Buzz on the Street: Europe Still in the Driver's Seat

All day and every day, some of the stock market's best and brightest traders and money managers share their ideas, insights and analysis in real-time on Minyanville's Buzz & Banter. Below are some excerpts from this week's Buzz. Click here for a 14 day free trial.

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Monday November 14, 2011

Wrestling With the 200 DMA
Jeffrey Cooper

The SPY closed over its 200 dma with a flourish (October 27th) into our turning point date of October 28th.

The move was rejected, which is not atypical for the first attempt.

However, once again the SPY closed over its 200 dma on November 8th but was rejected with authority the very next session.

This morning, the SPY test its 200 dma and shows an outside down day.

Is a topping test of a test playing out?

Another authoritative distribution day below the annual 1257 pivot (the close for 2010 and the June low) suggests a failure at the 200 dma.

Today the S&P/SPY has triggered an ORB (opening range breakdown) so continued weakness into the bell could mean that today is that distribution day with the plug being pulled ahead of Friday’s option expiration.


(Click here to enlarge)

iHiccup?
Michael Comeau

Apple's (AAPL) down about $4 today, and it looks like the culprit is a Goldman Sachs (GS) research note expressing concern over a hiccup iPad demand.

Here's an excerpt from the report:

"...the new Hon Hai forecast implies more limited upside to iPad units, which is disappointing for a December quarter. While improving holiday demand into late November could certainly push the momentum in the other direction, we believe it is prudent to assume the iPad is facing some near-term demand challenges. We believe there are several factors driving this pressure, but we also believe these issues are temporary and will likely be solved by three key factors in early 2012: (1) the continued adoption of iCloud, (2) the launch of Siri on the iPad, and (3) the addition of lower price points."

Though disappointing iPad sales are a concern, I'm staying long and strong with Apple, primarily because I think iPhone 4S demand is pretty much out of control.

Is This Thing On?
Michael Sedacca

Today has been a historically light day volume wise as we head into the traditionally volatile last hour of trading. So the question is, why? My guess is that traders are waiting to buy the dip tomorrow, given our pullback today from the 200 DMA. Headline risk has also been light, except for Merkel's party voting on a mechanism for countries to exit the Euro.

See the chart below of total shares traded today on the NYSE. So far we're tracking in on the volume for a holiday Friday, something that's hard to fathom on a Monday!

Bell Buzz Randoms
Todd Harrison

It seems like the entire world has a case of the Monday's as we slide and glide toward November expiration. 

It's already the holidays and the NASDAQ is point-zero-one percent lower than we were at the end of 2010? 

I typically like to take a day or so to edge back into the rhythm of things and today is no exception; "pure eyes" takeaways include bell-to-bell bunk banks (always important), out-performance of four-letter land (percolating performance anxiety), the higher dollar (no bueno for asset classes) and four sinners for every winner on the big board (4:1 negative breadth).

On the plus side, they've thrown the kitchen sink at this market and (as referenced above) we're more-or-less hugging the flat line.  On the other side, it seems the only positive is the hope of QE3 (or other synthetic measures to artificially manipulate the market).  That's what years of engineering will do; it keeps the bears looking over their back shoulder.

I'm long the journey and short the destination, so to speak, but I do believe we must massively de-leverage on a global scale to effectively reset the system.  That doesn't mean I can't be bullish or bearish or neutral on any given day--naturally--but it is a backdrop worth repeating, if you subscribe to that view.  Once you see the entire probability spectrum, you can map your risk profile and time horizon accordingly.

Alas, it's Turnaround Tuesday tomorrow so no matter what happens into the close, keep your eyes wide open and your right hand up.

Fare ye well into the bell and may peace be with you.

R.P.


Tuesday November 15, 2011

Triangles and Seasonality
Gary Kaltbaum

A few numbers on seasonality:

I have read and verified that the market has been up the past 10 years from Veteran's day into the end of the year...as well, it has been up the past 22 of 24 years. I cannot ignore these numbers. The reason given is that the boys do everything possible to make their year positive. From past experience, looks like they are pretty good at it.

On top of that, markets are sitting in a very nice triangle pattern here. The midpoint is at about the 1255 S&P area. One good up day takes the market above the triangle. Of course, one bad down day takes you down below the triangle...but with seasonal strength, hoping for the upside. Of course, don't blink as this remains one of the toughest market environments I have experienced. Resistance remains in the 1250-1280 S&P area...with the financials remaining an anchor, while the semis continue to provide some wind.

If seasonality means anything...well, I had better shut up. Just don't blink as this will remain a news-driven environment.

Ten-Year Treasury Saga
Mark Eckelberry

ZN (ten year note futures) is poking its head once more above 130'180, which is the top of the opening range for November (see chart). Current resistance is the 78.6% Fib retrace from the year high to the October low at 130'29 and weekly R1 level of 130'235, which pretty much correlates to slightly less than 2% on the yield. The doom and gloom is right there on this chart, but it's not stopping NDX from outperforming today.

The best trading action occurs right at the DAX open, it has become painfully choppy to trade the US session and why traders who do not trade futures are at a distinct disadvantage over extended hours traders. In fact, ES (SPX futures) closed its 11/10 gap during those early hours (1237.75), whereas the current pit session low is 1241.75. It's an even better range for NQ (NDX futures), which dived down to 2310 in the European session, our session is holding 2329 so far.

In any case, for now keep an eye on ZN 130'180. Good news comes back at the close (in this case retail sales) and we could see a quick drop in bonds (rise in yields) as we get closer to the end of day. Forget the news and all the European noise, which has become a consistent bear trap every time it looks like the world will end. Turn off the TV and work the charts, if you can stand the Algo's chop. Just widen those stops and trade smaller.


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Results From GLD Quarterly Filing
Goldcore

Gold will be supported by its proven safe haven status, but is prone to short term weakness due to sell offs in the wider financial markets. Sentiment remains very fragile which will lead to continuing safe haven demand which supports gold in the medium and long term. Especially as the official policy response is inflation and the currency debasement.

The Gold ETF (GLD) SEC filings were released overnight and make for interesting reading.

Paulson & Co., the hedge fund founded by billionaire John Paulson, cut its stake in GLD to 20.3 million shares in the third quarter from 31.5 million as of June 30. The firm remained the largest holder.

Paulson's fund sold a third of their GLD holding which is quite a large liquidation. However, Paulson remains bullish on gold as was seen in positive comments he made recently so it would seem likely that this sale may have been an effort to raise cash after his fund suffered sharp losses in the last quarter. Some hedge funds sold the ETF to cover losses during a rout that erased $7.8 trillion from the value of global equities since May.

Given Paulson’s expressed bullishness on gold, his fund may have opted for allocated accounts as was done by David Einhorn.

The SEC filings also show that billionaire investor George Soros increased his stake in the SPDR Gold Trust.