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Buzz Bits: Markets Gain Ground


Your daily Buzz highlights....


Earnings Report - MV News

Hot Topic
(HOTT) reported Q4 EPS of $0.23 vs $0.22 on revs of $230.4 mln vs $228.64 mln cons.

Flashback! - Bill Meehan - 3:17 PM

This day in market history...
  • Closing levels 4 years ago:
    • DJIA: 10,607.23
    • Naz: 1868.30
    • S&P 500: 1166.1
    • Crude: 24.47
    • Gold: 289.

This day in Minyanville history...

  • In '04, Prof. Roney looked at a chart of the S&P500 in March Madness. More importantly I blame him for jinxing UK as they lost in the 2nd round to UAB, a team they'll face again on Friday.

In other news...

  • In 44B.C. on the Ides of March, Julius Caesar was assassinated.

Dressed myself in green
I went down unto the sea - Todd Harrison - 2:31 PM

The Minx triggers the level of lore (S&P 1300) and the gigglefest is officially upon us. We knew that there were a slew of buy stops on the other side of that ride and, true to form, they're being elected as we speak. The question on the lips of the critters is whether the white towels morph into yellow flags.

What am I looking at? The breadth (working 9:5), flat financials (the BKX is probing acne of its own), strong cyclicals (DD, CAT, DE), laggy nets (Google tetherballin' the 200-day), the clock (Succofest is good for the soul), SunMicro (+3%) and S&P 1305 (that's my ripcord on the metaphorical fur).

This particular effort hasn't been my finest foot forward but 15 handles (if I'm stopped out) is digestible in the context of a long, hard road. I've learned over the years not to celebrate wins (humility is a virtue) and not to beat myself up on the misses (they're inevitable). Smooth the process around the mean of emotion and focus on the mechanics of the swing.

As always, I hope this finds you enjoying the journey.


Position in SUNW

Getting With the Times - Sanjay Somaney - 1:26 PM

Sify (SIFY)
was initiated with a BUY this morning at Kaufman Brothers and with a $17 price target. Way too understated in my opinion.

What leads me to believe that Kaufman's target is way too conservative are the following facts as per the Internet and Mobile Association of India-IAMAI:
  • As of December 2005, there were 28 million internet users in India for a penetration rate of less than 3%. Shameful for a country with a population of over a billion.
  • IAMAI is projecting Indian internet users to balloon to 100 million by 2008. My take is we will see at least 50% upside to that number by 2008. I think by year end 2007 we will be at the 100 million internet user mark in India.
  • I think by 2010, internet penetration will hit 20% or over 200 million users. My optimism is based on the fact that over 81% of India's population is below the age of 39 and about 47% of India 's population is between the ages of 10 and 29. That's over 500 million people, folks. Prime candidates for cutting age technologies like cell phones, internet et al.
  • IAMAI also says that more than 60% of e-commerce transactions are done by 20-40 year olds which is a demographic group that covers about 420 million people in India.

SIFY and Rediff (REDF) are must owns for the next five years. I am not going to sit here and blow smoke up your butts about these two being the Google of India. That's pure bull and shilling. But I can tell you these guys will be like the Chinese internets in terms of valuation. Market cap in the billions and not millions.

Positions in SIFY, REDF

Randoms - Fill Zucchi - 12:48 PM

  • But for the fact that I pondered the caption of these randoms for almost a half hour, they would have been finished a long time ago. But, as you can tell, it was time well spent.
  • According to Miller Tabak's Tony Crescenzi " data just released by the Treasury Department indicate that it sold a net $16.6 billion of Treasuries in January, its largest sale ever and the most in percentage terms since March 2000."
  • If H&R Block (HRB) can't prepare its own taxes and has issues with its investment offerings, what happens when its sub-prime mortgage portfolio comes home to roost?
  • Today is a great day to trade. . . if you enjoy herding cats.
  • North Fork Bank's (NFB) officers will reportedly rake in hundreds of millions of dollars if Capital One's (COF) buy-out goes through. From the standpoint of COF's shareholders that gives a whole new meaning to the concept of "goodwill."
  • With the NAHB Index of Buyer's Traffic down to 39 going into the spring selling season, it looks like "they are building them but they may not be coming."

Position in COF

We're Pin Jammin' - Adam Warner - 12:30 PM

I began that monthly scan for Expiration pin candidates, and so far, I have come up with precious little, which I suppose is interesting in its own right in that it suggests a more volatile Triple Witch day than usual.

Anyway, the best candidate I came up with was Intel (INTC), one of America's most boring options. With the stock at 19.80, over 180,000 contracts remain outstanding on the 20 line. This pup has less energy than I do between caffeine "upgrades," so getting away from 20 before Friday feels unlikely. But alas, the 20 calls are virtual wallpaper already, so not much play here.

Yen Crazy - John Succo -
12:16 PM

So, we hear a lot of talk about going off the booze and raising rates. They say they are going to, and then someone says not yet. Who is this someone?

Japan is the engine of world liquidity. The U.S. is not because no one really wants the dollar anymore, while everyone wants the yen. When I say "want" I mean if interest rates between the two countries were relatively parallel, private investors would seek the currency of potential growth.

But interest rates are very different. The five-year in the U.S.
yields 4.66% while the five year in Japan yields only 1.23%.

The way I look at it is that the U.S.
must pay borrowers 350 basis points more to bring in capital than Japan. As I said, no one wants the dollar. If Japan raised their interest rates, then the U.S. would have to as well or else the dollar would drop.

This, I believe is the cause of the reluctance to raise rates in Japan. If Japan decides to raise rates we will not see the Fed stop raising Fed funds anytime soon. They can't.

Right now the global economy needs free money (nominal rates less inflation I believe is zero) to keep growing). The problem is that this creates more debt and more capacity, the very problem central banks face by their policies.

I am on record saying that eventually central banks will not be able to deflate the credit bubble and keep growth going. The eventual result is either hyper-inflation or deflation.

Hey, trading is kinda like Ultimate Fighting! - Jason Goepfert - 9:52 AM

For the first time since March 5, 2005, the S&P 500 closed at a new yearly high while the NDX was still languishing at least 4% below its own high. Prior to that, we'd have to go back to December 1997 for the next most recent occurrence.

Recall that last March, the S&P then topped out the next day and slid into the April low. In 1997, it topped out that very day and shed 5% over the next 13 days before resuming its advance.

Over the past 20 years, we've seen 8 of these types of divergences, and on average the S&P 500 formed at least a short-term top within 4 trading days, suffering a 4% correction over about a three-week period.

It's one more pattern that suggests that if we should happen to enjoy a run here in the coming days, it will likely not last very long before equities get head-butted.

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