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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.

Mandy More or Less? - Todd Harrison - 3:30 PM

The tape scrapes to session lows as Hoofy takes one on the nose. We wrote this morning that if credit didn't uptick, we could see a swift 1000-1500 point downside swallow. Well, we're 11%-16% there, depending on which side of the range you're looking at. No victory laps here--it's not how we roll in the 'Ville--just offering some perspective in terms of depth, scope and duration.

Is this an important close? Aren't they all? The INDU flag is perhaps the best illustration of what I'm looking at but truth be told, all the indices are sorta in the same boat. The fact that this is happening with the dollar appreciably lower is perhaps the most disconcerting aspect of it all.

Interesting times indeed.

Can we Snapper into the close? With Hank and his buttons, anything could happen. Based on what I'm seeing, however, that's a low probability bet. The game may have changed but the rules of engagement haven't.

Pick your spots, define your risk, play the odds... and don't be afraid to sit it out. There are gonna be alotta toe tags by the time this ends and our goal is to make sure there isn't one Minyan among 'em.

Fare ye well into the bell.


TXCO Update - Adam Michael - 12:19 PM

I have been on the road for the past two weeks, but wanted to give the 'Ville a quick update on TXCO Resources (TXCO) as it probes all-time highs. There are many positive things in the works here:

1) The Pearsall Shale play appears to be gaining traction. While it is still early, I estimate TXCO's acreage to be about 250,000 net acres. This is a geopressured gas shale that was producing 2mmcf/d from a vertical well recently. Several horizontal wells are in the process of being drilled/fractured… I expect more positive news here soon.

2) The San Miguel oil sands play continues to move forward albeit slowly. TXCO is exploring strategic alternatives (i.e. possible sale of assets). I would expect the company to net $150-200 million on an asset sale.

3) Activist shareholders are still involved as they obviously see the same value I do.

4) Shorts are up to 4 million shares (over 10% of shares outstanding) – it could add significant buying pressure in near-term on a breakout.

I would expect to make a run for $20 by this summer if/when it breaks out of its multi-year trading range (from $8.50 - $14.50).

Position in TXCO

Material World - Ryan Krueger - 11:45 AM

While the New York Times is being quoted for other reasons today, there was another story that may have even more desirable and has longer legs from my perch.

I've written recently about the contracts for iron ore prices that I expected would exceed the market's recent opinion on demand. Announcements out that 65% price hikes were agreed upon sent the group higher. Now the NYT is sharing word that Rio Tinto (RTP), which I do not own, is seeking an even bigger raise. We shall see. In the meantime, my firm has raised stops and added to length within the Materials (XLB) group again this week.

Every one of the 10 S&P sectors are still down year-to-date. I believed that Materials would lead on rallies and it is set to be the first to go green, perched about 30 bips subzero to begin the day. Plenty of risk, no question, but even more demand by the looks of prices that are not only being asked, but are being paid.

Golden! - Lance Lewis - 10:38 AM

So far so good. The XAU/Gold ratio is up over a percent as the gold shares are rallying on the strong earnings growth we're seeing in the 4Q numbers from Agnico-Eagle Mines (AEM), Goldcorp (GG),and Barrick Gold (ABX) even as spot gold is unchanged on the day. Kinross Gold Corp (KGC) is after the close and should also be positive. The market also seems to be recognizing the increasing leverage at Gold Fields (GFI) due to the falling rand.

Stagflation is near nirvana for gold and the gold miners, and people finally seem to be catching on to the fact that stagflation is firmly here to stay.

Position in gold, gold shares


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