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Buzz Bits: Dow Inches Higher, Nasdaq Drops to End Week


Your daily Buzz highlights...


Us or Them - Kevin Depew - 3:25 PM

  • Today we have the potential for a DeMark TD-Sequential 13 sell signal on the daily chart of the Dow Jones Industrials. This would be the first daily sell signal for the Dow this year.
  • For those involved in the iShares Lehman 20+ Year Tres. Bond Fund (TLT), a move to 85.50 is necessary for a new PnF buy signal. That would be the first buy signal since February.
  • The Wall Street Journal opinion page is now banging a loud drum for war in Iran. "Our point today is not to advocate any specific course of action," the editorial says before putting a shoulder to the chest of Congress with a straw man dare in the very next sentence: "If they [Congress] think an Iranian nuke is acceptable, they should say so."

    So there you have it, Congress. Although it is technically true that the WSJ editorial page did not explicitly advocate a specific course of action toward Iran, meaning, they did not come out and point-blank say, "Let's go to war with Iran," the editorial is written in a manner that is purposefully designed to rhetorically arrive at that very position - war.

    The message is: So, Congress, which side are you on? Our side or "their" side? It is both cynical and manipulative. And even those who might agree that an Iran with nuclear power is unacceptable should take offense that an argument written in support of that position is presented in such a manner.

Flashback! - Bill Meehan - 3:16 PM

This day in market history...

  • Closing levels 3 years ago
    • DJIA: 8,328.90
    • Naz: 1,424.37
    • S&P 500: 892.01
    • Crude: 30.76
    • Gold: 333.10

This day in Minyanville history...

In other news...

  • In 753 B.C., according to tradition, Romulus and Remus founded Rome

MSR - Silver - Tom Peterson - 2:43 PM

Silver: What a wild week – the combination of forced buying from squeezed shorts, panicky buying from investors afraid of 'missing the rally,' plus portfolio managers forced into buying because of new cash inflows caused a real spike in many sectors. It certainly appears a 'perfect storm' culminated, especially in silver this past week.

Last week we alerted readers that silver was likely to have a significant correction at the end of this "Eiffel Tower" run. Silver reached a 23-year high of $14.68. The correction Thursday was huge - the price of silver fell by a massive 20% from Thursday's highest price, to as low as $11.65 an ounce, before recovering slightly. Typically, corrections in bull markets unfold in a three-wave pattern. We wrote last week that a correction in metal prices would allow another long-side opportunity. We await further downside pressure to allow for additional positioning. BUT, be aware, that it is entirely likely that the next leg higher will be led by relative strength in gold, instead of silver.

Food For Thought: If you were Barclay's Bank, and capital was not a problem; and you were working on this silver ETF for a while, but in full expectation of getting approval - wouldn't you have already amassed a large silver position? So while market participants are thinking they can buy with impunity believing they'll be able to offload to Barclay's when the ETF is up and running, if you were Barclay's wouldn't you trade AGAINST that belief based on your proprietary knowledge advantage?

Position in metals

Just a quick buzz due... - Laurie McGuirk - 11:02 AM my little bloke's 4th birthday (and my relative indifference to the moves). I started writing for the 'Ville a few years ago and I promised my daughter a party when gold traded above $500 an ounce…The invites still aren't sent out yet!!

Short term traders are mostly gonna get beaten this market. Simple. Beware the GAP! Technicals? Not in silver at present. I mentioned previously that I didn't reckon they'd be much help going forward but who am I to say? I am mostly on the sidelines, watching while lawyers and accountants get the new gig up and running… this little mess in precious metals means nothing in the long run from my squatting box. I still reckon 540 and 9.78 sometime in next few months but, I wouldn't be short for quids. Four figure gold and 3 figure silver are inevitable from where I sit. Opinion only.

As for Iran? It is not an issue. Check the last three years of history for comparisons. This is the start of the "awakening" regarding the Bernanke "printing press". . It will probably take a few years.

Meanwhile, this is all PAPER metal nonsense, yet there is a major physical edge to it. Real metal is and has traded above $600 and $12. Note gold stocks hardly moved on a $75 move higher yet were down 10% on a $20 down click. Be careful.

