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Buzz Bits: Monday Markets Mixed


Your daily Buzz highlights...


Earnings Report - MV News

  • Alcoa (AA) reported EPS of $0.69 vs $0.52 cons on revs of $7.24 bln vs $7.12 bln cons

  • Micron (MU) reported EPS of $0.27, though may not be comparable to $0.06 cons, on revs of $1.2 bln vs $1.34 bln cons.

Flashback! - Bill Meehan - 3:43 PM

This day in market history...
  • Closing levels 3 years ago
    • DJIA: 8,221.33
    • Naz: 1,365.61
    • S&P 500: 871.58
    • Crude: 27.20
    • Gold: 326.60

This day in Minyanville history...

  • In '03, Toddo and the critters talked tape and philanthropy in Miracle Worker

In other news...

  • In 1970, Paul McCartney officially resigned from the Beatles while Let It Be was still at the top of the charts.

Spring Fever - Kevin Depew - 3:30 PM

  • The range in the SPY has expanded a bit since earlier this afternoon but, again, for now the support levels cited this morning remain intact.
  • Meanwhile, the SPX is showing relative and absolute positive performance versus the Russell 2000 today, the former up .4%, while the RUT is off .6%. Since February 1, however, the RUT is up 2.8% compared to just 1% for the SPX.
  • A few minutes ago Fil noted the "heebeejeebee" pattern forming in the XAU. Sure, it's been a long time since I traded a confirmed "heebeejeebee" break, but I gotta say Prof. Z is spot on in his assessment. The XAU PnF relative strength chart versus the metal shows the metal still firmly in control, as has been the case since February.
  • Meanwhile, a scan for some technical items of note returned the following:
    - American International Group (AIG) triple bottom break at 64
    - Blockbuster (BBI) triple top break at 4.5
    - WellPoint (WLP) double bottom break at 74, potential trendline break if moves to 73
    - Electronic Arts (ERTS) DeMArk TD-Sequential sell signal
    - Secure Computing (SCUR) DeMark TD-Sequential buy signal, PnF support at 10.

Position in gold, SPX/RUT equivalents

Chicken run!! - Fil Zucchi - 3:16 PM

  • Don't ask me why - other than the obvious divergence between the price of gold and the Philly Bugs Index (XAU) - but I got a sudden case of the heebeejeebees over the precious ones. In what may well go down as one of the biggest emotion driven snafus in my trading career, I have shed half of my equity positions and replaced them with call spreads.

  • Since its $20b buy-back announcement, Time Warner (TWX) is down more than 10%. What's down with that?

  • A Barron's article quoted a money manager suggesting that homies stocks will command P/E's twice as high as the current ones within 18 months. If earnings go where I think they are heading he'll be right in spades.

Positions in XAU, homebuilders

Bad Breadth - David Miller - 2:10 PM

Despite a fair amount of green on my screen, breadth overall in the NBI is not peachy today. Only 61 of the 159 stocks in the index are in positive territory and that figure has dropped from earlier in the day. As Phil noted in last week's Buzz, early April tends to be a seasonally bad time for the sector. The trick is, of course, to pick the bottom...

In technical analysis, it all depends how you want to draw the lines…… - Bennet Sedacca - 1:50 PM

Earlier I saw a prediction of a 6% 10 year note from a highly regarded Minyan. Frankly, he makes a plausible case. Please see my chart here, which starts the downtrend in rates much later and avoids the 'bubble' in yields in the 1980-81 period.

The result is a trend line on course with a date with 5.20-5.25 around our cycle low date of 4/24 and then perhaps a pullback. How deep of a pullback IF one were to occur? Well, in a finance-based, levered economy, we don't really know how long it takes for the higher rates to make it through the system. I think it is inevitable however, that the economy softens later on as the higher yields take hold.

Might rates just correct into a range of 4.50-5.20? VERY possible. Could economic weakness get worse due to leverage at the consumer level? Absolutely. That is the bottom trend line-and yes, sports fans, I think it is entirely possible late in the year, lots of volatility. Because no one seems to expect any!

