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Buzz Bits: Dow, Nasdaq Strong Again


Your daily Buzz & Banter highlights...

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

Mini Minyan Mailbag - Lance Lewis - 1:29 PM


You write great stuff. I'm just curious about your thoughts on Gold Fields (GFI). I bought it at 16 recently and the chart looks like a breakout. Do you own it? Also interested if you could post your favorites again, as i own gold and read you all the time.


Minyan Scott


Thanks for the kind words. No, I don't own any GFI at the moment, although I like the company and the current valuation level. I also believe the stock is probably headed higher in the near term. However, I do own GFI through the closed end fund ASA (ASA), which I think is actually a better way to get long GFI at the moment, due to ASA's large discount to NAV (it was near 20% a week or 2 ago). Then, you're buying GFI at a nearly 20% discount when you buy ASA, as opposed to purchasing the GFI common. Hope that helps...

Here's a reposting of some of my favorite golds:

Gold Fields (GFI)
Harmony Gold (HMY)

The South African Rand is an even bigger piece of confetti than the dollar. It should continue to weaken against the dollar going forward, providing South African producers HMY and GFI (whose costs are obviously in Rand, as opposed to their revenues, which are in dollars) with greater leverage to gold than their non-South African counterparts. ASA is a closed end fund of mostly gold shares (40%, or so is AU, GFI and HMY) that is trading at a large discount to NAV, which makes it even more attractive.

Golden Star (GSS)
Metallica Resources (MRB)
Nevsun Resources (NSU)
Minefinders (MFN)

All four of these junior names above are takeover bait and trading well below their NAVs, based on $700 gold.

Newmont Mining (NEM) - It's dirt cheap (nearly 40% below NAV based on $700 gold) and universally hated. A value play at this point, not to mention it has an enormous land package, which could yield exploration success at any time.

Positions in ASA, GSS, MRB, MFN, NSU, NEM, gold

You're walking around blind without a cane, pal. - Todd Harrison - 12:38 PM

It's been a freaky week across the board as traders digest the action and pare into the weekend. As I'm operating with half my systems--and as we dutifully jammy towards the launch of MV 3.0 tonight--lemme toss out some thoughts before jugglin' the struggle.
  • We asked yesterday what it would take to get the homies up (if they couldn't lift with all that jazz). Chatter of a Warren Buffett stake in Hovnanian (HOV) seems to have turned that trick as the group is getting jiggy today. It's due, yes, but be wary of invisible catalysts.

  • One of the screens I do have is the financials and they're my key. Citi (CTBK) (has been laggy all day and Bear Stearns (BSC) and Lehman (LEH) just joined it in Red Dye. They're mixed, as it stands, but they're the tell. As go the piggies, so goes the poke. Both ways.

  • Either way, I don't see an overt, downside reversal today given S&P 1540 below, performance anxiety anew and the action in beta. There are areas of lethargy---software, semis, small caps, but no great shakes on a Summer Friday.

  • Finally, and long overdue, mucho snaps to the MVHQ family for their tireless behind-the-scenes work ethic. You'll see a glimpse of that starting tonight and continuing in the weeks (content), months (The Exchange, MV Kids) and years ahead. The journey continues and we wouldn't be us without you. Thanks for that!


Things to Note... - Jeffrey Cooper - 11:42 AM

Yesterday before the open I mentioned the 1-2-3 / 180 pullback setup on Research In Motion (RIMM).

If you took the set up I would ring the register as RIMM shows a measured move here for the year from 120 to approximately 180 and from160 another 60 points up is 220. See weekly chart for the year below.

Click here to enlarge.

Google (GOOG) set up a target for me a month ago between 553 and 560.

553 is 360 degrees up from the 460ish low while 560 equates to a measured move of two legs up from that 460ish low.

So heads up GOOGly eyes... See the daily chart for the year below.

Click here to enlarge.

Software Disappoints - Adam Katz - 11:14 AM

Software has noticeably been underperforming in the market with Software HOLDRs (SWH) up less than 2% on the year versus the SPX up 9%. Granted, this is due primarily to sell offs in Microsoft (MSFT), Adobe (ADBE) and SAP AG (SAP) which collectively make up about 53% of the Software Holders ETF. SWHs are now testing their highs of the year, but have not yet broken through.

Now, let's talk about what is occurring on Main Street. Much of the IT resources at SMB, as well as large enterprises, have been sucked up to focus on major infrastructure upgrades (to the network and data center). This has slowed down the evaluation of new software products and, with many estimates at the high end of guidance ranges, this could prove to be a disappointing earnings season. I admit, the bars have been set rather low, as management teams from public companies learn about managing street expectations, but that hasn't stopped some reasonably notable negative preannouncements from occurring . Already, we have seen warnings from Parametric Technology (PMTC), a world-wide developer of lifecycle management solutions, Entrust (ENTU), a pure play security provider and Compuware (CPWR), the third largest provider of application software for mainframes.

Yesterday, we got a warning from Visual Sciences (VSCN), but the stock held up when it resumed trading, as the company also disclosed that management was evaluating offers for the Company. Also of interest, the sheer magnitude of these misses.

Today, I am looking at broker charts of companies that are likely feeling the same headwinds. BMC Software (BMC) has broken its 10 week moving average on what will be almost double its average weekly volume and looks ripe for a short into any rally back to its 10 wk MA of 31.30. SAP looks like it may be forming the second shoulder of a head and shoulders pattern and may be setting up for a short as well. On the long side, I would be inclined to pair up the shorts with longs, my MSFT and Oracle (ORCL), both with betas that closely track the S&P. MSFT is now in the beginnings of an enormous enterprise product cycle and ORCL, which has acquired several companies in the past two years, will have the financial wiggle rooms as they strip out much of the costs associated with those transactions in order to keep the Street happy from an EPS perspective.
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