Buzz Bits: Short Session Finds Dow, Nasdaq Higher
Your daily Buzz highlights
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Brought to you courtesy of the red white and blue... - Bill Meehan - 12:57 PM
The day that never really was comes to an end with green across most of the screen.
Everyone (all 10 of us still at our desks) knows that tomorrow the U.S. markets will be closed as we celebrate independence with bbq's, beverages, fireworks and little Japanese men eating more hot dogs in 12 minutes than most eat in a year.
When we shuffle in on Wednesday, we'll get weekly mortgage and retail index data, along with Factory orders. That's pretty much all the excitement lined up.
Have a great holiday! Be safe. Thanks for bearing with us. I'm off to the crystal clear waters of the Long Island Sound for the rest of the day...
ISM - Kevin Depew - 10:34 AM
Going through June's ISM report on Business, note that it was weaker than expected while prices paid for commodities continued to move higher while those commodities reported to be in short supply showed two new faces: copper and natural gas. (Copper was mixed, reported by manufacturers to be both up and down in price.)
Other items of interest based on what respondents to the survey are saying:
- "Business activity in the construction industry has slowed down considerably." (Glass, Stone & Aggregate)
- "Trucking is getting tighter, and we are spending a lot of time trying to find carriers to pick up loads in a timely manner." (Transportation & Equipment)
- "New orders have increased and many are from new customers." (Chemicals)
You Make the Call - Vitaliy Katsenelson - 10:24 AM
I've received a lot of emails from Minyans over the last week regarding Telecom New Zealand (NZT). The stock is yielding close to 10% (more if you count special dividends). The New Zealand government's actions to date were more drastic than I ever expected. In this article I make a bull and bear case for the company. You decide.
Position in NZT
State of the Markets: On to the third quarter - Phil Erlanger - 10:01 AM
The NASDAQ 100, S&P 100 and Dow Jones Industrial Average moved higher last week. The daily Squeezeometer signal for the NASDAQ 100 Index and the S&P 100 Index remain at cash/speculative buy.
Our 14-day choppiness index for the NASDAQ 100 Index moved from 60 to 58. This index ranges from 0 to 100, and the lower it goes the more a trend is evolving. The NASDAQ 100 has built up energy, and is in rally mode. The S&P 100 choppiness index moved from 54 to 48. The S&P 100 is also in rally mode. The NASDAQ 100 remains below its weekly DMA channel, as does the S&P 100.
CME Reports Record June Volume - Brian Gilmartin - 9:53 AM
The Chicago Mercantile Exchange (CME) reported strong June volume this morning, pushing the stock up in pre-market trading.
CME's June volume rose 51% y/y over June '05's volume on the strength of Globex trading and eurodollar options, and 2nd quarter "average daily volume" rose 31%, both very healthy growth rates, which we gave subscribers a heads-up on last week.
For the monthly volume report however, the key metric is "RPC" or rate per contract, or essentially revenue per trade or contract, which rose a little bit in May (reported with one month lag) to $0.644, versus April's $0.641.
Technically, the April 24th high of $504 is the key technical level: a punch above $504 and the stock will likely run to the $550 area. Our valuation model - using the forward 4-quarter estimates after the April earnings report - estimates CME's value around $535 per share, but estimates have been taken higher since the April report.
The key technical tell is the price action around $504 and subsequent volume: my firm needs to see heavy volume on a sharply higher day to convince us the momentum can continue.
Position in CME
GM and Nissan/Renault - John Succo - 9:09 AM
Nisson/Renault CEO Carlos Ghosn supports and investment in GM. This should not surprise anyone.
History repeats yet no one pays attention.
We have seen managers like Mr. Ghosn time and time again: they slash and burn unprofitable companies, keeping profitable businesses/divisions and firing all else. The company returns to profitability and they are declared "genius."
But what to do after that? That is where the real risk and genius should come into play: how to rebuild revenues profitably.
Mr. Ghosn, not wanting to reveal that he may fail at this, that his "expertise" has nothing to do with it or more accurately, this stage of business building is much riskier and more difficult, decides to dilute the risk by taking on another company in the stage of "tearing down" expenses. He goes to hide beneath the rubble of GM.
But wall street typical in its two dimensional thinking caves. BAC this morning raises their price target from $15 to the current price. Bravo. But they are not stupid; they include the caveat that without R/N capital infusion they still have the same bad opinion of GM.
For our part we view these shenanigans as nothing but desperation and will be selling the shares of GM against our long gamma as it goes higher and higher as more and more people cave.
Position in GM
Shake-Up - Laurie McGuirk - 8:18 AM
Sometime over the past couple of years, I think we may have touched on the likelihood of "official" diversification away from the USD. Russia are on record as saying "10% of reserves to be in Gold". It won't take more than a handful more Central Banks to join the current gold buyers to really shake the physical gold market up. Tick, tick, tick.
Position in gold
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