Buzz Bits: Dow, Nasdaq Slip
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Earnings Report - MV News
- Nordstrom (JWN) reports 4Q EPS of $0.89 vs. $0.90 cons on revs in-line of $2.63 bln.
- Brocade (BRCD) reports 1Q EPS of $0.17 vs. $0.13 cons on revs of $224.2 mln vs. $214.9 mln cons.
Bell Buzz - Todd Harrison - 3:44 PM
- There's a whole lotta tusslin' as contra-hour fades in the rear-view. The bulls are trying to hold the tri-fecta lines (S&P 1445-50, BKX 119, EEM 117) while the bears are honing their focus on the beaten up brokers.
- Pepe continues to stress the composition of the breakouts and breakdowns for good reason. Please take note of his vibage--he's stressing it for a reason. Sometimes, even in the context of a "rolling rotation," you can learn a lot just by observing.
- A few Minyans have pinged to inquire what the warning signs of The Phantom are. While my knee jerk reaction was "lower commodity prices," I understand that snark adds little value to the process. As such, I would offer that a higher dollar might serve as a precursor to "asset class deflation."
- What's 876,861,425,478,188 pennies between friends?
- I'll be on board and in house tomorrow until roughly 2:00 EST, before going back to Cali, to Cali, to Cali for our 24-hour turnaround. My plan, as it stands, is to leave my current posture in place. If that shifts, you'll be the first to know. As always.
- President Fish, tanned from the slopes of Colorado, is back in the critter shack after his fam time. As such, I'm gonna duck into his office to touch base and tie up. I sincerely hope you had a strong session and, if not, that you have a more profitable night. May peace be with you.
Vibes from the ultra-svelte Tony Dwyer of FTN Midwest Securities- MV Respect - 2:32 PM
- My firm has avoided being "cute" by trying to catch very near-term moves in the broad equity market, but we've found an indicator using Merrill Lynch's stock that suggests a corrective period may be near.
- While looking at a weekly chart of Merrill Lynch (MER) with a 14-week stochastic Oscillator, my firm noted that since the 2003 equity market low, anytime the MER weekly stochastic made a weekly close as it did last week, it continued to trend lower until it ultimately reached oversold, and was associated with a meaningful stock price drop.
- The MER weakness made us look at what kind of market correction took place at the same time and discovered the MER signal was also good indicator of a brief market correction. From the date of the MER signal, the S&P 500 corrected an average of 4.94% in 41 days.
My Firm Remains Focused on Upside. From an intermediate-term standpoint, we continue to believe our 2007 S&P 500 target of 1,650 should prove to be conservative so we would not recommend cutting equity exposure. Simply put, for those that have a shorter-term timeframe, I would wait a bit to put new money to work and any decline of greater than 3% should be used as an opportunity to aggressively add exposure in our favored sectors – Information Technology, Consumer Discretionary, Industrial and Healthcare.
Randoms- Fil Zucchi - 10:51 AM
- Energy plants developer McDermott Intl (MDR) is getting hit on the news that TXU will scale back the construction of a number of power plants. MDR popped up on one of my fundies screens several weeks back and I was looking for a better price to leg in. Wish granted. We'll hear from the company on March 1st. Incidentally, fast money Minyans may want to look at pocketing some premium from some pretty pricey calls.
- Seismic play TGC Inds. (TGE) put up some pretty large numbers, but the stock is down on comments that the weather may slow things down in 1Q. "Bad weather" and "homework-eating dogs" don't inspire much confidence as "reasons;" however, should it be true in this case, this drop would obviously present an opportunity.
- Considering the short interest in New Century Financial (NEW) and Novastar Fin. (NFI) before their implosion, the fact that they have not been able to find any kind of bid opens the door to the possibility that these companies might be in serious troubles.
Position in MDR
Utes dancing like it's 1999... - Jason Goepfert - 10:35 AM
Can't get used to seeing the Dow Jones Utilities Average (DUX) blazing atop the leaderboard? Can't blame you...the last time it scored a gain this large was four years ago.
Obviously the TXU Corp. (TXU) announcement is the catalyst, but what I find most interesting is that the sector is being goosed so much while hitting new highs in the process. This is dotcom kind of activity, not what we usually see in something so staid as utilities.
In fact, the last time the sector jumped 3% or more while closing at a new 52-week high was 12/26/00, after which it lost 12% over the next quarter. The time before that was more than 30 years earlier, 6/19/75, after which - any guesses? - it lost 12% over the next three months.
This wasn't always the case, though. If we go back to the next-previous instance, we'd have to travel back yet another 30 years, to 4/13/45, after which the utes gained 14% during the next quarter. But in recent memory it's been extremely unusual to see this low-beta sector acting so red hot, and the last couple of times it lead to searing losses for investors.
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