Wednesday, January 31, 2007

Evening State of Play

Wow... what a day today - truly remarkable. A dovish Fed? That's how it seemed to play out for many markets. The Fed didn't harp on risks of inflation amid a stronger economy and that sent the Dow to a fresh record on hopes that the economy will be strong enough to keep corporate earnings going, but not so strong to force the Fed to lift interest rates.

The Fed itself said it sees moderating inflation.

A dovish Fed? That led to a dollar swoon, with the dollar index falling almost to as low as 85-1/2 after again briefly (watch out for those briefs) touching the 200 day moving average. Now the dollar is suddenly just a little more than a half point above the 50 day moving average. March EuroFX surged to above $1.3060.

The dollar dip led to a big rally in gold with the April contract flying past $660 and February holding above $650. So even as my GOOG calls are likely to go up in smoke tomorrow morning as the volatility returns to normal, the overall portfolio continued to get greener this week with the gold play today and the crude oil gains earlier in the week. One thing I will say about GOOG is that one should not count their gains or losses until around 8:30 or 9 tomorrow morning in order to let the analysts to have their say. It was quite interesting that the stock printed as low as $473.21 after earnings and then managed to climb back to 494.80.

In some respects, Bernanke must be pissed, unless his bosses told him the stock market needed some goosing in which he will get a pat on the head for a job well done today. The Fed spent much of last year trying to build an image of Big Ben as the man who would throw on the "inflation fighter" cape at the mere whiff of rising prices -- similar to Dom Deluise as "Captain Chaos" in Cannonball Run. It was really getting quite desperate when Bernanke's inflation fighting credentials were being severely questioned not long after he took over as Fed chairman. "I am an inflation fighter, I really am!", he had to have desperately exclaimed on more than one occasion to anyone who would listen in those dark days early last year. Now the markets think the Fed is dovish again.

Back to gold and crude. As Jim Sinclair at has been saying, gold has been taking on a life of its own, but also today helped along by some tried and true factors like the falling dollar. Jim also noted earlier in the week that the IMF is keen to change accounting rules to stop Central Banks from manipulating the price of the metal and the raft of gold ETFs has also created demand for the metal.

Press reports say crude rallied because inventories of distillates dropped more than expected. The real reason is that the market is giving the Saudi's the benefit of the doubt... don't under estimate those guys and their resolve to keep the price up. Even Bush's SPR announcement will add lasting bullish background noise in the energy market for a long time to come.

This crude rally gets me back to the stock market which actually found some support from energy stocks today. The CRB itself has shown a sharp reversal in recent days. Here's a chart of the CRB (main) and the S&P 500 (upper secondary) showing that even as commodities rallied through '05 and '06, the S&P 500 forged a mostly steady course higher. And notice too, that large dips in the S&P in October '05 coincided with a CRB rout; same when the CRB topped out in May '06.

Of course, if crude gets itself back to stratospheric levels, or if gold rallies too quickly as a warning of dollar doom, all bets are off. For today, at least, these markets were largely in sync.

Bonds rebounded following the weak Chicago PMI and that too helped the stock market. As the Zen-man says bad news that pushes bonds higher, is indeed good news for the stock market.

The net result: stock futures tonight are little changed; crude has drifted lower by 30-cents; gold lower by less than a buck; dollar little changed.

Quick Late Afternoon Note

GOOG is down $5 after hours with the crowd seeming to be unhappy with the top line part of the company's results.

Gold and crude were the big movers in the markets today, and even the Dow perked up following the Fed announcement with a record high close. I have to dash out, but more later.

No Fed Surprises

Fed funds left at 5.25%... Fed even says inflation is likely to moderate. Who knew! I'll have to call my kids' nursery school now and let them know they can resume playing... the Fed has given the all clear for life as we know it to resume!

X Marks the Spot

With Tata's deal to acquire Corus (CGA), Reuters is reporting that U.S. Steel (X) could become an takeover target. Companhia Siderurgica Nacional (SID) is mentioned as a possible suitor. Although the report also says that CSN may find a better target in AK Steel (AKS).

A Little More on Google

A couple more analysts chimed in on Google this morning:

RBCM says it would not be surprised if GOOG reports a 20% jump in top line growth, though price movement in shares may be limited by pressure on margins from costs related to YouTube and Checkout.

AMTR says it's expecting solid results and doesn't find shares "terribly expensive" at current levels.

It will be quite interesting after the close. I have a small long call position.
The Lauriston Letter and the Jutia Group have in recent days both noted a flag pennant formation on the Google chart. We'll see what happens this evening.

