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Buzz Bits: Dow, Nasdaq Take a Dip


Your daily Buzz & Banter highlights...


Editor's Note: This is a small sample of the content available on the Buzz and Banter.

Earnings Report - MV News

  • Sonic (SONC) reports 3Q $0.31 EPS vs. $0.31 cons. on revs. $209.9 mln vs. $207.37 mln cons.

Bell Buzz- Todd Harrison- 3:53 PM

  • Ohh, that smell! Yep, the smell that surrounds you is the unfamiliar waffle of toasted bids. They've been few and far between and, rest assured, the masses are nibblin' on dips.

  • What are the pro's doing? Some are chattering that Computer Sciences (CSC) is a take-out play (stock, not pizza) and a (very) few have sold chunks of stock (we saw some seven figure IWM prints on the rope). Net/net, with the VXO barely beyond the bima (14), the expected path remains to the upside.

  • What could upset that apple cart (other than Apple)? The first blush thought is the financials, as contagion concerns manifest ever so slightly (trust me, this is simply a stir, not a shake). The two ponies to watch in this stable are Blackstone (tomorrow) and BKX 116 (right here, right now).

  • In the absence of acne through S&P 1540, we may well be forming a dreaded double top. Unfortunately, it's a bit early to call that shot (which is why we're watching the tighter tell in the BKX). S&P 1490, if and when, would confirm the squirm.

  • Chatta Box! We're hearing that there's a $2 billion sell program into the close. Not confirmed but our ears are your ears.

  • I'm gonna shift my focus to shaping my risk into the close. I hope this finds you with some jingle in yo jeans and a smile on yo puss. Fare ye well into the bell.


A Tale of Two Tapes- Jeffrey Cooper- 1:32 PM

A daily chart of the S&P (see it here) shows an outside day up yesterday.

Today the index traded above yesterday's high but turned red after an up open.

Should the S&P take out yesterday's lows at 1525ish it will leave an outside day down suggesting a probe of hourly support which is approximately 1521 and coincides with the 20 day moving average.

This would be a nice place to pull the rubber band back to support the market into the Black Beauty filly offering on Thursday.

Interesting that the IPO was moved up to roughly coincide with a Russell 2000 rebalancing on Friday---which should be supportive of the market. Did someone think support might be required?

An outside day down after an outside day up triggers a reversal of a reversal or Kaiser Soze signal (from the movie, The Usual Suspects) which indicates a fast move, so heads up if this occurs.

The other picture is that the S&P is tracing out a Stein and Handle pattern with the last three days being the handle with a possible probe to the 20 dma setting up the breakout that every trader I know seems to be looking for sending the index to a new all time intraday high. It probably happens, but it bothers me a tad that everyone is waiting for Godot.

Bottom line is the snapper in the bond market should be over which may mean a failure of the 20 dma on the S&P.

In stocks, Manpower (MAN) mentioned earlier is pulling back to its opening range breakout and looks interesting.

Limelight Networks (LLNW) is wound up in a tight hourly range and a tight daily range and looks poised to breakout and attack the opening tick of 23 where the IPO opened. See it here.

Position in MAN, LLNW

What's Working? Nothing.- Kevin Depew- 1:11 PM

A couple of us were sitting in a meeting yesterday afternoon discussing what's working now, the failure of some technical indicators over the past couple of years, and why this market "feels so tough" when "stocks," as measured by the S&P 500 and Nasdaq have returned about 30+% over the past three some-odd years.

I believe part of the reason it feels so tough is because of charts like this:

That's a 20x3 chart of the SPX. What it illustrates is how few "buying opportunities" there have been over the past three years for mortals. Like everyone else, I found it difficult to re-engage with stocks after 2002. When the bullish percent indices reversed up from very low risk levels in March 2003 I sucked it up and did what they said, but in less than three months those indicators were at their highest level since 1998 - and haven't been lower than 46% since.

Unless you are among the most talented traders in the world - I am not in that category - the best trade in this market has not been a trade at all, it's been to just buy something and hold onto it.

That's why it feels so much worse than it is.

Surely you jest...- Bennet Sedacca- 8:35

Nuveen is getting taken over for over 25 times earnings. For those that don't know Nuveen, it is a muni bond shop that sells packaged products to retail.

I view this as a watershed event in munis (read: bonds in general) just as I thought Sam Zell's REIT sale marked the high in REIT's. These folks at Nuveen aren't dumb. They are selling a 10% grower for 25x ( a PEG --Price/Earnings Growth Ration of a rather high 2.5x) at what is likely in the early stages of a secular bear market in bonds.

In trading circles we would say, 'done that way, sold to you.'

I continue to sell strength in bonds although this morning's rally is fading as I think it is likely to continue.
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