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Buzz Bits: Dow, Nasdaq Continue Slide

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Fool them twice, good for you! - Rod David - 3:56 PM

Thursday afternoon's steep rally was described in an article published here Friday. Despite having completely recovered the morning's deep and steep loss, it wasn't substantial enough to signal that momentum had reversed up. And now the rally has been retraced, almost entirely. This is not a retest of Thursday's low. Rather, it is the precedent to breaking Thursday's low as the decline resumes.

Six weeks ago, when the market had just dropped from new highs, the warning was that bear markets can surprise traders by pealing back additional layers of selling pressure. While that probably comes as no surprise to Minyans, the masses are just now awakening to the concept. Or perhaps more accurately, the past month's decline is awakening memories among the masses. Memories of finally realizing that a bear market was underway. How many want to be fooled again?



Bell Buzz - Todd Harrison - 3:42 PM

Thursday afternoon's steep rally was described on Friday. Despite having completely recovered the morning's deep and steep loss, it wasn't substantial enough to signal that momentum had reversed up. And now the rally has been retraced, almost entirely. This is not a retest of Thursday's low. Rather, it is the precedent to breaking Thursday's low as the decline resumes. Six weeks ago, when the market had just dropped from new highs, the warning was that bear markets can surprise traders by pealing back additional layers of selling pressure. While that probably comes as no surprise to Minyans, the masses are just now awakening to the concept. Or perhaps more accurately, the past month's decline is awakening memories among the masses. Memories of finally realizing that a bear market was underway. How many want to be fooled again?
  • Perspective Check: The multiyear trendline in commodity land is still hanging around CRB 328 (it's upward sloping).
  • With Lehman (-6%) in the rear-view (and alotta brokers coming up quick), the XBD is sitting directly on its 200-day moving average.
  • There is a fine line between using price to your advantage and fighting the tape. That line is called profitability.
  • The S&P is currently sitting on a trendline from the summer of 2003. It's stealth, but it's there.
  • While vols could (and likely will) appreciate, I think the "easy trade," with regard to married puts and stock replacements, was 85% (and five weeks) ago.
  • Please understand that my pure trading tries (both ways) are being flattened and anything on my sheets is something I will buy lower or sell higher. Hope isn't a viable investment vehicle and we can never let our definitions of investments be trades gone awry.
  • And yes, those on my sheets include Golden Star (-5%), Weatherford (-6%) and a spate of other commodity based holdings. I don't champion my winners but, at the same time, I take full responsibility for the losers. It's part of the process and I own it as any professional must.
  • Fare ye well into the bell, Minyans, and keep that right hand up.

    R.P.


Position in gss, wft, metals, energy, financials, rogaine



Flashback! - Steve "Spyder" Reiter - 3:27PM

This day in market history...
  • Closing levels 3 years ago:
    • DJIA: 9,196.55
    • Naz: 1,653.62
    • S&P500: 998.51
    • Gold: 352.90
    • Crude: 31.41


This day in Minyanville history...


In other news...

  • In 1994, police pursued OJ Simpson's white Ford Bronco in a slow speed car chase.


Stop draggin my, stop draggin my
Stop draggin my heart around... - Todd Harrison - 2:29 PM

We're in the throws of contra-hour as Boo steps up and stakes his claim to Monday fame. We've noted the troubled tea leaves all day and they remain much the same. The ever-so-slight shift? Yep, the dollar, which has quietly halved its session gains. It's admittedly granular but, as it's been a pretty snazzy contra-tell, it's worthy of a mention as we fit the minxy pieces together.

Away from that, we're going along and trying to get along as the S&P edges below the aforementioned 1246 level. The brokers in general, and Lehman in particular, flashed the red light early this morning and the rest of the tape seems to be waking up to that fact. Indeed, its hard to find seeds of green--from the metals (XAU -2%) to energy (OSX -4%) to the semis (SOX -1%) to the homies (HGX -2%). It just not a good day in Matador City.

To add spice to the mix, my eyes are spying Mexico (-4%) and Brazil (-2.5%) starting to act up again. ¿una advertencia de abajo debajo? Perhaps, but I'm hangin' tough with my current posture (adding select drillers and metals on slippage vs. a spate of financial downsides) and trading around my book. Hey, it could be worse--it could be raining!

As always, I hope this finds you well.



R.P.

Position in metals, energy, financials



Mini-Minyan Mailbag - Jason Goepfert - 1:07 PM

"Jason, did you see program trading was up to nearly 75% of all volume on the NYSE? What's that mean given the way the market dropped?" Minyan Jon

Jon, the NYSE program trading stats are double-counted, while the NYSE volume figures are single-counted. That means that programs did not make up nearly 75% of all volume - they made up half that amount.

Another factor to consider is the annual rebalancing of the Russell indexes this time of year. We always see a spike in program trading in June when these indexes are rebalanced, so that was certainly part of the reason.

Bottom line, I'm not reading anything into the spike.



Vexing VIXes - Adam Warner - 11:10 AM

About 3 years ago, a new VIX was born, changing the underlying vehicle from the OEX to the very similar S&P 500 and adding extra strikes to the formula. The old VIX now goes by the symbol VXO.

Since the "new" VIX includes more strikes, it tends to lift faster in times of nervousness, as out-of-the money puts get bid up. Ergo, the ratio of the VIX vs. the VXO should spike up at such times, and become a contrary tell.

Well, the ratio hit a 52 week high as the market tanked 2 1/2 weeks ago, but as the averages challenge the recent lows again, "nervousness" has receded by this measure, a somewhat bearish non-confirmation.


Patterns - Jason Roney - 10:45 AM

Equity pattern has been fairly consistent since May 1 - early highs and late lows. Since May 1, the ND futures are +48 overnight and -210 intraday in points. And coming into today, we've got 6 consecutive lower closes in the ND futures and 6 consecutive closes below the open.

This pattern occurred just once before in futes (prior to Oct 2005 low) and just eleven times for the Composite. In each case, there was a solid short squeeze within 1-2 days. Today's open is 1572 and the high morning high is 1574. The market remains vulnerable but a move back above those levels could produce a similar pattern (short squeeze).


Pre-Market Heat Seekers from InsideOptions.com - Jon Doctor J Najarian - 9:03 AM

NxStage Medical, Inc. (NXTM)

The Heat Seeker is showing NXTM taking a hit in the pre-market after the manufacturer of the NxStage System One(TM) portable kidney dialysis machine, announced the offering of 5,613,371 shares of its common stock at a price to the public of $8.75 per share. Shares closed Friday at $10.01, so you can understand why 5.6 million at $8.75 might pressure shares. Our Heat Seeker is showing shares down $.41 cents that close to $9.59.

American Woodmark Corporation (AMWD)

The Heat Seeker is showing a nice gain in the pre-market after AMWD announced results for the fourth quarter ended that showed sales increased 4% from the prior year to $216,429,000. Net income was well above the Company's previous forward guidance of $0.45 to $0.50 per diluted share. The Heat Seeker is showing nice bullish movement in AMWD moving it up $.83 cents from its close of $32.95 to $33.78.

Britesmile, Inc. (BSML)

BSML is showing up on our Heat Seeker because its Board of Directors has unanimously rejected the unsolicited proposal by Futuredontics, Inc to acquire the outstanding shares of BriteSmile for $2.00 per share in cash and $2.00 per share in Futuredontics common stock. The heat seeker is showing very strong buying, moving BSML up $1.11 from its close at $2.15 to as high as $3.26.

Position in AMWD



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