Sunday, December 31, 2006
While those figures are guesses at U.S. M3, the Eurozone still puts out real M3 figures and money supply is exploding across the pond (read about Eurozone M3) which leads to talk about additional ECB rate hikes. That of course would swing the rate differential further in favor of the Euro and push the dollar lower (and you thought the 'differential' was something your auto tech only talked about!) The article also mentions in passing that the Euro has now caught up to the dollar as the most widely circulated currency. That has broad and negative implications for the dollar too.
And for some comic relief, but then again maybe not so funny. I don't know where this orginates, but it's making its way throughout the web..
I have decided to put my name at the top of the page. TheButtonwoodSpeculator is now history. If I’m wrong about something – no secret identity for me to hide behind – you’ll know who I am. For now the present URL will remain, but i do have a temporary site up under http://www.jimkingsland.com/ and at some point I will migrate this blog over there and redirect traffic there as well; but one step at a time.
Yes, I'm Jim Kingsland. Kingsland is an old English name derived from one of the ancestors being a Viscount to the King's land about 600 years ago, or so the story goes. Most of the Kingslands were actually killed off in the early 1500's during a brutal feud between the O'Sullivans and the Kingslands. It seems the Kingslands whacked a few of the O'Sullivans, but then the O'Sullivans came back en masse and killed most of the Kingslands in Britain at that time. The family line survived because a number of Kingslands were living in Barbados -- there are only a few hundred Kingsland families in the world today. In the early 1850's, a Kingsland by the name of Ambrose was elected mayor of NYC and served one- 2 year term... long enough to set aside the land for what is now... Central Park! But I digress.
Originally, I had intended to keep a low profile as thebuttonwoodspeculator and show off a few stock pics and make some market comments. But why let nearly 30 years of credentials in broadcasting, with names on the resume including Bloomberg, CNBC and FNN, 1010 WINS and WBZ, go to waste?? Plus, why take the word of someone who won't tell you their name, especially when it comes to matters concerning your money? I realize these blogs are not dispensing official advice per se (see my disclaimer below), but anonymity in the realm of an effort that presents itself as an informational or educational entity is just a bit odd, but maybe that's just an odd hang up I have.
I'm going to strive to go beyond the well commoditized elements of the business news coverage. Everyone and his brother has lists of stock and options picks and coverage of top business stories. I am not going to fool myself into thinking I can do a better job than some of nimble young guys out there with their scalp picks, options plays, etc. Sure, I will look at a lot of that commoditized stuff, but I will dig deeper and find unique angles whether through quantitative, qualitative, or technical analysis (using my reporters sleuthing skills) that will hopefully give the both of us at least a small edge.... a leg up of just a short time over the competition can make a big difference.
For years I woke up at 2 in the morning to drive (would get car sick in car service, especially if driver showered by using cologne - I could tell) to midtown Manhattan to broadcast financial radio reports from 5 a.m. to 10 a.m. on a 50,000 watt a.m. stick to cover mostly stocks, plus a little on bonds, currencies and commodities; then I would run up a flight of stairs and hop on a t.v. set to do similar reports on camera. But behind the scenes, options, forex and commodities became a focus for me personally, and that will be a focus on this blog as well. There’s so much out there about stocks … and not nearly enough about anything else. I'm going to make sure to provide some decent information about commodities and forex on this blog.
Before my days in the studio, I spent a bunch more years down at the Exchange on Wall Street situated just above the floor near a bunch of options guys. Wow, did that make coverage loud and exciting. One trader could shout with such strength that I nicknamed him "Mr. Polyp", because I felt that someday his vocal chords would develop some sort of disease! So I've built up a wealth of contacts and eventually I will get around to generating some interviews and putting them up on this blog for some interesting special guest shots. I promise a "no cheer leading zone!!"
As time goes by in ’07, eventually I will get a feed, or email service of some sort up. Since I am partially sighted, the email feed is problematic, since I often will dash off a post, then realize that I need to do touch up corrections. Once I work through that issue, I will get the feed up.
