Buzz Bits: Dow, Nasdaq Finish Higher
Your daily Buzz highlights...
Watch Volatility - Adam Warner - 2:15 PM
Do take this with a grain of salt though. We have a little break in the action today, and with a holiday weekend upon us, we seem to be pricing everything as if it is already Tuesday. All of which gives the illusion that volatility has weakened more than it really has.
Take up your china doll--it's only fractured, ust a little nervous from the fall. - Todd Harrison - 1:58 PM
The Minx slinks towards contra-hour as the bovine search for a bit more power. In what might be a pre-cursor to the drifty sift that often surrounds holiday weekends, the flickering ticks are fewer and further between then we've seen. That's either a good thing or a bad thing, depending on how much volatility (decay) you're luggin'.
A quick sniff of my tea leaves finds the critter compass pointing north by northeast---with NYSE internals snazzy (3:1all day), leadership starting to emerge (note the metals (+4.5%) and energy (+3.5%), stochastics oversold, the dollar pink, emerging markets green (Brazil +3.5%) and resistance a bit higher (S&P 1280, NDX 1635), Hoofy has a bit more room before he runs into a pack of wild bears.
Boo will note the flies--namely, the semis (SOX -50 bips), Wells Fargo and Lehman (dabblin' in Red Dye), General Electric (been heavy of late), the homies (can't bounce despite being uber-oversold), as well as the potential for pent-up supply (as we trade higher).
I'm "still there" with my trading tries and will continue to roll up my stops through the close and into tomorrow. Then, as I'm gonna be away from my eight screens til Wednesday, I'll likely rebalance my risk profile (in the manner consistent with what we've discussed). I don't think this tape is out of the woods---there was some serious damage done--and I'm conscious that, given the current set-up, risk is indeed two-sided. That, as much as anything, is why I wanna "pair sectors" and find alpha bits.
As discussed this morning, the road ahead is gonna be a long one. My goal is to hit singles, preserve capital and stay in the game. I've seen alotta hitters and shooters come and go over the course of my career and I'm not looking to make a fortune on any one trade. For if we know anything, it's that the harder you swing, the more likely it becomes that you're gonna strike out.
As always, I hope this finds you well.
Position in metals and energy
My market's smarter than your market.
Oh, yah? Well, my market's been making more money than your market. - Rod David - 1:43 PM
AvidTrader's "Fat Lady" setup was noted here before yesterday's close. She cleared her throat overnight, sang through the Globex session's final hours, and gave an encore into noon. The session peak at noon was within a point of our S&P target. Now that the Fat Lady has sung, is it over?
Yesterday's cash session retest of the overnight lows and of the year's low resolved any near-term unfinished business at lower levels. Yesterday's drop was accompanied by "panic" news stories. A three-day weekend is fast approaching, and price action can start to be excused for its lack of volatility.
Price action since noon has trended gently lower to test the open's highs as support. Sustainable rallies are smart rallies, and letting sellers control irrelevant time windows - like the noon hour - is smart. And since the noon hour is relatively illiquid, its weakness is potentially bullish from a contrarian perspective. But sustainable declines are also smart, and trading ahead of a long weekend is relatively illiquid, too.
So, did smart bulls let sellers have control of the noon hour, or are smarter bears letting buyers control price action into the weekend?
Mini-Minyan Mailbag - Kevin Depew - 11:56 AM
Do you think this Enron verdict means anything to the market? To the Banks? Interested in your thoughts.
Minyan Scott "Free"
Honestly, I don't. A lot of people have been pinging me this morning saying the market will rip higher on a guilty verdict. But you know I believe markets are non-linear. If the market does move higher on expected guilty verdicts, then everyone will be able to say after the fact it was related to the psychology of the Enron verdicts. If it moves lower, then it will have been priced in already (since we're at the day's highs) and the market will be said to have "sold the news." It's like a public handicapper who mentions every horse in a race positively while reviewing the field before the race. After the fact, he can say he had it since he made a case for that horse.
As for Enron, the legislation related to what occurred is already on the books, called Sarbanes Oxley. So the trial is just a show at this point.
Presidential Powers and the Waiving of SEC Rules... - John Succo - 11:41 AM
This BusinessWeek article, "Intelligence Czar Can Waive SEC Rules," which was also discussed in Five Things... this morning, directly affects us so we need to assess the likelihood of this. If true, it becomes even more of a cartoon.
There's no question this rule has been used frequently in the past in the defense sector. Lockheed Martin (LMT), Boeing (BA) and other defense-related contractors have long used the ability to assign dollars/profits/losses to "Project A," etc., and we would expect that to continue.
What's new here is that (1)the power is officially delegated outside the Oval Office (where theoretically it never was before), and (2) it seems to be creeping to non-defense industries.
On point (1) there's also no question that the President was not approving all the LMT or BA financial statements before, so we know someone else did it. It seems reasonable that this official delegation to Negroponte is to shield Bush from the backlash over the Verizon and other phone company's alleged turning over of private records.
On point (2), I think this raises the real issue here - the intent of the provision giving the President this power in the first place. I think that is what people could and should legitimately object to.
The power of the government of the U.S. was intended to be rooted in the citizens of this country not in the bureaucrats running the government. Those powers may be necessarily "special" in times of war, but this becomes especially dangerous when the "war" is subjectively defined.
Breakfast Buffet - Jon Doctor J Najarian - 9:32 AM
- MasterCard Corp. begins trading Thursday slightly below expectations as the world's No. 2 credit-card brand fell victim to a volatile market and concerns over its mounting legal problems. The Purchase, N.Y.-based credit card association's stock will begin trading on the New York Stock Exchange with an initial public offering price of $39 -- below the $40 to $43 range it originally expected.
- LSE Shares Hit By Nasdaq Patience - Shares of London Stock Exchange Group Plc, operator of Europe's largest equities market, fell as much as 9.7 percent after Nasdaq Stock Market Inc. Chief Executive Officer Robert Greifeld said he's, "in no hurry to acquire the LSE."
- New Home Sales Shocker! Sales of new homes unexpectedly rose in April to the highest level this year, even as inventories of unsold homes hit a new high of 565,000! Sales increased 4.9% to an annual rate of 1.198 million from a revised 1.142 million in March that was lower than previously reported, the Commerce Department said yesterday.
Reversal Day Yesterday - Brian Gilmartin - 8:40 AM
Our technical software - TC2000 - is calling yesterday a "reversal day" given that it had all the necessary ingredients (as detailed in the nightly report):
1) A steep downswing with conspicuous momentum
2) A new intra-day low
3) A vigorous lift off that low
4) A close in the upper half of the day's range
5) A close above the previous days close
6) An increase in volume accompanied the action
What caught my eye was the 3.0 bl shares traded on the NYSE. Is that a record volume day for this year?
When the equity market bottomed in mid-March, 2003, and Lowry's put out their buy signal, I was hoping we would see a 3.0 bl share day, but according to my notebooks, we didn't get higher than 2.0 bl.
When the bear market of 1973 - 1974 ended in the summer of 1974, the signal was the rally on record volume during July, 1074. (The reason I go back this far is that it was the last period, previous to 2000 - 2002, where the S&P 500 had negative returns two years in a row.
Position in S&P Index Funds
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