Buzz Bits: Dow, Nasdaq Lose Ground
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Earnings Report - MV News
UnumProvident (UNM) reported Q1 EPS of $0.42 vs $0.43 cons on revs of $2.65 bln vs $2.63 bln cons.
American Eagle Outfitters (AEOS) reported April comps +19% vs +9.6% exp. Q1 sales were $522.4 mln vs $504.6 mln cons.
Starbucks (SBUX) reported Q2 EPS of $0.16 vs $0.14 cons on revs of $1.89 bln vs $1.87 bln cons. April comps were +6% vs +6.4% exp.
Electronic Arts (ERTS) reported Q4 EPS of $0.14 vs $0.09 cons on revs of $641.0 mln vs $583.3 mln cons
Gangsta, Gangsta! That's what they're yellin'
It's not about a salary, it's all about reality - Todd Harrison - 2:54 PM
Reality bites as we edge through another chapter and my eyes are spying some stealth sneakage in--yep, you guessed it--the financials. As soon as I scribed that it was "interesting" they weren't slipping with the slippy tape, they pucker-upped their buttercup. My proxies? Citi and Goldman, although JP Morgan is also on my radar for obvious reasons.
Can they alone turn the tide? Not unless they drag the breadth higher, which they're trying to do as we speak. What is evident, however, is that demand "lives" somewhere near S&P 1300ish and as long as Hoofy holds that line, the reverse dandruff (bullish) pattern remains in tact. Hey, I don't create the ticks, I just follow 'em.
Just remember that the dip shtick is a curious phenomena. It emboldens bulls and promotes complacency as long as "scaling in and averaging down" works. I can't tell you the last time we saw three dips in a row but please remember both sides of this double-edged dynamic. And understand that as long as you trade with discipline and define your risk, you'll be just fine either way.
As always, I hope this finds you kickin' tail and takin' names.
Position in C, JPM
Range Against the Machine - Adam Warner
A day after that monster range, Apex Silver (SIL) has returned to something resembling normalcy. At least until Maria talks to Hugo Chavez later.
Volatility has declined from triple digits in the May options to the mid 70's. And the low 70's in June, about 10 points lower. So with the stock down moderately, it is a Sea of Red out there, with call, puts, and the stock all down.
Position in SIL
How do you know when the end of a move is near? And please, Wall Street sell-siders don't take offense......no offense intended. - Bennet Sedacca - 1:08 PM
I was just offered some bonds that profit from DOWN MOVES in Treasury bonds. A little late, no? Even the salesman, a good friend of mine, agreed it was ridiculous and that it was a bit late. But in sales, any kind of sales, that is where the phrase 'if the lady wants green shoes, sell her green shoes' comes from.
Another tell of an end of a move in any asset class is when the last bear you know caves in after being bearish for a bull run. I will not name names here, but some notable perma-bears are turning these days. I call these watershed events, much like when Julian Robertson (probably the GREATEST value manager EVER) closed up shop just as value made an historic bottom in 1999.
Lastly, you can usually look at the secondary calendar of issuance to spot tops. Insiders and companies are usually sellers at or near tops (smart money) and the Street is happy to sell into what is 'working.' The opposite, you might say, of 'buy low and sell high,' like many of us old-fogies were taught.
Merrill Alters Asset Allocation - Tom Peterson - 11:53 AM
Merrill's Richard Bernstein was just on CNBC. He is shifting his allocation downward in 'bonds' from 45% to 30%, up in equities from 30% to 40% and up in cash from 15% to 20%.
With all due respect - sincerely - this makes no sense to me. As yields rise, and equities exhibit the kind of negative divergences we've been seeing in the past weeks, treasuries in reality are becoming increasingly attractive relative to equities.
While I favor a stock-by-stock approach and have focused on several special situations again this year, I note that even several stock groups that I favor are becoming overbought and vulnerable to at least short-term corrections /consolidations (i.e. metals, energy). Plus we at BER are anticipating an interim low in treasury prices in the near future (i.e. tens trading at 5.25 - 5.40%) along with an interim high in the S&P.
Therefore, it occurs to me that perhaps an asset allocation shift like this (with perhaps others joining in on the general idea) is HOW we can get the interim turns in stocks and bonds that we are anticipating soon. TRP
Rolling rolling rolling . . . - Fil Zucchi - 10:27 AM
- I was mucho worried about XM Satellite Radio (XMSR) at the beginning of the year with the stock near $30. It is now in a basic free fall and for my money it is time to abandon the darkside and stick with the risk controls.
- Best trade so far today? I lacked enough stupidity to short Garmin (GRMN) over the last couple of days.
- A lot of my precious longs have morphed into precious call spreads first thing this morning and playing more "defense" with the Streettrack Gold (GLD). Just trading them Minyans.
Positions in precious metals, GLD, XMSR
You want updates? We got updates. - Rod David - 9:21 AM
S&Ps: The overnight drop that tested our pullback limit was accompanied by improving MACD and RSI. The pullback limit did what pullback limits do (at least, the first time they're tested) and produced a bounce to... our bounce limit. There's still room for another point higher - almost back to yesterday's highs - before considering whether yesterday's problematic rally has legs.
Crude Oil: Overnight strength filled the gap created by last week's open. Natural resistance there has sent the price back under yesterday's close. The sequence doesn't need to be repeated during regular trading hours, although that would be cleaner. But unless today's close were a new high, the next corrective leg down should soon be obvious.
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