Don't Look Now.. But Crude Has Turned Higher

The market is convinced that OPEC is getting its act together. ha ha. But you can't fight the tape. Big surge in the last 15 minutes. Just under $59 remains a key target - the 50 day moving average.

I am also long in gold. April contract has surged to $660.

Crude Awakenings

The latest government figures show crude inventories rose 2.68 mln barrels vs. consensus estimate of 1.5 mln. Gasoline inventories surged by 3.82 mln vs. consensus estimate of a rise of 1.8 mln. The Distillates fell 2.65 mln barrels vs. the consensus estimate for a draw of 2.1 mln barrels. Crude continues to hold above $56/bbl.

The Big MO

Altria has decided now is the time to spin off the rest of Kraft division - no doubt feeling the worst of the tobacco litigation is behind them.

So far it's a tale of two markets. The Dow is higher, thanks to Boeing, while the rest of the market struggles. Tech in particular is hurt by the SNDK news which is hurting the SOX part of the tech universe in particular today.

2:15 will still likely be a pivotal time - when the Fed releases its FOMC statement.

Chicago PMI

The economy bulls didn't have much time for celebration following the stronger than expected 8:30 GDP figures. At 10, the Chicago PMI data showed manufacturing back in contraction with a reading of 48.8. Prices paid index fell to 54.9 from 56.9 in December. New orders slumped to 46.3 from 56.3. The employment index fell to 42.8 from 48.2. This sets the stage for a weak national PMI report.

Morning Market Comment 1/31/07

Gross Domestic Product in the 4th quarter came through at a stronger than expected 3.5% and consumer prices (the deflator) fell by .8% for the first quarterly drop since 1961. Core PCE rose 2.1% excluding volatile food and energy. What's interesting is that the big improvement in GDP came largely thanks to a drop in energy prices which improved the inflation picture and even the trade imbalance picture. In a seperate report, the Employment cost index rose a smaller than expected .8%.

This data gives Fed policy makers something more to chat about during day two of their get together. 2:15 will be the usual announcement time. No rate move is expected and given the strength in this morning's figures you can bet the Fed will continue to sound a cautious tone that it's concerned economic strength could accelerate inflation, or that no one should expect a rate cut anytime soon. However, the warning signs have been popping up. If a guy like Jamie Dimon, which we noted last night, is talking about financial distress that a big group of borrowers are going through, Fed policy makers no doubt are thinking about the issue of a credit crunch somewhere down the road as well. So while it is likely the Fed will strongly imply that no rate cut is in cards for the next two quarters and could threaten a rate hike, I remain convinced that the Fed cannot lift interest rates later in the year unless the ugliest of scenarios develops where inflation really perks up, and that indeed would be a very ugly situation. The present rate raising camp is also the largely bullish, cheerleading stock market bunch. IF the Fed is forced to lift rates later in the year, it won't be for bullish reasons.

The other big event on the calendar is Google and its earnings. Implied volatilities are, well implying, that the stock could move $30 or more this evening. Which way? Citi's analyst thinks GOOG will actually miss - say it aint so! But the Journal's "Ahead of the Tape" column says analysts surveyed by Thomson by and large think the company will handily beat with a 90% jump in earnings as Microsoft and Yahoo continue to suffer setbacks in their web search ad businesses. Anyone have an opinion on GOOG, or care to share what they're planning to do? Please do so in the comments section. I will probably stay off to the sidelines. The blogger Option Pundit has some interesting Google thoughts:

Heading into the open, this morning's data is actually strong enough to keep the market concerned about interest rates. Remember, the Fed doesn't have to lift the short end; the long end can move higher and negatively impact stocks. The 10 year treasury is down 6/32nds. Stock futures are lower.

A bright spot in Dow: Boeing. The stock is up 3%. Quarterly profit more than doubled and the company lifted in 2007 outlook.

Time Warner earnings merely matched estimates. The stock is down 1-1/2 percent.

After yesterday's surge, crude and nat gas have eased off just a bit. 10:30 inventory release for the liquids will determine if the barrel market can go even higher. Gold continues to mark time at just above the $640 level. EuroFX down 19 points.

