Fare ye well!
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Todd Harrison (12:02pm)
Bada Bing, Bada Buzz
- Snaps to Professor Neal Dingmann of MS Howells & Co. fame for his timely educational analysis (nice feel!)
- Note the DRG 325 level as the Merck (MRK) smirk carries the group into Matador City.
- If Fish takes a few more meetings, I can let ye faithful know where the MiM2 retreat is gonna be held.
- Breadth remains staunchly skewed (2:1 negative).
- Sante Fe Minyans, please phone home.
- The S&P is entrenched in an "NDX type" channel. That makes 1190 "a" level (1200 remains "the" level."
Todd Harrison (12:10pm)
"Pimco's Junk Bond fund (PHK) has taken a hit today (Waah waah waah -- Dammit, that's contagious!). I also watch DHF and DHY as a proxy for the junk market (although those 2 do not have as much $ volume as PHK) and DHY is taking a hit too. Anyhow... as the Iron Horse has opined, it's something to keep an eye on. Minyan Ryan."
Todd Harrison (12:19pm)
Questions I'd really like to know...
- Remember when we would use crude as a predictor of price for the trannies?
- Can you please take 30 seconds, click here, get a critter template and forward to everyone you know? (thanks)
- Are you hoping or rationalizing?
- How is it that the professor could make a radio out of a coconut but he couldn't build a raft?
- Do you see the VXO up 6%?
- Will the consumers follow the drugs higher as traders sing the safety dance?
- Can the Raiders win with Kerry Collins?
David Miller (12:22pm)
Biotech is actually a little weaker today than the IBB or NBI suggests. Breadth is 55 up, 5 flat, 99 down.
Todd Harrison (12:39pm)
"For those in precious metals, right here right now is a significant inflection point. Your C (Citigroup) is my CEF (Central Fund of Canada) in the universe of precious metals and if you see the activity today, it is having a difficult time going green despite the move in metals.
As it is a bullion fund it is currently at or below NAV (it has traded as high as 20% of NAV). The volume today is high and it usually represents smart money. If it closes green then a significant intermediate term bottom is in with new highs this year. If it closes red then watch the panic selloff in precious metal shares over the next few days. Just my humble take. Minyan LC"
Jeff Macke (12:53pm)
Sarbanes Oxley: Grousing picking up some volume
USA Today (McPaper) had an interesting article regarding the upticking complaints coming from corporate America about Sarbanes Oxley. There is a strong contingent of execs who would like to complain but remain silent both from fear of reprisal (paranoid or not) and perceptions that the co.s that complain "have something to hide".
As for the tape, it feels to me very much like some sort of wash-out type fear is needed before I'm interested on the long side in an aggressive way. Some real support-breaking grimness into the meat of earnings over the next couple weeks is the particular pitch I'm waiting for from Mr. Market.
Speaking of support, I'm not involved and still have tread marks on my head from trying to talk smack the last time they reported but does the Apple (AAPL) chart look poised for "something large" (good or bad) tonight? The stock has pulled back 10% and is sitting on uptrend line which also happens to be the 50-day MA.
It's almost certainly a bad idea for me to even look at such things on that name, given my history with them... alas, I'm here to serve, regardless of the personal danger.
Todd Harrison (12:56pm
Wake up, Little Susie, Wake up...
The Minx slinks over the Hump as the critters sit on a tree stump. It's that quiet out there as traders weigh whether this is a "back and fill" or if yesterday's curiously constructed rally was a cruel joke. I'm not sure the script has been written yet but, either way, I'm keeping close tabs on our mainstay tells as we edge towards expiration.
Despite the heavy calendar, the next true test for the tape will come on Friday when Citigroup (C) and General Electric (GE) talk turkey. We don't have to remind you of the importance of the financials, particuarly given the action in General Motors (GM), Fannie Mae (FNM) and Amer Int'l Group (AIG). And yes, all of the above are financials, with or without their beards.
Best guess? Fade (read:sell) rallies with an eye on our levels (read: defined risk). There is alotta structural smoke out there and while it might not spark a fire, there is more risk (potentially both ways) than most folks are accounting for.
Just my two cents as we wade through a Thainless day...
MV News (1:07pm)
The 5-year Treasury note auction drew a 4.046% with a bid/cover of 1.86.
Todd Harrison (1:15pm)
Scribes and Vibes
Drugs not Hugs! The DRG, led by Lilly (LLY) and Merck (MRK), are trying to turn resistance into support.
Wanna plug into the MV network? Soon 'nuff, my friends, as Fish knows exactly how to get us there.
The single best piece of career advice I ever got? From Rebbi David Slaine: "Do you trust them?"
Billy Meehan is trying to diet. I don't think I've ever seen a more miserable expression on someone's face as there is on his as he picks at his salad.
Note the bunk bonds on the back of the auction.
Tell check? Still south by southwest but the longer we sit with these internals, the more likely it is that we'll close on the lows.
