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Buzz Bits: Dow, Nasdaq Gain Again


Your daily Buzz highlights...


Editor's Note: This is a small sample of the content available on the Buzz and Banter.

Earnings Report - MV News

  • Sun Microsystems (SUNW) reported 4Q EPS of $0.04 ex-items, not comparable to ($0.02) cons on revs of $3.83 bln vs $3.61 bln cons.
  • (AMZN) reported 2Q EPS of $0.05 vs $0.07 cons on revs of $2.14 bln vs $2.10 bln cons. Gross margin was 23.8%. North American segment sales were +21% y/y to $1.16 bln.
  • Corning (GLW) reports 2Q EPS of $0.26 ex-items vs $0.25 cons on revs of $1.26 bln vs. $1.28 bln cons.
  • Xilinx (XLNX) reports 2Q EPS of $0.24 vs. $0.26 cons on revs of $481.4 mln vs. $487.9 mln.
  • Murphy Oil (MUR) reports 2Q EPS of $0.93 ex-tax benefit vs. $0.92 cons. The company sees 3Q EPS of $0.60-$0.80, ex- tax charge of $0.10/share vs. $1.05 cons.

Bell Buzz - Todd Harrison - 3:34 PM

  • I'm inclined to say that today was an important session as we broke the pop-and-drop mold, double resistance (50- and 200-day) and the first tranche of lower highs in the S&P.

  • I offer those humble thoughts with the understanding that this tape is so bipolar (how bipolar is it?), it's difficult to have any measure of conviction for too long a period.

  • I learned a long time ago that I'm never gonna make as much (or lose as little) as I think I should. That's just a trader's mentality and I've sorta gotten used to it.

  • Enjoy the five day weekend, Pep, and say hi to all the fabulous folks at Men's Warehouse.

  • NDX 1510 is a natural level for Boo's bruise to awake anew.

  • As discussed, I let my metal equities run (XAU +2.5%) and pared my piggy puts. I still think they have a OSX style giggle in 'em but the "easy" trade (off the 200-day) may have passed.

  • I've got three very anxious peeps in my office--lemme hop and pet 'em (in a soothing--not sexual--way). Fare ye well into the bell and have a tremendous close.


Position in metals, financials

Watch Those Ticks - John Succo - 2:53 PM

Ticks have reached +1000 five times today. And the market has gone nowhere.

This used to be a rare occurrence. NO more.

The desperation of buyers is illustrated in this high tick reading. Buyers willing to pay the offer even if the market is declining.

This clearly shows that buying is being done through futures more and more. It used to be people bought individual stocks liking their chances. Now they just want to buy the "market."

Why would this be so? it seems to me that nominally higher asset prices is essential to keep the bubblicious economy going. High debt requires highly valued collateral. When collateral goes down, debt gets unwound and that is ugly.

You have heard this before. I remind you because this is not going away and it is is getting worse with time.

Imagine our bureacrats fretting about this day in and day out. How desperate are they? Maybe desperate enought to set up an offshore hedge fund funded with government credits and directed by federal officials?

Heresay I know. But the more I stare at the action, the more I am convinced that the buying is non-economic.

Two-fer? Three-fer? - David Miller - 2:36 PM

  • Biotech looks like it might stay strong enough to put in two back-to-back positive breadth days for the first time since the last week of June. Advancers in the 164-stock NBI were 132 yesterday and are holding around 110 so far today.
  • Genentech's (DNA) big deal with private firm Inotek is one more in a long string of frustrations for those of us who hold shares in publicly-traded biotech companies. Valuations in the private space are considerably higher than in publicly-traded companies, despite the latter usually having much later-stage pipelines. Even the partnership deals, like the Inotek deal today, are happening more often in the private space. Yes, I know private companies are easier to deal with because VCs control the strings. That makes it no less frustrating.
  • Two thoughts about Jason's Core Duo anecdote... (1) Dude, "couple hundred thousand" cells?!? (2) Now you've lit the geek in me and I might just decide I need one of these things... I'll just have to get it installed before Vista becomes the law of the land as I have no desire to be a guinea pig early adopter.

