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Buzz Bits: Markets Close Mixed


Your daily Buzz highlights...

I got a fever... - David Miller - 3:37 PM

Yes, biotech is getting smoked today. the IBB is (slightly) outperforming the BTK so there is a silver lining, but this decline is making people nervous. There are only 24 advancers in the 159 stocks in the NBI. I don't see any specific cause for this and expect once "ASCO fever" starts hitting the popular financial media we'll likely see a bottom. A high-dollar acquisition of a biotech will also help. Support is around 800 on the NBI.

Flashback! - Bill Meehan - 3:15 PM

This day in market history...

  • Closing levels 6 years ago
    • DJIA: 11,114.27
    • Naz: 4,267.22
    • S&P500: 1,501.34
    • Crude: 25.21
    • Gold: 279.80

This day in Minyanville history...

  • In '04 Laurie McGuirk chimed in from Down Under in Oz-Fest.

In other news...

  • In 1830 in Fayette Township, New York, Joseph Smith founded the first Mormon Church.

Yo-Yo Randoms - Fil Zucchi - 2:19 PM

Excuse my recent radio silence but after coming back from vacation it took me this long to find the keyboard again. Then again nothing much is happening as Sammy is currently the unchallenged ruler of the Universe.

Meanwhile Boo is hanging with the big biotech names today, as Genentech (DNA) loses yet another level of support. Yesterday ubertrader Brad Sullivan noted some aggressive put activity by respected option traders. Wassup with dat?! Is it tied to Professor Gilmartin's very intriguing "Dems election sweep" thesis? For my book, biotech is the only group where the big-picture fundies make sense, though I am mostly playing where Prof. Miller is supervising the action.

Can someone make a bear case on StoneMor L.P. (STON)? Making a few bucks off of the Grim Reaper is as close as any of us will get to getting back at the dude.

Are you a condo developer? Be scared, be very very scared.

How long can this orgy go on?

Anecdotal Tell Alert? - Adam Warner - 1:28 PM

As we know, buy-writing has become all the rage in recent years. The benchmark is the BXM, an index on the CBOE that measures the return of buying the S&P and perpetually shorting an at-the-money call of 30 day duration against it. It outperformed the S&P during the "lean" market years early this decade, but in a "bull" market like we have today, it began to underperform.

Go figure, you mean you give money away when you constantly write ever-cheaper calls in a rising index?

Anyway, never fear, the BXY, the "S&P 500 2% OTM Buy Write Index" is here. Now instead of theoretically selling ATM calls, you can now theoretically sell calls 2% above the money. For an even lower volatility, no doubt. The effect of course is that this new index will do a bit better in up moves than the BXM, and worse in down moves. If we ever see one again.

Jungle Boogie! - Todd Harrison - 11:06 AM

It's a nutty morning in the city of critters as I juggle the struggle of the Minx with one hand while mapping out the final MIM3 agenda with the other. It's all good--and very exciting--as we're spicing up the mix a bit with heavy hitters from the hedge fund side. I'm still making calls, shaking hands and kissing babies but we should have something tangible in short order.

Turning my A.D.D to the tape...

  • The rotation station continues as the semis steal the homie's thunder, metals and energy remain sticky green and drugs are being smoked (on the heels of Merck as the DRG breaks the trendline from the December low).
  • The financials are a mixed bag as well. The money centers are pretty in pink (Citi is back below $48) while the big cap brokers are higher in synch with Lehman (2 for 1).
  • NYSE breadth is 2:1 negative while the Nazz internals find three red for every two ahead.
  • At the risk of double indemnity (two sided risk), I'll offer that I think today is a time biding session in front of tomorrow's juicy orange crop report.
  • Trade. Don't guess...that's the quickest way to give it away.
  • Back to my deep dive on the mountain jive. As always, I hope this finds you well.


Position in C

Broken down chart alert! Flag alert! Hedger loss alert! - Bennet Sedacca - 10:46 AM

We focus mostly on 10's as we don't play the long Treasury market often (not never, just not often), but this chart may actually be fuglier than 10's, if that is possible.

I realize it is early, but there is something that smells here. Like old fish at Fulton Street. But support is, well a ways away. We continue to focus on end of April lows, and openly wonder how the hedgers are this wrong, unless hedged, which I wouldn't find terribly unlikely. Or, sometimes, people are just wrong and lose. I've done it. Like all of us. But I keep sensing that '1-888-get-me-out' is nearby.

Position in various Treasury securities

Another paddle on the rumor mill - Vitaliy Katsenelson

Citigroup ( C) was cleared by Federal Reserve Bank of NY to make acquisitions. The ban was imposed last year after a series of regulatory problems.

My take is that this is great news for Citigroup as it shows a significant improvement in the company's controls and management. Also Citigroup stayed away from making "less than smart" acquisitions, which many of its competitors were involved in.

This may also add another large candidate to possibly bid on Lloyds TSB (LYG). Speculation that a large American or European bank may make a move for LYG have been around probably as long as the company has been around (a long time), so now there is one more to add to the LYG rumor mill.

Position in C and LYG

Immigration Legislation Making Bond Market Nervous - Brian Gilmartin - 9:06 AM

No one seemed to pick up on the correlation between the recent ugly action in the 10-year Treasury, and the discussion over immigration currently underway in Congress.

With an approximate US domestic unemployment rate of 4.5%, that implies that 95.5% of all Americans are employed, and if the rug gets pulled out of the labor pool in terms of having some portion of alien workers sent back to their country of origin and having to re-apply for citizenship, that could certainly be inflationary.

I am not making a political statement, but simply commenting upon the potential disruption of labor supply at the time of a robust US economy and demand for labor, if there should be a major change to immigration policy. (It is the old "demand-pull" argument you studied in basic economics.)

Personally, I'm all for legal immigration, and giving everyone a shot at the American Dream.

We aren't active bond traders, but practice more of a laddered, buy-and-hold strategy within client portfolios. But I can't help but think this issue is making bond holders nervous.

long muni's and intermediate bond funds


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