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Buzz Bits: Dow, Nasdaq Move Up

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Keeping It Real - Fil Zucchi - 11:52 AM

  • I've had my eye on NYSE Euronext (NYX) for a long time, but the price just was not right for me. Today, at a 1 PEG, I pulled the trigger on the long side. I view this as much riskier than its 1.45 "beta" but it's the kind of name that can create balance against positions very heavy with "negative gamma". For what it's worth, talk is that Bear Stearns (BSC) has been a buyer all day.

  • One of my biggest bow-wow's over the last 18 months has been Sirf Technology (SIRF); I read the Q2 earnings call transcript a couple of times and there was very little to be happy about. I was flat out wrong in thinking that the pricing pressures and competition in the GPS chipset market were built into SIRF models and the price. Still, at 16'ish the stock was way too cheap (and painful to the ego) to abandon.

    This morning the stock is popping on news that it has secured its first design win in Motorola (MOT) cell phones. I am sure this will help to a certain degree, but it does little to alleviate the basic problems I failed to recognize. I will be using prices to trade myself out of the name while trying to minimize the damage.

Positions in NYX and SIRF.


Gold Climbing - Mark Bloudek - 11:47 AM

I have been watching gold priced in Yen for some time and it is has been climbing rapidly over the past couple of weeks. We are now about 1% from the all time high.

Meanwhile the price of gold in dollars is 3% from its high of 730 in 2006. If/when gold breaks in either of these currencies, some real fireworks could be set off.

Rollover? - Jeffrey Cooper - 11:43 AM

If volatility is a function of liquidity and lack of liquidity, and the light volume of late is a function of lack of confidence, what does that same about the sustainability of the rally phase?

Not much. It seems this second mouse move over its 50 dma by the S&P ---the second mouse gets the cheese--- will project to a turn up of the monthly swing chart up at 1504.

If that occurs, the behavior at that time will be extremely important---especially as the index will have traced out a 1-2-3 swing to a test of the breakdown pivot. This is a bearish pattern. If the index rolls over from such a pattern it would suggest a minimum test of the lows. It might indicate that the move into the August 16 low was simply leg one of three legs down.

How far will the Fed ease? - Bennet Sedacca - 9:27 AM

Well, a lot. most likely.

I have created a chart here that highlights the spread between 2 year Treasuries and the Fed Funds rate. We are presently in the 1.10% range. Over the past 15 years, whenever this spread exceeded 100 basis points, the Fed eased, dramatically. Note the yellow line is the fed Funds rate, and the white line/axis is the spread of 2 year minus Fed Funds.

So, expect an ease and dovish commentary next week.

How have stocks done after the first ease? generally, not well. The stock market usually responds after the second and third ease. But given the unprecedented amount of debt outstanding, this time could be a little different, in either direction.

The market loves a steep curve an the only way we get steep with 2's at 4% is a 3% Fed Funds rate.

No positions in stocks mentioned.

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