again.
And for those of you who have been around long enough to know, dividend yields do matter. In fact, they have contributed for roughly half of the return of stocks over the last century.
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