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Buzz Bits: Bulls Hang On

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Your daily Buzz & Banter highlights.

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



Who you gonna trust? - Jason Goepfert - 3:50 pm

Since the trouble began in October, stocks have been highly correlated with bonds in a negative way (i.e. as stocks rose, bonds dropped and vice-versa). Despite the rise in bonds today, however, the S&P 500 is holding up. That's doubly interesting since the BKX Banking Index is also getting hit hard.

I checked for any other time since 1994 that the BKX Index and the 10-year T-Bond Yield (which moves inversely to prices) were both down more than 1% on the same day, and came up with 171 occurrences. Out of those 171 days, there were only nine that showed the S&P 500 with a positive return on the day... when banks and bond yields dropped more than 1%, then 95% of the time the S&P 500 also dropped.

So today's resiliency is highly unusual, but what I care most about is if it's predictive. I checked those nine instances to see if there was anything consistent about them. There was and it was mostly negative.

Three trading days later, the S&P was positive only two times and averaged a return of -0.9%. A week later, it was still negative seven out of the nine times and the average return dropped to -2.7%. The average maximum gain during the next week of +1.4% was swamped by the average maximum loss of -4.1%. The two times it managed to gain over the next several sessions, it gave back those gains and then some during the following week.

It seems the S&P was the dog being wagged (and shagged) by the banks and bonds.


Bell Buzz - Todd Harrison - 3:41 pm

  • While opportunities abound, The Battle of 1405 reminds me of the adage "sometimes the ability not to trade is as important as trading ability."

  • How am I going home? With a slight limp and positions consistent with what we've discussed.

  • They say I'm crazy. I really don't care. That's my prerogative...

  • A&M esreveR? NO! Reverse M&A!

  • So it's said, so you know and so you see, BKX 75 is a massive, major, incredibly important level for the piggies, if and when.

  • I shudda to think where this tape would be without $1.3 trillion of artificial demand.

  • I'm outie tomorrow to pay my respects in the ayem and rehearse a wedding dinner at night (I never understood this--what, we need eating practice?). As such, lemme wish ye a fabu Friday and a noice weekend. Enjoy the journey Yo--tomorrow is promised to nobody.


R.P.



It's a Small World after all. - Charles Payen - 1:33 pm

Legendary investor Warren Buffett has said he's ready to mount a journey to Europe and look for investments in the euro zone. He might be onto something but I think it would be smart for Europeans to take their inflated currency and buy US assets. The same holds true for European stock investors who should be all over American stocks like Saks 5th Avenue (SKS) in New York or Disney World (DIS) in Orlando. As it turns out there are suitors on either side of the Atlantic, looking across the pond.

  • Best Buy (BBY) took a 50% stake in CarPhone Warehouse of the UK for $2.1 billion. The investment will help facilitate a joint venture between the electronic retailer and Europe's largest seller of cell phones.

  • Illinois Tool Works (ITW) will pay a 98% premium to own Enodis of the United Kingdom. The $2.01 billion offer tops one presented earlier from Manitowoc (MTW). So not only do we have an American company taking over a European company but it paid up for the honor. So much for the weak dollar holding back progress, more than $4.0 billion in deals today belies that notion.

  • DRS Technologies (DRS) of New Jersey is considering selling out to Finmessanica SpA of Italy for a 25% premium according to a piece in the Wall Street Journal today.



Correction Over? - Lance Lewis - 10:06 am

Note the HUI and other gold indices are trying to break out of small bullish inverted head and shoulders patterns on the daily charts this morning.


Click to enlarge


Also of note is the fact that despite the euro printing another new intraday low for the move this morning since its correction began, gold has diverged and is up $9. As I've noted before, a positive divergence in gold from the euro was what signaled the end of the last correction in gold in December, and the current positive divergence (which started last Friday in gold) appears to be signaling the current correction is over once again too.

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