Buzz Bits: Dow, Nasdaq Close Higher
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Earnings Report - MV News
Genentech (DNA) reported Q2 non-GAAP EPS of $0.56 vs First Call non-GAAP $0.47. GAAP EPS was $0.49, including stock option compensation of $0.04 and other items of $0.02, which may not be comparable to $0.44 cons. Revs came in at $2.20 bln vs $2.12 bln cons.
Bring it Home Buzz - Todd Harrison - 3:44 PM
- The snoozy cruise of the Tuesday dew has adopted a decidedly more upbeat tone into the bell. Please note the switch flippage on the internals (9:5 positive) and the green tint in the banks.
- Keep an eye peeled to BKX 108. It's a big level (for the market) and it's right here, right now.
- Meanwhile, in inertia land, the drillers (OSX +3%, semis (SOX +3%) and metals (XAU +2%) continue to outperform.
- The rising tide did not lift the homebuilding boat, however, as the HGX endures another 1.5% in drippage.
- For those who chose to play the QQQQ trade, rolling stops higher will protect your intraday gains but--again--it will not buffer overnight gap risk.
- If I were short Bonds, I wouldn't be so quick to cover.
- I still think mental illness is the most universally misunderstood affliction. We're quick to say that someone is "nuts" rather than find a working social solution. Of course, empathy only goes so far---when a sick individual affects others by his or her actions, it forces the hand of those in charge. Unfortunately, from what I gather, those in charge don't always understand when someone is indeed ill.
- Yes, I'm excited to hang with Shobin. And Saut. And Succo. And Reamer. And Dwyer. And Bennett. And Santoli. And DeMark And our friends at Thomson. And all our other fine scribes. How can I not be? We're a community and once a year, we gather to exchange ideas, bridge networks and forge friendships. It's the journey...and it's coming up quick!
- Fare ye well into the bell, my friends, and let's usher some white light towards India. They surely need it as they sort through today's wreckage. The toll is 257 and counting....very sad indeed. If your biggest loss is financial, consider yourself fortunate. Tomorrow, as we know, is promised to nobody.
Position in financials
It doesn't rain because the sidewalk is wet - Scott Reamer - 1:14 PM
Another great example of TV putting the cart before the horse today with the bombings in India. Claiming that gold is "obviously" rallying because of a flight to quality due to the terrorist bombings, they are making a classic (and fundamental) error of cause and effect; the old post hoc ergo prompter hoc fallacy that we have written about so frequently.
Gold is up about 3% from yesterday's lows and it certainly appears that, at 6am or so when the story hit Bloomberg headlines, that gold ticked up.
But what do we make of, say, silver (which is clearly an industrial metal. It's up 6% from yesterday. Were investors clamoring to put their assets in silver as a result of the train blasts? Or how about copper, itself up 5% from yesterday's prices? Maybe copper is a new safe haven? How about lead (up 3%)? Or nickel (up ~4%)? Or tin or zinc? How do we explain that almost all other metals are up today if gold is up on the terrorist bombings?
Of course those last examples answer themselves. It's ridiculous on its face to claim that terrorist bombings cause investors to move monies into gold just as it's ridiculous to suggest the bombings cause investors to buy copper, lead, or nickel.
Don't look now, but major S&P housing index ready to go - Bennet Sedacca - 12:33 PM
As my friend Tom Peterson would say, it is 'coiling for a move.' See the chart here of the S&P Supercomposite. The longer it stays in this range, the further it should break out of it, when it does. Stocks like Lennar (LEN) have already broken down and my guess (purely that - but based on anecdotal evidence of foreclosures and for sale signs piling up nationwide, particularly down here in the Orange State) is that the rest of the nation will follow.
Also, the retail stocks are acting like the consumer is toast.
One last thing. Has anyone noticed the flag forming in the BKX? See the chart here. This backs up Professor Reamer's idea of a big top. After all, who gets it the worst if housing and retail go at the same time? Yep, financials.
Kinda reminds me of the bear flag in bonds in February.....
You Beta You Beta You Bet - Adam Warner - 11:13 AM
Contra to the punk action in volatility lately, a common theme in trading this summer is a flight to safety and out of *beta*. The 6-month chart here comparing IBB to BBH is a perfect example. The ratio between the two is a 7-month low, suggestive of aversion to speculation.
Comparing Big Oil to Oil Service, or just Big to Small in general, as per Prof. Depew, yields similar results.