The http://www.jsmineset.com/ site is something that I have been a avid reader of for quite some time. It's owner, James Sinclair, has impeccable credentials and has made millions in the gold trading business: http://www.forbes.com/global/2001/1210/064.html. Sinclair is the real deal with a long track record and not a johnny-come-lately hot shot. He has some very important things to say about the current state of play with respect to many matters these days and is worth listening to.
The http://cometgold.com/ site ended my search for a place to go for a steady stream of information about gold and metals. Comet also has a community of investors who talk about metals and features links to resources and information. Comet has it all.
The premise of the rally on Friday was that analysts were thinking that catalysts in the weeks ahead would rally that stock back to its previous highs. The market was weak on Friday, but even so - there wasn't enough relief in the news of the day Friday to keep Apple at the highs of the day. There was call buying all the way out to the Jan100s... bad idea IMHO... always buy in the money, or close to it. For shareholders, the stock getting stuck near $85 might not be a big deal until the "catalysts" that analysts are looking for arrive, but for call holders in the $90 strike and above eaching passing day is tick, tick, tick, tick. But MacWorld and earnings loom large, so Wednesday will be interesting.
Saturday, December 30, 2006
Actually, I had tried loading a beta version of Vista on another machine a few months back and totally corrupted the hard drive; it was a mini disaster. I'm going to wait a little while before before I give the official release a go.
Friday, December 29, 2006
Alltel (AT) is up more than 4% on WSJ report that it may attract a private equity offer. STFL threw fuel on the fire, according to flyonthewall.com, by stating that a bidding war could erupt for AT. However, analysts at SOLE aren't so enthusiastic and reiterated their SELL rating on AT doubting anyone would step in to buy the wireless carrier at current valuation of $22-bln.
Pacificnet (PACT) is breaking above recent resistance after landing a contract with China Telecom. The formula is simple: Up and coming U.S. company + new business deal with the word "CHINA" in it = a nice rally. Stock up as much as 14% today.The bigger issue is whether the stock can ever break beyond its mostly range bound condition which has kept it trapped under $9 over the last few years.
edit: by the end of the day PACT closed just above $6, well below the highs, which from a technical standpoint probably gets it off to a poor start in the New Year.
Apple (AAPL) is the big news today (click here), perhaps the intrepid Jan90 call buyers of the last few days will end up being right.
WTI bounced off of $60 and no doubt will be challenged again amid the warm weather... but check out DT's blog.. he's not throwing in the towel yet WRT to cold returning at some point: http://dtwxrisk.blogspot.com/. As noted earlier in the week the $57 area is the big long term area of support, though many shorter term areas would have to be taken out first.
Gold/dollar... the Euro is up 35 this morning, while gold touched $638. Demark studies are showing that a close above $638 would be an ideal and bullish signal.. we're getting quite close. The recent turn up in the Euro vs dollar has clearly been beneficial to gold.
Have a happy, healthy, prosperous and blessed New Year folks! Thanks for reading! I was out with my son and daughter for Chinese food the other night and somehow the subject of their great-grandmothers came up. My paternal grandmother lived to 97 and my maternal grandmother in Korea, their great grandmother, this wonderful, small little woman of 4' 10", is still alive and holding her own at the age of 98. My 6 year old was not impressed by the longevity of the great-grandmothers and said, "I don't want to die, I want to be a kid forever." With that statement the barrage of steaming dishes arrived and the conversation changed. But my son's statement lingered on in my mind. For a six year old, he's a perceptive young guy, already aware that time and the changes it brings does indeed march on.
While fairly obscure services like the DR examine the issue of liquidity, along with this little blog, I think it's going to be a huge issue in 2007... there, my first 2007 prediction as well.
Thursday, December 28, 2006
One of the more interesting pieces of speculation to hit the Street over the past 24 hours is that Apple will make its long awaited SEC filing early - this evening - instead of tomorrow evening, to spank the shorts into submission. It's hard to say whether that speculation is helping to provide a floor beneath the stock today. If it is and no 'early' filing is made, it will only end up being counter-productive to those who made the suggestion to intimidate the short side.
