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Buzz Bits: Dow, Nasdaq Higher Again

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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.



Earnings Report - MV News

Red Hat
(RHAT) reports 2Q EPS in-line of $0.11 on revs of $99.7 mln vs. $97.6 mln.

Paychex (PAYX) reports 1Q EPS of $0.35 vs. $0.34 on revs of $459.4 mln vs. $461.4 mln.


Buzz in the Afternoon - Todd Harrison - 3:27 PM

  • Wah Wah! Our Minyan Mole at the back room Boom Boom meeting responded "I did ask your questions and it was a very frank and interesting meeting. I hate to do this...but because it was off the record, I can't tell you what he said. " So much for Deep Throat!

  • More Amaranth insights with regard to the metal equities.

  • Please note that the NDX breadth is flattish. Flattish. As in, not confirming this upside move.

  • The market could break out, spurred by performance anxiety into quarter-end and, for that matter, year-end. But please Minyans, don't let the incessant cheerleading shape your investment decisions or, more importantly, your risk profile. We've seen this movie before--in years passed and in the spring--and you need to look at both sides of the trade before you play your hand.

  • I'm not buyin' the breakout. Figuratively, and literally. With that said, and with a respectful nod to the Turnaround Tuesday Gods, I've still got some upside exposure and I'm diggin' my gamma. You know what it is by now so I won't waste your time--or my fingers--in walking through it anew.

  • But there is risk, my friends, and the compression continues to build (as evidenced by the five finger Charlie in the VXO (-5%)

  • I have a confession to make--I'm a self-proclaimed hypocrite. I said so in Vail and I'm still guilty of living to work more often than I work to live. Alas, it's a new year and I'm gonna make a conscious effort to practice what I preach. I know, as do you, that tomorrow is promised to nobody.

  • Fare ye well into the bell, Minyans, and have a mindful night.


R.P.



Randoms - Fil Zucchi - 1:56 PM

  • Following up on Bennet's Buzz regarding the S&P500 (SPX) channel, please note also that should we retest the bottom of that channel, the chart will show a very well defined "megaphone top."

  • With the decline in home prices now being publicized on the front pages of newspapers, the next couple of months homes supply figures should be very telling as to whether sellers crawl back in the shells and wait it out (i.e. listings get pulled) or people previously on the fence pull out their own "For Sale" sign.

  • Do we bears sound desperate yet, as we parade every negative data point and chart we can find? Is that what it's going to take to make the market go down?

  • A couple of decent looking charts: Compucredit (CCRT) and Fair Isaac (FIC); and a really nasty one: Jackson Hewitt (JTX).

  • I've got $35.60 on my radar for the StreetTracks Spdr Homebuilders (XHB); and it's not to buy it.

  • Equities, precious metals, commodities, real estate, private equity and corporate bonds: can Mr. Bubble go hide anywhere else? Where?


Position in SPX



Cancel Those Marble Back Scratchers! - Adam Warner - 1:50 PM

So riddle me this. How does a high school team with Michael Vick, Brian Uhrlacher and Troy Palamalu need a last second halfback option pass from LaDanian Tomlinson to barely squeak out a win?

And I resent that Macke double shot of Jersey/Met bashing. Joe Mauer can expect a little Pedro chin music when he gets wind of this, lol.

Anyway, we FINALLY saw some semi-capitulation in the energy option space yesterday. Size went up in the XLE Oct 51 puts, and volatility clicked up about 10%.

But that was then. It's back to the same-old, same-old today, as premium sellers are on the march.

Now that makes sense from the standpoint that volatility should lift in chart disequilibrium (the breakdown recently) and then decline as the stocks move back into a comfort range. Problem is, it never really lifted much, save for yesterday's brief spike.


Migration - Kevin Depew - 11:49 AM

  • The Oil Service HLDRs (OIH) managed to clear the first resistance hurdle at 126 (should act as support here) with the next potential stop the gap between 130 and 131.
  • Also watch the Housing Sector Index (HGX) as it has resistance at today's high, 215.50. A move through there opens up more bullish opportunities in this counter-trend bounce.
  • Minyan Gerry yesterday noted the potential for a migration from Financials back to Energy.
  • That seems to be taking place, but I believe the secular trend is broken and this move is simply a tradable counter-trend rally from oversold conditions.
  • "This email will self-destruct in 10 seconds."



Crude Update - Adam Michael - 9:22 AM

Commercials decreased their net short position by about 20,000 contracts as of Friday's COT report and are now positioned virtually flat. I have been looking for commercials to go long crude before a bottom is in. Friday's report uses data through last Tuesday (when crude was still hovering around $62), so we may be there given the additional drop in prices towards the end of last week.

See the chart here.

The most bullish setup would be for crude to consolidate around $58-60 during the next couple of weeks, commercials to keep building a larger "net long" position and for open interest to decline from near all-time highs. I will be watching the energy shares to see if some sort of positive divergence occurs where the shares go up for a few days while crude is flat or declines. I have been told a fair amount of funds have been reducing their energy holdings before the end of the quarter, so perhaps we get a bounce in the shares when these sellers are done.


Time for a breather? - Bennet Sedacca - 9:03 AM

My firm has been selling many of our Treasuries as mentioned yesterday. We are into the teeth of resistance as yesterday's Buzz mentioned as well and a cycle high is in store for us this week. Throw in there sentiment (outside of the hedgers) is frothy and the fact that stocks and bonds are at odds, and a pullback should develop.

I stress SHOULD develop. I have opined many times that stocks and bonds are at decisive odds at present. This sort of inversion has always led to recession in my career but this stock market is certainly resilient.

Thanks to Minyan Bill for the chart here. it shows that we have now had a 50% retracement in 10's for the entire bear market move from last Summer until now. So it is a logical stopping point.

The $64,000,000 question is whether it is a pause that refreshes or is it the end of the move? I wish I knew. If anyone has next month's Journal, please feel free to forward to me!


What you need to know... - Jon Doctor J Najarians - 8:13 AM

US Consumer Confidence – Right now, the market expects a solid increase to 103.0 from 99.8 the month prior and I believe gasoline prices tumbling to the lows for the year will be the catalyst for the increase. Watch the dollar as well, as my scenario playing out should help the greenback.

Lowe's (LOW) Guidance To Low End, Shares Rally? You heard right, and when you see a stock rally off bad news, those little hairs on the back of your neck should be telling you something. The Mooresville, N.C.-based company said the company will add 155 and 150 stores in 2007 and 2008, respectively. Shares were $0.90 lower in after hours, but have rallied from that to be higher by $0.31 in the pre!

Walgreens (WAG) Profits Up 25% - The Chicago-based drugstore chain said strong sales of prescription medications helped the bottom line increase by $412.3 million, or 41 cents a share, from $329 million, or 32 cents a share, a year earlier.

United (UAUA) Chief Talking Merger? UAL's CEO said his company would be a "key player" in what he sees as a much-needed industry consolidation. UAL reportedly has retained Wall Street investment bank Goldman Sachs Group (GS) to explore strategic options, including possible mergers with other airlines.

Position in LOW, UAUA

No positions in stocks mentioned.

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