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Buzz Bits: Dow, Nasdaq In the Green

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Explain to me why they keep buying please! - Bennet Sedacca - 1:56 PM


While the S&P makes fresh six year highs (and notably below its 2000 peak) and the banners of new highs on the Dow all over the place, I asked myself a question.

I certainly don't mind my assets being marked up for me 5% this month.

See the chart here of how Europeans have been faring in US stocks over the past eight years. Well, in a word, horribly.

They are no where near making money, let alone accounting for inflation.

In the for what it's worth category, my firm is beginning to lighten up on our over-exposure to large cap value that we have maintained since 2003.

I just think the risk/reward is starting to veer a little too much towards risk. I am still exposed, but this sector no longer looks cheap to me.


AMD's Commitment to Change - Jeff Macke - 1:16 PM

Greetings from NYC where I'm covetously eyeballing Todd-O's desk and its 8-screens as he packs up to go to Boston. "Don't worry sweet monitors... the Lone Wolf is coming and he's going to treat you the way you deserve.

Other, less creepy, things I'm watching...

  • Advanced Micro Devices (AMD) is trading lower after spiking as high as $15 last night on the news that they were willing to consider all sorts of strategic changes, including private equity. While commitment to change is nice, running out of money is not; especially when you're trying to run a semi-conductor company.

  • NPD data for March showed more than $1 billion spent on video game systems and software, combined, for the month. It was a 33% gain over last year and ahead of analyst expectations. Get used to that phrase ("ahead of analyst expectations") in the video game space for the next couple years.

  • Footlocker's (FL) bid for Genesco (GCO) is interesting for two reasons, one for each foot: 1) Footlocker is moving into even more bits and pieces (small box, themed) stores, even as Nike (NKE) et al threatens to crush them with large stores and 2) Footlocker is not only still alive, its looking to be buyers rather than get swallowed themselves.



Jungle Boogie! - Todd Harrison - 11:35 AM

As the tape settles and the smoke clears, the following thoughts are germinating in my crowded keppe. They're in no particular order and be forewarned, they're completely unedited.

  • Is this a short-side capitulation? There's no way to tell, although the Red Dye angst was palpable this morning. I will say that, as the semis and piggies led us higher this week--and they're both laggy today--Hoofy would be wise to keep his right hand up.

  • I'm not betting on the pop & drop, mind you. With market breadth stronger than a mule's breath (3:1), the quack count is lacking. For those with ursine inclinations, however, I would urge you to eyeball the litany of levels discussed this morning. Sector stuff is "tighter" than the pure tape reads and allows for risk definition. Which is good.

  • So, as I've gotta be in Bean Town for a Bar Mitzvah tomorrow, how can I not go to Fenway tonight? I just scored two tickets on the "cheap" (right behind the Yankee dugout, for those watching at home) and will sneak out of the 'Ville around 1pm to catch the hopper. I think it was Andy Dufresne who said "Get busy living or get busy dying."

  • I'm gonna emerge from this expiration as light as I've been in a while. My S&P put funeral, to be held at 4 pm today, is a living, breathing, costly reminder why I hate trading front month paper. That sound you hear is me stepping out of the batter's box and hitting my cleats with the bat.


As always, I hope this finds you well.

R.P.



Interesting Short Interest - Jason Goepfert - 11:28 AM

The recent short interest statistics released by the NYSE were surprisingly robust yet again.

Over time, short interest rarely declines very much, so it shows a secular rise, and it's hard to read a lot into that. So, we have to make some changes, like adjusting the figure based on average volume (called the Short Interest Ratio), and/or de-trending the data based on its trend over a given number of years.

The way I look at the data, the current short interest ratio is 6.89 (meaning it would take about seven days of nothing but short covering to buy back all the shares currently held short). That's the highest ratio since August 1998, but I like to then de-trend the ratio by comparing it to the average over the past three years. Currently, the ratio is 18% above its three-year average.

That's a lot of short interest, both on an absolute and relative scale.

Since 1950, whenever the short ratio has been this much over its three-year average, the future three-month return in the S&P 500 was +5.4%; the six-month return was +9.7% and the one-year return was +18.2%. Those are all more the double a random return during the study period, and for those who care about such things, they are all statistically significant at the 99% confidence interval.

Like the margin debt/free cash statistics, this is another series of macro-market data that is generally market-friendly.

No positions in stocks mentioned.

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