Buzz Bits: Dow, Nasdaq Finish Just Lower
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Dear Brian, - Vitaliy, Katsenelson - 4:06 PM
Herb and I battled the issue of Walgreen (WAG) vs. CVS vs. the rest of the world on August 4th last year. You and I have talked a lot about it offline. I still believe Walgreen is one of the best run companies in the United States, BUT everybody knows it and loves it to death.
Though my firm does own Walgreen (against our will) in some accounts where we have low cost basis. CVS is the stock we have been buying over the last couple of years. It is not the same quality of company as Walgreen, but nothing is. CVS is still a very good company, that is not loved to death and thus offers better risk reward than Walgreen's.
Position in WAG, CVS
Da-Bears - Jeff Macke - 3:08 PM
Build-A-Bear (BBW) workshop, a name I've never actually owned personally despite playing a guy on TV who considered it a long in May, is down 14-some-percent today after trimming revenue guidance for the current quarter. The company still expects to come in "close" to their 22-cent estimate for the quarter.
In markets, as in horseshoes, Close simply doesn't count. When the top-line goes weak in specialty retail it's time to bail until the co. gets back on track (which is why we do our monthly Retail Round-Up).
Speaking indirectly of Fast Money (on CNBC Wednesday nights at 8pm), I've gotten some well-intended, supportive, emails regarding the Stock Trial segment, in which I defended the selection of BBW and the other's picked on me. The bit was actually my idea so no need to feel bad on the attacks; I wanted them.
The Big Idea wasn't self-abuse. It was the injection of different kinds of accountability and scrutiny of past picks into financial television. Real traders are wrong all the time. The Truth is that you do your homework, you generate ideas and you reassess constantly. Examination of missteps isn't a posture of weakness or particular strength; it's simply a prerequisite for rational portfolio management. It's an idea I know the Minyans are already familiar with, I'm just trying to put it on the Tee Vee in a lively way.
With that I'm off to hang with the kids, hit golf-balls and otherwise mentally rejuvenate myself. Have a great and safe weekend, all. I'll see you on Monday.
Hi Ho Silver - Kevin Depew - 2:47 PM
- Minyan Kneel! notes the HUI has cleared the 20-day, which could position it for a run higher.
- I told him my take is that the HUI has an identical pattern to the SPX and that the gold equities will trade like regular equities while the metal will trade relative to the dollar.
- That doesn't mean it can't go higher, but the DeMark indicators I use are not yet flashing a low-risk counter-trend entry point.
- Minyan Kneel! then quickly responded that when gold was going up constantly towards $730, the gold stocks were doing nothing or selling off. "That was the opposite of what the S&P was doing. Now, this morning, gold opened down $10, and the stocks were only slightly down.
- I replied just as quickly with two charts:
Chart one is the HUI relative to the SPX (HUI in, what else, gold and the SPX in... let's go with green) from December through April.
Chart two is the HUI relative the SPX since April.
Please feel free to call me a nut case after reading this buzz, but some interesting food for thought..... - Bennet Sedacca - 12:52 PM
We talked recently how the increased volatility in stocks and the beginning of spread widening in corporates could be 'just the beginning' or maybe a warning shot across the bow as this cyclical bull wears down.
Well, check out this chart. I know it is a bit off the wall, but I thought, what the heck, have some rotten tomatoes thrown at me on a Friday afternoon. The chart compares the VXO in 86-87 and the VIX/VXO complex all the way until now.
Notice how there were some initial spikes, then it calmed down , then came the real spike. This also happened prior to other down moves like in 98 and 2000-2002 period. Maybe the market is telling us something is wrong? A move in the volatility complex to new highs would convince me. Now easy on those tomatoes.
Tug-o-war - David Miller - 12:13 PM
It's a tug-o-war between Hoofy and Boo this morning. Biotech joined in the early weakness and the subsequent rally and, at the precise moment I type this, seems to be holdings its gains a little better than the rest of the market. My biotech tells are positive, but volume is really anemic. Up or down, I don't see a great deal of conviction. Convictionless markets are not typically good for the biotech sector.
A biotech exec. asked me this week whether I thought we were in a bear market in biotech. My answer was 'no,' but that it wouldn't take too much more damage in the overall macro market to get us there.
A mirror image, of the mirror image? - Fil Zucchi - 11:16 AM
- The banks are following the bonds to Red Dye. Please note the 10yr Treasury (TNX) is breaking through support, with the next stop around 5.5%. These two "partners" should keep a lid on too much equity enthusiasm.
- On the other hoof, basic metals and energy will do their best to juice things up, and the fact that the initial OIH pop is sticking may add more fuel to the fire later.
- I am continuing to trade actively around volatile names - Akamai (AKAM) and F5 Networks (FFIV) themost obvious.
- I continue to think that gold and silver have entered a multi-month broad trading range of $550 - 630 for the former and $9.50 - $12 for the latter, and I am going to trade around them accordingly.
If you are guessing that I have little conviction across the board you are correct and therefore I'm gonna shift my attention to where there never is a pattern, or a dull moment: my golf game.
Save your ammo and rest up Minyans, earnings season is just a week away; and have a GRREEAAT weekend!!
Position in TLT, OIH, AKAM, FFIV, precious metals
Deal or No Deal? - Adam Warner - 11:14 AM
If there was much in the way of front-running these energy patch deals, they left few option trails. At least in today's pups.
This being Wall Street. every energy stock smaller than Anadarko (APC) is now a takeout candidate, and every stock bigger is now a buyer. Options are priced accordingly, although I would say the volatility pop in the "smalls" is not as big as I would have expected. Particularly given the monster lift in Kerr-McGee (KMG).
Could it be another Freaky Friday? - Woody Dorsey - 9:28 AM
Most markets seem lower which would qualify it as a UDD (Universal Down Day.) Risk appetite is flagging. During Bear Markets, weekends tend to take on a quasi-seasonal negative holiday effect.
I saw a man on Financial TV yesterday who said "after all the craziness of the last few weeks, markets are stabilizing, which is a good thing." Why are down markets crazy and up markets cool?? This bear will likely be more vicious, more quickly than the media punditry wants. Bad positions/performance may keep up some selling pressure into month end and quarter end. Maybe they can try another upside try in July for a bit.
A perfect storm for Bulls, if they can weather it. - Rod David - 7:57 AM
Yesterday's low has the major elements for a bottom. The target of Thursday morning's sell signal was met at the noon hour's low, satisfying selling pressure. Both retests of the target were recovered and maintained into the close, helping to prove the target's durability. And the tests occurred during counter-trend timing windows, allowing buyers to reserve plenty of energy to fuel a rally.
If Bulls can't exploit this opportunity by rallying strongly Friday morning, then there must be a more substantial undertow growing. And there are signs of undertow. For instance, although Thursday's afternoon's second recovery exceeded the first, that excess was lost into the close. Undertow? S&Ps did make higher highs overnight, but not maintained as of this writing. Undertow?
The overnight highs touched the prior high - yesterday's noon hour high at SPX 1249 (ESu 1259'00) – which now requires the afternoon's high at SPX 12247.50 (ESu 1257'50) to hold as support. This being a Friday, the open's bias signal (or no-bias signal) will define most of the session. Early strength could retest this week's highs up to SPX 1256 (ESu 1266'00). Early weakness could retest last week's lows down to SPX 1227 (ESu 1237'00). Undertow!
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