Buzz Bits: Dow, Nasdaq Get Big Boost
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Editor's Note: This is a small sample of the content available on the Buzz and Banter.
Earnings Report - MV News
- Juniper (PNPR) reports 2Q revs of $567.5 mln vs $567.2 mln cons. The company is not reporting earnings at this time, as its investigation of stock option grants is not complete.
- Lam Research (LRCX) reported 4Q EPS of $0.84 (in-line) on revs of $525.6 mln vs $507.1 mln cons. Gross margin was 52.2% vs 50.2% q/q. Orders were +23% to $640 mln.
- Qualcomm (QCOM) reports 3Q pro forma EPS of $0.42 (inline) on revs of $1.95 bln (inline). The company guides 4Q EPS to $0.39-$0.41 vs. $0.42 cons on revs of $1.88 bln-$1.98 bln vs $1.99 bln cons.
- Motorola (MOT) reported 2Q EPS of $0.33, unclear if comparable to $0.29 cons, on revs of $10.88 bln vs $10.13 bln cons.
- Intel (INTC) reported 2Q EPS of $0.15 vs $0.13 cons on revs of $8.01 bln vs $8.22 bln cons.
- eBay (EBAY) reported 2Q EPS of $0.14 (in-line) on revs of $1.41 bln (in-line). Listings totaled 596 mln.
- Yum! Brands (YUM) reported 2Q EPS of $0.68 vs $0.62 cons on revs of $2.18 bln (in-line).
- Washington Mutual (WM) reports 2Q EPS ex-items of $0.94 vs. $0.93 cons on revs of $3.64 bln vs. $3.78 bln cons.
- Kinder Morgan (KMI) reports 2Q EPS of $1.05 vs. $1.02 cons on revs of $2.85 bln. The company reaffirms full year EPS is expected to meet $5.00 vs. $4.97 cons.
- Apple (AAPL) reported 3Q EPS of $0.54 vs $0.44 cons on revs of $4.37 bln vs $4.39 bln cons. Gross margin was 30.3%.
Bell Buzz - Todd Harrison - 3:34 PM
- Is it real...or is this just like the quarter-end mark?
- Fed fund futes are still pricing in a 60% probability of an August rate hike.
- The irony of the whole "to hike...or not to hike" debate is that everyone--from the press to my sales coverage--is saying that it's a bovine friendly. History doesn't support that claim.
- Can you feel the beat within my heart? Can you see my love shine through the dark?
- While I've been on the street for sixteen years, I'm still shocked at times with what passes as value added financial commentary. That's not a dig--I think it's an opportunity.
- I'm luggin' some JP Morgan puts home (initiated in here) and will trade 'em with a trailing stop. I don't foresee upside gap risk (given today's earnings/move) and it "fits" with my current "make 'em to take 'em" approach.
- Please put the wouldas, couldas and shouldas away--they're not gonna help you with the next best trade.
- If you're diggin' the 'Ville, please help us spread the word. We'll be happy to set your entire network up with a gratis trial on your behalf.
Position in JPM
Kiss Me Twice, Kiss Me Deadly - Jeff Macke - 2:54 PM
As I've long suspected, you can learn everything you ever need to know from 80's and 90's pop/ rock music lyrics. This week's evidence for my ground-breaking theory comes from Target (TGT) corporation and leather clad rocker Lita Ford's hit, "Kiss Me Deadly."
Target kissed investors once last April, when the company missed EPS estimates for the first time in memory. I bought the dip, if only reputationally, by pondering the stock from the long side multiple times on Fast Money. Well, late Monday Target kissed us twice and it was deadly as the company took down sales estimates to 3-5% after confirming the prior 4-6% outlook just 2 weeks prior (as noted in the Retail Roundup).
The stock is down to the mid-40's, losing grip with the $50 area it had been drifted about since April. A second warning so soon after not just April but the guidance from two weeks ago raises a major Red Flag. I could have saved a lot o' trouble if I'd just listened to Lita. For more on my pop/rock = life theory, come to MiM3 where daring Minyans will discover that I do, indeed, "smell like I sound."
From Slick - Ryan Krueger - 2:14 PM
From "Slick," my best childhood pal, now in the business of refining gasoline and his golf swing, I quote: "Getting crude is NOT a problem. There is a bunch of oil in storage for refineries with no intention of ever running it." I'm leaving out the numbers, replaced by "a bunch," but it's safe to say it raised my eyebrows."
If you can buy in the cash market as it comes out of the pipeline and immediately sell it in the futures market at a higher price (I gotta dog and his name is Contango), it's a risk free trade for those with storage. That's not quite the "end of oil" tight market that some would have you believe exists. If there is far too much of it than is needed, who in the world would buy it at a higher price for a future delivery? A trend-following trader me thinks.
