Buzz Bits: Dow, Nasdaq Climb Higher
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Earnings Report - MV News
- Yum Brands (YUM) reports 1Q EPS of $0.70 vs. $0.64 cons on revs of $2.22 bln vs. $2.15 bln cons.
- Allied Waste Products (AW) reports 1Q EPS of $0.14 vs. $0.10 cons on revs of $1.46 bln vs. $1.47 bln cons.
- Watson Pharmaceuticals (WPI) reports 1Q EPS of $0.43 vs. $0.24 cons on revs of $671.60 mln vs. cons of $621.71 cons.
- Cephalon Inc. (CEPH) reports 1Q EPS of $1.25 vs. $1.02 cons on revs of $423.9 mln vs. $421.32 mln cons.
- Dreamworks Animation (DWA) reports 1Q EPS of $0.15 vs. $0.07 cons on revs of $93.7 mln vs. $70.9 mln cons.
Rocky Tape for Boo - Jeff Macke - 3:05 PM
As I walked in Minyanville HQ to find a frustrated-to-tears Boo Bear slapping an impervious Hoofy I couldn't help but think of Drago from Rocky IV, noting that his opponent was "Like a piece of iron." I hear you, Boo. Three retail blow-ups, squishy economic data and predictably horrific results from the Remaining Two automakers didn't seem like a recipe for a rally to me, either, yet here we are.
To paraphrase Rocky from the end of the same film, "If you can change, and I can change then maybe... just maybe... the bullish trend can change." It's just not going to happen today.
- Dow Jones (DJ) going to Rupert's NWS? The mind boggles in ways I'm going to have to wait to fully discuss until tonight's Fast Money.
- Speaking of things we'll discuss tonight, note Dreamworks Animation (DWA) ramping ahead of reporting earnings after the bell. Going out on a limb, I'm going to guess DWA says optimistic things about Shrek III tonight.
- If you haven't seen De La Hoya - Mayweather 24/7 on HBO (a division of Time Warner (TWX), of course) I highly encourage you to check it out. Mayweather figures to win (as is the consensus in the office) but I still think Pretty Boy is going to trip over a left hook or two.
Randoms - Fil Zucchi - 12:33 PM
- There are some violent moves across many asset classes this morning. Not sure what it means, except that larger price ranges in established trends often mark turning points for those trends.
- Most likely candidate for the above theory appears to be the Euro (EC), which gave up 80bps within 40 minutes after the release of the ISM numbers. Notice that the last two down spikes were marked by high volume bars. The Average True has risen sharply four times in the last few days while the price made little progress, and lastly the DMI - a measurement of trend direction - is now negative, and the ADX - the measurement of the strength of that trend - is rising. I am showing this in a 60 min. time frame, because if you look at it on a daily basis you'd still see a strong (though weakening) uptrend. This is consistent with my thinking that we are due for a multi-days pullback in the Euro to the 1.34 area, within the context of a much longer-term move up.
- Please see the Chicago Merc (CME) as it stabbed hard below the 200DMA and snapped right back. Aside from the fundies behind this stock, it has been a very good proxy for speculative trading.
- Under Armour (UA) is getting smacked on disappointing, expenses-driven results. I have buzzed in the past how I believe this company is, and will continue to, eat Nike's (NKE) lunch, and is probably the only retailer I'd feel comfortable owning, but only if I can buy it very near $40.
- Operationally speaking Pan American Silver (PAAS) results were pretty disappointing, yet the stock is hanging on. Is that a tell?
- The iShares REIT's (IYR), highlighted yesterday, continues to get hit; Vornado (VNO) is today's primary culprit as its results were less than "en fuego." Earlier this morning a guest on CNBC was arguing for a continued boom in commercial real estate based on the fact that buildings are still changing hands for under "replacement" cost. I may be old fashioned (or just plain old), but "replacement cost" is the dirty little excuse big boys use to justify dumb deals with "other people's money." To hear that being used on national TV as a presumably thought out reason for investing in CRE borders on lunacy.
- Pending home sales dropped 5% MoM for the first month of the peak selling season. Homies are shrugging it off and Centex (CTX) despite dismal numbers. I am sticking to my view that one of these days some out-of-left-field statistic will catch people's attention, the panic phase of the homies debacle will start, it won't end until even the staunchest bear will be in awe of how far things will have plunged.
Position in ECM07, XHB, IYR, PAAS
Tactical S&P Buyers Eye 1489 (June Futures) - Jess Thompson - 9:55 AM
Since early April, shallow reactions have been readily bought in S&P 500 indicating tactical (short term) order flow has been dominant.
Once order flow imbalances take root in the S&P Juggernaut it can be a surprisingly tenacious beast. I would expect tactical buyers to come back in at current levels.
What Bulls Want to See: This morning I'm monitoring the following price levels to see if tactical buyers absorb current offers:
- 1489-1489.50 June S&P futures
- 36.90 XLF (Financial ETF)
- 158.60 to 158.90 MDY (Mid-Cap ETF)
What Bears Want to See: If bulls are unable to absorb and defend 1489 in June futures this morning, that weakens the short-term bullish case and opens up the offers for a thrust down to 1477-1480 (Jun futures).
Market Update - Sally Limantour - 9:25 AM
In the mini S&P (ES), 1499.25 has been the point of control area (market profile lingo)
for the last two trading days so it is resistance now and will serve to cap rallies...until it doesn't. Next support is 1483.25.
I am watching US Steel Corp (X) as a proxy for commodity demand and it is showing signs of weakness as it left a gap to the downside and closed poorly yesterday.
I am playing defensive in gold, silver and copper here and waiting to see how they consolidate their gains. The legacy banks in Europe have been consistently inconsistent in their selling of gold where they sell aggressively one week, stop, then start selling again.
Energy is on the defensive as concerns about the Al-Queda terrorists against Saudi oil facilities has subsided. In addition a report that Valero's refinery in Texas has started up again is subduing recent fears of a gasoline shortage.
Here is an interesting look at recession probabilities.
Positions in ES, copper gold, silver
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