Buzz Bits: Dow, Nasdaq Close Higher
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Earnings Report - MV New
- Electronic Data Systems (EDS) reported Q1 EPS of $0.06 vs $0.08 cons on revs of $5.08 bln vs $4.77 bln cons.
- Adobe Systems (ADBE) adjusted their guidance to the lower end of prior ranges. The company took Q2 EPS to $0.30-0.32 vs $0.31 cons on revs of $640-670 mln vs $662.1 mln cons.
"They call me Double Down" - Jeff Macke© - 4:00 PM
A quick word from the Time Suck Tar Pits where I'm bucketing out the rising levels of muck while simultaneously prepping for the BIG Same Store Sales data arriving this this week. Specifically, I added to my positions in Coldwater Creek (CWTR) and Safeway (SWY). The latter doesn't release SSS but WalMart (WMT) was out earlier this week with big numbers which I suspect were drivEN by grocery. Also, I'm working a theme for the post.
Be sure to tune into to the Ville for my Retail Roundup this Thursday morning. The numbers should be big, given the "Easter shift"; the question, of course, is will they be big enough...
Position in CWTR, SWY
Flashback! - Bill Meehan - 3:51 PM
This day in market history...
- Closing levels 4 years ago
- DJIA: 10,091.87
- Naz: 1,644.82
- S&P 500: 1084.56
- Crude: 26.31
- Gold: 307.90
This day in Minyanville history...
- Macke said "A Dissident is Here" as turmoil at Morgan Stanley heated up
In other news...
- In 1939, Lou Gehrig established a new major league baseball record, playing in his 2,130th consecutive game, a streak that began June 1, 1925.
Bell Buzz - Todd Harrison - 3:44 PM
- One of the more frustrating days in recent memory--which isn't saying much--eyes the close with Hoofy firmly in old school control. NYSE internals are jazzy, the brokers are leading by example and the energy patch is sporting acne anew.
- The fly in the ointment (aside from the obvious geopolitical stuff)? Tech continues to lag, both in terms of price action and internal health. This could BE my long vibed rotation (out of tech and financials into energy and metals) unfolding or it could, in fact, be a red flag. It remains to be seen and yes, I know that money has yet to vacate the financials.
- Adam's Buzz on volatility is an important one. Not just for silver, but in general. I continue to feel that out-month paper has alotta ways to win independent of directional bets (think stock replacements or married puts).
- Wait'll Otis sees what I'm secretly working on. He'll love what I'm secretly working on!
- As discussed earlier, I've actively traded my risk today and will hit the hump more balanced than I've been in recent sessions. I've still got some piggy puts on, natch, but I've got offsetting deltas in other arenas.
- May peace be with you.
Reply to Todd on Google slide question - Phil Erlanger - 2:15 PM
In my firm's opinion, the slide in Google (GOOG) is a low short ratio .62 followed by a short intensity level of 45% with a weakened technical rank. The stock is now a long squeeze. The first bounce occurs when put activity gets high. Not even close here as we see excess call activity. Can you say $350?
Microsoft's (MSFT) earnings announcement and susbequent call is the problem for Larry and Sergey. Microsoft is going to deploy capital, i.e. there huge cash balance, to do battle with Google. Google has $3.8 billion of cash and short term investments to Microsoft's $34.6 billion.
From a recent A.P. story we note, "In an interview with The Associated Press, Chief Financial Officer Chris Liddell said its third quarter earnings and fourth quarter outlook were below Wall Street's estimates in part because the company has decided to increase research and development spending in areas where it isn't a market leader but sees potential."
Bolivia, Metals and Energy - Kevin Depew - 1:51 PM
In answer to Toddo's question below, why the Bolivian flu hasn't spread to the energy patch, one possibility is that Bolivia is a very small player in the oil and natural gas space. Also, the nationalization push reported this morning stems from a 2005 act where the government passed a natural gas law imposing significantly higher taxes for oil and gas firms than other industries. Nationalization has been in the works for quite some time. A government can achieve nationalization through outright seizure, or they can pass legislation, taxes, etc. that is so severe that foreign companies have no choice but to abandon their projects.
What was new out of Bolivia yesterday was this: "This is just the start ... tomorrow or the day after it will be mining, then the forestry sector, and eventually all the natural resources for which our ancestors fought," Morales told a jubilant crowd in La Paz's main plaza, according to the Australian Herald.
Apex Silver Mines (SIL), as was noted earlier on the buzz, owns the San Cristobal property in Bolivia, and in the grand scheme of things possible nationalization of Bolivian mining is a far more significant possible development in that sector than in the energy sector.
$10 dollars a day keeps . . . me up at night. - Fil Zucchi - 1:37 PM
Gold is up what seems to be its daily allotment of $10. Meanwhile, courtesy of the Bolivia spook Toddo mentioned, the Philly Gold Index (XAU) was actually heading south for a while. Stumpy (aka yours truly) left a couple of fingers under the Apex Silver (SIL) tire tracks before I was able to get the rest of my hand out of the way. Hurt nonetheless.
With a somewhat clearer focus (picture San Francisco at 9 a.m. in the summer when you can see at least as far as your toes) I then hopped on more Pan American Silver (PAAS) (a bit of Bolivian exposure but not much) and a few other precious ones. That supposedly clearer thought was that with Gold up $10 and now 30% above its 200DMA, while the XAU was actually down, the "arbitrage" of going longer equities and short some Streettracks Gold (GLD) made some sense.