Crude inventories dropped more than 8 mln barrels vs. consensus estimate of 2.5 mln... Holy Cow! in the words of the great Phil Rizzuto. Gasoline inventories rose by nearly 3 mln barrels vs the consensus estimate of 750K. Distillates were 472K vs. consensus estimate of 500K.
Some analysts are saying the recent fog and grog problem at the Houston ship channel account for these wild readings. Thus far, crude is up only 18-cents and nat gas is holding to a rebound of 2.5%.
By the way, one of the blogs which I check out on a regular basis is Kevin's Market Blog. Today he has an especially insightful post about Jake Bernstein's Rules of Trading which is definitely worth a look: http://kevinsmarketblog.blogspot.com/2006/12/trading-rules.html.
Marketwatch characterizes this morning's action in stock futures as the market being on "pause" after the Dow's run to yet another lifetime high. They also devote some space to Apple (AAPL) which is down only about 2% (Click Here). I thought Howard Lindzon did a clever job blogging about the potential play on words for possible Apple headlines (http://www.howardlindzon.com/) in light of what is rapidly becoming known as Apple-gate on the Street.
In addition to Euro strength, we're also seeing some bounce to the ounce in nat gas - rebounding after getting slammed earlier in the week.. even a modest bid to crude oil ahead of inventory data a little later this morning.
Barrons.com alerts to heavy insider transactions:
"Insider sales overall rose to $2.8 billion for the week ended Dec. 22 from $1.6 billion the week before, according to Thomson Financial. Most of the selling is options-related as the average premium shot up to 70%, generally a high level. The number of sellers outpaced buyers 2.7 to 1, a bearish sign.Insider sales overall rose to $2.8 billion for the week ended Dec. 22 from $1.6 billion the week before, according to Thomson Financial. Most of the selling is options-related as the average premium shot up to 70%, generally a high level. The number of sellers outpaced buyers 2.7 to 1, a bearish sign."
But then Barron's then goes on to quote a market maven who says the insider selling is not as bad as selling that preceded recent bear markets... so carry on... no worries.
It appears that prosecutors investigating the radiation poisoning of the former Russian spy in London last month are doing what amounts to "following the money"... and that there may be a tie to Yukos, according to this report in The New York Times. Truth is indeed stranger than fiction.
Wednesday, December 27, 2006
We'll see how things shake out tomorrow morning. Call me loony, but I find it hard to believe that 3% can be melted off the bid on shares of a 69-BILLION dollar company literally in the final 12 minutes of late after-hours trading because some small timers unloaded their odd-lots of AAPL because they heard only half the story on CNBC about Jobs receiving the improper grant, but not surrendering them. Seeing that bid evaporate in real time was remarkable - not often seen since stocks are usually halted pending news - and fortunately 8 p.m. came along to stop everyone dead in their tracks until tomorrow morning. I'm willing to concede that only about $12 mln worth of volume was involved in the late selling spree, so if I'm wrong, I'm wrong - and after hours trading be damned if the market can be manipulated that sharply.
"BELARUS: Belarusian First Deputy Prime Minister Vladimir Semashko said Belarus will increase transit fees for Russian natural gas going though its territory to Western Europe if Russian energy giant Gazprom increases its prices for gas to Belarus. Semashko's comment follows Gazprom's announcement that it will increase the cost of gas for Belarus from $46 per 1,000 cubic meters to $200."
Keep in mind 1 cubic meters = 35.3146667 cubic feet (ah, what would we do without Google), so even at $200 per 1,000 cubic meters that price is still pretty darned good... but still a gargantuan shock to various parties involved. Read more about the situation via this Business Week story. Bigger and nastier natural resources disputes are just one more pleasant thing to look forward to as we move deeper into the 21st century.
