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Buzz Bits: Markets Rebound


Your daily Buzz highlights...


Quick thoughts into the weekend... - David Miller - 3:38 PM

  • Man, am I jazzed about MIM3!
  • Biotech looks to be losing buying support on the charts I follow. Odd thing is that the pattern seems to presage a basing pattern. That said, it feels a little different this time. I think we're good for more gains between now and the end of the year, but I'm not sure I'd put all my capital at work today. (FYI, any statement with the word "feel" in it is obviously not advice!)
  • Antigenics (AGEN) clobbered a lot of individual investors. Not only do drugs have to be scientifically sound, the management teams that own them have to be able to run good trials. You cannot separate one from the other.
  • I've seen two analysts lower their ratings on a stock from buy to hold while raising their price targets this week. What's up with that?
  • After my panel performance on Tuesday, I was approached by three VCs who are looking to invest in the public biotech market instead of the over-valued private market. We detected this trend about a year ago and I think it will only get stronger.
  • Toddo, I'll see your We Built This City and raise you the theme song from Mr. Roger's Neighborhood. For those old enough to remember the dial-up BBS world, you can alternately title this bullet point "Tunez in your Head."

Flashback! - Bill Meehan - 3:13 PM

This day in market history...

  • Closing levels 7 years ago:
    • DJIA: 9,666.84
    • Naz: 2,365
    • S&P 500: 1,268.59
    • Crude: 15.18
    • Gold: 284.25

This day in Minyanville.history...

In other news...

  • In 1989, the Exxon Valdez spilled 11 million gallons of crude oil into Alaska's Prince William Sound.

I know I shouldn't do this - I know I shouldn't say this - I know I know I know but...... - Bennet Sedacca - 2:28 PM

I have been pinging back and forth with folks (some of which like my hero Toddo) that I disagree with on the Intel (INTC) call. I am not a tech analyst but I understand companies' earnings and balance sheets.

See the attached chart. On November 10, 2005, under much fanfare and ballyhoo, INTC announced a $25,000,000,000 buyback. Now, best I can tell, they only have half of that in cash. They are losing ground to Advanced Micro Devices (AMD) and keep lowering guidance. A rational thing to do? Hoard the cash or invest in R&D? But nooooo. They have to lever up to cover up the lousy fundamentals and options issuance.

Where was the stock when they announced the buyback? Like 25 1/4. Well, how do you like me at 19.55 (no disrespect meant to my friends that own it)? But, I openly wonder if they didn't know bad news was coming and that the buyback is here to keep it from going to where it belongs, at, like, 12. Anyway, I got that off my chest and hope it didn't offend any of my friends that are holders.

Incidentally, I doubt this is the only company behaving irrationally like this. I know Succo would agree......

Have a great weekend!

More than one type of March Madness - Fil Zucchi - 1:14 PM

Let's recap yesterday's existing home sales numbers and this morning's new home sales.

  • First, existing home sales measure "closings" of sale contracts executed 60-120 days before. So what was reported as existing sales yesterday were in fact sales that occur between November and January.
  • Second, month's supply of existing homes was unchanged, despite the spike in sales - which strongly suggests homes are being dumped on the market at least as fast as they are sold.
  • Third, new home sales reflect contracts signed last month - not closings - so that tells us that the market is doing a face plant.
  • Fourth, not only new sales are doing a face plant, but month's supply of new homes jumped up a full month. That suggests that either homes (most likely condos) are being built "spec" or cancellations are leaving inventory on the market.
  • Fifth, median prices down across the board.

Res ipsa loquitur

I now return to my regularly scheduled vacation in bone chilling Amelia Island, Florida

Position in homebuilders

Whoa, Boy! - Jason Goepfert - 12:23 PM

The TRIN on the NYSE has been hanging at or below 0.40 most of today. This is extremely unusual behavior. We saw something similar on Tuesday on the Nasdaq right before it reversed, and to see two such incredible readings so close to each other is even more odd.

We typically gets these types of low readings intraday only when coming out of intermediate-term downlegs. We saw it right after the lows in March, May and August 2004, for example.

It's much more rare to see them after the market has already rallied. About the only recent occurrences I can find are June 7, 2004 and October 1, 2004. After both of those, any further upside in equities was not sustained.

Deep Friday Thoughts - Adam Warner - 12:15 PM
  • The IWM implied volatility continues to trade 20% above the historical volatility of the stock. If I had a dime every time someone got on TV over the last 5 years and told me it was time to switch over to Big Cap, I would be hosting my own Reality Show on NBC by now.
  • Volatility is getting slapped in the Google (GOOG), down 10% or so. The "news" is finally out, now what?
  • Love the concept of upgrading GOOG this morning, "predicting" a reaction that has already happened. Who do they like in last night's Duke game?
  • Is there really a pent up demand to buy sushi at Wal-Mart?
  • I am boycotting BP Gas until they tell me my carbon footprint.

Position in IWM, GOOG

Crawl don't run - Vitaliy Katsenelson - 10:36 AM

Intel (INTC) looks interesting at this point. I looked at it and decided to wait on buying the stock. The Advanced Micro Devices (AMD) threat doesn't worry me that much, they've been a rounding error on INTC's cash balance.

I am concerned about the computer upgrade cycle nearing the end, not the beginning. Laptops were a great help, and I could be wrong but it appears that the high growth is nearing the end there, at least for awhile. Microsoft's (MSFT) Vista will help to reignite the future upgrade cycle as it demands a more powerful computer. Though most of the demands from Vista are on graphics, not processing. Most consumers will not see the distinction and they'll buy a new computer instead of buying a new graphics card.

Laptops did help Intel's upgrade cycle as laptop users upgrade their laptops every two years or so, versus four years for PC users. On discounted cash flows, today's valuation is very appealing, on P/E it appears to be fairly valued - in other words it doesn't have much margin of safety, at least not in my estimation. I feel like I don't have to run to own INTC, so I am crawling, waiting for an opportunity to present itself.

Position in MSFT

The Gaggle Haggle - Todd Harrison - 8:09 AM

Google was added to the S&P and the bulls are gigglin' to the tune of ten percent. Minyan Dennis asked me about this a few weeks ago, as he knew I faded Yahoo! when it was added way back when.

As I told him, that was a different world and a different set-up, so it's apples and oranges. Yahoo! was uber-extended during a manic euphoria, whereas Google is (was?) twisty oversold while the broader market is basing above recent acne support.

So, while much of this demand is artificial and nothing has changed with regard to Google fundies, I'm not laying into this particular issue. It's too crowded and there are better edges in my universe.


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