As I've said often, I personally own physical metal – most others don't. Therefore, I don't really care about the day-to-day stuff in the paper markets. You all know my view and that this is no surprise. When the 99% indifferent PUBLIC wakes up, then you will see – SURPRISE. My physical is NOT for sale, certainly not in the foreseeable few years. Others see it differently, good luck to them.

Position in gold, silver

Deja Vu all over again... - Scott Reamer - 10:07 AM

Just heard on GE television a stealthy hyper-bullish call. One of the advisors being interviewed says he thinks the current market setup is better than the 1982 low and he expects over the next five years we could see the market outperform the five year period from 1982-1987 (pointing to monetary and fiscal stimulus as the principle reasons). Thus, tacking on the 222% gain from the 1982 low to the 1986 peak, we have, voila...

DOW 36,656.

Where (and when) have I heard that before?

Position in GE

A funny thing is starting to happen---like Yogi said--it's like Deja Vu all over again - Bennet Sedacca - 9:40 AM

I remember the last couple of market tops quite well in more than one sector - they all feel the same. To make a LOT of money in this business, across ALL SECTORS, requires running against the crowd during the extremes and with them during the times where we are simply 'trending.' Kind of like carrying the ball from the 15 yard line to the other 15 yard line and letting someone else get the riskiest 30 yards.

The funny thing, why mention this, is that like at previous tops I have witnessed ( and I am not CALLING a top, simply throwing out some commentary), the older and wiser and more seasoned professionals I know are the most cautious. Maybe it is 'different this time' (I don't buy that - never will) and we will just rally forever with some of the nastiest macro - no - THE NASTIEST MACRO DATA on record staring us right in the face. Some of us have exact reasons for being cautious, some just feel it in our guts, or both. The typical investor I run into is the most bullish I've seen in a long time and is really beginning to question my cautious stance. The pieces, for me to be cautious, have fallen into place.

Let's see if Yogi or the rookies are right......

Capital Idea - John Succo - 9:31 AM

Capital One
(COF) reported much better earnings than expected, at least from the 30,000 foot view.

But again we ask the silly question "why?" Again, we are letting the facts get in the way.

The company made those great earnings through under-reserving for loan loss provisions: they actually went down by about $600 million The company said that the credit quality of their portfolio improved and therefore they do not have to hold as much money aside. This increases earnings.

We find it interesting that the company increased their issuance of credit cards, thus capturing more of macro trends, yet those macro trends clearly show that overall credit quality is dropping (most other such companies have increased credit loss provisions).

How can COF have different facts? They don't. You must realize how many assumptions go into these calculations. From being able to retroactively decide when loans are due to how much is due, these companies can play with their numbers like you can't believe.

And we think this is what COF is doing. Other analysts we talk to are scratching their heads too.

Position in COF

The Tech sector forest, and the Google tree. - Rod David - 8:46 AM

NDX futures have gained about 5 points overnight on Google's (GOOG) earnings news, testing Wednesday's pivotal high (the high prior to Thursday's actual high). S&Ps closed Thursday above Wednesday's highs, and its Globex gain is only challenging Thursday afternoon's highs. It's interesting that GOOG sat out Tuesday's broader market rally, obviously (now) reflecting pessimism that helped it to react so strongly to its earnings news. Now the broader market is sitting out GOOG's rally, and you-know-what doesn't travel uphill.

GOOG's fissure and crack in January and February helped to reveal the Tech sector's "multiples-gone-wild," taking NDX down through March. The NDX underperformance vs. the broader S&Ps was a central theme to our bearishness through March's rally. Their recent role-reversal has yet to prove its durability. The inversion may just be a correction of the indexes' prior relationship, and GOOG's reaction Friday may be the most glaring correction among all.

Meanwhile, Thursday morning's S&P surge fulfilled the historically mandated cash session retest of Wednesday morning's Globex high. It also retested last Friday morning's Globex high. The tests were rejected by closing under both. Having neutralized the Globex highs' magnetic attraction, closing at new highs would be a function of new buying pressure, and probably not just a retest. But having neutralized the attraction also means that sellers can now act without inhibition.

So it is interesting that Thursday's internals diverged negatively. More NYSE up volume than down volume produced fewer advancing issues than decliners, despite S&Ps closing higher on rising heavy volume. There's a lot of selling into higher prices, and we should know by Monday's open whether that's the product of a lot of small players, or the product of smarter big money, under the cover of GOOG's reaction.


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