This has been good news for us at the pump! 50 dma is an interesting area for crude. The last big break below the 50 dma sent WTI from $73 right down to $57. Does that mean crude is going to fall another $20? Wouldn't that be wonderful, but the answer to that is in the realm of "now way, Jose". Already today, the bears have lost their ambition with follow through crude selling of only 17-cents more to the downside following yesterday's slide. If the bears acquire further gumption for a further push lower the $57 area remains key. The chart clearly shows that you can draw a line just above $57 from today all the way back to March of 2005 as support/resistance. If ever there was a time for the bears to test this $57 support area again, the coming early January time frame (if this mild weather can stick around) ahead of another OPEC output cut and months before the summer driving season would be it. Whether they will is a completely different story, especially with major geopolitical tensions looming on the horizon. The complete shrugging off of the UN-Iran sanctions was somewhat surprising, but until crude breaks $60 I'm not convinced the market has thrown all geopolitical caution to the wind.
Otherwise, it's looking as if the late Santa rally has further legs with continued excitement over the Ford-Toyota talks; the sale of the Minneapolis Star Tribune for $530 mln and the recent slide in the price of crude. WTI down another 30-cents this morning as natural gas continues to lead the way lower on the mild winter weather. As stated yesterday, indeed there are red flag divergences (eg. breakdown in Dow transports, QQQQ; low put to call) but as long as the S&P is able to remain above its 30 day moving average, the bulls seem good to go.
Lightreading.com's 2007 Unstrung's Look Ahead is worth a read (Click Here). Among the predictions: Sirius Satellite could be bought out and that Time Warner could be the buyer.
It's likely that next Wednesday markets will be closed in observance of the death of former President Gerald R Ford. We'll see what the regulators decide. Monday is already a market holiday for the New Year Holiday, so a Tuesday close is highly doubtful. Kudos, by the way to Reuters, for including the ticker symbol F, for Ford Motor, in one of the early obits of the former President... you can't make this stuff up.
Tuesday, December 26, 2006
This doesn't mean winter is completely DOA. I've got a new link in my favorite's section to the right. It's Dave Tolleris' wxrisk.com weather blog. Dave, or DT to his friends, is a pro meteorologist based in Virginia - he is THE man when it comes to forecasting and serves a number of big name clients in the commodities world. He's also nice enough to blog and share his weather insights with anyone who stops by his blog. Just the other day DT emailed me to say that "there may still be some winter left". We'll see what that means from a trading standpoint.
Of course, sooner than you know it, we'll be talking Spring again and with that season comes the speculation and trading opportunities in gasoline ahead of the driving season, along with summer demand for natural gas to fire power plants, not to mention the threat to energy assets from hurricane season. Reliable weather knowledge is key to being able to trade in the energy markets and DT's company is at the forefront providing that type of information.
DT's blog is something I look at every day. The first thing you realize with DT's blog is that you have escaped the powder puff and scripted world of the Weather Channel, or even your local tv weather babe or dude, and have entered a nuts and bolts world of original thinking, real science and real weather forecasting that still has wit and a sense of humor.
While the Nasdaq sold off more sharply than did the S&P and Dow earlier in the year, the breakdown underway in the Nasdaq at this point bears close watching given that the Dow Transports have been under heavy pressure of late. Within the Nasdaq, big names leading the way lower in recent weeks include: Apple (recently breaking through its 50 dma), Google (breaking down following a head and shoulders top) and Ebay (falling apart following a break below its 200 day moving average). If those examples aren't shabby enough, behold... Gilead's chart... Yikes, it has Sominex written all over it:
So more reasons to be cautious going into the New Year. Whether it's 2005 all over again and the markets slump and dump right away in '07, or the topping out process results in one more blow off rally and the process takes us into February is anyone's guess. But it does appear as if the winds are shifting and we're now getting a whiff from the direction the bulls have been grazing in.... potent aroma.
If there's anytime of the year when the consumer is going to pull out the stops and spend, it's during the December holiday season, yet they mustered the ability to spend just 3% more than the year before. If that doesn't point to a hangover from years of over reliance on home equity and plastic, then what does?
There's still time for retailers to salvage the season with big sales this week (though margins will be crunched). And if all else fails, the first quarter can be salavaged by turning Groundhog Day in Feburary into some sort of mega-retailing event!!