Now to me, this is exactly NOT what you want to see. The best markets exhibit the reverse behavior. But it is particularly odd in that with such a preference for *safe*, shouldn't options see some buying interest? Particularly in companies set to report earnings. That is clearly not the case, to say the least. In fact as Prof. Succo mentions, it is just the reverse.
Try. Try Again. - Kevin Depew - 10:59 AM
- So far seeing the double down (underperformance) in the RUT, negative BKX and higher dollar weighing in on Boo's side here.
- Try as I might, I cannot find any technical justification for looking at Semis on the long side just yet. Recent DeMark 13 buy signals in TD-Sequential and TD-Combo for the SMH (semi HOLDRs), for example, produced only modest, at best, counter-trend reactions.
- Of course, that doesn't mean the SMH can't go higher, it just means I can't find anything to allow me to take a disciplined shot at the long side.
- In individual Semi names, however, there are some interesting setups to note: KLAC, AMAT, and MU have all three registered DeMark TD-Sequential buy signals.
- Minyan "Double" RL asked about Coke versus Pepsi seeing that Pepsi is a long, long-term outperformer versus Coke. Is the trend your friend here?
- Not in my book, DRL. On a monthly basis PEP has registered a DeMark TD-Combo 13 sell signal and is nearing a TD-Sequential sell signal as well, while on a weekly basis it has also registered a DeMark 13 TD-Sequential sell signal and may do so very soon on a daily basis as well.
- Coke is not exactly ready to explode, but it is noteworthy that it has none of the sell signals in place that PEP does, so if I were playing the two positions against one another I would consider cashing in my PEP chips now.
Position in RUT/SPX equivalents
Small picture, big picture - John Succo - 9:23 AM
The small picture...
I think Fleck's earlier comments are right on; they echo mine from yesterday. Trading stocks all day there is definitely supply above fighting the still easy central bank credit still marginally finding its way in spurts into speculation. This tug of war will be resolved as fundamentals become clearer to the market. But a waning real estate market as the engine of cash and speculation is a shell of its former self.
The big picture...
Foreign investors are said to be interested in Midway Airport in Chicago. This, folks, is the only way the trade deficit will be partially settled: recycling all those dollars back into U.S. hard assets like land. But I still don't think that will aleviate the pressures on risky assets for the amount of dollars held by foreign private investors pales to what is held by foreign central banks, who have themselves been printing (selling credit) their currencies to buy dollars. The only way this will settle itself is for other central banks to give in and stop printing currency (like Japan lifting interest rates finally from zero...doesn't that smack of the ridiculous?). When this happens the trade and current account deficits will be washed away by a deflationary settlement of debts; not a pretty picture. It is a race to the bottom. Who will get there first?
On the Unfolding of Ungainly Guidance - William Fleckenstein - 8:23 AM
Next week we're going to get a blizzard of earnings. I think that third-quarter guidance for many of the tech stocks that I follow may be on the weak side. (As to the results from corporate America in general, I don't really have a big opinion.) Suffice to say, there are many crosscurrents, but there definitely seems to be quite an undertow to the tape.
However, near-term squiggles aside, and notwithstanding potential Fed-is-done enthusiasm, I continue to believe that the bear market which began in 2000 (and has been hibernating for the last couple years) is back. That is the important point for folks to understand. "The next time down" -- being this time -- is liable to be quite ugly, indeed.
What You Need to Know - Jon Doctor J Najarian - 8:02 AM
Dell To Introduce New Pricing Initiative – The PC maker calls this a major move, and I'd call it very necessary if they want to nip the erosion of market share to Hewlett-Packard (HPQ) in the bud. That and getting the AMD chips on PCs as quickly as possible!
Aren't You Glad We Said Take Profits in Alcoa (AA)? Even though the aluminum producer hit multiple times on Heat Seeker going into earnings, we said take the bulk of your profits off the table. Why? Because even though profits were up 62%, the revenue missed Street estimates and now shares are down as much as $1.50 in the pre!
Bad News At Lucent Hits Alcatel – I show shares of Alcatel (ALA) down nearly 6% on this morning after soon-to-be partner Lucent Technologies (LU) warned that Q3 profit and sales would fall from year-earlier levels and miss analysts' expectations. Earnings are seen at 2 cents a share, compared with 7 cents a year earlier.
Position in DELL
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