Buzz Bits: DOW, Nasdaq Fall
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Sorry Minyans, the Minx is busy right now - Fil Zucchi - 2:15 AM
As I watch paint dry, the Minx is prolly watching the early March Madness festivities because trading is thin and thinner. That being said, keep an eye on yesterday's lows, as a break that sticks for more than a few minutes might turn into something meaningfully uglier. My guess? Momentum indicators are positively divergent in this pull back. A "double bottom" on the short term charts (60 minutes) could serve as a base for a sharp rally tomorrow which in turn could set up a most excellent short opportunity going into next week's options funeral.
Your guess is as good as mine, Minyans, as to what will actually happen - just sharing the voices in my head.
Meanwhile for a visual of what the process of forming a top looks like, pull up a weekly chart of Brookfield Homes (BHS). Being a relatively small homebuilder, without options, and majority controlled, I am not going to mess with it. But toss in divergent block money flow, and that's a chart not even Hoofy could love.
Now back to Madison Square Garden where it would save us all 39 minutes of assorted agonies if they just put 60 seconds on the clock and a tie score.
Mini-Minyan Mailbag - Todd Harrison - 1:45 PM
"Toddo, I'm no expert in technical analysis but the chart on INTC looks very UGLY. I think it could easily break from here. Thoughts appreciated? Minyan NG"
With a conscious understanding that technicals are but one of four primary metrics that dictate the price action (fundies, structural and psychology being the others), I'll offer the following vibes.
We often talk of field position when assimilating news. Given the fact that Intel is 25% off its January peak, the potential exists that a fair amount of the recent news is reflected in the stock (equities are a leading indicator).
With that said, we must also note that A) the NDX is dangerously close to triggering some dandruff (and Intel is 3% of that index), B) $20 will likely provide some stickiness as a function of March expiration and C) Intel 19.65 is a double bottom from 2004. So, for those looking to define risk, that's a fairly tight profile.
Hope this helps, my friend.
Can you search for the future on Google? - Tom Peterson - 1:31 PM
Google (GOOG) is back to test its 200-day m.a. now. It still shows recent positive money flow. It seems traders were too quick to buy the last shakeout on Feb. 28th and there were too many coat-tailers that need flushing. Thus there was a very normal refusal at the broken support area (a.k.a. the '"ice") at the $400 plateau.
If one wanted to assign an Elliott count, it would probably look like what I have numbered in the attached chart. If that is correct, it has a 5th wave yet to be completed. That 5th wave may take it into a better test of the arbitrarily drawn blue trendline. If it tests that line it will also be a good test of the $320 area it broke out from back in October. If it breaks the 200 day m.a., which seems quite possible, then it will break a lot of hearts and probably cause some margin selling and capitulation.
Thus any dip down to the $320 -330 support would seem to be a good risk/reward buying opportunity as long as one has strict loss discipline. Of course, the stock seems very high priced on a sales multiple basis. Today's news on the settlement may be 'immaterial' to use the Google spokesman's phrase, but it may also open the door for others (we previously have mentioned the dissatisfaction amongst companies paying Google for click-thru ads from last Christmas).
On the positive side, there are inklings that GOOG may be able to pull a Q1 surprise out of their hats. So that is a potential added positive on a new entry. Buyers could take a stab at buying this test of the 200-day, but they should be prepared for a probe to $320 - 330 where sizable demand is more likely and the risk is lower. As always the decision will probably rest on how well one has judged the fundamentals. The technical indicators tell us where demand should arrive, but right now sellers are still in control. TRP
Fur Balls! - Boo the Bear - 11:50 AM
Hey Hoofy, while you're enjoying the fruits of your manual labor, I'll note that Google is getting gaggled (-$5), the HGX is rolling, rolling, rolling over and the piggies are wafflin' a bit as we edge to our daily hump.
I see the 2:1 breadth and, as Toddo noted, that's a feather in your cap. But as you're A.D.D (just like me), I'll remind you that the internals were nosty yesterday before Snapper saved the day. Yes, they sometimes laggards, so respect--don't defer--to any single tell.
And please pass my Daisy's phone number--I've got some thoughts on mutual homogenization that she may wanna hear.