Geopolitical events are having the biggest impact on the price movements of gold and crude oil. Gold has been up as much as $10 and crude as much as nearly $1 on the latest round of tensions between Iran and the UN. Crude also got a lift from ongoing unrest in lovely Nigeria. While the sabre rattling goes on between Amhadinejad and the UN, it been interesting to watch the internal political developments within Iran, though most analysts, including the Stratfor people, think that while the average Iranian is unhappy about standards of living, Iranian foreign policy is not about to change since power in the Iranian Assembly is more symbolic and supportive of Ayatollah Ali Khamenei. My entry for gold still remains at above a close of $632... so close, but not yet.
This is a big vacation week for the movers and shakers on Broad and Wall, so almost needless to say, the trading volume will be thin as 2006 comes to a close. But even as junior traders man the desks and floor posts, there will some economic data that may move the markets:
The most important piece of economic data comes this Thursday: the Chicago PMI. Last month, you'll recall, the index of manufacturing in Chicago-land fell to 49.9 in a big surprise to many. The drop brought on talk of a coming recession. Economists are forecasting a slight December rebound back above the expansion line to 50.1%. Incidentally, Marketwatch columnist Mark Hulbert used the "R" word in his column, and not to scoff on the notion of one, but to suggest that IT might be on the horizon: (Click Here).
Other data due out this week: On Wednesday, new home sales are expected at a 1.02 million in annual seasonally adjusted rate compared to 1.004 million in October. On Thursday we'll get figures on consumer confidence and existing home sales. It is conceivable to think that we may see a near term plateau in home sales, but c'mon now, this talk in the mainstream media that housing has already bottom is completely ridiculous! The housing market really fell off a cliff only last summer - so they expect us to believe that the crunch is over only after about 8 months?? I don't think so, since the housing woes are really part of the larger phenomenon of the popping of the Greenpsan 'credit bubble'. This is going to take time to work out, folks.
So it looks like a rebound attempt will try to take hold, but with the VIX surging above 11 on Friday, it will need to be watched closely along with all the usual suspects (breadth, put to call, ticks, etc) for latent strength, or weakness. The chart below clearly shows that SPX has found support at about its 1 month moving average - something I've called the "lower end of its bullish channel".
The 1405 area remains an important area of support for the bulls. At least they've got history on their side since the Santa Claus rally has often extended into the final trading week of the year. But if that 1405 area is broken, it may signal the start of a break and a confirmation of other bearish signals that have been mentioned here in the blog.
My trading activity this week is going to be very limited since volume will be thin in most markets, but I am positioning for a variety of interesting plays in the New Year. I'll have more on that as the time draws closer.
Sunday, December 24, 2006
Other folks are starting to talk about this problem that the Dow Transports are having, including this write up on Marketwatch.com (Click Here).
Earlier today, technical market guru John Murphy emailed me on the subject, as part of a subscription service and noted:
"In two recent tops (2000 and 1990), the transports peaked at least half a year before the industrials. At two other tops (1994 and 1987), the two peaked together. In all cases, however, a drop in the transports either coincided with -- or preceded -- a top in the industrials. That being the case, the recent downturn in the transports should be enough to raise some concerns about the continuing uptrend in the industrials."
Later in the week, I'll talk more about other stocks that are showing signs of wear and tear - big names like: Apple, QQQQ, Gilead, Starbucks, Ebay, Intel, Google, Sears and others.
For the benefit of anyone who might be fully invested in stocks, the picture below is something known as CASH. "Cash" is defined as, "money in the form of coins or banknotes, esp. that issued by a government." Fully invested bulls might want to examine the stuff pictured below to get re-aquainted. While I'm not saying that Tuesday is the day to jump into it, there may come a time when allocating at least some portion of portfolio into so-called "cash" might not be a bad idea in 2007... just a thought, or just sayin' as the young crowd says these days here on the net.
