Buzz Bits: Dow, Nasdaq Slide
Your daily Buzz & Banter highlights...
Bell Buzz - Todd Harrison - 3:43 PM
The Minx slinks towards the first of our five nail-biting holiday session closes. While we've discussed the caveats of trying to trade 'size' in thin mints such as this, there are select benefits of being at our turrets today. Such as:
- The ability to play ketchup to the Sisyphus style email pile.
- Lotsa time to chew through charts and identify defined risk levels.
- Having a moment to order gift baskets for those who have done you a solid of late (such as Minyan Dougie Kass with the Petty show in East Hammie).
- Taking a walk down Minyanville Main Street so you can proudly sport your Critter attire.
- A "control group" type setting to see if my newfound left eye tick is indeed a function of stress.
Alas, as I pull together this Buzz (with the thought that a little levity goes a long way), the flickering ticks are bickering quicker. As such, and in the interest of being Frank, I'll share these thoughts.
- Hi, I'm Frank.
- With the futes jumping points at a clip, a little agenda can go a long way. Still, in a normalized market, which may not apply, tapes that are heavy all day (with 2:1 negative breadth or worse) tend to end that way.
- S&P 1457 (200-day and trendline) and the BKX pennant remain level of lore.
- Noice feel on Friday's close, Coops.
- My posture remains consistent with what I've recently discussed. "Trading around" a short bias via S&P puts with an eye towards reducing risk (both ways) into the holiday weekend. My admittedly not-as-tight-as-I-would-like stop remains above BKX 111.50 (and I'll look to roll that lower if given the opportunity).
- Fare ye well into the bell and have a mighty mindful night!
Biotech's AOB Lookin' Good! - Quint Tatro - 1:47 PMKeep an eye on Chinese Biotech's American Oriental Bioengineering (AOB). The stock broke its down trend starting from May 2007 and is starting to bring in some volume.
Biotech's AOB Lookin' Good! - Quint Tatro - 1:47 PM
The company has a 0.61 estimate for 2007 and 0.76 for 2008. With a recent jump in earnings of 67% and revenues of 49%, I would view this as an attractive value. I grabbed a half position at $9.34 and will see how it acts should it hold this break before looking to add more. I have a stop at today's low, which is $9.03.
Position in AOB.
Feel That Energy? - Adam Michael - 1:22 PM
The Commitment of Traders Reports released Friday showed that commercials have drastically reduced their net short position during the past three weeks from a record -120,000 futures net short position to a current -42,000 futures net short position. There is still a lot of speculative money betting on ever rising crude prices and open interest is still near all-time highs. Historically, commercials will continue to reverse their net short position (and eventually go net long) into the October/November timeframe. My guess is that the energy equities will bottom a good 4-6 weeks before the commodities bottom.
Click here to enlarge.
On the fundamental front, Chinese crude imports for the month of July were released recently. Historically, there has been a strong relationship between Chinese Crude imports and Crude (Brent) oil. Brent went out near $74 at the end of July and has since back off. "Fair value" for Brent crude seems to be about $68 based on my regression against Chinese crude imports.
Click here to enlarge.
I am moving to a more neutral stance (from my bearish stance that I've held since July) on crude. I think we see some more downside into October, but it is time to start putting together a "wish list" for the energy shares as I expect we could see a bottom sometime in September. I will have some ideas in a column later this week.
Through the Periscope - Jeffrey Cooper - 10:44 AM
Wynn Resorts (WYNN) made a new all time high and has "souped back below the prior high". Heads up for a large range day in the opposite direction of Friday's large range day, which would leave an Expansion Range Double Stick Sell Signal.
The IYR appears poised to roll over, again. Ditto OIH, which closed at the high of the session Friday right at its 50 day.
Many times when a stock or an index closes at the very high of the day, at resistance, after a multi-day run, it tends to define a high. In fact, there are an abundance of sectors, including the leader to the downside, the BKX, that look poised to roll over.
That does not necessarily mean the downtrend will accelerate from here immediately (if that is in fact what is in the cards) without one more retest at these levels, given that it is a thin week going into Labor Day and Bernanke's speech at the end of the week. Moreover, even in pronounced downtrends it is not unusual to see a two week rally, just as two days against the trend is typical of fast moves.
Position in WYNN.
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