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Buzz Bits: Dow, Nasdaq Seeing Red

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Your daily Buzz & Banter highlights...

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The Bipolar Stroller - Todd Harrison - 3:07 PM


  • Minyan Mike informs me that my last Buzz was wrong and that folks over on RealMoney are looking for a rally. As I haven't hung in that 'hood since 2001, I was unaware of that tidbit. So you know.

  • NYSE internals are trying to improve but the Nazz breadth is stuck in the 2:1 negative muck.

  • It's hard to make the case for capitulation given our field position and the year-to-date gains. That doesn't mean we can't lift, natch, but in the grander scheme of things, we're far from "panic" (in the classic sense of denial-migration-panic).

  • In that vein, make sure you score Professor Woody Dorsey's take on the sentiment cycle. He's very, very good.

  • Never lose your sense of humor, Francis. A little levity goes a long way.


R.P.



The Day After Yesterday - Jeffrey Cooper - 1:56 PM

I doubted that the powers that be would let the market fall out of bed on a Friday after Fugly Thursday. They've been there, done that. The ideal place to stabilize the market into the weekend:

  • Undercut yesterday's low and give it the old college... er working group try.

  • Note the up-down-up sequence on a ten min chart of the S&P today after the test.

  • That doesn't mean it has to go positive--on a normal day it would probably reverse back up--but trendlines have been broken along with passive psychology and ranges have exploded--I think the 'objective' is to stabilize things in front of the weekend.

  • Y'all see how Apple (AAPL) went right to the 144 square immediately after it went red on the day on a break of 146?



Not a Watershed Event - Vitaliy Katsenelson - 11:15 AM

See an article I recently wrote here. In this piece, I am arguing that yesterday's selloff is not a watershed event and basically a non event. Macke called the article a very Russian one, when I inquired why he explained that "My ancestors ate frozen wood while staving off Napoleon. 300 points doesn't scare me."

But 2.3% decline on 25% plus appreciation over last 12 months? That is not just me being a "tough Russian": that is just common sense. This sell off in financials created opportunities in two of my favorite stocks, First Marblehead (FMD) and US Bancorp (USB) (OK, USB is less of a favorite, but 5.2% yield and ultra conservative management is what I look for in a bank. I don't want any lending heroism or Star-Trekish "will go where nobody has gone before" sort of behavior).

Also, Jos A Bank (JOSB) lost ten points over the last couple weeks, and its valuation is very alluring at this point. A weak economy may shave off a couple points of its growth rate over the next couple of years, but it should still do EPS growth somewhere in the mid-teens.

Position in FMD, USB, JOSB



Risky Business - Jon Markman - 9:20 AM

For a reality check on the sudden loss of credibility suffered by the big private equity firms lately, check out the trading in Hilton Hotels (HLT) and Lyondell Chemical (LYO). Some analysts have said that the credibxt window is only closing for the riskiest bond sales (those aimed at the purchases of British drug vendor Alliance Boots or the U.S. carmaker Chrysler), but will remain wide open for less risky purchases, such as the seemingly rock-solid Blackstone (BX) bid for Hilton.

Yet, despite the fact that both the HLT and LYO deals had large cash components, both stocks are trading off by as much as $2.50 from their buyout offer prices, suggesting a lack of confidence that the deals will get done. That gets your attention.

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No positions in stocks mentioned.

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