Saturday, December 23, 2006
As a quick anecdotal aside: number one son and I went for a quick retailing jaunt in Woodbury, NY today - to the sprawling 220 store Woodbury Commons Outlet and the nearby Super Wal Mart. Both were quieter than I had been bracing for. Wal Mart was shockingly quiet, even the cashier remarked how she was trying to figure out "where everyone was", in her words. At the Woodbury outlets, the lot was only half full, but it is an outdoor outlet and only 25 miles to the south is the 3.5 mln sq ft indoor Palisades Mall, or 10 miles to the north, the 1.1 mln sq ft Crystal Run Mall. At Woodbury Outlet, it should be noted that the Coach Outlet (COH) was mobbed. Simply unbelievable... mobbed, with people buying, otherwise many stores we visited were quiet. My son, Ben, simply hated Coach (as one would expect for a 1st grader)... LOL, but my wife will love her new bag.
Wal-Mart.... no line at check-out on the Saturday before Christmas?! That was simply amazing. The Super Wal Mart that we visited in Monroe, NY has always had one of the worst run front ends, so today's easy check-out had to be due to a lack of customer traffic and not better organization. And indeed, the store seemed quieter that usual for the weekend before Christmas. My son and I swung through for some basic food shopping items. We did look around for some unplanned give gift buying opportunities, but didn't find anything; and I think that's part of the big problem that Wal Mart is still failing to overcome. It just can't seem to break out of the mold of serving the basic, no frills needs . I'm actually surprised that Mart CEO Lee Scott has last as long as he has.
Friday, December 22, 2006
"Retailers grumble about first 'Global Warming Christmas'; disastrous sales for cold-weather clothing, from cashmere caps to wool scarves... Developing... "
No surprise to you, Dear Reader.
Sometimes Wall Street research can be eye opening. Merrill has a note discussing the future of Yahoo! and AOL. The two could either end up merging with each other, or they could seek separate transactions with other competitors, according to highlights of the research report. The report noted that Microsoft could be an acquirer in the space muscling out traditional media acquirers. While MLCO maintained a buy on YHOO, it did lower 2007 estimates citing the recent management shakeup and the outlook for Panama. Regardless of which company ends up doing what with whom, it looks like most who were either original AOL shareholders, or long time Time Warner shareholders, or long time Yahoo! shareholders will still retain the coveted title of.... Bagholder. ouch.
Apple has become the subject of morbid fascination for me. iPhone has been the subject of much speculation, we'll soon be getting earnings, the chart is starting to look shabby, ect. This site: http://www.looprumors.com/ has some interesting chatter which throws the Cingular name into the mix.
A variety of analysts loved the RIMM numbers that were out yesterday, but here again another one that's had a huge run and to no avail... the stock has stalled out today. It has really been an interesting situation for shares of Goldman Sachs, Adobe, now Nike and RIMM. Perhaps the New Year will bring better times for these high flyers, or more consolidation?
Stock futures modestly higher... with durable goods printing higher for November, prices flat, consumer spending higher.
Half day of trading for most products in Chicago will mean a very quiet day for Wall Street.
The big mover is nat gas... slumping almost 3% this morning. First day of winter here in the NY Metro features partly sunny and a high of 44! I don't what it is with my fascination with the World Sunlight Map... but the Earth's Shadow is now at it's largest in the northern hemisphere http://www.die.net/earth/ and the promise of summer's return will begin a little later today.
I'm out the door this morning for more pre holiday activities!
Here's the Philly Gold and Silver Index... all things considered, it has held up remarkably well... a testament to consolidation in the industry and expectations that gold and silver are not finished yet. 120 has been triple bottom support for the XAU and notice the 50 day is crossing over the 200 dma as well...
Thursday, December 21, 2006
But notice the upper RSI portion of the chart: relative strength is at the lower end of the range and that has often preceded sharp near term bounces. An even stronger indication that a bounce might be in order is that thestreet.com's Jim Cramer said earlier today that copper is a "fiasco" which he wants nothing to do with (Click here for the Cramerian fun and games). Wow.. sounds like it's time to load up!
Ok, seriously now, there is indeed a supply abundance in the short dated contracts which is one of the reasons that Cramer ticked off and is indeed a good reason why Copper could test the 300 day - something it hasn't done since 2005. So while I think it is looking like we're heading for a test of the 300 day moving average, I wouldn't be surprised to first see a brief rebound, or dead cat bounce.
