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Buzz Bits: Dow Inches Up, Nasdaq Down

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Vibes From Minyan Peter - Minyan Peter - 3:50 PM

This afternoon the Federal Reserve released its non-mortgage related consumer credit figures for the month of July. The headlines I read referred to the 3.7% annual increase as the smallest increase in consumer credit since April.

But to me that misses the point. The growth rate for non-credit card debt (largely auto loans, student loans, and personal loans) fell from 5.6% in June to just 2% in July. Yet at the same time annualized credit card growth rose from 6.4% in June to 6.6% in July.

That the credit card debt growth rate is accelerating at a time when the growth rate on other generally cheaper alternatives is declining is very troubling. Here is yet another data point of plastic becoming America's lender of last resort.

And I am not sure how long the consumer can remain "resilient" paying double digit interest rates.

Minyan Peter.

It's a show about nothing! - Todd Harrison - 3:43 PM

With all due respect to Jerry, Elaine, Cosmo and the gang, today's minxy episode would give 'em a run for their money. Naturally, given the death defying escape from the abyss, we're talking about closing levels (don't blink) as opposed to intra-day action. And, as you know, we're purely referring to the motion (on the surface) rather than the movement (underneath).

Indeed, if we nit-picked the market particulars, we would be left to wonder (in no particular order):

  • The importance of Goldman's jig (which we've been eying all day).
  • The magnitude of Countrywide (breaking the Bank America convert price).
  • What the action in the long bond means.
  • Wal-Mart at the M.O.A.L. (mother of all levels)
  • The (flat) price action in Intel on the heels of raising their revenue guidance.

What's it all mean? For today, not much--and while I was kicking myself this morning for punting my puts (and with a conscious nod that my timing coulda been better), today was a recipe for whippage unless you had supreme timing. That's holding yourself to an uber-high standard (you can pick the direction or the timing, rarely both) so take it easy on yourself as we edge into the anniversary of September 11th.

Tomorrow, as they say, is promised to nobody.

R.P.


Pop Goes the Tech Volatility - Adam Warner - 1:36 PM

Well, there is certainly some impressive options action here as the QQQQ is a 52 week volatility high. (See chart here.)

In fact, this is the high since early 2004 when it was moving the opposite direction. As I noted last week, there is also mounting evidence that the market expects volatility to base at higher levels. The yellow line in the chart seen here measures volatility for a hypothetical ATM option with 180 days until expiration. That too is at multi-year highs in the low 20's. Just for reference, volatility spiked two other times in the past 15 months. Once was in June '06, and 180 day volatility topped out about 17.5.

The other occurance was late February/early March of this year, and 180 day volatility topped out not much above 15. In other words, the market thinks this pop more real than the others. Now just for reference, QQQQ volatility was 70 around the bubble.

It's not going there again, barring some sort of market crash. These aren't wild growth names any more. But it does put into perspective how much volatility caved.

Not what the doctor ordered... - Jeffrey Cooper - 9:39 AM

The up open is not what the doctor ordered for the bulls so I don't think we should start kissing each other just yet about the prospects of a pedigree for this reservoir dog of a decline.

Whatever today shapes up like even if we only get a mild decline or a narrow range pause day I would keep in mind the propensity for the market to alternate and pause. In other words, the market may pause after Friday's stab down much as it did on Thursday after Wednesday's stab down. But I wouldn't bet on that just yet until we get at least past the first hour without selling grenades being launched.

Fire works could begin tomorrow with the solar eclipse and Boom Boom in the Box trying to jaw bone his way out. Is the jaw bone connected to the Fed's tail bone?

I wouldn't get suckered into a pop up open anymore than I would the operatics of Friday's phantom emergency rate cut. They can cut rates to zero but it won't stop unwinding of garbage on leverage. It won't stop the prospects of an abundance of hedge funds faced with redemption by the end of Sept.

World markets are hundreds of times larger that the Fed now and if the S&P slips below the levels of recent lows where hundreds of billions of reserves were injected, the Street will realize th jig is up and that the Emperor is wearing hand-me-downs. And The Working Group may get worked.

On the Radar:

  • VMWare (VMW) had great relative strength on Friday
  • Crocs (CROX) is an n/r 7 volatility signal day after what looks like a failure pattern on Wednesday.
  • Apple (AAPL) up against resistance on this AM's pop open, but 1 classic 1-2-3 Holy Grail pullback and n/r 7 pattern at Fridays close.
  • Short term S&P resistance around 1460ish

Position in VMW.

No positions in stocks mentioned.

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