Buzz Bits: Fed May Raise Interest Rates
Buzz and Banter Sampler
Earnings Report - MV News
- Medtronic (MDT) reported Q3 EPS of $0.55 (in-line) on revs of $2.77 bln vs $2.89 bln cons.
Flashback! - Bill Meehan - 2:59 PM
This day in market history...
- Closing levels 10 years ago
- DJIA: 5515.97
- Naz: 1096.85
- S&P 500: 648.10
- Crude: 21.63
- Gold: 396.80
This day in Minyanville history...
- Toddo penned The Big Chill as rumors of NYC oil tanker fire spread through trading floors
In other news...
- In 1965, Malcolm X was assassinated as he was about to address a rally in New York. He was 39.
A little bit of this and a whole lotta that! - Todd Harrison - 2:09 PM
The FOMC minutes are on the tape and there seems to be a little something for both sides of the critter fence. They started with a hawk flying by screaming "inflation is somewhat higher than desirable" and "some further policy firming may be needed."
At the very same time, a dove whisked by to whisper that rates "seemed close to where they needed to be" and "core inflation should remain contained over time."
I, like you, did a double take. Is it a hawk? Or was it a dove? Or was it a hawkdove, the type of bird that simultaneously chirps out of both sides of his mouth?
I don't know about you but this Minyan sure is glad that the new Fed is clearer in their stated mission....
The Park of Darkness Strikes - Jeff Macke - 12:50 PM
Over the weekend, Disney (DIS) announced the departure of 50-year vet Marty Sklar as the head of Imagineering (read: Theme Parks). Pixar (PIXR) big wig John Lesseter will lead the new theme park division, reporting directly to Disney CEO Robert Iger (Mr. Sklar had reported worked through the Parks and Resort Management division).
Disney also allowed Mr. Sklar the chance to write an emotional departure letter (available here) prior to sealing the longtime Disney family member in a specially designed "Mouse Head" cryogenic chamber near Walt, located under the Pirates of the Caribbean ride in Disney Land.
Theme parks are 25% of Disney's corporate revenue and those of you who made it through my feverish trip to the park with me last December probably already guessed that I think it's a great sign for Disney to pay more attention to their core asset parks. In fact, from where I'm sitting the only downside of the roster change was my President's Day weekend getting ruined by Walt's endless complaining to me about "All the punk kids" moving into his neighborhood.
COT update from the CFTC reveals interesting data..... - Bennet Sedacca - 12:01 PM
The CFTC released their weekly positions for hedgers, large specs and small specs. I was most curious to see that despite the well accepted long bond auction, they stayed long something on the order of 56,000 long bond contracts - that equals about three full days of trading and is significant I believe.
It could suggest a couple of things. 1. The smart money totally buys into the fact that Helicopter Ben doesn't care about inversion or 2. they want a deflation hedge (which I agree with Toddo is unlikely at this time) or 3. they think there will be a squeeze in the 30 year as it goes 'on special' in the repo market due to lack of supply.
In 10's hedgers are relatively neutral, but total outstanding interest in the 10 year future is just about 2,000,000 contracts - a near record. So whichever way this bear flag breaks, volatility should be interesting to watch.
As for SPU's, the hedgers remain very short, while large specs (hedge funds?) are near record long. So that could be quite a cat fight, as hedgers tend to position early, while hedge funds seem to mimic each other lately. My money, post April 1 (not advice-just a guess) is with the hedgers.
Position in various Treasuries
Tune In - Tom Peterson - 11:23 AM
Our last note on DirecTV (DTV) was the morning of Feb. 8th. We thought the lows were in and that it had a good chance of trying for the resistance between $15 1/2 and $16 1/2. It is at the lower edge of that zone now.
Tomorrow is a big analyst day - the news could be quite exciting. Technically, the stock has done yeoman's work already, and it is coming up to close the September gap.This area just above is natural resistance, and I think shareholders should consider the possibility that a good webcast tomorrow may very well mark the short-term end of this move. A consolidation between the $14.80's and $15 1/2 would be bullish, but a retrace back as low as $14 1/4 or so would not be out of the question. If it can pullback while displaying positive money flow then another leg up could be anticipated, so we'll be watching to see how robust demand is on any correction/consolidation. TRP
See the chart here
Position in DTV
Watershed. - John Succo - 10:35 AM
Every once in a while a trade occurs that wakes you up and makes you go "Wow." It is a trade that occurs that makes you think something is just not right, the world has now gone crazy.
Someone just sold 150,000 Microsoft (MSFT) October 30 calls at $.36 versus buying stock at $26.45 delta neutral. The seller could be a fund trying to generate "premium;" more likely, the seller was a dealer who is long convexity from the company (remember when MSFT sold its option program to JPM). Regardless, it is price that makes us go wow. The level of the option price is something that makes us hear "puke" in the background. It is a level that a company like MSFT, regardless of how much cash they have, should not see options trade at.
The price is super-cheap. This does not mean that we do not understand why they are selling at this price: there are several technical factors that are forcing the stock to trade in a compressed range. This does not mean that it cannot, and probably will, trade at this low volatility if market volatility does not change. It means given the risk of market volatility picking up and the chance (although small) of a micro reason for the stock to pick up in volatility, they are too cheap.
It is substantiation that the market is ignoring potential movement. It seems to us that everyone is on that side of the trade.
Position in MSFT, JPM
Morning comments from Katie Townshend, CMT, chief market technician for MKM Partners: - MV Technicals - 9:46 AM
Stocks rebounded last week, recovering from a month-long pullback. The S&P 500 Index (SPX) and Nasdaq Composite (COMP) neared their yearly highs. Further firming action is possible as short-term overbought conditions return to the market; only a third of the components of the SPX are above 80% on their daily stochastics. However, we do not expect meaningful upside because momentum has waned, and there is resistance nearby at the January highs of SPX 1294.90 and COMP 2332.92.
The major indices have lost positive momentum as they consolidate near their highs. The recent breakdown below the 50-day moving average was a sign of worsening momentum. The rebound rally has not improved the momentum outlook even though it brought the SPX and COMP back above their 50-day moving averages. Lower highs in the daily MACD indicator still are in place, suggesting risk of a more significant correction phase. If short-term overbought conditions become widespread again, which could happen in a matter of days, the major indices likely would initiate a correction that brings them to initial support.
State of The Markets: Dipping Our Toe In The Water Again- Sell to Speculative Buy on Squeezeometer - Phil Erlanger - 8:14 AM
The Dow Jones Industrial Average, S&P 100 and the NASDAQ 100 moved higher last week. The daily Squeezeometer signal for the NASDAQ 100 Index moved from sell/sell short to cash/speculative buy on February 17. The S&P 100 Index moved from sell/sell short to cash/speculative buy on February 15.
Our 14-day choppiness index for the NASDAQ 100 Index remains at 51. This index ranges from 0 to 100, and the lower it goes the more a trend is evolving. We are now in a choppy trend for both indices. The S&P 100 choppiness index moved from 58 to 50. The NASDAQ 100 Index moved into its DMA channel, while the S&P 100 moved above its DMA Channel.
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