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Buzz Bits: Dow, Nasdaq Take a Hit

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

Bell Buzz - Todd Harrison - 3:50 PM

  • Snapper is trying to rally the troops but, despite marginal improvement in the internals, his efforts remind me of our pal Sisyphus.

  • That's not to say that the laws of inertia are dead. Case in point are the metal equities as the XAU are having a good month today (+4.5%).

  • Minyan Ken "Hey now, I'm a" Klaiman (get your game on, go now) just asked what my "upside alert" is on the CRB. "338ish," I said to the man in the Big Papi jersey, "that's a bit through the 200-day and above the previous July low."

  • It's Turnaround Tuesday tomorrow, folks, so make smart decisions as we edge towards the bell. If you don't have an edge or an exit strategy, don't carry the trading risk overnight. And "see" the catalysts. Always see the catalysts.

  • What are the odds that Robert Toll gives some snaps to the shorts he was gonna "crush" 100% ago during tomorrow morning's conference call? Slim to none, I would guess, although his stock will be a pretty important tell tomorrow for those involved in the sector.

  • Fare ye well into the bell, Minyans, and have a mindful night. In 100 years, today's P&L will be a pimple an an elephant's arse.

    R.P.


Position in metal equities

Metal Health Day? - Kevin Depew - 1:36 PM

  • An interesting stock which on Friday gave a DeMark TD-Sequential sell signal is Cigna (CI).
  • Meanwhile, Abbot Labs (ABT), which we mentioned registered a TD-Sequential sell signal last week, has now formed a 9-13-9 DeMark pattern (bearish) on the daily chart.
  • That's a sell setup (9), followed by a sell signal (13), followed by another sell setup (9). Near-term downside for ABT is visible to just below 47, then 46.
  • The Amex Gold Bugs Index (HUI), up 4.7% today, has formed a "shakeout" pattern on the PnF chart: unbroken double top (348), followed by a double bottom break (332) and then a reversal up (336). See the chart here, courtesy Stockcharts.com.
  • Maya Psychon. Just because.


Is the 'Wall of Worry' slowly being taken down? - Bennet Sedacca - 11:33 AM

An important sentiment indicator that my firm tracks finally crawled out of 'extreme pessimism' mode this morning. It doesn't mean that we can't head to 'extreme optimism' of course.

Also, the VXO did hit 11 the other day before bouncing a bit today, but remember that in the past, it has crawled down to 'single digit midget' levels in the past.

How high can we go? Well see the chart here. I draw the line with a crayon, as Todd likes to say, and I come up with 1350ish or so. That is NOT that far from here in terms of percentage terms. That might also give you a 9 handle VXO, no?

Just some thoughts on what COULD happen. One thing's for sure, we will tighten up stops and become more alert if that happens, or on the other hand, if stocks like the brokers continue to act like they are today........Not advice, of course....

Department of Complacency Department - Adam Warner - 9:27 AM

The popular volatility measures all look out 30 Days and estimate the degree of market fluctuation between here and there. But right now, nearly half of that time will be spent mapping out where to get potato salad for the Labor Day B-B-Q. Thus the VIX et. al. will naturally understate the "true" volatility going forward.

So what if we glance at some longer dated readings? Well guess what, similar story. Here's a rolling measure of the implied volatility (yellow line) of the SPY looking out 120 Days (essentially a December option now). And as you can see, at 12.5 we have virtually given back the entire volatility pop from 11.20 to 18 that took place from May into early June.

In other words, this option slammage is not just about end-of-summer doldrums, it's an absolute return to the complacency before the Spring Shakeout.

Position in SPY

Abercrombie & Fitch and Lowes - John Succo - 8:41 AM

Last week I commented on Abercrombie and Fitch (ANF). A first look at their earnings made me wonder why the stock was so strong. So we kept digging.

Their inventory grew by A LOT. Days inventory grew as well; the stuff they have over a quarter old should be very concerning, especially for a business that thrives on novelty. And finally when you account for the tax adjustment, they actually missed numbers.

The thing that sent the shorts (pun) covering was the company's guidance for next year.

Next year for a retail novelty clothes store? They would be lucky to know what they will sell next week.

Lowes (LOW) report this morning reminds us how flighty these guidance numbers are. LOW just finished affirming guidance last month and are now lowering it. Oh, and by the way, there is absolutely nothing good in LOW numbers this morning. The stock is down $1 pre open and despite some "gurus" who love the stock, reality won't bend for them.

ANF is going through massive short covering and we are selling it on the way up. LOW we will see, but jumping up and down doesn't change facts.

The consumer is in trouble and these stocks show it (along with others mentioned last week).

Position in ANF, LOW

The physical market is chatting - Laurie McGuirk - 8:35 AM

Has anyone noticed the chart of the London gold fixes for say, a month before the new financial year (we go June 30 - July 1 down here)? The rate set for the close of the month and year for many miners was exactly $600…How suss is that?? Anyways, forgetting window dressing, note that there has only been 1 London fix that was below the $614 level - let's call it $615. That is where someone big is buying physical metal, IMO.

That was a Friday arvo when gold was driven to $605 on July 24 (when much of Europe was at the beach) - note the return to "normal" the next AM fix. We have had a few cracks at this area and think this is a big sign that gold has very limited downside. Risk-reward is massively skewed to the upside...the physical market has spoken!!

Those who attended MIM3 would have had the $622 target in mind as to where I was looking for the pullback to get "in." I think we just saw it....opinion only as always. Time horizon is three years, not tomorrow, please remember.

Position in gold, silver

'06 Elections Will Start To Matter - Brian Gilmartin - 8:29 AM

Intrade, an online futures market for political, social and weather events is currently predicting that the GOP will retain control of the Senate (82% probability) and a 47% probability that the GOP retains control of the House, up from 43% recently.

After Labor Day, the elections should begin to matter, although the S&P 500 likely hits its low on June 13th, continuing the pattern of short, sharp corrections we have seen since the market bottom in March, 2003.

The brokers appear to have bottomed, but two former leadership groups, energy and the exchanges like Chicago Mercantile Exchange (CME) are now lagging as tech and financials led the market rally this week.

The Nasdaq had its best week since May, 2003 (shortly after the bottom of the bear market), rising 5.2% last week. The Dow Jones rose 2.7% while the S&P 500 rose 2.8%.

This recent, 3-month correction has resembled the market action of 2004's correction, which lasted about five months: from March '04 - August '04.

Position in CME

What you need to know... - Jon Doctor J Najarian - 8:07 AM

5-Day Rally Torpedoed By Missiles? We've got a week-long rally that saw the DJIA finish Friday up 46 points, on the strength of Microsoft (MSFT) and the S&P 500 rise 5 points. The volumes have dropped dramatically, as traders take the balance of the summer off, but there's nothing like a few missiles (10 in fact) from to get the interest back.

Sandisk (SNDK) Cutting Prices To Woo iPod Buyers - Sandisk, which holds the second-largest market share in digital music players behind Apple (AAPL), plans to introduce a $249.99 MP3 player, the Sansa e280, with eight gigabytes of storage capacity.

MedImmune (MEDI) Files New Drug App – MEDI filed an investigational new drug application with the FDA for MEDI-538 for the treatment of patients with B-cell-derived non-Hodgkins lymphoma. Shares are starting to hit the Heat Seeker in the pre-market.

Position in MEDI

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No positions in stocks mentioned.

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