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Buzz Bits: Dow, Nasdaq Drop

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



Bring it Home Buzz - Todd Harrison - 3:30 PM

  • It's funny, this doesn't look like one of the seven deadly sins!

  • Food for thought, in a sushi sorta way.

  • Tapes that are weak all day (with 2:1--or worse--negative breadth) tend to end that way.

  • In Flow's Diner, we've seen buyers of NUE calls, LOW calls, MER calls, PD calls, ONXX calls, MDT calls...man, that's alotta call buyers, eh?

  • That smoke you smell is MVHQ turning the screws on planning Minyans in Manhattan for December 1st. This is 100% for the kids, with an afternoon of content (think Vail) and an evening of rug cutting (think, uh, Vail).

  • I'm rebuzzing an earlier Buzz bit because I think it's worth it::
    • I "think" September is gonna be a meaty month and, given the toppy stochastics (and the rule of thumb that an uptick in vol equates to a downtick in prices)--not to mention the continued weight of the CRB (-50 bips)---the intuitive extrapolation is that the move will be lowe.

  • The VXN (+10%) just joined the VXO (+13%) in double digit territory. I think both have a ways to run.

  • And to think, my biggest short is up today. Hey--it happens and if I've learned anything in this business, it's that we've gotta take the good with the bad.

  • I'm flipping my lids but worry not, I've gotta lot left on my to do plate before I even think about some shut eye. I sincerely hope you've had a fine Hump and that you're night puts it to shame.

  • May peace be with you.


R.P.



It's just a little dirty, it's still good! - Sanjay Somaney - 2:35 PM

I am considering taking a good guy shot at Hewlett-Packard (HPQ) given the brouhaha over the spy-games being played by the Company's Board.

In the long run of things, it matters not. These guys don't do much in any case. LOL.

When Walter Hewlett had that messy board struggle in 2002, that marked the bottom point in the stock and it has done very little since then except go up.

What is important to remember is that just like Advanced Micro Devices (AMD) is taking Intel (INTC) to school, HPQ is spanking Dell (DELL) at the moment. Dell will not be able to turn things around on a dime, neither will INTC.


It's All About Sector Rotation - Brian Gilmartin - 2:14 PM

I've written a couple of times that the rally off the June-July lows was very different than the rally that took us to the May 9th top, in terms of market leadership.

My firm has avoided adding to or buying tech, semis, pharma and some of the money-center banks like Bank of America (BAC) and JP Morgan (JPM) the last few weeks and instead have bought the cyclicals like the transports and industrials, added to our exchange and brokerage exposure, as well retailers.

We buy "oversold" and sell "overbought," which would seem to fit with the "range-bound market" mentality.

Positions in tech, semis, BAC, JPM


Hate the game... - David Miller - 12:49 PM

Genta (GNTA) was unable to convince the ODAC panel the data from their Phase III trial in CLL demonstrated a "substantial" benefit. The panel voted the drug down and we'd expect the FDA to follow their lead. Shares in Genta are still halted, as is customary when small companies go in front of an advisory panel.

This panel meeting held nothing in it that would indicate it was a turning point for biotech as it revealed nothing we did not already know. ODAC remains in the pocket of the FDA, forgetting their primary reason for existence is to inject patient and clinical reality into the regulatory approval game. This decision was 100% expected, though it is unfortunate for CLL patients who lost the chance for access to an effective drug with minor side effects.

I'll be gone for the rest of the week as I will be in Boca Raton tomorrow through Saturday.


Bulls in a china shop. - Rod david - 10:34 AM

Hours before Tuesday's close, S&Ps had already laid the groundwork for a decline. But optimistic buyers insisted on retesting the noon hour's high, and patient sellers were only too happy to hand them more rope to form a Double Top. Otherwise, the pattern could have been resolved without this morning's mess. And it is a mess.

Gapping down under prior lows from a prior high isn't the wisest career move for a young breakout that is just getting started. Then the drop touched the natural support of last Wednesday's high. Unfortunately, Friday's post-open pullback had already used this as support to launch a higher high, so this morning's retest represents a failure.

Tuesday's volume into new price highs increased from Friday's pace. If today's volume were to increase further and price remained down, momentum will have reversed down. Bulls still have one out, dependent upon today's gap having expended too much selling pressure too quickly. More rope?


Are the Odds on Your Side? - John Succo - 10:22 AM

OK, option prices are dirt cheap. So what?

How do they get dirt cheap? By people selling options. When they sell options, they are betting that stocks won't move.

Someone just sold a chunk of IWV (Russel 3000 ETF) November 80 calls at $0.15. The seller is just trying to get some "income." If the IWV breaks through 80 by November (up 6.5%) the seller will lose money. Most likely though the seller has underlying long exposure in the IWV to hedge this sale. If IWV goes down or up big, the seller will lose.

The point is the seller is not getting much for this sale. These options are dirt cheap. The market may never move, but I bought these because the pay-off is so good if it just moves a little more than it has.

People look back and say the market hasn't moved so it won't in the future (inductive reasoning). This has some validity, but ignores "conditions" that I will talk about later.

With options this cheap I have a large bet on. The odds are very good. It doesn't mean I will make money, it means that for the risk of losing a little I can make a lot.

It may not be good to bet against the crowd if you don't get "odds." With odds like these, it is time for me to bet against the crowd.

Position in IWM


What you need to know... - Jon Doctor J Najarian - 8:15 AM

Ford (F) Taps Boeing (BA) Exec For CEO - Bill Ford Jr III will still hold more titles than Mike Tyson, but CEO will not be one of them! Allan Mulally, who had been head of Boeing's profitable commercial plane division, becomes one of the first chief executives of a major automaker to come from outside the industry. Citigroup upgraded shares of Ford this morning and they are higher in the pre.

Google (GOOG) Launches News Archive Search – GOOG plans to launch a service today that allows people to search for news articles dating as far back as the 1700s. They've already cut deals with the NYT, Washington Post, Dow Jones and Reuters and expect more to follow.

XM Satellite (XMSR): SEC Examining Subscriber Targets - The SEC has requested documents related to the subscriber targets after a shareholder suit alleged that XM misled investors regarding its ability to cut costs and reach its subscriber goals, and complains that the executives sold stock before disclosing the large rise in costs. XM's subscriber-acquisition costs rose in the fourth quarter to $89 per subscriber, compared with $64 the previous year, more than investors had expected.

position in F

No positions in stocks mentioned.

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