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Buzz Bits: Dow Slips, Nasdaq Surges

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Your daily Buzz & Banter highlights.

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Bell Buzz! - Todd Harrison - 3:51 PM

After noodling the caveats of deferring to fundamentals this morning and sniffing out Snapper as we seemingly were slipping into the abyss, the Minx is eyeing the most unlikely of scenarios--a flattish close. Man oh Manishevitz, talk about the path of maximum frustration!

To be sure, there are session winners---Intel, Yahoo, Google and a gaggle of beta come to mind--as well as daily sinners, which include the "stuff stocks" on the heels of a mighty, flighty run. It is worth noting that market internals continue to drag, which is yet another non-confirmation (banks, trannies) that the technicians in our midst continue to noodle.

How much of today's action is real and how much is Memorex? Well, for those of us trading, every day's bottom line is a livid, fluid reality. There are clearly undercurrents as a function of Friday's expiration but the jury remains out on our metric test.

I know, I know, that a coupla bucks will get you on the subway but as the boys used to sing, if I knew the way, I would take you home.

Lest you thought you were gonna rest easy, take a look at the slammy jammy overnight calendar. Earnings will hit the wires fast and furious and we've still got a few sessions of near-term negative gamma. And, when that's all said and done, we'll shift our attention to Halloween. Not because we get to dress up, simply because it's mutual fund year-end and there's likely to be tricks and treats galore.

Food for thought as we continue our journey. And an interesting journey it is.

May peace be with you.

R.P.



Rate Cuts Still on the Table? - Sean Udall - 3:05 PM

Beige book and recent Fed chief comments make me believe that rate cuts are still on the table for the upcoming meeting.

As for the big downdraft today goes. Risk is again being priced in which reduces valuations of the very best GARP stocks. I continue to think accumulating shares of companies producing well above market growth at reasonable prices will be very well rewarded in the coming weeks and months.

The pullback in Yahoo (YHOO) today is one such gift.

Conversely, buying over-heated stocks in over-heated markets could be disastrous without very tight trading and/or risk controls.

Given recent M&A action in tech, lower long term yield and the most recent Fed commentary it's time to dust off and refresh my 21 Bullish Tech Prediction piece again.

Position in YHOO.


Minyan Peter: This Week's Bank Earnings - 9:57 AM

A couple of quick observations from the major bank earnings this week from Minyan Peter:

  • Most are putting investors on notice that they expect continued deterioration in credit quality into the fourth quarter.

  • Credit deterioration appears to be across all loan categories, not just sub-prime mortgage credit. Home equity loan quality was highlighted by several as the next sector to watch. As Wells Fargo (WFC) wrote in its release, "Almost half of the increase in net credit losses from 2Q 2007 was concentrated in the home equity portfolio, where losses accelerated in the quarter given the steeper-than-anticipated decline in national home prices."

  • While most are reporting higher charge-offs for the quarter, allowances, as a percentage of loans, are not increasing, and in some cases are actually decreasing. For example, while Wells' loan book is up 18% year on year, its allowance is only up 1%. Similarly, Key's allowance is up $11 mln year on year, to $949 mln while non-performing loans have more than doubled to $498 mln.

  • With few exceptions, capital ratios are declining as asset growth over the past year has far exceeded capital generation. Further, stock buy backs for the quarter were muted at best.

Position in SKF.



Quick Start - Quint Tatro - 9:52 AM

We're gapping out of the gate with strong breadth and strength across the board. So far the action is hot and heavy and unfortunately it is an environment that is very tough to do much of anything.

I did add some Intel (INTC) on the dip here as it is the first of my Dirty Dozen to break out and is a break I want to own. I won't get too cute trying to game my entry here, rather I put a small piece on the radar and will now remain patient awaiting another prudent set up to add.

I also started Charles Schwab (SCHW) which I spoke of on Monday and in my article this morning. I continue to like how this one is basing near highs. I will place a stop below $22.00 and add on a break over $23.01.

If anyone followed my speculative play in Clean Energy Fuels (CLNE) from a few weeks ago, now would be a perfect time to peel a little but let a little run. It is always a good thesis to follow.

I fully expect the naysayers to tell us just how terrible today is and how this will only lead to a lower market. At some point they will be right, but at this moment, it has paid us well to remain open minded.

Positions in SCHW, INTC.

No positions in stocks mentioned.

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