Buzz Bits: Dow, Nasdaq Inch Forward
Your daily Buzz highlights...
Bell Buzz - Todd Harrison - 3:50 PM
- The day that started with tech issues.....ends with tech issues as this is the third time I'm scribing this buzz.
- Again, as much as the tape seemingly wanted to rally today, the tea leaves never gave the bovine the wink.
- Will Turnaround Tuesday save the day? In a normalized market, I would offer that it's got a good shot. But given the uncertainty in the world and the unknowns abroad, there are a few too many uncertainties for my liking.
- I do think that Boom Boom will try to sooth thy savage beast when he hikes to the hill. The question then becomes one of Fed Credibility (Fedability) which, from where I stand, is steadily eroding.
- I'm going home with some energy and metals in tow--along with some sizable "situations" on my book--and plenty of powder in my pockets.
- I "think" I'm traveling on business tomorrow although I'm awaiting final word from President Fish. Trust me, given our tenuous juncture, I wanna be right here beside you tomorrow.
- If your biggest losses are those financial, consider yourself fortunate. There is a lot of pain in the world and yes--there is the potential that it gets a whole lot worse.
- May peace be with you.
Position in energy, metals
10 or 10? - Jason Roney - 1:48 PM
Today the NDX has the potential to post its 10th straight lower high. That would be just the third time... and we've never seen 11 straight. The prior two occurrences ended 5/23/06 and 7/17/96.
It's interesting to note that the last was in May of this year, as well as the symmetry of the moves. In May the NDX declined 8.5% from the prior day's high to the low of the 10 day streak.
Today's low is almost exactly 8.5% decline from the high on 6/30. The technicals are clearly broken - but the symmetry of the may move suggest a counter-trend Tuesday is likely - at least to see a higher high (unless happens this afternoon of course). Not advice, just pointing out the interesting potential setup.
Banks BBQ - Ryan Krueger - 12:16 PM
Speaking of Seinfeld episodes (I needed no encouragement Pomboy!), I walk into one each time I make a trip my new bank.
Before you laugh at me not with me, understand this is a new adventure to me as my partner and I worked in one for many years and never went to another. Boy, have things changed! Gone are the days of waiting in line, the bankers are now waiting in line. My current indoor-record is 5 "hello's" (only one "hey" and I had him fired) in less than 30 seconds. It is truly unnerving for a guy who thinks one over-the-top-cheery greeting is still too many. Call me a jerk, but I'll trade any of them for solid service with no problems or any "I'll have to check with my manager, but would you like a cookie while you wait?" I look around and see a not terribly efficient 9-to-1 salesman to saver ratio that can't be as happy for the bottom line. He comes back and hands me…(silly to think it was my answer)…an invitation to a Bank Barbeque! Speaking of which…
We recently opined about the law of large numbers, and we have shared that our most dramatic underweight (relative to the S&P) is Financials and has been for quite some time. How many retail investors do you think could even name the largest overweight in the market? Financials, at 21.6%. More than a touchdown lead on Technology (the second biggest underweight in our portfolio) Financials not only lead by a large percentage, but are understated when you consider where the profits come from in certain (and huge) "industrial" stocks - Financing.
When you make more money lending to customers to buy your stuff than you do ON your stuff, aren't you a financial company now? By my reckoning, more than a third of the S&P 500 is actually dependent on financing. When the cost of that product goes up, fewer customers can afford it – no different than any other business. How do I know? When they want to talk about brisket more than business, you have a pretty good clue.
Selsun Boo? - Kevin Depew - 12:08 PM
There's been quite a bit of chatter among traders about an inverse potential head and shoulders pattern shaping up in the PHLX Oil Service Index (OSX) and the Oil Service HLDRs (OIH). An inverse head and shoulders pattern is typically a bottoming pattern.
Here is a link to the daily chart of the OIH showing what some believe may be an inverse head and shoulders pattern.
Unfortunately, based on the Edwards and Magee definition of the pattern, the volume, a critical aspect in the identification of the pattern, does not confirm a potentially valid inverse head and shoulders bottoming pattern in the daily OIH chart.
However, I do see a potentially valid head and shoulders topping formation taking place on the weekly chart of the OIH. See that chart here.
Mighty big spot for the homies - relative to past bubble IMPLOSIONS - Bennet Sedacca - 10:31 AM
Yes, I have been a vocal bear on housing and housing shares ever since being asked to write on the 'Ville and before. The anecdotal and statistical evidence has lined up as well as the stock prices. You may hate me for dragging out the dreaded 'bubble comparison chart' but here it is because we are at an important impasse relative to past bubbles. See the chart here. Notice the support lines.
If they were to hold, you could get a decent bounce, but every bounce to me is still a selling opportunity. REMEMBER, in bear markets, particularly post-bubble bears, SUPPORT EXISTS TO BE BROKEN.
Next, see this chart. It compares the poster child of the tech bubble, Intel (INTC), with the poster child of the housing bubble, Toll Brothers (TOL) (hey, nice sales, Mr. Toll!). It is also close to bounce zone. But just like INTC back in 2000, I believe TOL's numbers to be garbage and to be lowered, along with the rest of the group. Enuf said.
Starbucks Testing Support - Brian Gilmartin - 10:00 AM
Just an opinion, Starbucks (SBUX) is giving us a nice opportunity to acquire the shares as it tests both its 200-day exponential moving average and as it approaches a gap fill near $32 per share remaining from the sharply higher opening on the Feb 1 '06 earnings report, which resulted in the stock running to $39 and change.
From perusing the attached chart, SBUX should have solid support at the $32 gap fill given that it is also the site of the October, November, 2005 highs, and $32 also represents the 50-week moving average on weekly chart.
Where would my firm say SBUX has a fundamental problem? If the stock went through all this support in the low $30's on heavy volume.
SBUX reports earnings during the first week of August.
As a long-only advisor, we have a longer time horizon than day traders and hedge fund managers, so adjust these comments accordingly.
Position in SBUX
Minyan Mailbag: Broadcom calls trading volume - Fil Zucchi - 8:29 AM
Hello Fil, regarding your Buzz on [Broadcom calls trading volume}, do you see it as hedging or a directional bet? If it's directional, I would buy the stock and hedge with a put and watch for a big up-move. Otherwise, I'd pass. - Minyan Ralph
Hi Ralph - Professor Succo and Dr. "J" are far more qualified to "read" the entrails of Friday's high volume in Broadcom (BRCM) Jul 30 calls. I can offer you the following:
- There were 192 trades totaling 9,596 contracts. There were 16 trades of 100 contracts or more totaling 6,943 contracts. Those are not likely to be retail trades.
- Buying options with almost 3-digit volatilities and a week to expiration seems an awfully tough way of making money.
- BRCM's current EV/Sales (by no means the decisive metric, but one I like to use) is ok relative to past valuations, but hardly cheap in absolute, and certainly nowhere close to the post-bubble trough multiples.
- On the positive side, if the economy is not on its way to a recession, semiconductors in general seem to have priced in a whole lot of bad news, and, among the large caps, BRCM and Marvell Tech. (MRVL) are the ones that make the most sense to me.
Position in BRCM, MRVL
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