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Buzz Bits: Dow, Nasdaq Continue Climb


Your daily Buzz highlights...


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

Bell Buzz - Todd Harrison - 3:57 PM

  • Anecdotal Evidence? I saddled up to a bar with TO once and he did not strike me as the kinda guy to take mercy on himself. I know you never know, but for what it's worth.Professor Bennet pinged me regarding past action in commodities before previous equity melts. Stay tuned for some good vibage from Blue Steel.

  • The highlight of today? Other than some Public Enemy (Don't believe the hype), the energy and metals space. My intention remains to parcel my overage out into this liftage and stay balanced vs. my short fiancials. As this mean reverts (on a trading basis), the degree of my directional bias will follow in kind.

  • Succo's Buzz on the value of short interest is making quite the splash in hedge fund circles.

  • Remember that spooky NAHB vs. S&P (with a 12 month lag) chart we've been highlighting? Snoop Tony Dwyer, among others, will look at the other side of that trade tomorrow.

  • Breaking News! Have a good night, Minyans, and enjoy it. We'll never have another September 27, 2006. Ever.


Position in energy, metals, financials

Cooperation makes it happen. - Kevin Depew - 2:37 PM

  • Minyan Ashley (Go Cats) "Judd" asks about General Motors (GM) on a DeMark basis. Interestingly, the stock is registering a TD-Sequential sell signal today on the daily chart.
  • Minyan Michael "Already been there, done that GM stuff Moore" notes the Utility HLDRs (UTH) seem to be moving higher again after the late July DeMark sell signals.
  • The UTH at first glance seems to have better technicals than the Dow Jones Utility Average, but I would note that Excelon (EXC), the largest weighting in the UTH, is registering weekly TD-Sequential and TD-Combo sell signals.
  • How about a compromise? If we go through and look at the UTH components and their weightings then we can perhaps find aceptable longs and pair those against the weaker components that can be stripped out via options.
  • What about simply selling the weaker stock components? Keep in mind the dividends.
  • EXC, for example, has a 2.59% yield.
  • Tomorrow's headlines today:
    - Record Dow Run Thwarted by Crude Prices
    - Dow Hits Record on Rising Crude Prices, New Home Sales

Have a Dow Cow - Jeff Macke - 12:15 PM

Todd-O's "media trollop" comment would be hurtful if not for the fact that I'm trying to juggle a few hundred things in an effort to meet CNBC's request that the Fast Money Four be available tonight to do a special "Dow at Record Highs" segment for this evening's On the Money.

Given that juggling my defense is reduced to a) he "borrowed" the phrasing from my Minyans in the Mountains 3 speech and b) I prefer the term "Strumpet."

At the risk of ruining my media tease by giving it away, my thoughts on the new Dow high at the moment revolve around whether or not it's worth it to take anything off the table during this Old School (circa 1999) mark-up quarter-end. On the bullish Hoof I'm a firm member of the church of letting winners run. The "Consumer Isn't Dead" names I've been totin' (in real life and on TV) like Safeway (SWY), Gymboree (GYMB), Nordies (JWN) and Federated (FD) haven't done anything exactly wrong; they're just looking pretty crowded at the moment.

Whether you're trading, shopping or strumpeting the counter-intuitive truth is that working the less crowded corner of the Street is generally the dominant strategy.

Positions in JWN, FD, SWY, GYMB

Too Much, Too Soon - Rod David - 11:21 AM

Yesterday's "breakout" session to new highs fulfilled the least bullish scenario described here in Monday's article. A deeper pullback Monday morning would have worked out the excesses already reflected by the prior week's "ineffectual optimism" and left the market in a better position to attempt another rally. Instead, S&Ps have rallied to new highs and stretched buyers more thinly.

The thinness of buying is already showing itself in this morning's failure to maintain its new high. And not just any new high, but the first follow-through from yesterday's breakout. A close today above this morning's high would confirm that yesterday's breakout was valid, while a close under this morning's lows would signal that the "breakout" was false.

If yesterday's breakout IS false, then S&Ps need not wait for today's close before proving it. Just retesting this morning's lows would be likely to retest yesterday's lows, too. And just retesting yesterday's lows - the lows of the breakout session - would confirm that the breakout was false and that a much steeper decline was underway.

Gotta love math - Fil Zucchi - 10:58 AM

In college I kept telling my math professors that I was not doing too bad because in prior courses I had done far worse. The logic behind my argument was rock solid of course if only I had been applying it to the housing market: Do far worse the month before; just about as expected this month . . .and your m/m improvement is gonna look fabu. Any questions?

Should you not agree with me however, and believe that housing is on the rebound, please remember that a decent sales number should not surprise since many homies close their yearly books in September and have every incentive to liquidate spec properties at any price. The dark side of that is the type of disappearing gross margins we saw yesterday from Lennar (LEN), and the beginning of widespread value destruction.

I have started selling call premium in the StreetTrack Homies (XHB).

Position in XHB

Quick. What do new car sales have in common with new home sales? - Bennet Sedacca - 10:30 AM

REBATES. Yes, the very fact that General Motors (GM) sells a car with a rebate or that homebuilders give away a Mercedes when you buy a house suggests one thing to me--that is, desperation to unload inventory at any price.

I have done some digging on the balance sheets of the major builders. I am using for this commentary 2005 data relative to 2004 data. What do I see? Book values rising. WHY ARE THEY RISING? Because inventories AND long-term debt grew at 50% rates year on year as best as I can tell. This doesn't take into affect the slowdown in 2006.

So while I thought there would be a short covering rally in homies, and a rally bought by hopers, I think it will come to an abrupt end as the shorts that 'shorted into the hole' have covered.

Then, in my opinion, earnings will turn to losses as the automakers lose money. It is the same dynamic. Desperation.

What you need to know... - Jon Doctor J Najarian - 8:10 AM

2nd Highest Close Ever – I just thought that sounded better than the panting, "we're just 54 points from the all-time high for the Dow." Reason to be optimistic: Corporate profit growth remains robust, with a record 18th straight quarter of double-digit percentage profit gains by the Standard & Poor's 500 companies. Reason to worry: Inverted yield curve warns of recession.

Government Gives Green Light to Spinach, But Should They? Sure Popeye loves the stuff and so do I, but since consumers are being told to check where their spinach was grown wouldn't you think the packages should be required by law to disclose? Me too, but USDA officials acknowledge that not all packages say where the food was grown!

Health Insurance Up 7.7% - This is more than twice the rate of inflation according to the Kaiser Family Foundation, a health care research organization that annually tracks the cost of health insurance. Employers on average pick up 84% of the cost for individuals and 73% for families.

Honda (HMC) Biz Jet? That's right, Honda, know more for motorcycles and cars is bringing out its business jet with a $3 million price tag. It's a sporty airplane that stands 13 feet tall at the top of its tail, seats six or seven people and flies faster than its closest rivals, as fast as 480 miles per!

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