That, Minyans, remains to be seen of course. Is that a fog horn I hear?
Position in SIL, PAAS, GLD
That whole Maria/Big Ben story leaves more questions than answers. My personal theory? - Adam Warner - 1:22 PM
We are reading way too much into his offhand comment, or whatever it was. He wants to be called Flexible Ben and not Dovey Ben. But it does not mean they won't suspend rate cuts temporarily as he hinted. Maria thought the story was so significant that she casually mentions it in the middle of an interview, then wonders why the bond pit behind her goes nuts. And CNBC flashes that "Breaking News" graphic every time Ken Lay orders lunch, or the local Exxon raises pump prices 5 cents, so truly no one thought they had some major scoop here.
A bigger mystery though is how Chloe can access any gov't agency via WIFI from some hotel bar, while my laptop can barely read my router 2 feet away?
And just for the record, I care not a whit about this Fed stuff, beyond the extent to which it can blip markets.
Remember my bear flag that got me out of bonds 100 basis points ago? Well how 'bout one that looks EVEN WORSE? - Bennet Sedacca - 10:23 AM
See the chart here. It is the broadest housing index that S&P has. And it is NASTY. I think it has already broken. Man, did those insiders make some good sales or what? All the while telling us how great fundamentals are.
Well, ladies and gentlemen, this chart - IT AIN"T SO. Fundamentals are deteriorating fast and that could only accelerate. Hovnanian (HOV), Toll (TOL), etc. The list is long. Yeah, they are cheap to book. But the book is based a lot of times on land prices and they aren't on fire, I imagine.
The reason I find this interesting is that I was questioned when I said there was a bubble in housing and housing stocks. I also said it is NOT different this time. I was questioned by many that it was. Well, if this chart doesn't tell the story, nothing does. It's not different this time, except to the extent the fallout could be uglier.
Why is this so important? Well that bear flag and ensuing bear market in Treasuries led this by 6 months. Yields important to housing? Yep, they are important to everything with leverage which I am afraid we will find out in due course.
If you believed they put a man on the moon, man on the moon... - Todd Harrison - 10:09 AM
I do, Michael Stipe, but if they can facilitate a lunar round trip, why are we having such annoying technical glitches this morning? Take me at my word, we take everything 'Ville related very personally and we're aware that there are some funky stuff in the computer. WAIT? It's in the computer? I got it!
Now that we've got that problem solved, my attention has turned squarely back to the flickering flack. We knew coming in that the first hour was gonna be "noisy" as traders rewound and unwound some late-day risk. That's going on as we speak as we edge our way to "purer" tea leaves. At least they'll be pure as long as Boom Boom refrains from eating any meals in public.
NYSE internals are slightly positive (flat in the Nazz) as the homies and biotech again usher in some "S's over N's." The all-important financials trade "ok" although I'm viewing this first rally attempt as a re-knee-jerk after the late day supply. Use Citi $50 as your "over/under" in the vein of "as goes the piggies, so goes the poke."
I'm scanning for "bottom's up" situations" but I can't help thinking of the "top down" crosscurrents. Indeed, if psychology is the most important metric--and you believe, as I do, that our collective confidence will dictate our financial fate--the double whammy of dicey approval ratings and Fed missteps must remain somewhere in our crowded keppe. It may not be today's business but it's on my mind and now, if all goes well, it's on your screen.
Fare ye well and I'll be back.
Position in C, financials
S&P 500 P/E and Earnings Growth - Brian Gilmartin - 9:50 AM
According to First Call data, year-over-year earnings growth for the first quarter is 13.4% as about 80% of S&P 500 companies have now reported q1 '06 data.
The forward P/E on the S&P 500's projected earnings is 14.8(x), with earnings growth expected to accelerate slightly in q2 and q3 '06.
So we are trading at 14.8(x) 4-quarter forward earnings for y/y growth of 13.4%: does any else besides me think that is a pretty reasonable valuation for the S&P 500 ?
Based on the 10-year Treasury yield, the theoretical market P/E is 19.7(x).
I don't understand all the bearishness, but hey, that is just me.
Position in S&P 500 Index Funds
That's why they call it "resistance" - Rod David - 9:24 AM
Monday's opening surge tested its limit -twice- each time being rejected back under the prior two sessions' highs. But rejection of a rally attempt isn't the same as a sell signal. Neither was the fact that most of the day ranged dully in positive territory, refusing both to fill the open's gap below or to retest the highs above. This "ineffectual bullishness" was certainly cause for an expected eventual drop, but it was also cause for expecting one more failed rally attempt to trigger it. Bartiromo & Moskow only accelerated the process.
An overnight rally thoroughly tested the new bounce limit, and just managed to remain within its 1-point range at the Globex close. But the gap back to Thursday's open at lower levels still requires being filled. And a single 30-minute drop -regardless of its slope or severity- isn't enough of a consequence for the past three consecutive sessions of distribution (new highs in the morning that aren't exceeded in the afternoon). So, the bounce limit or the next is expected to produce another leg down. And another leg down would form a Double Top between this week's high and April's, and a bigger Double Top between April's high and March's.
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