Buzz Bits: Dow Climbs, Nasdaq Drops
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Earnings Report - MV News
- Applied Materials (AMAT) reports 2Q EPS of $0.34 vs. $0.28 cons on revs of $2.53 bln vs. $2.35 bln cons.
Whataya Say, Vuja De? - Todd Harrison - 3:05 PM
Contra-hour comes to a close with Hoofy hanging by his toes. We noodled the action this morning, when all was well in the world, and opined that if the ursine found some moxie, the semis would serve as a downside proxy. Hey, a broken clock is right twice a day but that thought, as it stands, has manifested from perception to reality.
We know expiration is playing mind games with the tape--S&P 1515 and 1525 are magnets--and also understand that the further they drift from strike, as they are now, the less pull they provide. S&P 1498 now becomes the level of lore as we enter the most important hour of the day.
I haven't been a buyer of this tape for a few weeks---my bad, I suppose, but there's no hiding in the 'Ville. With that said, I'm watching Goldman and the brokers, Google (is that dandruff?), breadth (2:1 negative on the Nazz) and Apple as my guides into the close.
Defined risk removes emotion, we know, so don't press, guess or otherwise stress with your hard earned coin. Just frame your risk and play with an edge.
As always, I hope this finds you well.
Surprise, surprise... - Lance Lewis - 12:15 PM
...Today's CPI showed "no inflation," clearing the way for the Fed to ease if retail sales continue to fall off a cliff like they did in April. Funny how we got the "just right" data just in the nick of time, right (wink, wink...)? Nevertheless, the stagflationary reality remains, and that means any potential rate cuts will only stoke inflation even more.
Note the US dollar index's bounce (the smallest in a year) appears to have failed, which opens the door to new lows. See the chart here.
Not so coincidentally, gold has also held its trendline and is trying to rally after what is potentially its smallest correction in a year, increasing the odds that the next attempt at taking out $700 will be successful. See the chart here.
Equally positive, the HUI held its 200 day moving average on the latest selloff. Note that selloff in the HUI is the shallowest failure at the 370 level to date, increasing the odds that it will finally take it out on the next attempt. See the chart here.
The Fed's Hoenig speaks tonight on "Monetary policy and the economy." I wonder if he will give the dovish nod to the kiddies?
Position in gold shares
What Was The Question? - Jeffrey Cooper - 9:35 AM
We can all relax now, this morning's numbers reveal it's not stagflation.
It was just a deer in the headlights.
It was just Dan Quayle.
The S&P appears to be pinned to 1500 for expiration, but it's too early in the week for me to believe it will settle this way.
A break of 1498 that sticks should magnetize the index lower while the all time closing high of 1527 beckons.
Today's first few hours should offer a good tell on the bias.
Names on my radar:
Essex Property Trust (ESS) is a triple bottom break ahead after tagging a necktie of the 200/50/20 day moving averages yesterday.
Also Chipotle Mexican Grill (CMG), CROCS Inc. (CROX), Vertex Pharmaceuticals (VRTX), Priceline.com (PCLN).
Position in ESS, VRTX
Who Needs Protection? - Sally Limantour - 9:28 AM
This morning we have a slew of more buy out news but so far the market is ignoring this and yesterday's action was telling as we quickly gave up the previous day's (Friday) value area which indicated a trend day down. Has anything changed other than Richard Russell, who has been bearish for years and has now turned bullish?
One thing that's bothering me in the background is potential protectionist measures. We need to watch the upcoming Chinese delegation on May 22nd to see if there is any rhetoric in this direction.
Morgan Stanley's Stephen Roach believes the US Congress has bipartisan support for trade sanctions against China and possibly Japan. In front of a tripartite Congressional hearing on trade issues last Wednesday he said:
"My worst fears were realized. At the end of three hours of grueling give and take, I left capital hill more convinced than ever that the protectionist train has left the station."
Today in FT there is an article titled Globalisation's losers need support, which also hints at protectionist measures.
Commodities were bashed across the board yesterday after their recent rally and this has a feel of across the board liquidation. Gold has the upcoming rollover from June to August which typically sees selling pressure. Physical demand is strong and any trade back to $655-660 should be supported. If not, this will be telling. Keep in mind that gold was nailed last year during this time frame and bottomed in mid June.
CPI will lead early trading but my guess is if we continue to reject the 1508.00 level in the mini S&P (ES) the market will stay defensive and possibly test 1495.50 area. First resistance now comes in at 1509.50, then 1512.50.
Positions in gold, S&P
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