Decline in Natty Gas - Adam Michael - 1:59 PM

Natural gas has spiked over the past week due to heat from the West Coast and the threat (low in my opinion) of tropical development in the Gulf of Mexico. Consensus estimates for this week's injection range from 11-48Bcf (One of the more savvy natty gas traders I know thinks we see a slight draw which would be unprecedented for this time of year). These are short-term drivers for natural gas and matter little to me.

Longer-term, we have a serious problem with supply. According to EOG Resources, (thanks to my friends at Pritchard Capital for pointing me to this chart), the decline rate for current US natural gas production is estimated at 32% a year. 10 years ago, the decline rate was 20% so you can see that we are moving in the wrong direction.

The natural gas decline rate has been increasing each year and is, in my opinion, one of the single most powerful arguments for a bullish posture in natural gas (and the drillers) over the long-term. We have to find more and more natural gas to replace declining production each year. In addition, a larger percentage of the new production brought online comes from more "unconventional sources" (Coal Bed Methane, Tight Gas, and Shale Plays)…which often require higher investment and more drilling.

I plan to write up a more detailed piece on unconventional energy later this week.

This? Why, I can make a hat or a brooch or a pterodactyl... - Rod David - 12:43 PM

So, what to make of Monday's surge? Whatever was said about last Wednesday's S&P surge would apply equally to Monday's session. Both rallies were session-long, and both held the resistance of corrective targets. In fact, each held a test of the same corrective targets, so Monday's rally was obligated to produce a higher high, which it did this morning. And while Thursday and Friday's drop began signaling that momentum was reversing down, Tuesday morning's failure is trying to do the same thing.

S&Ps are sorely missing the energy needed to sustain a breakout. A lot of energy was expended by Monday's opening gap up above prior relative highs. A lot of energy was expended throughout the day without refueling, as all but one minor dip actually retraced and recovered from under a prior relative low. And Monday's total gain was substantial.

That missing energy may as well be an adrenaline boost if sellers don't step up their efforts beyond this morning's failure. The opportunity is there to prove that S&Ps have only ranged from the lower-end of a range to its upper-end. S&Ps, the Dow and NDX are currently struggling just to remain above yesterday morning's high. But we're already halfway through the noon hour, and sellers haven't proved they care to prevent at least a retest of this morning's high.

Where Art Thou "Homie?" - Fil Zucchi - 11:44 AM

Another day, another batch of bad news from the homies. Last night it was Centex (CTX) delivering the news of 21% drop in orders and whacking estimates. Today is the homies cheerleading corp (National Association of Realtors) telling us that "it's all good," and things are gently leveling off. Uhhmm let's see:

  • Condos yearly sales pace down 500k units.
  • Condos months supply: 8.0
  • Total months supply: 6.8 vs. 6.4 last month, with total units available for sale up 150k vs. an annual sales pace that decreased 100k

If 8.0 months supply was not bad enough (and if memory serves me right we are near or beyond the numbers seen at the trough of the '89-'92 S&L disaster) just think about this: against annual condo sales of 800k units, the Washington DC area is slated to deliver 25k new units in 2007, and I heard Miami is close to 70k more. These are projects out of the ground, well past the point of no return.

Homies stocks are up a bit today despite the constant waves of bad news, but that is not surprising as a function of where they have come from. The important take-away is that, IMHO, the resolution of the housing bubble and the related credit bubble is on the same track, if not worse, of the Nazdog circa mid-2000.

I'll leave it to the Minyanship to imagine the consequences of this meltdown on the markets and the broad economy.

What you need to know... - Jon Doctor J Najarian - 8:01 AM

Texas Instruments Earnings & Guidance Solid - On an operating basis, Texas Instruments (TXN)-- the biggest maker of chips for mobile phones -- said it earned $739 million, or 47 cents per share, after excluding parts of the business it has sold. Heat Seeker has TXN higher by over a dollar on 2 million shares in the pre.

Netflix 2Q Triples, Competition Stiffens - The Los Gatos, Calif.-based company said that it earned $16.8 million, or 24 cents per share, for the three months ended in June. The results topped the average estimate of 18 cents per share, but concerns about better, tougher competition have shares getting a smack in the pre.

Kraft Foods (KFT), the world's second-largest food company behind Nestle SA, said Monday its second-quarter profit climbed 44 percent over a year ago as it benefited from more advertising spending and cost savings from its ongoing restructuring.

Position in TXN

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