Buzz Bits: Dow, Nasdaq Move Up
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Bell Buzz - Todd Harrison - 3:39 PM
- I'm not smart enough to know where we go, with certainty (it's a multi-linear discussion) but I'm humble enough to paint both sides of the picture. It sorta rubs my craw to watch someone on TV say "we got what we needed from the Fed" and encourage folks to climb aboard the Rally Express. I've seen that movie before (in 2000) and alotta folks never made it out of the theater.
- With that said and through objective eyes, the bears had every opportunity to flip the switch today--higher dollar, pink piggies, covered shorts--but they couldn't seal the deal. We always gotta respect (but not defer to) the price action.
- I am, so you know, going home with some (cheap and cheaper) downside paper in the S&P and Morgan Stanley (against minimal core long side exposure). I've got gamma (What's gamma? Click here!) but, to be clear, I'll make more if we trade lower (and lose more if we rip higher). So, that's my bias (with an eye towards some aforementioned stop levels).
- BKX 111.50? As it stands, it stands above.
- Keep in mind that Goldman will shape the tape between the next two bells. I don't have a (direct) position but I've sorta laid my cards on the table. For better or for worse.
- Visine please! Red-eyes don't make for seamless sessions but, ya know what? It's almost over! I'm gonna flip lids and juggle the struggle so I can grab a goose with Minyan Peter (and perhaps Miss Pomboy) and hit ze hay at a realistic hour. I hope ye faithful had a fruitful session and I'll see YOU on the other side of Grandma Goldman.
- May peace be with you.
Position in S&P, MS.
Leaks in the Dike - Mr. Practical - 12:40 PM
Stocks certainly love Mr. Bernanke's major move yesterday. They should feel loved by Mr. Bernanke. I have said before stocks are the most public spectacle of a healthy economy.
But bonds certainly don't feel very loved by our new Fed chairman. I could talk all day long about moral hazard, about too much debt and the Fed's solution to add more. But all you have to do is look at bonds.
If you stick stock valuations in a model, you don't use fed funds rate to discount, you use long rates. A rise in long rates is a big negative for stocks. If stocks are going up when long rates are that means risk is increasing. It is also one thing to see stocks go up when long rates go up when the economy is growing. But when the Fed acts this aggressively we should all be able to read between the lines.
So now we have another leak in the dike. I never advised selling stocks short because they are mostly driven by sentiment. But I do advise when risk is going up and this is definitely that time.
Think with your head and not emotions. The Fed is now desperate to re-inflate and they have abandoned the dollar to do it. Bonds don't like that. Especially when bonds are owned by international investors.
Keyword: BIDU - Ryan Krueger - 9:57 AM
Just a quick note on a company not terribly well-understood or covered in the U.S.-- Baidu.com (BIDU) is more often written off as some silly momentum stock.
Dominating the Internet search business in China is not likely a passing fad. According to the latest survey results, the China search market continues to concentrate with Baidu and Google (GOOG) accounting for 92.4% of total primary users.
Baidu had a 69.5% primary use market share, up 7.6% from September 2006. Google had 23%, down from 24.1% September 2006. Notably, Yahoo (YHOO) has slipped precipitously.
View From Q - Quint Tatro - 7:50 AM
Good morning Minyans. While you're sipping on that coffee and catching up on the news flow, here are some ideas to consider for the day:
Yesterday was a monster move and I won't bore you with the details you already know. The question is, where do we go from here and how do we play it. The best thing that could happen at this juncture is for us to move sideways or even slightly lower for a few days consolidating recent gains. I am still scratching my head however wondering if the performance anxiety and short interest is such that before we consolidate we have some more upside ahead, but I will only remain open minded and not gamble.
They key now is to search out opportunities that offer decent risk reward. Chasing an Ascent Technologies (ASTI) doesn't make much sense to me so rather than look at stocks that have already had a major move, focus your attention on stocks that could just be getting started.
A few that interest me are Andersons Incorporated (ANDE) and Spectranetics (SPNC). The gain producer recently reported a 112% jump in year over year EPS and a 68% jump in revenue. With a trailing P/E of 15 and relatively low upcoming earnings and revenue comparables the company looks attractive on a fundamental basis. Technically the stock has been slowly trending higher since mid 2006 and recently started to trade in a very tight range insinuating that a break in one direction or the other may be coming. I am looking to start building the stock in this area with my add points being over $49.40 and $52.70. I will keep a stop around $41.50. SPNC has seen a decent bump in revenues recently however the trade is more of a technical one as the company has been basing nicely around multi-year highs. I would like to see the stock inch back towards the $15.00 level on high volume at which time I would be inclined to start a position. I would add on a clear break over $15.25 with high volume.
We have seen a very strong run and at this point anything can happen. Stay open minded and remain flexible. Don't be sucked into one major thesis or another rather let the chart be your guide and use your speed to exit should the action turn.
Go get 'em today.
Position in ASTI.
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