Mini-Minyan Mailbag - Kevin Depew - 11:33 AM
Prof. Kev -
As I am reviewing charts in many sectors etc., it looks to me that NOTHING looks very good... Everything from metals, oils, housing, most biotech, retail, etc. looks broken down with a possible bounce. Do you see the same thing?
Dear MS -
According to traditional PnF indicators, market and sector risk is very high. In addition, when I review DeMark TD-Sequential and TD-Combo indicators on long-term monthly charts, I see potential setups and signals that are nearer long-term buying exhaustion points across most sectors and indices. On a monthly basis, there are 13s (sell) active in the SPX, NDX, HGX, XBD, UTIL, CYC, TRAN, CRB Index and a 12 in the INDU, to name just a few.
That does not mean things will collapse from here, and these can be "active" for months before a move completes or possibly even "resets." But occurring as they are in so many indices and sectors simultaneously, it does, in my opinion, raise the probabilities that we are nearing an important inflection point.
Classic tell - Herb Greenberg - 11:17 AM
Why do I get the impression that I top-ticked Hansen by tossing in the towel? Anyone? (Hint: Because that's ALWAYS the case.) I do want to make this very clear: While I've said I'm tossing in the towel, Hansen remains firmly on the radar. I'm just basically conceding I was wrong. It could be argued that it is riskier now than ever. I continue to believe that any misstep will lead to a rapid reversal of momentum.
Interestingly, after a brief knee-jerk, the stock has cooled. Could that be because every short-seller with half-a-brain has covered? Quite possibly. If so, that would mean that if what goes up ever goes down, based on any disappointing news, the landing will be hard. It could also mean, of course, that investors are waiting to hear what the company says on its conference call at 2:30 ET.
A little bit of trivia on volatility--but you need a strong stomach to view. Be forewarned! - Bennet Sedacca - 9:20 AM
OK. So everyone is 'selling vol' like naked puts and calls to 'generate income.' Personally, I generate income by buying bonds, but that is a story for another time. Check out THIS chart. I have said that I am old - even Toddo just called me OLD (in a nice way). But those of us who were around in 1987 can't forget the Crash. I actually printed the screen from the end of the day and kept it, it was so unbelievable.
What got that rolling? Something called 'portfolio insurance.' That was invented to protect people from losing in a down market by a bunch of 'rocket scientists' - obviously they should have stuck to rockets. Anyway, notice the spike in vol from VXO 20 to almost 200. The old VIX as I recall traded near 250. Why? Because people had stock put to them which they had to sell which triggered the portfolio insurance implosion. I saw pads of paper of margin calls 10 pages long with some rather LARGE numbers on 'em.
The point? Trades with high risk and low reward are silly. That is the educational part of my story. Will it happen to all the put sellers again? Don't know. What I do know, and how I have earned returns I am proud of over the long run, is to 'buy from the fearful and sell to the greedy.' IOW, go for low risk/high reward trades, particularly when leverage is involved. Not advice, fellow Minyans, but having lived through some of those tough times, it is fun to share.
You used your 'get out of jail free' card - David Miller - 8:58 AM
As expected, the FDA Advisory panel recommended to the FDA to put Tysabri back on the market. The panel seemed to think having to ship the drug one vial at a time was a little too much, but they otherwise generally agreed with the FDA and BiogenIdec's (BIIB) plans for strict doctor training, risk/benefit disclosure, and patient tracking for the drug.
Wall Street bulls were giddy, with one analyst raising his BIIB price target from $38 to $68 after the panel. While this is unquestionably good news for the company, please remember that the FDA is not bound by the advisory panel votes. Even though the panel said there didn't need to be any more studies, I would not be surprised to see the FDA simply continue the Subpart H approval status of Tysabri so they can control the advertising. The panel also said Tysabri could be used first line, an unexpected win for BiogenIdec. I also would not be surprised if the FDA ignores this vote and decides to limit the drug to second-line patients (those patients for whom other drugs have stopped working).
BIIB's short interest dropped almost 4M shares to 6.3M over the last two months, but this decision will still hurt the Tysabri bears. Both BiogenIDec and partner Elan (ELN) saw their stocks up significantly in after-hours trading. If you're playing this morning, please use limit orders.
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