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Buzz Bits: Lay, N. Korea Rule Headlines as Market Slides

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Your daily Buzz highlights...

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Zagat Market Guide - Kevin Depew - 3:45 PM

As we put the finishing touches on our first post-holiday session of an abbreviated wk., we turn to the Zagat's Stock Market Survey to see what participants are saying about the market.

Traders and investors in this "no-nonsense" market describe the action as "orderly" and "ho-hum" in a geopolitical atmosphere that is "dicey", though most agree is best to "avoid on weekends" due to the fact it is "closed." While bulls praise the "exceptional value" and "pre-2000" prices, bears continue to find the prices "tres cher" and recommend you "bring a rich aunt" before ordering any additional shares.

And so it goes in the land of No-Doze. Hope this finds you well rested, or just plain well. Tomorrow is a new day with some data to be digested in the early a.m., including the Monster Employment Index potentially adding fuel to today's ADP report fire as well as possible ECB action and initial jobless claims.

This Gas Ain't Natural! - Jason Goepfert - 1:40 PM

Re: Kevin's Buzz about Nat Gas, what's even more remarkable is the way that traders have been treating the decline.

Normally when a commodity suffers a large retracement, we see large commercial traders reduce their hedges and sometimes even become net long. For the first time I can find in over 15 years, this has not happened recently, as hedgers are actually becoming more short as the commodity declines.

In contrast, speculators (by definition) - who are normally die-hard trend-followers - have been becoming more and more net long. We just don't see this very often.

So either "this time is different", or the setup is very bearish for Nat Gas.

Tracking the July 5th Fireworks Dud - Rod David - 1:04 PM

The rally from June's lows was already considered to be a corrective bounce. Monday's session-long rally was made possible only by the good fortune of being lightly attended. MACD and RSI diverged negatively into Monday's S&P new relative highs. The Dow and NDX didn't even make new relative highs. But it is somewhat surprising for both reality and traders to bite S&Ps so hard, by gapping under Monday's lows.

The opening sequence extended under Friday's lows, as well, signaling that a top is forming. That doesn't yet excuse S&Ps from a normal requirement for filling the gap back to Monday's close, but the open's gap and extension do go a long way. Closing today under Friday's lows, and failing to recover tomorrow, would allow an exemption from filling the open's gap.

"Upside down you turn me..." - Fil Zucchi - 11:42 AM

  • Builders in the Washington area are offering 6% broker commissions for closings by 7/31, 5% for closings by 8/31, and 4% if closing by 9/30. Ads of outright price cuts of 10%-20% are also popping up. Common sense would suggest that lenders loan loss reserves might deserve a look sooner than later, but I doubt anyone will blink until Q3/Q4.
  • The best day-trading tell for me remains breadth levels at 10:30 a.m: +1000 / -1000 at that time and a trend day in the corresponding direction is usually in the offing.
  • Quest Software (QSFT) and Marvell Tech. (MRVL) are today's "option whipping boyz." I am sticking to my views on this issue and acting accordingly.
  • If we break SPX 1262 and don't recover it quickly, look for Hoofy to head for Germany for some group therapy (sorry Minyans, the 'Ville's no-brag rule does not apply to sporting events). That being said, if the French beat Portugal and Italy, I'll be joining Hoofy as well.
  • I've not mentioned any new names on my radar screen for quite some time because . . .I really have not been looking. With too much take-over money sloshing around I am hesitant to short individual names. And with a growing conviction that we have entered the second leg of the secular bear, I am hiding in the longs that I feel most comfortable with.
  • 1538 was the Naz 100 (NDX) Thursday low.


Positions in SPX, MRVL, QSFT, QQQQ

Screeching VIX - Adam Warner - 11:11 AM

Big lift in the VIX today, over 11% as I write.

If you take away one point from anything I scribe, it would be to take day to day published VIX moves with a grain of salt. As I mentioned late last week, option prices essentially dipped low enough to give a free shot at any sort of volatility over the stretch from June 30th to July 10th. Well guess what, we got some news today, and ergo the apparent volatility pop.

If the CBOE asks me to design an easy-to-consume volatility index (I am waiting by the phone, lol), I would incorporate day-or-the week biases, and holiday effects. And if these were present, both the dip of last week and the subsequent bounce back today would look far less impressive.

COT data shows hedgers buying long end again......no change elsewhere worth mentioning - Bennet Sedacca - 10:20 AM

See the chart here. Once again, yields fall, they sell--yields rise, they buy. Buy low, sell high. Wow, where have I heard that before?

Bonds are getting drubbed today - which, frankly is contrary to the 'flight to quality' trade we have heard of so much over the years.

Keep in mind. This data was as of TUESDAY, so we don't know what the hedgers did after Boom Boom juiced the market on Thursday. We'll have to wait a few days.

No huge changes in 10's or S&P's. They are slightly short the stock market and relatively neutral in 10's.

No positions in stocks mentioned.

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