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Buzz Bits: Dow and Nasdaq Finish Mixed

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Your daily Buzz & Banter highlights.

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Are yields about to turn up? - Bennet Sedacca - 3:18 p.m.

Treasuries have been woefully overvalued to me for a long time vis-a-vis inflation.

If year on year PPI is 7% and CPI is 4%, why on Earth should 10's trade on a 3.75?

If 'no clue' is your answer, then you agree with me.

Take a look at this log chart of 10 year yields. We are close to breaking out.


Click to enlarge


And this is just what a levered consumer/economy needs...


Materials Falling Behind - Ryan Krueger - 2:52 p.m.

To follow up on the earlier Buzz, here's a name that I almost hate to mention because it's most certainly not a timely Buzzworthy trade idea for me – but it very well might be worth that perspective for others. Notice that Vale Rio Doce (RIO), a name I've mentioned many times would be breaking through into new un-chartered territory if it closes at these levels today.

I started buying the shares just below $4, and yet I am more comfortable with my position today even though they now are trying to add a zero behind that number.

I Buzzed during the market's big pullback that I believed Materials would be the first sector to go green for 2008, despite ample opportunities for rotation to grab the baton – and it has. I continue to point to the simplest scoreboard to measure how crowded this trade is not, for at least one guidepost. Materials have skyrocketed to fully 4% of the S&P 500.

Recall that Energy was in the mid-single digits of the index's weight only a few years ago, and has now grown to become a teenager.


Click to enlarge


Position in RIO



One Dog's Looking this Way, the Other Dog's Looking that way... - Todd Harrison - 2:39 p.m.

The fluttering nuts continue to strut as we toggle and twist around technical inflections. DJIA 12,800 you say? Pishaw, I say... look at the Trannies (eww!), which are thisclose to their level of lore (5000). It's enough to make you say "If it's this quiet now, what's gonna happen when summer really arrives?"

Some top-liners as we edge through the Monday's.


Position in LEH, BIDU

Gold Diverging from Dollar? - Michael Paulenoff - 12:26 p.m.



Have gold prices (GLD) stopped responding to the weakness in the dolllar? Lately, it certainly would appear so. Let's notice that since mid-March, the Euro actually has carved-out a "rising wedge" pattern, which depicts a series of horizonal rally peaks (around 1.59.00/85 juxtaposed against a series of rising pullback lows), which are putting upward pressure to thrust the euro above 1.6000 into new all-time high territory. Conversely, we have gold prices ignoring the still-bullish pattern in the euro/dollar, and instead, in the grasp of a downside correction that points towards additional weakness beneath the 4/01 low at $872 on the way to $850/$820. Why the divergent action?

My suspicion: that gold prices are... anticipating 1) a peak in Euro/dollar in the days ahead, and 2) that at the next FOMC meeting on Apr. 30th, the Fed indicates that it is has cut enough to stimulate aggregate demand, and that it's concerned about inflation, which will warn the markets that the current rate cut cycle is complete - and that the next Fed action will be to raise Fed funds. If any of my suspicions are on the mark, then both gold and the Euro are anticipating (will anticipate) the shift in the direction of rates in the upcoming days.


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