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Buzz Bits: Dow Slinks Lower, Nasdaq Creeps Up

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Your daily Buzz & Banter highlights...

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



Earnings Report - MV News
  • Cisco (CSCO) reports 3Q EPS of $0.34 vs. $0.33 cons on revs of $8.87 bln vs. $8.77 bln cons.
  • Walt Disney (DIS ) reports 2Q EPS of $0.44 vs. $0.37 cons on revs of $8.07 bln vs. $8.11 cons.
  • Electronic Arts (ERTS) reports 4Q EPS of $0.06 vs. $0.02 cons on revs of $613 mln vs. $586.2 mln cons.
  • Gateway (GTW) reports 1Q EPS of ($0.02) vs. $0.01 cons on revs of $1.01 bln vs. $983.6 mln cons.



Take it to the limit, one more time.... - Todd Harrison - 3:29 PM
  • Pretty Sneaky Sis! Yeah, the Minx is resilient today in the face of still drekky breadth and the stronger dollar. I can't help wonder if the out-sized (upside) open interest (next week) is influencing the price action.

  • Coops De Ville highlighted S&P 1498 as the worry wart in today's tape. It never got there (the low tick was 1500.66) and, hence, the Matador Crowd never kissed the frog.

  • As go the financials, so goes the tape. We eyed that off the March lows and it remains in play as we edge into May. I haven't slapped on any exposure yet (know thyself--it takes me a few days after a week away) but I continue to eye BKX 118 and XBD 260 as technical toggles.

  • Minyans are starting to get excited to hang with Rizzo and the boyz on May 23. I'll be there with the MVHQ front line and will offer a finski to the first person to hip check Farley into the boards.

  • If we were playing kickball, I would yell "do over!" right about now. System issues, lagging jets, our office move (end of next week), new initiatives (Otis will be psyched), MIM4 discussions, media manifestation and all sorts of other things are vying for limited mindshare today. Slap an A.D.D. writer/trader in a sensory overload environment and voila! Here we are. I hope ye faithful are doing well and you hit 'em hard into the close.


R.P.



This Looks Like a Problem - Kevin Depew - 2:38 PM

Here is a chart of the S&P 500 Equal-Weighted Index with the S&P 500 Bullish Percent plotted behind it. It looks problematic. As you can see, the S&P 500 Equal-Weighted Index has been making new highs here even as the S&P 500 Bullish Percent has failed to recover its February high.

There are actually two divergences at work on the chart. The first is the one mentioned above, the second is that, so far at least, the May high for the S&P 500 Equal-Weighted Index hasn't been confirmed by the S&P 500 Bullish Percent either. On the line chart it has turned down below the late April high.

In simple terms, this means that underneath the hood these two moves higher by stocks are being fueled by weaker demand.


Buyout Frenzy! - Sally Limantour - 10:01 AM

The Canadian dollar has been advancing and the 91.00 level is resistance on the weekly chart.

Mr. Dodge (soon-to-be Governor of the Bank of Canada) said,"the demand for commodity exports has been rising sharply and has helped to create the economic boom and investment flows into Canada have increased."

Is aluminum the new steel? Alcoa's (AA) hostile $33 bln bid for Alcan (AL) is a move toward consolidating the global metals market. This merger would create the world's largest aluminum producer. The buyout frenzy in the natural resource sector will clearly continue. BHP Billiton (BHP) and Rio Tinto (RTP) and others I am sure will not sit back.

Crude oil has fallen $5/ barrel in the last two weeks. No, I am not short, but looking to get long and am amazed at how well the Athabasca play is holding up Suncor (SU). I like that resource rich area of Canada.

From Boomberg: Metals Bubble Poised to Burst on Increasing Supplies, "Once again we have an enormous amount of unsold copper.This is a real bubble." says metals trader, David Threlkeld.

While bullish on the stuff cycle, I always think about the contagion effect where stocks start their correction and all the asset classes follow. Risk management rules ease the concern, but how do we put stops in on this?


Sellers take another swipe... - Rod David - 9:27 AM

It is helpful when analyzing price action to have some sort of "organizing principle," a single filter through which price action can be viewed and interpreted. In the past couple of sessions alone, S&Ps have provided multiple elements that might construct this filter, except that they're in conflict with each other.

For example, S&Ps have dropped five points overnight, and that might seem to be a bearish factor; after all, momentum can be self-fulfilling - just look at the two-month old rally. But the pullback might only be a healthy exercise, creating a price discount to help absorb tomorrow's FOMC news.

Of course, that discount can get wider. The risk in this pattern is that Friday afternoon's consolidation formed an Ascending Triangle. If Friday morning and Monday morning's highs formed a Double Top, then the interim triangle essentially dictates that the pattern resolve down sharply.

There are other elements, and they're also conflicting. But suffice it to say that holding a lower low through today's first hour would point lower before higher, but holding this ground would allow a higher high, first.

No positions in stocks mentioned.

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