Let my Inspiration Buzz... - Todd Harrison - 10:49 AM

The Minx slinks up the front of the hump as the bovine look for a bigger jump. As discussed this morning, I expect a probe (after Friday's sloppy slippage) and the longer it takes, the more difficult it will be to digest. How am I playing it? Gingerly, Mary Anne, with a bit of manicuring.

In particular, I've nibbled back ever-so-gently on some piggy puts (financials) as they jump higher in the Monday breeze. I'm also keeping a close eye on SunMicro as it dips a dime on chatter that their revenues will be light. As this isn't an "earnings play" for me, I'm gonna add some more long side exposure if and when the stock ebbs towards $5 again. So you know...

Other than that, we're going along and getting along as we ready for another week of freaky streaks. I sincerely hope you all had a mindful respite and that your week puts it to shame. It's a new season--fresh with folliage and foibles--so let's make it a profitable one as we edge towards the long holiday break.

As always, I hope this finds you well.


Position in SUNW, financials

Enough already. - Rod David - 9:18 AM

March's rally targeted SPX 1307.50 (ESm 1315'50-1316'00). Each of its subsequent retests failed to close above it. Except for one, last Wednesday, but it was immediately rejected. Of course, each probe's failure also produced a test of February's prior highs as support, and sellers weren't any more successful at exploiting the weakness. But a rally's burden of proof belongs to buyers.

Sellers meanwhile have knocked down all of the buyers' arguments. A loss of only 4 points from Friday's S&P close would win the case.In reality, a loss of only 4 points Monday - especially on flat volume - would be a little suspicious. So, if sellers are making their move, then the 4-point loss should extend sharply lower (perhaps following a shallow obligatory bounce), and volume's pace should increase substantially.

Sunday night's Globex session fell back to Friday's low, but S&Ps have gradually firmed back above Friday's close. MACD and RSI are deteriorating and diverging negatively into the overnight recovery. If sellers don't attack the open, then there is still room this morning for S&Ps to trend higher for a test Friday afternoon's high without signaling that momentum had reversed up.

Friday's market weakness may have been immigration and tax-related... - Brian Gilmartin - 9:03 AM

Both the capital gains and dividend extension and the more-publicized immigration bill died before passage on Friday, and although I'm hardly a conspiracy theorist, I couldn't help but think that the broad weakness in the afternoon was related to the failure to get these two issues resolved.

Comments in the financial press over the weekend implied that the immigration bill will eventually get resolved, but for the equity markets, the cap gains and dividend rate extensions are more important.

It is simply an opinion, but I think politics, mid-term elections and pending legislation plays a bigger role in shaping returns this year than in the past few years.

In the near term however, attention is now focused on earnings: per Thomson Financial First Call, the q1 '06 year-over-year growth in earnings per share for the S&P 500 is 10.4%. Also per Thomson, if this growth rate comes to pass, it will be the 11th consecutive quarter of double-digit eps growth for the S&P 500, or only the 2nd time we have seen 11 consecutive quarters of double-digit eps growth, since 1950.

Position in S&P500 index funds

Homie Commentary - John Succo - 8:58 AM

These comments about housing are taken out of a macro report issued by a major bank:

"The delinquency data is based off Q4 levels when ten year Treasury yields were 4.4%. They have since risen to 4.97%. Delinquencies usually carry on rising for a year after rates stop rising.

Median income data showed real incomes falling last year. Debt levels grew by about 10%. With household income now reliant on capital gains on their property, the fact that the market has been slowing, could now really pose some major problems.

So far the rising delinquencies has not yet translated into foreclosures, but should it do so, the pain could be substantial. It is worth remembering that the U.S. is sitting on record ever debt."

We agree. U.S. GDP is imbalanced with nearly 50% attributed to housing activity. Capital gains from houses and stocks is fueling the accumulation of more marginal debt, which fuels more capital gains.

This ponzi situation is not lost on the FED who is desperate to keep the music going. As a result, our portfolio has a strange mix of gold, energy, and equity volatility for these strange times.


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