Buzz Bits: Markets End the Day Mixed
Your daily Buzz highlights...
Earnings Report - MV News
American Int'l Group (AIG) reported Q4 EPS of $0.17 vs $0.31 cons on revs of $27.4 bln vs $22.9 bln cons.
For whom the bell Tolls? - Kevin Depew - 3:35 PM
- Minyan Richard asked about Toll Brothers (TOL) and Caterpillar (CAT) technically.
- On a PnF basis TOL remains below important long-term downtrend resistance in the mid 40s, but has reversed up on the chart and will break a double top at 35. As well, TOL has registered DeMark TD-Sequential and TD-Combo 13 buy signals on the weekly chart. Not advice, but I see room to resistance at 39, then 43.
- CAT is testing resistance here at 75 on a PnF basis. No clear DeMark signals on the daily chart, but I would note the PnF price objective of 70 has been met and exceeded.
Flashback! - Bill Meehan - 3:34 PM
This day in market history...
- Closing levels 11 years ago
- DJIA: 4069.15
- Naz: 809.34
- S&P 500: 495.41
- Crude: 18.18
- Gold: 383.70
This day in Minyanville history...
- Prof. Zucchi entertained us with some "Perfect Storm" Randoms
In other news...
- In 1915, the Federal Trade Commission began operation with 5 commissioners paid $10k to regulate commerce and prohibit unlawful trade.
The moment of truth, it seems is upon us..... - Bennet Sedacca - 2:49 PM
We have focused on this chart for a while in 10's. The downtrend line is still intact so Strike # 1 exists. But there are two lines of defense, one of which has been violated, the other still alive. This is getting too close for comfort.
Fundamentally, we are pretty darned sure we will have a 5% Funds rate in a couple of months and if tens and the rest of the curve remain here, I believe that Bernanke would play his inverted yield curve moral hazard card. Stocks act like it, but the giddiness on TV in stocks is rough to take. We are remaining flexible, owning high quality 2-3 year Treasury and MBS. But note to self: Don't be stubborn. For now, we are looking to lighten equities in the next 10-15 days, even if it 'feels wrong.'
Many times, the trades that feel the hardest are the smartest.....
Position in Treasuries and MBS
Pat on the Back - Sanjay Somaney - 2:34 PM
Patni Computer Systems (PTI) was up 4.81% in India on the heels of a Citigroup research report that pretty much talked about the same stuff I did yesterday in our Diary; namely.
- Minimum 25% rev growth over the next two years
- Margins expanding
- EBIT growth will continue
- Demand Increasing
- General Motors (GM) declining as a percentage of revenues, a good thing
- ABN AMRO win is a big one and a high-growth account for PTI
- Offshore demand very strong. Minimum 30% growth over the next 5 years.
Position in PTI
A glimpse at the process - Fil Zucchi - 2:11 PM
- Best trade so far this year? Shorting Advanced Micro Devices (AMD) off the pop from the Intel (INTC) warning.
- Worst trade so far this year? Taking the dark side of Capital One (COF).
- I am not talking about percentage returns on the trades, rather the thought process that led me to them. I shorted AMD because bad news for INTC - THE 900 lbs gorilla in CPU's - can only mean a tougher environment for AMD down the road; given where AMD stood at the time there was very little bad news baked in the price. (By the way, despite some leftover options, the AMD trade is now closed).
- On the other paw, I shorted COF based on the never ending overarching macro theme that the consumer is toast. Great "philosophizing" on my part, but so far it ain't happening. The fact that COF's stock price got dented by the North Fork (NFB) buyout is besides the point.
- Is there a moral to this story? Maybe that to play specific companies it's best to go right after those specific companies, while to play the macro trends is probably best to use macro tools.
Position in COF, AMD, INTC
Watch Those Financials - Tom Peterson - 1:51 PM
We noted the other day that Goldman (GS) had a $149 PnF upper limit target and that if it got there it may have to consolidate. So far it has not been able to extend its gains above $149. Then we had Bear's (BSC) great quarter today.
But BSC has a different appearance than GS. It shows that substantial distribution has been occurring into this new high zone. And it shows a loss of relative strength. So at best it should have to consolidate here too, in this case above $128 -130. If it breaks $130 the next support area is around the 50-day at $127.61 (and rising). However, today's reversal looks pretty emphatic and it may be the beginning of a more major top. We note that stocks usually top when they make peak earnings. Only time will tell if this is peak earnings for BSC, but the tale of the tape right now suggests it is, so shareholders should prepare themselves for this possibility. Keep an eye on whether short interest starts to rise from here forward also. Shorts will probably sell it against a close above $137.60. TRP
See the chart here.
Pay No Attention to the Put/Call Behind the Curtain - Adam Warner - 1:27 PM
Not sure I have ever seen numbers like this, but the CBOE put/call is at .21 as I write. What's going on?
Well, the SPY goes ex-dividend, and apparently everyone and their hedgie friend is putting on a dividend play in the March calls. This involves buying or selling a directionally neutral March call spread, such as the March 127-128, exercising the calls you own, and hoping you do not get assigned the calls you short as part of the spread. With expiration tomorrow, there is little risk the SPY goes below the strike you may get short.
Position in SPY
Chatting with the Profs - John Succo - 10:36 AM
Here is a conversation I had with Fil. The 25% chance statistic is the delta of the option: the probability that the stock ends up in the money.
Zucchi: John - the Akami Technologies (AKAM) Apr 30c look silly cheap to me, especially given the posture of the chart; any thoughts?
Zucchi: if people latch on to the possible breakout u could see 30 in one day
Succo: they are cheap to fair yes
Succo: well yes
Succo: that is directional
Succo: from a vol perspective cheap to fair
Succo: price is saying there is 25% chance stock goes above 30
Succo: if u think the chances are higher than that u should buy them
Zucchi: Yes - I did - shorted a bit of stock against it
Zucchi position in AKAM
Streaker! - Todd Harrison - 9:49 AM
That "bad visual" you just had was me undressing from my bear costume. My concerns remain but, from a defined risk standpoint, I'm stepping aside on my trading try. The next time I'm at the table, remind me to grab those fifteen S&P handles back.
Is expiration helping Hoofy? Quite possibly--we know alotta dealers were short upside calls (S&P 1300,1325 and QQQQ 42). The path of maximum frustration may include the evaporation of March puts before the crimson tide arrives.
The Matador Crowd will lean against S&P 1300 as a bovine back stop. Why? The triple nipple, evolving acne (see the IWM and BKX) and the simple fact that past resistance is future support. Just remember, Minyans, technicals are but one of our four primary metrics?
Indifference to Macro Imbalances - William Fleckenstein - 8:00 AM
Looking at yesterday's macro data du jour, the TIC report was interesting in that it marked the second consecutive month where foreign inflows were less than the trade deficit. Thus, yet another data point, on top of Tuesday's current-account deficit, which underscores my point that the news doesn't matter until it matters. In the meantime, it's worth keeping our eye on.
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