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Buzz Bits: Dow, Nasdaq Drop Sharply

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Your daily Buzz & Banter highlights.

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The Bearded Lady! - Todd Harrison - 3:30 PM

Minyan Peter offers good food for thought on the banks. With the BKX off almost 15% year-to-date, the concerns in the space aren't necessarily "new." I do believe that they've got room to swoon--note that the sector is still up 68% from the (oversold) 2001 low--but these trades rarely arrive in a straight line (twenty years ago today notwithstanding).

I'm wondering if the "financials in drag" are next up in the food chain. We saw the JP Morgan punt on Ford and GM's financing arms today and there are a lot of similar stories in a finance-based economy, from Target to General Electric and the like. Food for thought as we figure it all out. If we are in the early innings of the debt unwind, there will be room to maneuver.

Closer to home, we offered that S&P 1495 was the most intuitive next stop and Hoofy is already eyeing it. He, along with every other bull, has been conditioned to buy dips and as they've been rewarded with that strategy, it'll likely take losses and lessons before it's abandoned as a stylistic approach. Trailing stops, proactive patience and steadfast discipline remain staples of any sustained trading approach.

I've been in a personal fast market all day (week? month? year?) so please forgive the jugglefest. Look on the bright side, it won't be hard to spot me on tonight's Hoofy and Boo debut. Fat guy, little coat, red bloodshot eyes, hair follicles everwhere. Man...when they said I have a face for radio, they weren't kidding!

Fare ye well into the bell, Minyans, and may peace be with you.

R.P.



Randoms - Fil Zucchi - 2:05 PM

  • Thanks to Minyan Scott for pointing out Levitt Co. (LEV) troubles. We certainly do not want to exclude anyone from competing for first price to the Bankruptcy Courthouse.

  • So CNBC interviewed T. Boone Pickens by phone about the latest tick on the price of oil, while he was sitting on a plane waiting to take-off. Does that look a little toppish?

  • I have not finished reading all of Cypress Semi (CY) call transcript, but from what I read the metamorphosys from "tech leader" to "cash flow machine" not only is continuing, it's in full bloom. That said, a couple of things to keep in mind: CY's Book-to-Bill of 1.01 was a bit weaker than in 3Q, though seasonality may have something to do with that. Q4 was 78% booked - a bit less than the 80%+ we saw in the last few quarters. Also, CY's stock market cap is growing more and more correlated to that of SPWR. So even though the discount for the semi-only business continues to grow - it's currently being valued at a puny 0.8x sales and 6x cash net income - the fact is that CY's stock price is now far more exposed to SPWR stock moves than before. Protect accordingly.

Position in CY.



What To Make of SNDK - Sean Udall - 1:23 PM

Maybe the market is fueling the selling, maybe expectations were a bit too high but SanDisk (SNDK) had a pretty good quarter and as a technology company it does a great job of getting the right products in the right places to keep fueling growth. Much consolidation has taken place in its industry and while current pricing declines are what everyone focuses on currently, that dynamic may change in the future.

I'm not a huge SNDK bull longer term but I have selectively traded the stock on sell-offs that I have felt were too large in the past. For today's trading perspective the shares might offer solid risk reward setup with the stock down almost $6 on the day.

For the covered call buying crowd the covered write play on SNDK might also work quite well.

I'm buying SNDK for a trade with a short to intermediate time frame. The Xmas selling season is traditionally a good time for SNDK as well and recent earnings reports (Yahoo (YHOO) / Google (GOOG) versus Caterpillar (CAT) / Schlumberger Limited (SLB)) serve to strengthen my thesis that tech will outperform many of the value stocks stars that now sell for growth stock valuation levels.

Position in SNDK, YHOO and GOOG.


Dow/Gold Ratio - Lance Lewis - 12:12 PM

Note the Dow/Gold ratio appears to have begun a new leg down as the market finally begins to grasp the fact that the US is trapped in a stagflationary mess.

After no miracle to support the dollar comes out of the G7 this weekend (which is the highest probability outcome), the dollar could have a very rough time next week, and I expect gold and its shares will accelerate their climb as a result. Watch for this Dow/Gold ratio to break to new lows in the coming weeks...


Click to enlarge

Position in GLD and gold shares.

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No positions in stocks mentioned.

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