Buzz Bits: Dow, Nasdaq Head Higher
Your daily Buzz highlights...
Earnings Report - MV News
Network Appliance (NTAP) reports 1Q EPS of $0.14 vs. $0.16 cons on revs of $621.3 mln vs. $61.8 mln.
Hewlett-Packard (HPQ) reports 3Q non-GAAP EPS of $0.52 vs. $0.48 cons on revs of $21.98 bln vs. $21.79 bln cons.
BEA Systems (BEAS) reports 2Q non-GAAP EPS of $0.14 vs. $0.12 cons on revs of $339.6 mln vs. $334.7 mln.
Bell Buzz - Todd Harrison - 3:58 PM
- The Minx blinks at S&P 1300 and TRAN 4400ish. Not a shocker, I suppose, but now it gets entirely trickier.
- I look at the tape as 8,000+ hedge funds standing in a circle shooting at each other. The last thing I wanna do is shoot myself in the foot!
- Does anyone else have Vailitis?
- Do you feel naked without risk? You shouldn't. The ability not to trade will prove to be as beneficial as trading ability.
- Can someone please tell Professor Sedacca that he left his Boa at the 4Eagle ranch (and no, I'm not talking about a snake).
- And just like that, the hump is behind us. Fare ye well, faithful, and I'll see YOU tomorrow.
Why I'm a Nearvous Energy Long... - Brian Gilmartin - 3:08 PM
1) Sentiment is overwhelmingly bullish - Minyan Phil told the table at dinner on Friday night at the Vail ranch, after a fellow Minyan questioned my nervousness over energy, that the Fidelity Select Energy Fund has seen an enormous inflow of new money. In addition, Minyan Phil, an energy derivatives trader in his former life, said that the shape of the forward crude curve was in a precarious position, which he was watching closely. Finally, I can't find one commentator on financial television recommending an energy sell.
This feels very much like the tech top in the spring and summer of 2000 in terms of the combination of trading patterns and sentiment.
2) It is taking longer and longer to make progressively new highs in the price of crude oil.
3) As we mentioned earlier, according to Ned Davis's research, energy is trading 3 standard deviations above the mean in terms of relative outperformance (relative to the S&P 500). Just to be fair though, Ned Davis said that the Nasdaq peaked out at 6(x) in March, 2000.
4) Per Thomson Financial First call data, forward earnings estimates for the energy sector just aren't seeing the upward revisions they were in 2004 and 2005.
5) Oil and energy were former leadership groups and are now lagging.
Positions in OIH, XLE
Russell Options Zisked - Adam Warner - 2:29 PM
It had to happen.
IWM options clung to the volatility ghost of Spring way longer than their Bigger brethren, but no more. Near money's are trading at roughly a 22 volatility, which if it sticks will mark the lowest premium level since early June.
Now option weakness is NOT shocking in late summer with a strong market backdrop. But on expiration week? Isn't that when Option Cowboys take out their plots and graphs and determine exactly where each stock should close, and then move in there violently?
Apparently not, this go around.
Position in IWM
Uh, hmmm, sorry pussycat doll, but that would be a definite no. - Kevin Depew - 2:09 PM
It's taking significant buying power to get the SPX to move in terms of PnF signals. The Bullish Percent chart for SPX is about 2% away from a reversal up (2% net new buy singals, not 2% in point terms).
Meanwhile, the percent of S&P 500 stocks above their 50-day moving average is already back above 60%. See this chart which shows how since March this indicator has stuggled and topped out near 70%.
Combining this evidence with the SPX:VIX chart posted below and I believe the risk/reward favors sellers at these levels.
Position in SPX equivalents
Large and in Charge - Vitaliy Ktasenelson - 11:27 AM
A couple of weeks ago I wrote an article for the FT which also appeared on the 'Ville, making a case that quite a few large cap growth stocks like Microsoft (MSFT), Wal-Mart (WMT), Johnson & Johnson (JNJ) are trading at very attractive valuations.
Their earnings more than doubled or tripled since the late 90s but the stocks have not gone anywhere, for the right reasons I might add - they were overpriced.
I believe the investors in these stocks that bought them in the early 2000s fell into what I call a "relative valuation trap" as they appeared cheap relative to the end of the bull market valuation. I believe today they are cheap on a more important absolute basis. However, after I wrote the article, I received several dozen "right on" emails and only one "you are out of you mind emails," this tells me I am probably too early as too many people agree with me.
Positions in WMT, MSFT
What you need to know... - Jon Doctor J Najarian - 8:06 AM
Sprint Nextel (S) & Verizon (VZ) To Begin Ads on Cellphone Networks – Both companies have both been running trials of banner ads on their wireless information and entertainment services this year and will soon offer 10 seconds video ads on their networks.
General Motors (GM) said it has cut the price of factory-installed XM Satellite Radio (XMSR) by 39% to $199 beginning with most of its 2007 model vehicles. General Motors said it has built over four million XM-equipped vehicles since 2004.
Applied Materials (AMAT) Profits Up 39% on 56% Jump in Sales – The tech company that supplies machines that help manufacture chips used in computers, flat-screen TVs, hand-held music players and other devices blew by forecasts and AMAT estimated their target market will expand to $37 billion by 2008.
Position in AMAT
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