Buzz Bits: Dow Edges Lower, Nasdaq Ticks Higher
Your daily Buzz highlights...
Fare you well, my honey. Fare you well, my only true one. All the birds that were singing are flown, except you alone. - Todd Harrison - 3:49 PM
Yep, most of the birds have indeed flown the coop. It's Friday in the summer in front of the last week of August--can you blame them? I mean seriously, who wants to be sitting in front of the screens with so many alternatives staring us in the face. We could horseback ride, we could swim, we could jump on the trampoline---I mean, the options are endless!
Despite conventional wisdom that the markets would do a whole lotta nothing, they pretty much did just that this week. The S&P and NDX are pixels away from their starting points and, while there was motion under the hood, the overall movement was the definition of a summer sideways slither.
Perhaps the Minx is catching her breath (and her breadth) before an assault on S&P 1300--the only difference between "basing" and "churning" is the subsequent direction--but the dynamic we noted earlier this week remains in play. With the CRB back (slightly) below the 200-day and directly above the 5-year trendline, the jury will join many on the street being out next week.
Not I, said Todd, at least not yet--I'll be here bright and early Monday morning with the rest of the Minyanville crew to bring you the best and brightest thoughts we can muster. I sincerely hope you all have a fantastic and safe weekend and, for those taking some time, make it count. You've most definitely earned it!
May peace be with you.
Golden! - Laurie McGuirk - 1:32 PM
Note the gold probe lower was rejected immediately by the physical market buying. Big support at the 615-20 level and it's being tested hard. The physical market buying is absorbing heavy real metal selling in some large volumes at the London Fixes. The next few sessions will tell us a lot. If 615 holds here then we know where someone "big" is buying real metal.
Position in gold
Tornado Watch - Kevin Depew - 11:45 AM
We drew straws here on the desk and the result is Spyder is stationed against a large 10 foot plate glass window on double secret tornado alert. I told him to watch for flying house trailers. These things always begin with the flying house trailers. "And for godsake son, hold on tight!" We can't afford any weather interruptions during market hours. We are, after all, professsionals.
Meanwhile, the market is playing a little game of twister of its own. Ns over Ss and the SPX over the RUT. To further complicate matters, today we have a DeMark TD-Sequential sell signal on the daily chart of the Consumer Staples ETF (XLP) to go along with recent daily DeMark sell signals for Abbot (ABT), Pfizer (PFE), Altria (MO), Pepsi (PEP), Anheuser-Busch (BUD) and a number of other "defensive" names. The XLP also shows weekly and monthly perfected DeMark sell setups. Time to move along as risk aversion has found some other areas to rotate into.
Finally, here's a question from the new Series 7 exam: If the NDX is higher than the SPX, and the SPX is higher than the RUT and the Dow, then which cousin is the brother of the oldest son?
Position in RUT/SPX equivalents
Quo emptor? - Rod David - 11:33 AM
Last Wednesday's "breakout" to new highs started a countdown for sellers to retake control. The vagaries of Friday's expiration session allowed as long as until Monday's opening sequence for S&Ps to break under last Wednesday's low, for sellers to prove that the breakout was false. Sellers let that window open and close with nary a downdraft coming through it.
That started another countdown for buyers to prove their intent was to extend the rally, and not just keep sellers at bay. Their window closed at today's opening sequence. And today's opening sequence did recover from an initial sell-off. But the window for buyers to prove their control also included Thursday, and like that session, today's buying surge has fallen flat.
None of which (yet) signals that buyers don't intend to extend the rally before today's close, or that sellers won't fill the void by retesting recent lows. A decline has room intraday to test SPX 1291 (ESu 1293'50) before pushing buyers' resolve. But a close today under only SPX 1294 (ESu 1296'50) would signal that sellers had found new resolve for a deeper decline on Monday.
Tech and Semis - Brian Gilmartin - 9:25 AM
I continue to think the semis are setting up nicely for a year end run, and likely a decent 2007 too, and that tech is bottoming.
With Microsoft's (MSFT) Vista due out in early '07, and upgrade expectations very muted, the launch of Apple's (AAPL) new iPod in 4Q, and expected arrival of Sony's (SNE) PS3, a new XBox, and Nintendo's Wii, we will have a plethora of potential catalysts for some of the tech sectors in the 4th quarter.
Semi's continue to trade very well: National Semiconductor's (NSM) "warning" of two days ago was met with a higher stock price on sharply higher volume the next trading day. Applied Materials (AMAT) has traded well since their earnings report after tempering their October order guidance.
My firm's semi growth plays continues to be Sandisk (SNDK), given that MSFT's Zune should increase demand for NAND flash on top of Apple's new iPod, while our value plays are Intel (INTC) and Micron Technology (MU).
Positions in QQQQ, SMH, SNDK, INTC, MU, MSFT, AAPL, AMAT other semi's, some video game companies
Softening Housing Market - John Succo - 9:05 AM
H&R Block (HRB) is another example of the effect the "softening" housing market is having.
First COF, CFC, LEND, HD, LOW and now HRB. How long before the effects are felt by WM or even BAC or WFC?
Unlike the mainstream media, my firm sees housing as the engine of liquidity for the consumer as the collateral base for debt. We see housing as the key to an imbalanced U.S. economy.
By the way, let me clarify a statement I made on the Buzz on HRB this morning. I wrote quickly and it sounded crass. I said, "we love to see scared people crowded into a car going off a cliff."
What I meant by that is when we have a long volatility position, the perfect scenario in generating liquidity out of a stock (volatility) is when the ownership is crowded into a stock that is having real problems. If one or two decide to aggressively sell, the stock will be more volatile and the sellers will "need" the liquidity I will provide in their selling.
Positions in HRB, COF, LEND, HD, LOW, WM, BAC, WFC
What you need to know... - Jon Doctor J Najarian - 8:12 AM
Big Ben Speaks in Jackson – That's right, the last market moving catalyst of the week is pulling on his cowboy boots and Stetson out in Jackson Hole . He is the keynote speaker and the title of his speech is "Global Economic Integration: What's New, What's Not." Pass the shrimp.
DOJ Asks Judge To Block Northwest Strike - The Department of Justice asked a federal judge to block a threatened flight attendants strike against Northwest Airlines. I feel for the workers, but if a strike occurs NWACQ.PK will merge with Delta before the year is out.
More Cuts In Prudhoe Cause Oil Gusher – The Heat Seeker shows Nymex Crude futures higher by $1.19 to $73.55 overnight as a "technical fault" has reduced the Prudhoe Bay pipeline by 90,000 barrels per day!
Stock Repurchases Top $116 Billion! According to the latest filings, there are over $116 billion in buybacks for the S&P 500 alone! After all, why would you give money (dividends) to total strangers (shareholders)?
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