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Buzz Bits: Dow, Nasdaq Close Higher

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Your daily Buzz highlights...

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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 - 3:48 PM

  • I didn't cry when Old Yella died but I've got tears in my eyes as I read Billy Meehan's retrospective. The apple of literary ability sure didn't fall far from the tree.

  • 7% slippage in the XAU? Yep--nary a lift in commodity land and I would be surprised if that pain remains contained.

  • I did pick up some metal equities this morning (Golden Star among them). If we're in a CRB led draw down (as I suspect), my piggy puts will kick in nicely. If not, I figure they'll dance with Snapper.

  • Breadth never gave the upside wink today. Just a little 'real time' noodlin' as we always look for a high quack count when trading.

  • I'm gonna hit the 'print' button before thy closing bell rings. Then, after a quickie edtiorial meeting, I'm gonna celebrate life with my bride-to-be and be mindful for all the blessings we share. Thanks for sharing your journey with us, Minyans--we'll see you bright and early tomorrow.


R.P.

position in metals, financials



Volatility of the Volatility - Adam Warner - 1:36 PM

If it seems like nothing much has happened option-wise in a while, you are correct. As this chart shows, the volatility of the VIX itself spiked in the May-June market swoon to a multi-year high.

Well, that was then, this is now. The "volatility of the volatility" (blue line) is now at a 52 week low.

In other words, the VIX itself has stabilized to the n'th degree.

It was unclear at the time (at least to me) what this *spike* meant in the spring. In retrospect, it was in and of itself a sign of nervousness that even exceeds the standard volatility indices.

So what of now? Well, historical volatility of anything lags a bit, but it is yet another demonstration of how utterly complacent we got in August and early September. And if you believe low volatility begets high.


Can someone please explain THIS to me? - Bennet Sedacca - 12:10 PM

Everyone is trying to figure out why oil is falling. Is it falling due to some sort of technical or seasonal reason? Or is it truly elastic (we believe it is to a degree) and does demand actually fall as prices increase? Oil, after all, is necessary but not addictive, like truly inelastic products such as tobacco.

But look at this chart of the trannies. If oil were truly falling in price due to technical reasons other than lack of demand, the trannies would be taking flight, not looking at fresh new lows.

From a purely technical perspective, look at how the 50 DMA has crossed down though the 200 DMA and the lagging MACD indicator is about to cross to the downside on daily charts. The question I have is if it acts this poorly with oil prices down every day, how will it act with rising prices?

To me, the trannies have joined the inverted curve and homies as signs of a slowing economy and possibly a recession on the horizon. Not advice, just what I see.


Best Buy and Costco - Brian Gilmartin - 11:59 AM

It will be interesting to see if tomorrow morning, Best Buy (BBY) confirms Costco's (COST) comments on high end consumer electronics, and the slowing therein.

When COST warned on margins a week ago, it was the slowdown in some of their high end goods like consumer electronics and furniture which surprised the Street.

COST's gasoline clubs will benefit from the rapid drop in gasoline prices given the inventory turnover at these gas clubs, as will Wal-Mart's (WMT) Sam's.

We are seeing the best opportunity to enter COST cheaply since May '05, when COST warned due to the sharp rise in gasoline prices in the April - May '05. There should be very good support at $45 for COST, given the trendline convergence on the weekly and monthly charts.

Costco and Best Buy represent an interesting consumer dynamic: will the housing slowdown and the Fed have pushed the consumer over the edge further than a drop in gasoline and energy prices can boost discretionary income again?

Right now, it looks that way.

Position in WMT, COST


Making up for Friday - Rod David - 9:14 AM

Thursday's close under prior lows signaled that the trend had reversed down. The signal was still fresh, and therefore vulnerable to being disproved. Sellers stepped back Friday to see what proof buyers could offer, but they only offered an "inside day" (price action contained entirely within the prior session's range).

Worse, yet, Friday trended up intraday on lower volume, "ineffectual optimism" that suggested the only buyers doing any bottom-fishing were so-called "weak hands." Sellers' patience allowed MACD and RSI to neutralize Thursday's near-term oversold condition, freeing Monday's open to resume the decline in a big way.

S&Ps did drop overnight, back to two-week old prior lows. More recently, S&Ps are bouncing to retest last week's lows as resistance. If the cash session can retest the overnight lows and still recover to close above last week's lows, then a bounce to last week's highs would be in-play. Otherwise, next stop: a retest of August's lows.


(Mis)Behavior of Markets - Kevin Depew - 8:21 AM

Gold futures for December are off 2.24% this morning and at one point were below $600. Silver for December is off 3.29% this morning. Why?

News reports are blaming the following, take your pick:

1) Iran/EU talks and general improvement of geopolitical tensions.
2) Drop in crude oil prices below $70 bbl.
3) Firmer U.S. dollar.

But wait, the dollar is off 14 basis points this morning. Crude is down nearly 15% from July 14. the U.S. Dollar Index is lower by .17 since July 14. Silver is actually up 5.4% since July 14, as is the S&P 500.

Meanwhile, on Friday it was reported that "Wall Street rebounds as oil prices fall." However, this morning, with Crude off another 1.4%, SP futures are lower by 5.

The point is that markets are non-linear and their movement is rarely tied to specific news events. "Correlation does not mean causation. Just because a particular piece of news is commensurate with a price move in a security (even statistically significant ones) does not mean that that is the reason for the change," Scott Reamer wrote back in March. That lack of correlation is not so important to most traders as the visual and logical appeal of the stock/crude relationship often remains intact... until it doesn't. Like this morning. Scott wrote, "It's dangerous to trade purely on news. It's dangerous too to assume all the other traders out there are governed by rational calculations. They aren't." Pretty good advice based on what we're seeing so far this morning.

Position in SPX equivalents



What you need to know... - Jon Doctor J Najarian - 8:16 AM

Intel (INTC) Facing European Anti-Trust Review - A European Commission spokesman said today that the EC will widen an antitrust review of Intel to determine if it convinced an electronics retailer to exclude rival Advanced Micro Devices (AMD). Shares are under pressure in the pre.

JPM Upgrades Micron Tech (MU) - Chip maker Micron Technology was upgraded to overweight from neutral, as JPM sees improving pricing outlook which should enable margin expansion at the company.

Texas Instruments (TXN) Mid Quarter Update – It's that time again and the question is will the largest supplier of chips for cellphones guide to the middle (negative) or to the upper end of the range for revenue? Cost controls could help them surprise to the upside, but we don't have a Heat Seeker, or Depth Charge reading on them yet. Stay tuned.

No positions in stocks mentioned.

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