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Buzz Bits: Markets Gain Ground


Your daily Buzz highlights...


Earnings Report - MV News

(SBUX) reported June comps of +6% vs +7.0% exp. Total sales came in +22% to $751 mln.

It's Five O'Clock Somewhere... - Bill Meehan - 4:12 PM

This session rolled to a halt with the three major U.S. indices all in the green.

The Dow, closing +0.66%, got its big lift from the +6% strength in Altria (MO) after the Florida Supreme Court threw out excessive punitive damages in the Engle trial.

The Naz limbo'd in just above the flatline after bouncing off session lows about an hour and a half before the close. The S&P edged higher by a quarter of a percent.

Finishing in the red slightly were the semis, cyclicals, utes, and natural gas index (XNG).

The morning data should be the brush that paints the picture tomorrow.

Decisions, decisions, decisions - Fil Zucchi - 12:40 PM

  • On the "trading" side of things, I have not found a decent setup in gold for quite some time. With this morning spike, the futures have retraced almost 50% of the swoon. The RSI is still in no man's land, but the $636-642 area should be meaningful resistance and good at least for a short term trade on the dark side. For those new to my thoughts on precious metals, I am probably as bullish as anyone in the 'Ville, but the recent volatility presents opportunities on both sides.

  • In equities, I was briefly tempted by the Opening Range Breakouts in the Russell 2000 futures (ER2) and Nasdaq 100 (NQ) (breaks above/below the high/low of the first 10-min. bars) but with tomorrow's Big Bad Event looming and breadth still hanging in the green, I will pass on the day trade.

    P.S. the ER2 position is unrelated to the day trade discussion.

Position in ER2, gold

Relationship Counseling - Kevin Depew - 12:30 PM

See the drip lower for the NDX here, crossing to negative territory on the day as the RUT is now underperforming the SPX, though both are still positive.

The Dow is the outperformer today, boosted considerably by the nearly 6% spike in Altria (MO). Professor Reamer and I were looking at this a bit ago, however, and noticed DeMark TD-Sequential sell signals in place on MO on the monthly and now the weekly chart. MO breaks a triple top on a PnF chart today, but based on the longer-term DeMark indicators I believe that breakout has a high probability of failing.

Position in RUT/SPX equivalents

Lights Out - Ryan Krueger - 10:51 AM

I recommend the Bobcats get to work quickly on their offseason plans while they have access to their new owner for a few days, while the lights are still out in Atlantic City.

Speaking of turning the lights on I wonder how many have noticed this little nugget of news. The growth of gambling in Macau is well documented, but it may be even more remarkable than most realize. To give you an idea what's going on over there consider that total revenues just passed those in Vegas despite being short-stacked in rooms. Vegas has about 20 hotel rooms for every one in Macau.

I will continue focusing on the far less glamorous ways to "grind out the rent money" just like Knish. Instead of the obvious and very few casino names to look at who will benefit, how about the basics? Like keeping the lights on. I'll take a stack of coal over a 'stack of high society.'

Peabody Energy (BTU) reminds us this morning that "American" companies, and others, are likely to try and get closer and closer to the action, in owning the natural resources (Australia is home to many and looks pretty well positioned on my map) that is needed for ANY of these more exciting stories to unfold.

These are among the many tailwinds I speak of in Kaizen vs. Complacency and I think each day the news from other parts of the world, those in the early innings of Democracy vs. Capitalism, will be relatively more important than our own news than it was the day before....for the rest of my career.

Position in BTU

My Take on June Employment - Jon Doctor J Najarian - 10:37 AM

Three months ago, ADP Employer Services, part of Automatic Data Processing Inc. and Macroeconomic Advisers LLC teamed up to bring what they said was a far more accurate prediction of what the monthly non-farm payroll numbers would be. ADP & Macroeconomic Advisers base their prediction on a sampling of payroll data covering about 225,000 companies and some 14 million employees.

