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Buzz Bits: Dow, Nasdaq Strong Again


Your daily Buzz & Banter highlights...


Editor's Note: This is a small sample of the content available on the Buzz and Banter.

Earnings Report - MV News

  • Bebe Stores (BEBE) reports 1Q EPS of $0.14 vs. $0.13 cons on revs of $154.4 mln vs. $151.37 mln cons.
  • Starbucks (SBUX) reports 1Q EPS in line of $0.19 cons on revs of $2.26 bln vs. $2.30 bln cons.
  • Crocs (CROX) reports 1Q EPS of $0.61 vs. $0.49 cons on revs of $142 mln vs. $113.91 mln cons.
  • Electronic Data Systems (EDS) reports 1Q EPS of $0.31 vs. $0.21 cons on revs of $5.22 bln vs. $5.26 bln.
  • Tim Hortons (THI) reports 1Q EPS in line of $0.31 cons on revs of $424.6 mlm vs. $419.63.
  • Chesapeake Energy (CHK) reports 1Q EPS of $0.87 vs. $0.78 cons on revs of $1.58 bln vs. $1.54 bln cons.
  • Ternium (TX) reports 1Q EPS of $1.11 vs. $0.87 cons on revs of $1.8 bln vs. $1.68 bln cons.
  • Cabela's (CAB) reports 1Q EPS of $0.11 vs. $0.12 cons on revs of $462.1 mln vs. $464.6 mln cons.

Activision and Sandbagging on Display - Jeff Macke - 12:46 PM

  • Activision (ATVI) has announced a preliminary revenue figure of $300 million for its 4th quarter, compared to previous guidance of $200 million and a consensus of $214 mln. The company held their guidance for fiscal 2008 revenues at $1.6 bln, or 6% growth.

    Considering that March's NPD data showed industry growth tracking at 33%, with supplies still constrained for Nintendo's Wii (NTDOY) and Sony's PS3 (SNE), not to mention the fact that ATVI just beat guidance by 50-freaking-percent, there are already suggestions from William Blair and others that Activision is being "conservative" in its guidance.

  • On a slightly related point, and by way of demonstrating how we are getting so many earnings Beats of late, Jeffmacke (WOLF) has announced that this post will contain no more bullet points.

  • Speaking of Sony, the company's Spiderman III has beaten expectations and previous Spiderman releases by recording over $29 million in first day box-office at 16 international markets. This demonstrates both Spiderman's franchise power as well as the relatively feeble size of the international movie market. The movie opens this weekend with a "whisper" over/ under of about $150 million for domestic weekend box-office.

  • Minyanville and Jeffmacke are pleased to announce that the number of bullet points in Jeffmacke's current post will come in at 4 vs previous guidance for 2. "We attribute the beat to Jeffmacke's uncontrollable wordiness" said Jeffmacke in a press release. Mr. Macke kept guidance for future bullet points at a conservative zero, below consensus estimates of 1 to 2.

Under the Hood - Kevin Depew - 12:25 PM

  • New point and figure buy signals are leading this morning 14 to 6.
  • Overall buy signals are leading 36 to 11.
  • How did a quiet Thursday morning in the 'Ville get so busy all of a sudden?
  • Minyan Scott notes from the front lines: "Just wondering who they poll in the Individual Investors Association poll? It seems odd to have 28% bullish and 54% bearish in this market. I do not see that with people/clients I speak with. My only thought could be that they are 'bearish" on their particular financial situation going forward... maybe too much leverage on their home, house dropping in price, inflationary stuff like food and gas, etc."
  • Minyan Agneta asks if there is a relationship between the point and figure bullish percent indicators (which are positive for the SPX and NYSE) and the DeMark indicators, which have recently registered sell setups in the Dow, NDX and SPX.
  • I use the point and figure bullish percent indicators for an overall market context. When they are positive, the market is controlled by demand.
  • The DeMark indicators, however, I use for more specific timing. When they register buy or sell setups, those setups can proceed to what is called countdown. The countdown is what delivers the ultimate buy or sell "signals."
  • We have sell setups in place for those indices, but not yet the countdowns to the sell signals.

Skinny Dippin' - Jeffrey Cooper - 10:07 AM

Based on the shallowness of the pullbacks and persistency over the last four years, I think you have to play heads up on any up open that reverses at this point. However, only trade that relinquishes 1490 based on the hourlies would signal a drive to turn the weekly chart down which from my perch is overdue to turn down.

When the S&P does exceed these shallow pullbacks and a seller does appear there is a better than average likelihood that any correction will be larger than anticipated. You could say that about the action over the last four years and the Feb, uh, "pullback."

The point is if they go down and stay down especially below 1490 after what may be a Test of a Test (test of 1498, test of Feb high?, test of March 2000 high?), it's out-skies. When the tide goes out we'll see who's been swimming without their shorts.

See the hourly chart here.

Trapped Buyers in Google Feelin' the Heat - Jess Thompson - 9:54 AM

Back in mid-Jan., sellers regained dominance in Google (GOOG) (see this chart) when they broke the bids (green dots) at point A. Sellers retained control by offering in size (at points B, C & D).

GOOG buyers regained control (at point E) by breaking the offers (pink dots). Since mid-March stacked bids have been providing underlying support to dips.

The more detailed view of the local daily price action (on this chart), shows bids just under 464 (point B) -- which supported a seven-point bounce from late on May 1 to above 471 on May 2.

But, there's now a substantial supply (volume) of trapped buyers overhead above 471.65 with very poor trade location.

All buyers who initiated longs after GOOG earnings were released (after the close of April 19) at point A, are now deep underwater.

Bottom Line: If buyers can defend 463.50 and GOOG can regain 471.65 (see the chart here) that reduces pressure on trapped buyers.

If GOOG closes below the bid line at 463.50, sellers regain dominance and trapped buyers are forced to either liquidate or sell into a subsequent rally.

No positions in stocks mentioned.

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