So, I think Professor Gilmartin is right, crude's pull away from the energy equities likely doesn't last. But, which one is lying? I think calling for a huge pullback in crude (which Gilmartin was NOT calling for I don't believe, he simply went long equities) might make perfect fundamental sense in every regard. I heard the best in the business, another good friend of ours, do just that on Bloomberg radio recently. But, those poor fundamentals have been in place for many months and many dollars of moves in the opposite direction. These moves end when they end, not a moment sooner, and do not care about storage at the moment. Everybody explains this "fear" premium, I see just the opposite: a "greed" premium in place thanks to massive bets from traders who could not find Cushing, OK on the map, where storage is trumped not by terrorists but by traders.
I'm long both for different reasons, but…I think the commodity is more likely over-owned at present (and yet can still head much higher) while ultimately I think certain equities are under-owned. Yes…still.
Position in energy
Sproing! - David Miller - 1:20 PM
- Biotech is rallying like the compressed spring it has been in July. Since the market returned from vacation on July 5th, the NBI has posted just one positive breadth day. Today there are 152 stocks up of 164, the highest bullish percentage since the lows in 2005. The second highest was June 29, 2006. The IBB outperformed the BTK on the way down over the last week or so and is outperforming it on the way up today. It broke the 69-70 support Friday, but has just popped back above $70.
- While there is still lots to worry about overseas, my firm covered 2/3 of the overweight IBB short position we added to our model last Friday as soon as Dr. Bernanke's testimony hit the wires. Absent Syrian or Iranian direct involvement, an attack on the ship transporting Americans to Cyprus, or some other 'unique' headline I think the conflict in Israel and Lebanon has moved to "background" as far as the markets are concerned (forgive me if it is still in my foreground as I have dear friends with families in Israel and northern Lebanon).
- Fil, does anyone really believe the FOMC is hands off the market? I mean Dr. Greenspan said in a public speech in 1999 it was both a tool and target of monetary policy. I submit it is the only major tool of monetary policy the FOMC has left in a world economy.
- If you are wrong and make money, the market doesn't ask for a rebate. If you're right and you lose money, the market doesn't give you a rebate. - How I Lost a Million Dollars.
Ben Gets Friendly! - Woody Dorsey - 11:35 AM
Stocks were hungry for some good news and Ben delivered it. Thus, risk appetite is being revived. But for how long? How many days? How many hours? Note that he is talking down inflationary pressures. So why is Gold rallying?
My firm expected a pause in tightening too. A pause! If global interest rate rises are in a secular move. Ben may have to tighten up again...next year. This is a very different credit market cycle than the last 20 years. Yes, Treasuries are due to rally but how far can they really go in this environment? Thus the BenSpeak may be more of a hiatus than a terminus. He is saying read my bips but we say follow the money....er, follow the gold. Enjoy a few days of risk appetite relief... the market sure needs it.
Sometimes a surge is just a surge - Rod David - 10:59 AM
In the short time since yesterday afternoon's new low, S&Ps have retraced half of the two-week decline. And another big chunk of the drop could still be retraced, without signaling that the market had bottomed. That would be in-line with June's two Gotcha! setups that produced two near-record single-session rallies (more than 26 S&P points on both June 15 and June 29).
Of course, both of those rallies were retraced entirely, as should today's rally and any rally triggered by the Gotcha setup. A number of factors at this week's lows already require new lows to print.
Can NYSE up volume maintain its current 10:1 spread over down volume? Yes, and the ratio could even expand. But the odds aren't nearly as attractive as what was offered by yesterday's Gotcha. Could Bernanke say anything more constructive in his House testimony tomorrow than he's telling the Senate today? Anything can happen, which pretty much sums up what that bet relies upon.
While it doesn't make sense to short into this morning's surge, the timing isn't any more appropriate for increasing exposure to the long side, let alone just now entering long.
Yahoo approaching its 200-week moving average - Brian Gilmartin - 9:02 AM
According to the attached chart, Yahoo! (YHOO) will likely open below its 200-week moving average of $28.90.
The bottom panel of this chart shows that on a stochastics basis, Yahoo is nearing an oversold basis as severe as mid-2002, and in 2001.
However, we have to go back to the mid-August 2004 lows between $25.50-$25.70 to find what should be the next support level for Yahoo.
If there was one company whose earnings were expected to be decent relative to the rest of large-cap tech, it was Yahoo's, which makes this report especially disappointing.
Position in YHOO
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