Buzz Bits: Dow, Nasdaq Close in the Red
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Tension Mounts... - Kevin Depew - 2:25 PM
One of the things I'm focused on right now is how tension in the market continues to build. I view this "tension" through three separate lenses. The first two are:
1) The percent of stocks above their 50-day moving average indicators for the NYSE, Nasdaq-100 and S&P 500.
- All three of these indicators are near the high-risk 80% level which precedes corrective moves in the market.
2) The second is the longer-term bullish percent indices for the NYSE, Nasdaq-100 and S&P 500.
Both the NYSE and S&P 500 bullish percent indicators are both well above 70% while the NDX bullish percent is at 68%, each at levels that are associated with high market risk. It is important to note that these are not "timing" indicators or techniques. In fact, all three remain in columns of Xs on their PnF charts, which you can see for free at Stockcharts.com, and only when they reverse down to columns of Os can we say that the context of the market has changed from one controlled by demand to one controlled by supply.
The third lens is how I judge the timing issues. DeMark TD-Sequential, TD-Combo and TD-Line indicators are a few of the price exhaustion techniques that I use to evaluate specific timing decisions.
With risk "high" based on the PnF indicators, I am comfortable reducing broad exposure to equities as specific DeMark TD-Line resistance targets and/or sell signals are met. When I am doing well, staying disciplined and following the indicators in an objective manner, then this reduction (or addition as the case may be) occurs as a process. When I lose discipline (and money) and try to outsmart these indicators, anticipate them, or just plain ignore then, then it gets haphazard and is less a process than an event. September was like this for me, a situation that I was able to work out of (painfully) after ignoring changes that began appearing in August.
The task now is to be aware of the changes that are nearing, not anticipating them, and positioning based on where the greater probabilities for success lie. Even so, I still am finding stocks that look attractive here even as the signs begin to accumulate that risk for all equities is high.
10 year update - Bennet Sedacca - 1:47 PM
As you know, my firm took profits (and continue to do so) in longer dated items, notably agencies, preferreds and CMO's.
Market sentiment got too bullish for me as some data I saw showed fund managers 105% long their bogey, a 3 year high. Note the pullback on the chart here.
A natural stopping point would be where the two lines converge or 108-16 or so in 10 year futures. Traders would buy there I guess with a tight stop.
As an investor, I will likely wait a bit longer. Buying 10's at 4.40% is an outright call on recession in my book, no matter what Elmer says to the contrary.
Positions in agencies, preffereds, CMO's
Yahoo: Rearranging the Deck Chairs? - Brian Gilmartin - 9:35 AM
One of my firm's lemons this year, we are still long Yahoo (YHOO). As I read the press release about Sue Decker late last night, and her assuming control of one of the three main tentacles of the Yahoo re-org, I thought "this might have possibilities" despite the fact that there would be no likely change in earnings estimates from this.
The attached weekly chart tells me I'd love to see Yahoo trade above $30 on volume.
One (potential) positive: several analysts have mentioned that Yahoo would be a perfect fit for Microsoft (MSFT) given that Softee's internet division is a less-than-stellar performer.
My firm's plan for Yahoo after the summer disappointments was to see what success the company had with the Panama launch since it went live in mid-October and whether YHOO could ever again gain market share, or at least stave off some of the market share loss.
Today's price action and volume will be a good tell, but for now, we watch and wait.
What you need to know... - Jon Doctor J Najarian - 8:11 AM
Yahoo (YHOO) Redo – In an attempt to get its groove back, the internet portal is reorganizing its operations and says Chief Financial Officer Susan Decker will start a new role while another exec will leave the company early next year.
Merrill Downgrades Burlington Northern Santa Fe (BNI) – The broker said the company is near its price target and that coupled with its outlook for weaker volumes in the fourth quarter and slower economic growth into 2007 justified the downgrade.
Novell (NOVL) Sales Weaken – The business software maker posted disappointing quarterly results on due to weak sales of older products. It missed estimates and shares are down over 11% in the pre as a result.
Credit Suisse Cuts HSBC - Citing a recent disappointing trading statement, CS is telling clients that while it anticipated weakness in the mortgage services business, it had expected that other areas would provide sufficient momentum to offset this shortfall.
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