**CEOs and companies named in this post while resembling real life, outrageously paid and retired incompetent boobs who were let go from poorly run real world drug companies were purely fictional and coincidental.
Google-GOOG initiated with a Buy & $650 target@CANT
Cantor believes Google will continue to benefit from the secular shift of advertising and marketing dollars to the Internet and they see no signs of business hitting the "proverbial wall." :theflyonthewall.com
It was just the other day that I noted the bad chart formation of Google: http://buttonwood1792.blogspot.com/2006/12/while-i-was-out-goog-adbe.html
What I wonder about with respect to some of these pie in the sky buy recs is what type of organic growth or otherwise they're expecting out of Google. Perhaps in advertising and marketing there's room to grow, but in the area of traffic and searches, Google may be much further along than officially thought... Which may be good, but then again, not so good if there's no room for further growth. (Here's an eye opening perspective).
The first is Apple. It got up close to mid-90's last month and ran into a brick wall after hitting a lifetime high. By the way, I stopped into an Apple Store earlier in the week at the mega Palisades Mall in West Nyack, New York where you could barely walk around. It was like the old Star Trek episode where the planet was so crowded that everyone was packed together like rush hour in the Tokyo subway. Well, it wasn't that bad, but business was booming and my daughter is going to love her iPod color player when she gets on Christmas.
Those iPods were going faster than bananas at a chimp convention, but apparently someone on the Street must have realized that everyone this side of the next star system would have to buy an iPod to keep the stock roaring past $100. Today AAPL has managed to bust down below its 50 day moving average. This bears some watching. The break below the 50 dma is similar to what happened at the start of the year which followed a blow off top and ended up being a fairly long lasting slide down to the 200 dma.
Let's look at QQQQ. It is just today moving a tenth away for the 50 day.
QQQQ has spent the better part of four months above the 50 day moving average - similar to its run of late 2004 as seen on the chart. It's slump below the 50 dma was a lot sharper and faster in early 2005, but the similarities are striking; so this is something that will need to be watched closely as well if it makes the move below.
The range of the calls and puts is between the $160 strike on the call side and $120 on the put side where volume is over 1,000 contracts today in the January chain. I'm just staying off to the sidelines. I doubt RIMM does two huge gap ups quarter to quarter, but there's a good chance the trend can remain higher unless they disclose they've royally screwed up since the last earnings report.
While I generally hate the idea that the best idea on Wall Street these days is this lame idea to pump and buy stocks at all time highs (it is pervasive) there are some exceptions and RIMM could be one of them. Companies with near monopolies fit into the "exception" category. Of course, the issue for RIMM is becoming just how long they hold their veritable monopoly. Tonight is going to be very interesting.
It's been interesting to see corporate earnings in recent days in the retailing and retailing related space. NKE numbers good, but not great enough to get the stock to go meaningfully higher this morning. CIBC summed it well with an increase in its stock target, but also noting that the stock will likely take a breather for a few months after its big run. These things don't go higher for ever. What I want to know was who bought at the AH high yesterday of $100.75?
Bed Bath and Beyond - one analyst calls it "Best of Breed", and I think that's accurate. But charts don't lie, and as noted yesterday, it was not able to pierce $42 on two runs recently. This morning on a miss it's down to $38.77. Of course, we know what happened earlier in the week to Circuit City.
Some of these corporate results and subsequent guidance are starting to have a topish feel to them. Granted, nothing is collapsing, or crashing, but many stocks which have had mega runs to multi year or lifetime highs are suddenly in holding patterns. Even Goldman Sachs after wildly beating Street has seen its stock stuck at the $200 mark. It again goes back to basics like the troubles emerging in the transportation stocks and growing questions over what's going to happen in the economy in '07 - soft, or hard landing? The Buy High - Sell Higher Camp may be running into some trouble. What will the high flyers of '06 do for an encore in '07? The latest 3rd quarter growth estimate shows GDP at 2% annual rate as the housing market continues to take a toll on the overall economy. That's a 2% pace in Q3 compared to 5.6% in Q1. Can't wait to see how 4th quarter GDP is shaping up.
