Buzz Bits: Dow, Nasdaq Close Lower Again
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Bell Buzz - Todd Harrison - 3:59 PM
- This bull costume feels funnier than that rope in gym class.
- I sure hope this works before tomorrow night. The only thing worse than losing to John in softball is that look in his eye when he sees that bull costume at Succofest.
- Man, I feel like Tim Hardaway just pulled a crossover dribble on me.
- While the S's shluff into the bell, I'm spying a handful of names that have seemingly found sponsorship. Hey, a broken clock is right twice a day.
- Minyan Sean, I doubt that Angie would be very amused!
- Bear down $8, Goldman down $6 and Mother Morgan down $5. It's been a long time coming and it's coming down hard.
- Premature anticipation? Perhaps, but I always share my fare and my fare is currently skewed to the Matador side of the equation.
- This is a great trading market. But if you're a half step slow, its akin to sticking your paw in a blender.
- But you know what? It could be worse. And, for alotta folks, it is. Leave the flickering ticks at your turret, Minyans, and find some balance tonight. I offer those thoughts when the P is black or the L is red. At the end of our journey, net worth and self worth are two seperate discussions.
- May peace be with you.
Control Risk - John Succo - 3:06 PM
Minyans are seeing first hand why it is important to control risk when it doesn't seem necessary. Losses are risk manifest; no one (except a few) cares about risk until they turn into losses.
We looked at Goldman Sachs report and saw something striking: their trading risk as measured by VAR (see my previous article on VAR as to why this is dangerous) has nearly doubled since last year. Finding ways to make money in their business is getting tougher so they did what everyone else did: took more risk. The process of taking risk is inflationary and bids up asset prices, especially risky assets. The process of reducing risk, which is going on now, is deflationary and drives asset prices lower.
The Fed is in a box, just like their friends across the pond. They have shoved just about as much credit down investors' throats as they are willing to take. Liquidity is drying up and things are getting more volatile.
I see where congressmen are blaming Bernanke. This is typical. Senator Lott even said "Mr. Bernanke should learn to say things without saying anything." What a leader.
Unless central banks pull out all stops and really hyper-inflate (Scott thinks this has already passed), markets will continue to sink. We are now seeing volatility levels indicating risk reduction. Volatility levels are high enough where we may get a pause in declining prices, but given the incredible imbalances around the world I just don't know.
The end game is deflation I think. How we get there should continue to be volatile. But I still think this is a long term sickness rather than a car crash.
Position in GS
Melting Randoms - Fill Zucchi - 12:43 PM
- My StreetTrack Gold (GLD) short trade is now officially in the books. I have rolled down my XAU puts a good chunk and taken a lot of the money off the table. I have also nibbled gold and silver futures with a very wide scale, and with most of it still out there.
- While the move south in most Indices does not even amount to a correction, the speed of the decline is beginning to blow my mane in its wind (yes I do have more hair than TVJeffMacke - about 2 more in fact). That makes me very nervous of pressing my luck with short plays.
- I am adding to some of my main-stays, Akamai (AKAM) first on that list.
- The Azzurri looked pretty spiffy against Ghana yesterday. Let's hope none of them get arrested before the World Cup is over.
- Chatting with other traders, some are suggesting that a 50bps raise with a statement that the Fed is done would be a good surprise. I tend to agree with one caveat: surprises from Elmer were seen as strokes of genius (for whatever reason). A surprise from Boom Boom right now will make traders wonder if he left home without the daily lithium.
- Someone just smacked Whole Foods (WFMI) with a big ugly stick. Don't know of any specific reason for it.
Position in gold and silver, AKAM, WFMI, and 2 hair
See if you can guess what I am now. A zit, get it? - Todd Harrison - 11:03 AM
Woah, settle down John, that's a pretty nasty visual! I don't disagree that we may see a pop--I'm picking away into this mess and starting to lean long--but it's a pure trade and due, in part, to my peeling out of further puts (in the financial arena) as volatility pops anew. And please understand that this is independent from the spate of exposure I slapped away for a sunny day.
Yes, I see market breadth (3:1), the dollar (+55 bips) and I'm conscious that Goldman (GS) is off a finski as the BKX slips under 108 (as go the financials...). But with the multi-year trendline in the CRB nestled below (326ish), HGX 202 right here (right now) and the the first true probe lower seemingly holding (don't blink), I'm trying my hand (not making a stand).
Da nile? Nope, I "get" the whole liquidity wash (gold -$30) land the specter of forced selling (emerging markets don't lie). And I reserve the right to change my mind, as I'm apt to do, if I sense the wheels falling off the wagon. But as I pride myself on being forthright, I've gotta be straight with ye faithful. It may be dead wrong but we can try anything as long as we're disciplined.
As always, I hope this finds you well.
Position in gold stocks
Biotech News - David Miller - 9:26 AM
With only 19 advancers in the NBI, yesterday joined a group of days where very bad breadth signaled bottoms (March 2005, November 2005, April 2005). Is it different this time? The overall market mood is certainly more sour. The charts resemble the March/April 2005 double bottom, though the overall sentiment does not.
We took a shot at calling the bottom three weeks ago via some defined risk (options) exposure. We've received more than a couple of e-mails asking if it's time to double down at these levels. I don't think so. This time, we have to deal with a FOMC who may have decided (a la 2000) that it's time to wring speculation out of the markets and you simply can't get in front of that.
Hacking a trail deeper into the jungle. - Rod David - 9:16 AM
Thursday afternoon's rally really got underway at 1:30pm ET. S&Ps ended under this key low Monday, while NDX ended under Thursday's actual low. Meanwhile, the Dow Industrials was still in the process of testing its key low. When the larger cap stocks are outperforming the broader market, buyers aren't yet skittish enough to allow a sustainable bottom to form. The misplaced optimism was further underscored by Monday's low having stopped short of touching Thursday's low. Buyers slowed their efforts and/or sellers increased theirs.
In fact, S&Ps rejected an initial bounce overnight to drop 7 points to new lows. And lest the drop be dismissed as an anomaly, it was later broken by 3-1/2 points after another bounce. The low is a new Globex trend extreme, which is historically mandated to be retested during regular trading hours. A recovery back above SPX 1236 (ESu 1247'00) would trigger a more substantial bounce, but lower lows would remain the likely resolution.
If there is a silver lining to the storm clouds overhead, it is that volume accompanying Friday and Monday's decline shrank from recent levels. Meanwhile, volume was extraordinary at Wednesday's low. Confirming volume isn't required to increase until the breakout - but even then, a bounce back into the range wouldn't be surprising before extending the decline sharply lower. Not surprising, and also not required.
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