MV News (1:19pm)
Morgan Stanley (MWD) has named Michael Uva and Cordell Spencer as heads of investment banking and confirms Joseph Perella and Tarek Abdel-Meguid are leaving the firm.
Jon Anda will become chairman of Worldwide Equity Capital Markets. Raymond McGuire and Paul Taubman remain co-heads of Global M&A. Walid Chammah remains head of Global Capital Markets.
Todd Harrison (1:37pm)
At what point do yesteray's chasers turn tail?
Homies don't play today (-2%)
Note the broken brokers (again).
Getting bullish higher and bearish lower may work in a momentum driven tape but it's not a sustainable recipe for success.
Crude (-3%) is testing $50 again but it's considered bullish on a relative basis? If $50 is the base line in the months and years ahead, alotta models are gonna need to change.
NDX 1460. See it.
Wasabi Dave Perlin!
Todd Harrison (1:57pm)
Wicked Witch Time (There's no place like home!)
The Minx melts towards the close as Boo breaks out the crimson hose. As I peer across my eight screens--and with the notable exception of the drugs--only one word comes to mind. Fugly. Perhaps the Matador Crowd can kick save this pup (again) but tend to be skeptical of back-to-back Snappers.
Breadth, nosty all day, is getting worse as we splish splash through this latest puddle. We've already discussed the break that is the brokers (-2%) and the slop that is the semis (-2.5%) so I'm not gonna be redundant. So I'm not gonna be redundant. Suffice to say that the bandwagon bulls are gonna have some 'splainin' to do if they can't find their mojo quick.
NDX 1460 is the bottom end of the "churn" range and a break below will turn it into a ceiling. I still think that Hoofy has some powder dry (if we probe S&P 1160) but support gets weaker with each test. And, as you know, lots on the radar for Friday and beyond.
As always, I hope this finds you well.
Scott Reamer (1:57pm)
Hey Jason: what does history suggest when you see the VXN making new multiyear lows while the NDX is some 10% lower than its, say, last 6 month peak?
MV News (2:07pm)
United Technologies (UTX) has announced a 2 for 1 stock split as of June 10, 2005.
Jason Goepfert (2:08pm)
Scott, the history of the VXN is relatively limited, thus so is our sample size. What I looked for was a new six-month low in the VXN at the same time the NDX was at least 10% below its own six-month high.
There were only a few instances, all in 2002, and as you might expect the results weren't pretty. It happened in January, March and again in November and the average 20-day future return in the NDX was -6.6% with 11 out of 12 being negative.
Jason Goepfert (2:13pm)
Just as a follow-up to my prior answer to Scott on the VXN/NDX relationship, we can use historical volatility as a poor-man's substitute for the VXN, which allows us to go back further.
Using the same parameters, I was able to increase the sample size from 12 days to 42 days, going back to 1985. The results were still markedly negative, with a 20-day future return in the NDX of -4.1% and only 33% being positive.
MV Philanthropy (2:28pm)
We interrupt this Minxy show to offer our sincere gratitude to everyone who "opted-in" to the March Madness Minyan Brackets philanthropic effort.
I started the Ruby Peck Foundation for Children's Education as a tribute to my grandfather and the support to date has been mind-boggling. I know that most of you read the 'Ville for the financial vibes but RP will always represent the soul of this community.
Thank you for allowing Ruby to be a part of our everyday lives. ;-)
Todd Harrison (2:41pm)
"That spx/vix ratio I flagged you on yesterday I think significant too, especially with S&P at lower levels and the ratio as high as Dec '04 and feb' 05 levels. Minyan Metrosexual."
Note the April trendline in the S&P. It's right.....there.
The Minyan compass is still pointing south by southwest although it's getting closer to the equator with each passing tick.
The carnage in semicap land (off the ASML miss flagged this morning) is eye-popping.
Why can't we be friends, why can't we be friends?
Fish and I have a midtown mind meld on the bell before shakin' a tail feather for the special edition Succo-Kellnerfest. Just keepin' ya up (as always).
Phil Erlanger (2:43pm)
Major Chemicals disappointing
One of our favorite indicators to track is the one week change in group's making one month lows.
Major Chemicals have seen a 33% increase in stocks making new one month lows week over week. Stocks with low short interest that could be vulnerable include Akzo Nobel (AKZOY) and Dow Chemical (DOW) among others.
Todd Harrison (2:54pm)
I don't know why you're so upset, David Fine, nobody knows that I was referring to you as the Minyan Metrosexual in the last post. (not that there's anything wrong with that!)
I guess we gotta toss DJIA 10,375-10,400 back on the radar.
There aren't many Minyans more loyal than Sal Morreale and if this cause is close to his heart, it's close to ours as well.
Can Apple (AAPL) turn the worm? I would offer that psychology was "primed" for an upside validation but the sentiment wind has shifted. Everyone knows it's gonna be good. The question is whether it's gonna be good 'nuff?
Note the (continued) relative strength in the DRG (as it takes out resistance).
The definition of an investment should never be a trade gone awry.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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