Buzz Bits: Dow, Nasdaq End Down
Your daily Buzz & Banter highlights.
Timing is Everything - Fil Zucchi - 2:35 PM
Faves Akamai (AKAM) and F5 Networks (FFIV) are up for confession after the close. Given the spanking the Minx is dishing to Riverbed (RVBD) I can't say I have the warm and fuzzies. FFIV looks to be taking a pre-emptive spanking, but even at $40 there is plenty of room for disappointment from where I sit. Hence my protection move. Absent a disaster, I would be a buyer under $35.
AKAM is trickier because I view it as rather dirt cheap down here. The one metric that could send AKAM for a loop would be weak margins guidance, absent that - or something coming out of left field - I actually think the risk is to the upside.
On the dark side Costar Group (CSGP) also reports. Revenue guidance is smack on the estimates, but EPS estimates are at $0.16 vs. guidance of $0.12-0.15. No guesses on which way this one will break, but suffice to say I think the space (commercial real estate services) is at risk.
Position in AKAM, FFIV.
Look At Me, I'm A.D.D.! - Todd Harrison - 1:46 PM
I'll tell ya, in times like this, I could really use some plain vanilla yoga! On top of the tape--trading and writing--MV Kids (wait'll you see this!), the 11:00 AM meld (just finished) , my looming "must attend" 3:00 PM and my Sisyphusian inbox, it's all I can do to keep my head on straight. And that's not even factoring in tomorrow and Friday's nutty strut---one step at a time.
Some top line thoughts:
- The drillers aren't snappin' as they should given the 1.5% bounce in crude. See Friday's thought, although that was likely an 'easier' trade given the field position and sentiment.
- There's a reason we continue to highlight Festivus. Because there's still space! Just kidding (sorta!). Those who've been to a Minyan event understand. Those that haven't should!
- The tell today (with a flat dollar)? Market internals, which remain Punky Brewster (4:1 negative NYSE).
- The udder tell? The financials, natch. Watch BKX par (or, as David Slaine would say, "paaaah"). If the piggies poke through this level, it'll be telling for the tape.
- Reaction to news? Look at Freeport-McMoRan (FCX), which is best in breed (albeit a tad crowded). Watch this as a rate cut sentiment proxy ahead of next week's spooky FOMC meeting. That should benefit commodities which should help this stock.
- Should and shoulder? That is, of course, if you subscribe to the notion that the rate cuts are a panacea. They might help (think summer) or they might not (2001). See both sides before you get on the ride.
- Finally, while I pared both ways (after the "oh no you didn't!" Merrill try), I'm trailing my stops on my downside paper (which again, ain't big).
- Why? Well, among other things, my schedule is packed fuller than the Paris Hilton the next few days and if I've learned anything, it's the importance of risk definition and, dare I say, focus.
The Ink Spots - Jeff Macke - 10:40 AM
Good morning from New York where we're working very hard to generate a look of surprise over the fact that Merrill Lynch (MER) turned in a slop-show of a quarter. Monster write-downs in the financials are clearly the Rorschach Test for market participants of 2007. Like an ink-spot, Merrill's write-down isn't actually a clear picture of anything. It's a blob, flopped in front of the market with the hope that the tape will describe it as "sufficient".
Merrill has no idea if the write-downs taken today are enough. If it did, it wouldn't have exposed itself in the first place. Anyone who tells you different is selling something. In other notes:
- What was wrong with Amazon (AMZN)? About 20 points too much run-up going into the numbers. From where I'm sitting, it was a good quarter from a great company but I'm not interested in the stock unless/ until it's south of $80.
- AT&T (T) for Echostar (DISH) rumors simply won't die. I'm not a buyer of the non-news yet... in this tape, I have a preference for buying dips and boring.
- Speaking of dips, picked up some Coach (COH) yesterday on the plunge. A decent quarter and candid management met a pricey stock. A quality brand over 1/3 off it's highs of last summer; seems worth a long-side shot to me.
Position in COH.
Minyan Peter: Merrill Holding Up After Write-Downs - Minyanville Staff - 10:28 AM
A couple of quick comments:
First, given that the rumors circulating yesterday went as high as a $10 bln charge, I am not surprised that Merrill Lynch (MER) is holding up reasonably well. To me the more important stock to watch today is Lehman (LEH). At least to these eyes, the charges that Merrill took appear to be more severe than than those we saw from the other investment banks at the end of September. While I have no doubt that there will be more pain in the mortgage space (including Merrill), my impression from Merrill's writedowns this morning is that the company raised the bar and put other firms on notice that charges need to be bigger and sooner.
Second, note the muted reaction to Freeport-McMoRan's (FCX) earnings this morning. Given that they have been one of the poster children for the commodity trade, I was surprised given the strong earnings. Is this the top? Don't know, but FCX is clearly one to watch from here.
Finally, note the downward pressure on retail stocks (RTH as a proxy). With more firms preannouncing bad fall sales, it feels to me like the exodus is finally underway from these stocks.
Position in SKF, SMN.
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