Buzz Bits: Dow and Nasdaq End Lower
Your daily Buzz & Banter highlights.
Care About Your Health - Ryan Krueger - 3:30 p.m.
When I wasn't being ignored as first base coach or told to hold onto bugs they found between (and during) outs for my fighting lady tiger t-ballers, I spent much of the weekend thinking and reviewing Health Care positions.
I continue to think the US' biggest crisis is the best business we still do in the world. But years worth of dismal returns for most of the sector's stocks - I'm more certain today than I was last week - will continue.
I had heard anecdotally from doctors I visit with that preventive analysis from big ticket digital machines like General Electric (GE) installs and services were not being reimbursed.
Additionally look at some of the finest companies like Cerner (CERN) and Quality Systems (QSII) in medical IT, that I made such good money with for so long before being forced to cut them over the past year. Their charts tell a powerful and sickening story – doctors who can't get paid for the best technology they have to offer patients start to cut back on improving their own.
We have an enormous problem in healthcare. The cost is the focus, instead of the care.
We got a huge warning on Friday that despite how much guys like me believe in the long term potential and some of the brightest minds on the planet, that short-term nobody wants to pay for this stuff.
I think only one thing can change the batter's eye level on this sector short-term. A technology company that has mastered the art of consumer discretion buys a medical company and after turning the market's opinion, will begin to do the same for patients too. Patients who love the innovation in technology and mind-blowing choices born from a profit incentive want to finance none of that at their doctor's office when it matters most?
K&C Trading Rule #28: Don't argue with the market.
Gold Miners ETF Poised for Another Downside Loop - Michael Paulenoff - 3:18 p.m.
Purely from a technical perspective the most salient of the daily chart of the Market Vectors Gold Miners ETF (GDX) is the fact that for the past month all of the action has been confined between the declining 50 DMA (50.26) on one hand the rising 200 DMA (45.89) on the other.
Let's notice that a similar "between the averages price contraction" occurred between mid-Nov and mid-Dec, but the upmove off the 200 DMA rocketed the GDX right through the 50 DMA. The recent action between the averages shows that the GDX did climb sharply off of the rising 200 DMA, but failed to hurdle the 50 DMA, which has since become a ceiling on subsequent rally efforts. My pattern and momentum work argue for another loop to the downside into the 46.50-45.80 area at a minimum prior to the next attempt to hurdle the 50 DMA.
Click to enlarge
Buzz in the Afternoon - Todd Harrison - 2:22 p.m.
With our nutty strut off to an anticlimactic start--certain situations notwithstanding, of course--I've been prepping (in front of meaty melds Wednesday and Thursday) with one hand, trading with the other and typing with, uh, my tongue. Some random observations as we digest another case of the Monday's.
- My Winky Wright approach to trading has been quite profitable. When I've strayed from that discipline, be it Schering (SGP) or Wachovia (WB), I've been administered a quick reminder that nobody is smarter than the market. Yep, stay humble or the tape will do it for you.
- My motivation to trade out of my initial hole has been muted by the lack of edge I've seen. Trust me, I'm raring to go but I'm not gonna add insult to injury by tossing on blind bets and hoping for the best. That would be crazy and crazy's on the bus.
- The first thing I noticed as I glanced at charts of the mainstay averages in the weekend papers is the rather obvious "churning" across the board. Technicals are more of a context than a catalyst, I know, but it's textbook action that's working off the previous oversold condition.
- Any trader worth his or her salt takes some lumps every now and then. It happens. It's the cost of admission. It's the price of doing business. As with life, the reaction to hardships is more telling than the hardships themselves. Bad seasons define good fans, bad times define good friends, bad trades define good traders.
Position in WB
If Wachovia has to sell its soul... - Bennet Sedacca - 10:33 a.m.
...What happens to other banks?
We got a sniff of this last week as Wachovia (WB) CDS started to widen.
But the real issue, obviously, as we move more and more down the path to contagion, is whether there's enough to capital to bail out all of the bad banks, and not-so-good banks? My simple answer is no. If General Electric (GE) and WB, back to back, spit up these hairballs, what happens to the truly bad banks like National City (NCC) and Key Corp. (KEY) just to name a couple?
Rhetorical question, no? They'll be forced to accept any terms the buyer or bailout firm proposes. Or close up shop. And we all know that can't be allowed to happen.
The other issue is the huge amount of layoffs in the financial industry, many of which are rather highly compensated. So the ripple effect towards contagion continues. Position in NCC options, WB debt
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