The big earnings report due after the bell today is RIMM - talk about a flyer and raging debate over that one. Pearl is the keyword with RIMM. Has it saved the day? Did they ship out enough, or has it cannibalized other RIMM business. If only I had the definitive answers. But I will take a look at the charts and options on that a little later even as I dash out later for more holiday prep.
Iran is finding there's an economic cost to developing nukes... it's having trouble developing oil projects.
The knives are drawn in the BP succession battle (Click here)
Peter is also blogging about the frenetic pace of things going on at that desk and the news that's being covered. Check out his blog here: http://www.cnbc.com/id/15837548/cid/97549. Peter and I have had the pleasure of working together in the past and he's a pros pro with valuable insights. Make sure to add Peter's blog to you regular list of daily 'must reads'.
Wednesday, December 20, 2006
BBBY, not quite Blood Bath and Beyond, but still down 3% for the day after it came up light on top and bottom line numbers. As noted earlier, there was reason to believe that the puts would be the better way to go. Yes, retail IS a tough business.. though I do love my garbage can with the lid that opens automatically, bought during the 3rd quarter at Bed Bath and Beyond. Had I bought 740,000 of them, I would have made their quarter for them.
That chart is indeed the true Magilla. Jan105 calls actually look like a cheap shot at 85-cents. Where NKE is concerned these days, it doesn't hurt that Warren Buffet recently raised his stake in the company, or that Adidas recently warned, or that Nike has a collaboration with Apple, or that Nike could surprise with a stock split announcement. Some analysts, however, have cautioned that Nike could miss estimates this time around because of a shift toward casual skate-type products and European-styled silhouettes. Wouldn't that be nasty. But most analysts love the stock, including UBS which has a target of $112. Stocks that trade at lifetime highs keep me wary especially consumer stocks in a slowing consumer environment.
As usual, choosier bulls have definitely chosen the Dow lately... but there could be trouble ahead. While the Dow has continued to bop along in its fairly tight upward channel the Trannies started to break down last October and today broke below its 200 day moving average. The head and shoulders pattern in the Dow Transports is unmistakable and for how long the Dow Theory rule can be broken - where the Dow-30 keeps going higher while the transports falter - remains to be seen. In the words of Larry to Curly in warning that he might anger Moe over a scheme about to go badly wrong, "I'd be careful if I was you."
In going through the analysts comments, Soleil had some especially noteworthy things to say. That firm claims that that GOOG's average price per search keyword is down more than 10% since the start of the year. The firm also says U.S. search revenue dropped to 6% sequential growth in the third quarter. Those comments went by pretty much unnoticed especially after PACS lifted its target from $500 to $575. We'll see who's right eventually.
While the markets rebounded yesterday, 17 to 15 breadth on the Big Board was nothing to write home about and put to call indicators have been on the rise. That indicator alone doesn't signal an immediate correction ahead IMHO, but it bears watching when the crowd is loading up on puts in some big names like AAPL, WMT and DELL - just to name a few. But for weeks I've been talking about 'seasonality' and this is generally a bullish period of time for the markets. But we have seen fear, or the VIX find a floor at just above 9-1/2 and actually even an unwillingness to stay under 10 intraday, so there are some folks out there a tad bit more on the defensive.
There's no major economic data today aside from DOE crude inventory data a little more than an hour from now.
Morgan Stanley being total sleazes for failing to produce emails in arbitration cases - using 9/11 as an excuse! (Click here).
One company not getting coverage on the story stocks lists: Sharper Image. I couldn't help but to notice a note out from DANN that comps at SHRP will be down 22 to 25% this month. OUCH.
Zune and Vista finally like each other: http://www.theinquirer.net/default.aspx?article=36497.
I continue to be in holiday shopping and family arrival preparation mode. Posting will be limited during daylight hours for the rest of the week. Check out the World Sunlight map http://www.die.net/earth/... pretty cool stuff as we close in on the shortest daylight day of the year in the northern hemisphere. Night has indeed become a very large shadow in this part of the world.