Buzz Bits: Dow, Nasdaq Gain Again
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Bell Buzz - Todd Harrison - 3:34 PM
- And just like that, S&P 1540 is right here, right now. I was just pinging with Bennet about the "inevitability" of this level being mounted, either by a strong close or a gap higher tomorrow.
- Sans an overnight Debbie Downer, the "buy stop trigger" seems likely. THE question, natch, is whether it leads to an "all in" pop & drop.
- Based on today's fray, it's hard to imagine that they'll stop. Sorta like yesterday morning, when it was hard to imagine that they wouldn't probe lower.
- Nice feel Coops. And nice feel Adam Michael. But I feel like I haven't had a good feel since prom night...
- The sharpest rallies occur in the context of a bear market. While that's a pretty bold statement at present, keep in mind that the banks are stilling tracing out a fifth "lower high."
- Did I say S&P 1540 is right here right now? I gotta learn how to type faster. Be wary of vacuums, my friends, and trail those stops. Risk definition is independent of direction or velocity.
- Fare ye well into the bell and, for area Minyans who wanna cut the rug, tonight is our monthly Bonesfest at the Red Lion. MVHQ will be there in force and, as always, an open invitation applies!
Upthrust coming??? - Bennet Sedacca - 2:34 PM
So what lies on the other side of SPX cash 1540? A whole bunch of stops. And you can be assured that the floor brokers know it as well. So it is possible (probable?) that we see a breakout and then a pullback. If it closes below 1540 cash, the trap is set. If it closes above, you gotta be long.
Click here to enlarge.
Recall that a while back I said if the SPX breaks out, the same way that the DJIA did, it measures a move to 1725.
So this area is mighty mighty important.
By the way, this upthrust idea comes from Richard Wyckoff from the 1920s.
Position in PPH, SMH.
Apart or a part? - Ryan Krueger - 12:46 PM
I buzzed the other day about a group that one of my traps kept snagging for me that at first (last year) didn't interest me one bit – airline parts and service small caps – but that's exactly why I designed it to force me to respect some emerging action (it's a valuation and relative strength combination) that I might not otherwise. One name that I'm still long is AAR (AIR).
Again, I am looking into some under-scouted names, most of these I am working on average a handful of Wall Street analyst coverage at best, all feeding a macro theme that is real. As Dr. J said earlier this week, "The Boeing (BA) Dreamliner introduction is much bigger than the iPhone, but significantly less hyped." A great quote, and even perhaps a better trade.
I am about to go to lunch with Minyan Jorge who flew in from Miami last night after a three-hour "parts delay" on the tarmac. The last dozen friends flying anywhere, that I asked, have averaged two-hour delays. The desire (consumers keep missing their scheduled funerals) to get on vacation, or the business traveler's need to get to the next meeting seems pretty strong to consistently put up with that extraordinary hassle. I see a lot of dragons lurking but the economy falling apart isn't one of them. I'd rather buy "a part" in here.
I am long a five-minute commute and thankful for that every day.
Position in AIR.
Standout Action in NYX - Jay Shartsis - 11:17 AM
It is axiomatic that too widely-followed indicators tend to become self-defeating.
With that in mind I focus my analysis in more obscure realms. One such is the study of the put/call ratios for individual stocks. This is an attempt to gauge sentiment, as in stocks' tops are often accompanied by heavy call trading and bottoms by heavy put trading.
For example, NYSE Group (NYX) has been a recent standout in reflecting very high levels of put trading. Its 21-day volume-based put/call ratio recently hit 195 puts traded for every 100 calls, the highest level of option trader pessimism since the stock started trading 16 months ago. This contrarily suggested that a rally for the shares could be expected.
With that in mind, an episode involving NYX options on Tuesday earlier this week takes on added significance. Near 11:00 AM EST, the stock was trading at $77.16, up 69 cents on the session. Its July 80-calls jumped from their prior close of 67 cents to 95 cents. That gain was abnormally large considering the relatively small gain in the stock and is rated as a bullish element. So too was the overvaluation of that option to its "theoretical" value of 87 cents. Noteworthy too was the ability of the stock to advance in Tuesday's deluge.
These factors in concert pointed to NYX as a buy candidate. The call trading incident was a buy signal all by itself but was materially enhanced by the pre-existing incipient buy signal from the put/call ratio for the stock.
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