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Buzz Bits: Dow, Nasdaq Fall

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Of tips and trips... - Todd Harrison - 3:35 PM

Alrightee then, as Television's JeffMacke® sprawls out across the green couch in my office (bad visual, I know), I turn my tired eyes to my eighth screen to scribe some final thoughts to our freaky week. At the heart of the matter is a simple question. Is this simple "weekend selling" (after a heckuva run) or the start of something meatier?

The simple answer is "I don't know" and, unless you've got a crystal ball or psychic powers, odds are that you don't either. As such, what I would suggest is a dose of discipline and a dabble of lucidity. If you've slapped on risk for the sake of risk, there's no shame in paring into thy bell that tolls. The market will be here on Monday and you'll look at it with more balanced eyes if you're not lugging tertiary exposure.

As it stands, we're still clinging to the S&P trendline and still below the all-important BKX 119 level. Market internals are getting worse--not better--however, so that doesn't support a Snapper. Pressing, guessing or otherwise messing? Ask yourself why, and then take an honest look at your risk profile.

Remember, there aren't alotta folks outside of Minyanville who respect the potential for a volatility uptick (VXO +11%), so be proactive. This is where the Minyanville education will pay off in spades.

Fare ye well into the closing bell, Minyans, and have a fantastic respite.

R.P.


Chart Rock - Jess Thompson - 12:48 PM

Here's how my firm is reading the price action in the S&P 500 futures this week and this morning:

In the pink region (see chart at A), I see a cluster of closes and overlapping daily ranges which simply means price is moving sideways or congesting.

This week's range is expanded slightly higher and lower on Tuesday.

On Wednesday, the weekly range (Mon-Tue) is taken out to the upside, but on Thursday, (at B) the weekly range (Mon-Wed) is now reversed and expanding down.

Once the Mon-Wed range is broken to the downside the odds of making a new high for the week are very low (20% or less).

If the odds do not favor a new high for the week on Friday, then a retest of the weekly high has to be a high probability trade location to initiate a tactical short.

At C, price upthrusted Thursday's high to test the week's high. One type of reversal my firm looks at involves an upthrust of the previous day's high followed by a close below a given number of days.

Today if we close below X, we'll have a 2-close reversal (closing below prior 2 days after an upthrust); if we close below Y, we'll have a more bearish 4-close reversal (closing below prior 4 days after an upthrust).

So, if a high probability short is initiated close to the high of the week and it can work long enough (intraday) to offer partial profits offsetting risk to new highs for the day, then a short position can be held with a lot less mental energy and with indifference as to outcome.


Randoms - Fil Zucchi - 11:17 AM

  • Dr. J noted earlier that Blackstone has already put on the market a bunch of Equity Office Properties (EOP) buildings. Why wouldn't they? The deals have stopped being based on cash flow / cap rates a long time ago. We are in the full fledged "flipping" portion of the show. Remember this?

  • Minyan Neal G. wrote me in amazement at the fact that the New Century (NEW) blow-up did not even cause a blink in the credit markets. After all, this is an outfit with $22 bln in debt on its balance sheet - much of it categorized as not subprime - which just revealed its credentials as a graduate of the Aunt Fannie (FNM) school of bookkeeping. While I am amazed as well, the fact remains that by now we should just accept that these types of events are not likely to be the catalysts that collapse the house of cards. Or at least, as a function of the how fast money is being printed (if you believe the reconstituted M3 figures brought to us by Prof. Sedacca), $22 bln may not be that much any more. My sense is that the actual catalyst will reveal itself in a "aahh..." moment, as in "aahhh... who'd have thunk it!?"

  • The golden one has broken through $668 (looking at YGJ07 contract). A couple of closes above that devilish $666 and we may well be off to the races.

  • Prof. Krueger knows much more about this name than I do, but Quintana Maritime (QMAR) has a sweet looking chart, a 6.3% yield, and is a very nice collateral play to Bunge's (BG) booming business.


Positions in QMAR, YGJ07



What You Need to Know... - Jon Doctor J Najarian - 8:28 AM

Greyhound's Been Bought! The biggest bus company in the UK has agreed to buy Laidlaw International, the U.S. operator of inter-city Greyhound buses, for $2.8 billion plus debt. FirstGroup, which runs one in five busses in Britain and carries 2.8 million passengers a day will add Greyhound's 3,100 US destinations and 16,000 departures per day to its empire.

US Steel (X) Gets CIBC Downgrade – The global brokerage took X to sector performer from sector outperformer citing valuation. "While we believe recent production discipline by the North American steel producers could justify a valuation re-rating of steel-related equities, we believe this may be already reflected in the share price."

Blackstone To Sell Portion of Real Estate Portfolio – Just hours after finishing the deal to own Equity Office Properties (EOP) real estate portfolio, Blackstone announced it is selling office buildings in Seattle and Washington, D.C., to Beacon Capital for some $6.5 billion. This is the second sale this week by Blackstone, which also sold a group of NY office buildings to Macklowe for $7 billion.

JPM Goes Positive on Semis - J.P. Morgan upgraded its outlook on the U.S. semiconductor sector to bullish from cautious, saying that several leading indicators are bottoming and should begin to improve in the second quarter of 2007. JPM's top picks that it took to overweight are Texas Instruments (TXN), Microchip (MCHP) and Nvidia (NVDA).

Automakers Get Multiple Upgrades – Deutsche Bank upgraded Ford (F) and General Motors (GM) and Citi did the same for Chrysler (DCX) this morning. Deutsche said the positive outcome for negotiations on healthcare could improve GM's and Ford's flexibility in restructuring and re-sizing their businesses for profitability. Citi lifted it price target for DCX by nearly 33%!

Positions in F, TXN, NVDA

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