Buzz Bits: Dow, Nasdaq Finish Week on Down Note
Your daily Buzz highlights...
Word to the Wise - Sanjay Somaney 3:00 PM
I spoke with a Satyam Computers (SAY) floor broker in India today and here is what he said to me in a nutshell:
He said SAY is a high-growth company but is still valued very cheaply at 15-16x earnings for FY '07 ending March 31, 2007 and at 14x FY '08 in rupee terms. He says that it's his favorite high growth value play. I never thought those two could be used in the same sentence but there you have it. LOL.
He added that offshoring has become mainstream across the globe and most investors have not understood the fantastic operating environment these companies are playing in.
He says that SAY is following in Infosys' (INFY) footsteps and have over-delivered and also raised forward guidance. He said the significance of the rupee decline is also not understood by most investors, especially in the FII set. The rupee will remain weak or weaken a bit further giving these tech players tremendous leverage and more than offsetting wage hikes.
Word to the wise again. LOL
Position in SAY, INFY
Dell? Not Yet - Vitaliy Katsenelson - 1:58 PM
Dell is becoming a more interesting stock with every passing day. It had a "religious" investor following for a long time as the company defied expectations time after time. However, it takes awhile for the "religious" following to break down. Last week I wrote an article on Dell, titled: Dell? Not Yet. I received a lot of emails saying something along the lines of "how dare you trash my stock?" - That is when I knew, it is really not yet.
The negative sentiment on Dell is getting worse everyday; today's announcement, yesterday's report of a loss of market share to Hewlett-Packard (HP) did not help. But there will be a moment, probably sooner than later when Dell will be a screaming buy as investors will throw in the towel on the stock. I am waiting for a business magazine or newspaper to have Dell as a cover story telling us how it is broken and cannot be fixed as a buy signal. So not yet.
Funny Feelings, Fuzzy Feelings - Woody Dorsey - 1:02 PM
As an addition to the recent discussion here about the AAII investor sentiment, my experience with sentiment over the last 20 years is that interpreting the "Feelings" of the market can often be fuzzy. Sentiment is only an attribute of the market rather than a determinant...thus it always has to be interpreted.
Curiously, low sentiment (for instance we had daily readings last week of 2% and 3% bullish) is actually bearish because it confirms the emotional trend of the market. It is important when these kinds of feelings occur. During a trending function, there is actually a preponderance of negative sentiment readings. They infer a recognition phase. It is only at the psychological phase of capitulation where extremes sentiment may be a symptom of a bottom. Thus, at present, negative sentiment is leading and confirming a bearish phase.
Sentiment is always a "tell" of the market if we can diagnose what it is "telling." Like the Mona Lisa Smile, it is hard to read.
Deflation - Kevin Depew - 12:32 PM
Scott and I were just talking about gold, silver, copper and oil. "All are major industrial commodities and in my work all are signaling that major peaks could have formed and serious declines lie ahead," he said.
Looking at the long-term monthly charts of gold, copper, oil, commodities, I see that they are also showing DeMark TD-Sequential and TD-Combo sell signals in all those areas... just as the major equities indexes are.
Meanwhile, the dollar refuses to break. In fact, it has (so far) formed a higher bottom on the monthly chart and is working toward completing a potential TD-Sequential and TD-Combo buy setup.
What about bonds? 10-year notes have already registered TD-Sequential and TD-Combo buy setups on the monthly chart.
This setup - major long-term sell signals in equities, commodities and metals with long-term buy setups in bonds and potentially the dollar - is entirely consistent with a deflationary credit bust. Stagflation is the transition toward such a potential outcome.
A 'Magic' Charm Buys the Farm - William Fleckenstein - 9:17 AM
In the wake of Wednesday's moonshot and cooing from Bernanke, stocks traded terribly yesterday -- and far worse than the declines in the indices show. Bulls were unable to make any hay today out of (a) the weaker-than-expected Philly Fed report or (b) the dovish-sounding Fed minutes (though I suppose some folks could have read them as on the hawkish side).
As I've said repeatedly, I do not understand how people can be so terrified of the Fed, especially in light of how the economy is shaping up. Given my expectations, I will go out on a limb and say this: Not only will the Fed's next move not be a hike, it will be a cut. I'm not sure when that will happen, but that's how strongly I feel about this Fed and the current economy.
Expiration Date - Adam Warner - 8:50 AM
Lots of Chatta out there about expiration shenanigans.
I am not saying that stock manipulation is impossible on expiration day. Or that attempts never happen. Lots of the sharpest traders close positions and/or take today off, particularly techie types, to avoid the odd price action.
I would suggest that effective manipulation is often unlikely given the size of certain stocks and the volume unrelated to options. And that there are competing agendas out there, so it escapes me why option shorts are the only ones willing and able to move mountains. I would also suggest that there are also natural forces out there that drive stocks to and from strikes, with no nefarious intent involved.
But let's say you believe a stock is headed towards strike for whatever reason (and it really doesn't matter whether you or I think it is above-board or not). Instead of complaining about it (not here, on other venues), why not just play for it if it is so obvious? There is no law against selling a straddle with 2 days to go, or a day to go, or even on Expiration Day.
Not suggesting this in any way shape or form, just saying that it makes more sense to trade it, or close a position, than gripe.
What you need to know... - Jon Doctor J Najarian - 8:12 AM
Google Profits Exceed Estimates – Google's 2Q profit soared well beyond Wall Street's best estimates. The Mountain View, Calif.-based company earned $721.1 million, or $2.33 per share, during the three months ended in June, more than doubling its net income of $342.8 million, or $1.19 per share.
Microsoft Profits Up, Revenue Surprises! No boogieman in the closet this time, as the software monster topped Wall Street estimates for its 4Q and announced plans to repurchase at least $20 billion worth of shares. Rev also came in above estimates, and Heat Seeker shows shares trading up to $24.22 in the pre, a 6% gain.
Amgen Profits Down, Shares Rally! AMGN took a $1.1 billion charge for its acquisition of Abgenix, but the bio-tech boosted its full-year earnings forecast and Heat Seeker shows shares rallying 4% to $66.50 in the pre.
Position in MSFT
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