Buzz Bits: Nasdaq, DOW Drop
Your daily Buzz highlights...
Earnings Report - MV News
Palm Inc (PALM) reported EPS of $0.19 vs $0.17 cons on revs of $388.5 mln vs $377.7 mln cons. The company shipped 564k Treo units vs 575k exp.
Mini-Minyan Mailbag - John Succo - 3:36 PM
I was wondering if anyone found any importance in the failed government bond auctions in Iceland? Is it common for a developed nation to have a failed government auction? This reminded me of what Prof. Succo has written about the US; the Fed not being in control of interest rates and investors/foreigners demanding higher yields. Thanks.
Chilly reception for Icelandic bonds
Before 1987 world markets were much less correlated than they are today. With the proliferation of central bank intervention, that has changed. Financial markets are much more interwoven than they used to be. I do view it as portending of things to come.
Flashback! - Bill Meehan - 2:56 PM
This day in market history...
- Closing levels 5 years ago:
- DJIA: 9,504.78
- Naz: 1928.68
- S&P 500: 1139.83
- Crude: 27.31
- Gold: 261.7
This day in Minyanville.history...
- In '04 Prof. McGuirk sped things up as he put the Pedal to the Metals.
In other news...
- In 1806, Lewis and Clark became the first explorers to reach the Pacific Coast. They then celebrated by doing a 180 and heading back.
Saint Hoofy with a Rose
In and out of the Market he Goes... - Todd Harrison - 1:35 PM
The Minx slinks through the dew as critters wonder what to do. While I've been accused of having a bearish bent at times (moi?)--and I'll argue that I have been bullish, I've simply focused on energy and metals--I'm sorta, kinda getting the feel that Hoofy is trying to rally the troops. Here's what I'm watching for clues for a fuse...
- Citigroup. The stealth traction is impressive but it's now at uber-important resistance ($48). How it acts "in and around here" will be an important tell. I'm also watching Goldman in the financial space as, well, it's the second best read in that arena.
- Intel. ThankyousirmayIhaveanother?!? The sell-side continues to throw number cuts at the Mother Chip and it's thus far absorbing 'em. If it can hold the 2004 double bogie ($19.65), alotta bears might get caught leaning the wrong way (how do they know where we're leaning?)
- Breadth. It was bunk, now it's flatter than Fokker's first girlfriend. I like to use this as a primary tell only when it's skewed 2:1 (either way) but it remains on our radar.
- Microsoft. $26.50. Enough said.
- Rotation Station. Not all motion is created equally. I continue to think that sector rotation offers ample opportunity for incremental reward. In that vein, and as you know, I'm diggin' the semis over the financials at present.
- The clock and calendar. Why? March Madness, for one, as the "non-winners" always step up for children's education. And, casting our eyes forward, MIM3 is less than five months away and the critters are jacked to vibe in the mountains with the very best in human capital.
Position in INTC, metals
Builders: - Tom Peterson - 1:07 PM
Most of the stocks in this group appear broken on a daily basis, but not so bad on a weekly basis.
Centex (CTX) is struggling, but so far it has not broken below the main trend line and money flow is okay recently (but fading in just the past few days). See the chart here.
Ditto for Lennar (LEN). See the chart here.
Both also show a loss of momentum and volume has been dropping, which is another possible sign of distribution. We would not be surprised to see at least a partial rebound from these trendlines, but we would also expect a lower high to result unless money flow can quickly become more robust in coming days.
A quick note... - Jason Roney - 11:54 AM
The PHLX Semiconductor Index (SOX) looks suspiciously big today despite the overall market weakness. This is the tightest 5-day closing range in almost 10 years on the SOX. The difference in the highest close and the lowest close over the past five days is a little less than .5%! This is not a directional tell, but I'm not sure I would wanna be short vol on the SOX near-term after that kind of consolidation.
Deserve's Got Nothin' to Do With It - Kevin Depew - 11:35 AM
In the movie Unforgiven, as William "Bill" Munny holds a shotgun to his face, Little Bill Daggett pleads, "I don't deserve this..." Bill Munny replies, "Deserve's got nothin' to do with it." Then he pulls the trigger. What does that have to do with trading and financial markets? Everything. Deserve's got nothin' to do with it. Some of the feedback I've received about comments made on housing, for example, contain an element of... personal attachment, of self-identification. This is natural. But it is wrong. And it is wrong because it is natural.
More than a decade ago, when training as a stock broker, I was taught to make it personal. "People don't want to buy a stock, they want to buy a story," the trainers said. This was institutionalized in the firm's training program and was written down in the sales manual. Because we are human, one of the most difficult things to accept is that the market does not care about us, and that deserve indeed has nothing to do with it. It is not personal. The market couldn't care less whether we make money or lose money.
This is true whether we are talking about housing or a mutual fund. Evidence that housing is slowing does not make someone who owns a house dumb, or necessarily a victim. It is simply a fact supported by a set of data that does not care why you own a house or what you plan to do with it.
Rome wasn't burnt in a day. - Rod David - 9:28 AM
One day's gain does not equate to a reversal. Wednesday's rally is considered to be a correction of Tuesday afternoon's decline. The gain held a Fibonacci 61.8% retracement of the decline from last Thursday's high. Total volume was depressed from Wednesday's below-average pace. The gain also peaked upon testing the "higher prior lows" of the consolidation from last Tuesday through Thursday. And since those higher prior lows were touched, Thursday's open is all but required to gap up to new highs in order to avoid a resumption of Tuesday afternoon's decline.
The Dow meanwhile recovered nearly all of Tuesday's loss, while the NDX ranged narrowly. The Dow's outperformance of the broader-based S&Ps reflects a cautious bullishness, underscored by the lack of speculation that might otherwise have sent NDX sharply higher, too. Neither reflects base-building that would sustain a new rally leg. But also, neither precludes Thursday's market from printing higher highs intraday. The factors just make higher highs unlikely, or unlikely to be maintained.
An interesting development in ARM (Adjustable Rate Mortgages) land..... - Bennet Sedacca - 9:25 AM
Past readers know that we have been buyers as a stealthy way to play a cooling in the speculative side of housing - see the article here. I have noticed something I find anecdotally significant, and thankfully significant in our client holdings the last month or two.
We all know that most of the speculative real estate that was bought was financed with either Interest Only ARM's, HELOC's or anything else that a lender could squeeze by an underwriter. We were buyers of the ARM's for several reasons including constantly higher coupons.
As rates on ARM's (check out Bond Basics piece for definition) increased above fixed rate bonds, we saw a 'pop' in increased prepays and speculators ran to lock those rates in. Then a funny thing happened (not for the mortgage holder), ARM prepays, in our portfolios at least, fell off a cliff? (We are delighted to keep those higher coupons for longer periods, which was the plan in the first place.) Why? Most likely, prices have fallen in these speculative areas and the equity is gone. Nada. Kaput. The market has basically stopped as Professor Reamer alluded to yesterday in his buzz. Also, rents are falling as speculators who can't sell are scurrying to rent. I know the guy that bought my place in Florida is doing so......
This is extremely important anecdotal evidence that at least the speculative part of the market has cooled, if not ready to crash and burn. I would pay attention to this. Not advice, but important nonetheless.
Position in MBS/ARMs
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