Buzz Bits: Dow, Nasdaq Hit Hard
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Earnings Report - MV News
Flashback! - Bill Meehan - 3:43 PM
This day in market history...
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In other news...
Buzz in the Afternoon - Todd Harrison - 3:22 PM
- Why doesn't the NSA open a psychic hotline? They could amaze us with their skills while helping to pay down the budget deficit?
- I've been pinging with Herb Greenberg on the dollar. He makes a good point that most of America only views the greenback through the lens of "traveling." I maintain that, in a global economy, the ramifications are far more reaching.
- True to form, tapes that are heavy all day tend to end that way.
- The NDX seems to wanna kiss it's 200-day at 1650.
- My trader's eyes, while jammy, immediately spy the financials, S&P, dollar and the metal complex, in that order, before diggin' into the deeper delve.
- Hey Bernie Schaeffer! We'll see YOU in Vail!
- I'm gonna peel out of partial exposure in my piggy puts as a function of discipline. And yes, I'm aware that this is the first dip.
- I've got some into-the-close melds (with a powerful new scribe) before hoppin' to a business dinner and ending up at the Knitting Factory. Area Minyans are welcome to join us as
Position in financials, metals
Update from the "Feet on the (Barren) Street" - Fil Zucchi - 12:57 PM
Our residential "Feet on the Street" smelled something fishy just about at the peak of the housing orgy. I spoke to him at length this morning and his take is:
- In all but the most forgotten markets, nothing will move until prices come down 20%-30%.
- In the formerly hot condo markets nothing will move until prices come down "at least" 40% from here (50% from the peaks).
- Sellers are insisting on putting homes on the market at last year's prices, only to slash the asking price within 2 weeks. That's creating problems even for those who put their property on the market at "today's prices," because buyers now have an expectation of prices being slashed within two weeks.
- The end game for housing will be worse than what the S&L crisis did for commercial real estate.
Position in homebuilders
Sometimes, when things get really tough, I ask myself, "What would President Logan do?" - Kevin Depew - 11:52 AM
- Keep an eye on the Nasdaq Equal-weight Index (.NDXE). We noted in Point & Go Figure on Tuesday that a print of 1160 would form a bull trap and now we are nearly there. Just something worth watching given the bearish divergence between the NDX Bullish Percent, which is negative, and the recent breakout in the NDXE.
- The PHLX Semiconductor Sector (SOX) has broken a double bottom at 505 and violated trendline support that dates back to the October low.
- Watch the PHLX Housing Sector Index (HGX). A move to 248 breaks a triple bottom.
- The Transports met their long-term price objective earlier this week at 4900 on a 25x3 PnF scale.
- While just about everything else has long-term technical issues according to DeMark signals and PnF work, one area that doesn't is the Drugs sector. And note that is the one of the few enjoying some green today. A move to 340 on a 5x3 scale for the Amex Drug Index (DRG) would break a quadruple top, clearing resistance going back to May 2005.
- Isn't this redundant?
I am Mr. Rorque, your host. - Todd Harrison - 11:30 AM
The hectic frenzy settles in as our collective heads quiet the spin. A snapshot of the action finds the S&P slightly below the all-important 1315 level and the NDX well below the nearest-term support (1680). NDX 1650 (200-day) and 1635 ('06 lows) are the next levels of lore for the four-letter freaks.
Breadth is fugly, monsiour (2:1 negative on the S's and 3:1 negative for the Nazz) and our financial duopoly is supportive of further drip (watch Citi $50). Over in commodity land, the metals steadied the first wave of supply, in no small part to the fact that the dollar has reversed its early jig and is currently 10 bips to the bad.
While alotta eyes remain pegged to the inevitable all-time highs, I've got my right hand up as I manicure my risk. There are select names I wanna buy on dips (SunMicro comes to mind) and a slew on my wish list if and when some serious slippage occurs (WFT, metals, energy) but, as it stands--and as I sit--I continue to 'trade around' my short bias in the financials and have tight stops on my 'pure trades' (such as Microsoft).
Just another day on Paradise Island, my friends, so keep your eyes peeled for da plane or, as the case might be, some helicopters.
Position in C, metal equities, sunw, msft
We are getting mighty close to contract lows with 5 handle across the board….. - Bennet Sedacca - 10:48 AM
Breaking the lows in 10 year contract (104-26, now at 104-30 - just a mere 1/8 away) might trigger some stops and may finally bring those convexity sellers out of the closet. Remember, everyone seems to be a technician anyway since we don't know what M3 is (thanks, Boom Boom) and commodity prices are, well, vertical or parabolic - take your pick. What inflation?
Anyway, cycle low remains May 29th and seasonality turns positive around June 1. How convenient. We remain cautious as we have been for what seems like an eternity, but we are dusting off those buy tickets for an appearance of Mr. Snapper in a couple of weeks. We may, to be fair and in full disclosure, be buying a little bit in front of June 1, if the conditions are right. The main condition is that recent sentiment polls do not suggest that anyone has made a visit to the 'puke zone' yet - excuse my French. That, Minyans, is my feelings about the current situation, but not advice.
What will we buy if we buy? Most likely off-the-run long duration Treasuries as this is just for a bounce and munis are no longer attractive to me and I think they will lag any rally badly just as they have outperformed smartly during this decline.
Pins and Needles - Adam Warner - 10:35 AM
Lots of chatter related to publicity of an Expiration Pin study earlier this week. Quick paraphrased summary of the results: "Stocks are more likely to close at strike on Expiration Day than otherwise, manipulation definitely happens, although we offer no evidence of it."
Personally, I feel nefarious behavior has a minimal impact on pin probabilities Anyone who tries to manipulate is at huge market risk. Besides, options are a zero sum game, so it is unclear why option shorts can rig the game, while option longs, who want it away from strike, can not.
But in the real world, the more important question is what to do with possible pins, not worry about why they may happen. And if a stock trades near strike on a slow-moving expiration, and open interest is at all significant, it is likely to pin. So plan accordingly.
Morning comments... - John Succo - 9:38 AM
American International Group (AIG) had a kitchen-sink quarter: they missed on just about every front. We think they threw in as much bad news as possible laying clear the way for the new CEO. Only real earnings from property and casualty insurance were better than expected. The company took write-downs in the derivative portfolio.
This company is cheap to its peers, but probably deserves to be given the vastness of their derivative portfolio.
I see earlier comments on bulls comparing our situation to a goldilocks economy with low inflation etc. In the last year silver is up 215%, gold is up 80%, copper is up 170%, aluminum is up 77%. Golden Ben and the BLS have the official statistics sanguine through substitution, hedonics, and outright false algortithms (the higher oil prices go, the lower "core" inflation is stated). M3 is growing at an astounding 10% now despite the "show" of higher fed funds rate. Interestingly, once the discount rate has reached 6% (which it is now) there has been a correction in stocks basically 100% of the time.
Japan bank lending is soaring. It is almost exclusively due to real-estate lending. Watch carefull the dollar/yen for signs of Japan raising rates. When the yen rallies against the dollar, all that liquidiity from the yen carry will wane.
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