On paper, this looked like it might indeed be the best look at what to expect from the monthly jobs report, but then Tony Mandarich and Ryan Leaf also looked great on paper, but couldn't play pro football to save their souls! After all, the Green Bay Packers could have used that pick to take Hall-of-Famer Barry Sanders and Leaf was called "the biggest bust in the history of professional sports" by ESPN.

In case you think I'm being a little harsh on the ADP / Macroeconomic Advisors payroll predictions, here are their two previous looks into their crystal ball:

  • April ADP predicted 178,000 new jobs, but the report came in at 131,000 a miss of 35%.
  • The May prediction by ADP was for 122,000 new jobs, but instead the BLS said 74,000 jobs were created. This was a miss of another 40%.

Thus, armed as I am with the ludicrous ADP / Macroeconomic Advisors 368,000 prediction for June and their past futility, I boldly set's June non-farm payroll number at 239,200. Heck, I can't really do worse, can I?

I believe the moment of truth has arrived for the Homies - Bennet Sedacca - 9:56 AM

We have been vocal bears on housing shares for the past year. For those of you that missed my piece the other day with this chart, yes, it is the 'bubble comparison' chart I have dragged out countless times. I heard it was 'different this time' which I disputed, and I'll take this chart as a win.

But, the shares in the S&P Super composite Index I use are now 4.59 earnings. So, one of two things has to happen, because IF they make numbers, they are indisputably cheap. Or, they will continue to lower numbers and guidance as inventory builds, speculators will get foreclosed on and earnings to losses - yes I think that is possible, it IS a cyclical industry despite hearing about the secular trends.

To be honest, it reminds me of tech. What kills every bubble is overcapacity, whether it be chips, fiber, PC's, houses or land. But the moment of truth is at hand. Something now has to give. Just my thoughts, not advice.

Non-manufacturing ISM - don't ignore this number - Brian Gilmartin - 9:20 AM

It has always been amazing to me that with an economy that is 80% services (as opposed to manufacturing) and with manufacturing just 20% of GDP and manufacturing labor about 13% of the labor force, that more attention isn't paid to this morning's "Services ISM" due out at 10:00 am eastern time.

Other than GDP, and non-farm payrolls, economic data really doesn't capture the services aspect of our economy, or perhaps said in another way, our economic releases seem to do a great job measuring the 20% of our GDP, i.e. industrial production and manufacturing.

Anyway, the consensus for this morning's ISM number is 59, per the Buzz found below, so watch for any deviation from that number.

The other thought that I had is that with an economy that is 80% services, is how much impact monetary policy has on services vis-a-vis the manufacturing sector. The Fed has raised rates 17 times, and GDP hasn't slowed one wit, maybe (just maybe) due to the changes in our economy the last 20 years. (This might also be the reason $74 oil and $3 gasoline hasn't stopped the economy dead in its tracks.)

Stiffler's Deep Thoughts (a la Saturday Night Live) on a slower Thursday morning...

What You Need to Know Before You Go - Jon Doctor J Najarian - 8:01 AM

Lay Death Could Cut Restitution From Him – According to a host of lawyers, it is not clear the government can seek restitution against someone who has died. In fact, the 5th Circuit Court, which has jurisdiction over Houston has found exactly that in recent rulings.

AOL Considers Entire Offerings For Free! Ludicrous as that sounds, it's precisely what Time Warner Inc.'s (TWX) AOL unit is considering according to today's Wall Street Journal. Free email to anyone who has an Internet connection with a competing service. The move could hit AOL for $2 billion in revenue and lead to thousands of job cuts.

Southwest (LUV) Raises Fares For 4th Time This Year! LUV has raised fares by $3 or $10 for one-way trips and boosted the limit on its refundable fare to $319. The weekend fare increase was the fourth broad fare boost by the nation's leading low-cost carrier this year and the ninth in the past two years.

Position in LUV

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