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Buzz Bits: DOW Below 11,000; Google Takes A Dive

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Your daily Buzz highlights...

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Rhymes and Reasons - Todd Harrison - 3:22 PM

I was discussing the tape with a buddy who works at a mainstream financial publication and offered that there is a very fine line between respecting the price action and deferring to it. That's a particularly apt point as we watch the Minx retreat from the highly anticipated and widely perceived acne in the S&P.

In particular, I noted the action in the financials. One day does not a trend make and, as Hoofy correctly mused, this could very well be a retest of support (at BKX 106). My sense is that a conditioned complacency emerged when the piggies shrugged off the inverted yield curve and as they are our proxy for discontent, we must monitor them closely. As go the banks, so goes the tape. This we know.

Google is also an obvious culprit today--more from a psychology standpoint than an actual "weighting"--and yes, a case can be made that the economic data wasn't up to snuff. However, I would caution Minyans against being to "reactive" to Clarence Beeks.

Remember, friends, the market is a forward looking discounting mechanism. By the time we see economic figures to support a slowdown--or signs of stagflation--it'll already be baked into prices. Just a friendly reminder as we chew through another spew of flickering ticks.

As always, I hope this finds you well.

R.P.

Position in financials


Gold vs. Gold Stocks - Kevin Depew - 3:07 PM

The metal is outperforming the gold stocks rather handily today. The XAU broke the trendline from the May 2005 lows today with the move below 134. The HUI is closing in on spread triple bottom support at 300. Meanwhile, April gold remains on a buy signal on a PnF basis.

Since Feb. 7, when the HUI/Gold ratio reversed down, the metal is off about 1%, while the HUI is off about 2.5%.

Position in gold


Flashback! - Bill Meehan - 2:46 PM

This day in market history...

  • Closing levels years ago
    • DJIA: 10106.13
    • Naz: 1731.49
    • S&P 500: 1106.73
    • Crude: 21.78
    • Gold: 296.85


This day in Minyanville history...


In other news...

  • In 1984, Michael Jackson took home eight grammys thanks to his Thriller album.


Mini-Minyan Mailbag - John Succo - 12:48 PM

Prof. Succo

You talk often about the 'haves and have nots.' It seems to me that the rich won't do so well when the middle class is debt saturated and can't afford any discretionary purchases. The economy and stock market will tank. Since it's the rich who hold most businesses and shares, they won't fare too well when the economy seizes up.

Do you see things differently?

Minyan Jim

MJ,

It is more relative.

Everyone will get hurt, even those who have prepared for such an environment. This is due to the Fed's policy of "no way out, just delay."

We are talking about the difference between the middle class not being able to support their debt versus the rich just making less. Remember, I am not talking about the "perceived" rich, those that pretend to be rich but in reality just have a lot of debt. I am talking about the truly rich who have no debt: they will get hurt, but not "suffer."

-Succo



"You can't always get what you want" - Fil Zucchi - 12:07 PM
  • Yesterday I buzzed at the "thin and thinner" action. Today Boo is bringing along is friend "volume." Never forget: volume = validation.

  • To follow up on Prof. Sedacca's buzz about the P/E's for the homies - I still think Book Value is where you see the real overvaluation of the group. And, of course, the homies assume that the land values in the BV are actually sustainable. If not they can just pull a Beazer (BZH) and write off a few hundreds of millions . . .non-cash of course.

  • I have dipped a toe in BJ Services (BJS). Prof. Dingmann likes it and we are touching the October lows and 62% Fibonacci retrace on a downgrade from Merrill. I am aware that sharp objects are for clowns named "Stumpy," but the way I figure it the other nine toes are safe.

  • I see Google (GOOG) down a lot. But what I wanna know is why my Google bar keeps disappearing on me. Very annoying.

Position in BZH, BJS



Snaps - Adam Warner - 11:43 AM

I am not a big fan at all of the standard CBOE put/call. As Prof. Goepfert accurately notes, with all these hedge funds out there, what "prints" as a call trade may be in reality a synthetic put trade. And is the order initiator opening or closing? And is it a retail customer, or many retail customers, or is it Prof. Succo? One is a definite fade, one is clearly not. And trust me, I spent 13 years in AMEX crowds taking the other side of both, there is a big difference.

Jason is correct, you could literally fill a whole page with the flaws in the measure. The ROBO number, as well as the relatively new and untested ISEE reading, have way more value, at least in principal.


Shake, rattle, and roll... - David Miller - 11:19 AM

  • Five years ago today, I was treated to the first major earthquake in my lifetime here in Seattle. It was a 45-second, 6.8 roller that would have leveled the city except it was so deep. Even then, the damage was considerable. A special thanks to all those around the country who helped us out.
  • What goes up must come down. Everyone was noting the jig in the IBB yesterday. Today it's showing its red knickers. The lower end of the sector is still showing relative strength.
  • We've talked in these pages before about how funds short PIPE deals ahead of the pricing (which happens to be illegal insider trading if you were approached about the deal). For anyone who wants to see a particularly egregious example of this behavior, check out the short interest in Genta (GNTA). This sub-$3 stock started running a PIPE early in the month and people doubled the short interest to over 7 million. No financing deal yet, by the way, since the short pressure trashed the stock by over $1/share.
  • If you are inclined, please send some white light to Linda's family. Dad's in the hospital unexpectedly for an episode of atrial fib and Linda goes in today for a non-trivial surgery. Great people, bad week.

Position in GNTA (long, from last year)


Stagflation sandwich anyone? The reason behind the decline in 10's? - Bennet Sedacca - 9:12 AM

This chart says it all. The chart is of the U.S. GDP Price Index. The index, according to Bloomberg, "tracks the percent change for GDP price index and is seasonally adjusted at annual rates." Notice we are nearing the highest levels since 1993 and 2000 (rates were MUCH higher then in 10's).

This is happening at a time when the economy is slowing.Yes I know the 2nd qtr will be better, but the guidance I am hearing isn't exactly riveting. It is also bad for profits, when productivity is falling. It also explains why profit margins are retreating. Comparisons are gonna get tougher. All I can say is (to those old enough to remember the TV show Hill Street Blues - Ladies and Gentlemen, let's be careful out there.

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