Buzz Bits: Dow and Nasdaq End in the Green
Your daily Buzz & Banter highlights.
Financials reporting some more nasty numbers before FED day! - Sean Udall - 1:56 PM
Even while some the stocks have perked up mightily in recent days, there is still pain in the space. The Bank of Americas (BAC) and UBS' (UBS) of the world are doing their part to make sure the Fed gets the message. A message that has been ringing loud and clear even as the Fed was still raising rates in 2006.
Tomorrow will be an intriguing day and while I sometimes feel I have a good idea of where the Fed will go. This meeting will be tough for me to call.
Personally, I think the Fed should do 50-75bps and even more on the discount rate. Then they could probably sit back, wait for the changes to work and possibly not have to change rates again for a year or longer. In fact, had the Fed raised rates faster on the way up -- say by 50 bps a few times. Chances are they would have been able to stop between 3.5-4% and we would probably be in much better shape than we are today. The same logic would apply here. If we need cuts then give them fast, make them meaningful and then wait for the cuts to work. I for one, am not a fan of the pragmatic tinkering approach.
As far as what they will do. Again, I'm mixed. The futures have me pegged on this. High probability of 25 with a coin toss chance at 50 bps. However, a few folks are calling for a 25 with a 50 bps cut at the discount window and I think this scenario is the most likely. Also, based on this scenario I'm thinking we could have a sell the news reaction in the financials and probably spill into some other areas as well. Homies could also be susceptible.
If the Fed really gets on the gas and provides a 50/50, or 50/75 scenario then I think we could see the year highs retested within weeks and maybe even before year-end. As stated I also feel this scenario would be bullish for the USD and bearish for many commodities -- time will tell.
10 year update... - Bennet Sedacca - 1:26 PM
Clearly Treasuries got overbought on this last flight to quality trade. Now they are correcting as folks embrace risk yet again, and sell treasuries to buy over priced corporates and stocks whose earnings I can't begin to guess what they are, particularly in the financials.
So I took a quick look at the Fibonacci retrace and 4.35-4.40% makes some sense. It is also where yields broke down from.
Click to enlarge
In my book, the credit re-pricing remains in the early innings and I certainly wouldn't take credit risk. The chart below sums it all up. A classic double bottom that leads to rally in yields. After that, I really don't know, but am leaning towards VERY low yields in Treasuries and spreads that may take some of the folks that have never been through a credit crisis before (most investors). And considering the scope and size of this credit bubble... I can only imagine what the end game will look like.
Ahead of the Fed - Quint Tatro - 11:26 AM
If I could impart one thing to Minyan traders, it would be the importance of partial buys and partial sells.
Trends can always last longer than one expects and by partialing a position out into strength it allows you to continue holding at least some should the move continue, parabolic as it the movement in the solar stocks this morning. Momentum is present and while it is fun to may be. Even though my exposure is down significantly to the group, it sure is nice to see be going with the flow, make no mistake about it, Big Mo cuts both ways and when it finally dies here, it will get ugly. I always encourage selling into strength to book the gains and then revisit the trade at another time. I have taken some more gains in Evergreen Solar (ESLR) this morning and I don't have enough to sell down any more Canadian Solar (CSIQ), so I am letting that run.
I am not so sure I like this strength ahead of the Fed and I am letting my SPY short run here for now. I am letting the charts speak and at this very moment, many of them are extended, and I am moving slow.
Positions in ESLR, CSIQ, SPY.
Pattern Patrol - Jeff Cooper - 9:46 AM
- Deckers Outdoor (DECK) left a Gilligan Sell Signal on Friday as it gapped up to a new 60 day high and reversed to close near the low of the session.
- Garmin (GRMN) tailed off on Friday from resistance and is worth stalking either way: If it offsets Friday's tail it suggests an attempt to tag the old highs. Greif (GEF) looks poised for a pullback to its 50 dma 59ish after a spike last week to 65.
- Big cap bios Amgen (AMGN) and Celgene (CELG) continue to breakdown.
- Manpower (MAN) is approaching its 50 dma is at an inflection point.
- Excel Maritime Carriers (EXM) and DryShips (DRYS) are looking to play ketchup.
- First Marblehead (FMD), which I hopped on prior to this last break, now looks like a possible Spike Volume Bottom given Friday's upside reversal. See its daily chart here.
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