Tuesday, January 30, 2007

Quick Late Day Comment

The stock market managed to chalk up some modest gains, but nothing major as one would expect ahead of the Fed's rate decision and statement due at 2:15 on Wednesday

Wednesday is going to be a banner day on the economic calendar:

7 AM MBA mortgage data release. 8:15 ADP employment index is released. 8:30 4th qtr GDP expected to show 3.1% annualized growth with a 1.5% deflator. Employment Cost Index also due at 8:30 forecast to show 1% gain. 10:00 Construction Spending forecast to show December gain of .5%. Chicago PMI also due at 10 forecast at 52.

My take is that Q4 GDP will be sufficiently strong to keep the debate on when a recession hits raging on. But we've talked about a number of looming risks, especially in the area of credit. JP Morgan's Jamie Dimon today had a few words on that matter (Read here about Dimon and recession risk).

Ahead of all those eco figures the dollar is stuck at just under $1.30 vs the Euro. Gold is treading water at just below $646. Treasuries nudged a tad higher.

There's minor energy profit taking with crude giving back 37 cents and nat gas lower by 5 cents. Wednesday will be interesting for the liquids. Can crude get itself up to the 50 day moving avg at $58.92? That may largely depend on the DOE and API crude inventory figures that come out at 10:30 ET.

Stock futures are drifting lower. Sandisk (SNDK) got a 10% clobbering on worries profit margins will shrink on a glut of flash memory chips. This whole area of the chip market will get slammed tomorrow no doubt.

Natural Gas

If you think 5% was a big move in crude oil, nat gas was up 10%. The primary mover is extra cold weather forecast for much of the nation next week. We could see an $8 handle if not handily cross $8 if the forecasts start to look like a done deal later in the week.

Crude Oil

I've been tied up with a bunch of things this afternoon, but not so much that I haven't been trading today. My primary focus has been on crude today. OPEC by way of the Saudis has drawn $50 as the line in the sand and will further cut production. Whether other OPEC members comply is another matter and it will take a couple of weeks to determine whether the overall cartel has cut enough to support prices at these levels. From a technical perspective, there's no reason to believe that the $59 mark can't be challenged in the days ahead for WTI especially with the 50 day moving avg looming large at $58.96.

Morning Market Comment 1/30/2007

Stock futures are on the rise this morning. Procter and Gamble posted in-line results. 3M guided higher for 2007. Colgate's earnings and revenue were above estimates for the 4th quarter. Countrywide is down 3% after posting earnings that missed estimates by 2c/shr. Revenue at CFC also missed by about 200 mln, and the company guided lower for this year. The markets await the 10 a.m. release of consumer confidence figures with a reading of 110 expected. At noon the 2 day Fed meeting begins.

Motorola is up 4%. Says
"Motorola-MOT confirms receipt of notice of nomination to the Board from Carl Icahn
Carl Icahn holds approximately 1.39% of outstanding shares. The Company has not yet set a date for its 2007 Annual Meeting."
Let the fun and games begin!

As we discussed yesterday, the Saudi's say they're comfy with a $50 per barrel crude oil price. Making sure the price comes close to the target just doesn't happen by itself. The Saudi's are taking steps to make sure it does. (Read about Saudi Oil here). WTI is up 39-cents this morning.

Gold nudging higher at the $644 mark; dollar little changed; 10 yr treasury up 2 ticks.

And you've got to love the story in the Journal this morning about the concern of Chinese regulators over folks in that country doing things like mortgaging their homes or using credit card lines so they can get a piece of the action in the roaring Chinese stock market. The more things change, the more they stay the same; and no matter where you are located, a raging bull market entices many to try to jump in to better their lot in life. Too bad most will lose their money as happened in the internet boom bust here no long ago.

Monday, January 29, 2007

Evening State of Play

Major stock indices were flat today. The markets were on hold ahead of the start of the Fed's two day meeting tomorrow and a barrage of economic data that starts flowing at 10 Tuesday morning with the consumer confidence data. Then at noon the Fed policy makers gather behind closed doors (brings back memories of the Charlie Rich country hit lyrics: "When Ben Bernanke gets behind closed doors... and he lets his hair hang down.. makes me proud to be a Fed policy maker... Oh no one knows what goes on behind closed doors!!!") But I digress. At these two day affairs, they actually start off with a rousing game of Pictionary, then Monopoly where no player ever goes broke because he/she has his own currency printing press w/special helicopter. Seriously, the first day of these two day affairs is spent considering the data and reports supplied by the regional Fed banks. Then on day two they have the usual rousing debate on whether or not to do anything about rates. With Andy Lacker not a voting member this year, it will likely be a unanimous decision to leave rates alone with a continuing expression of inflationary risk.

Ahead of the data and Fed meeting stock futures are flat. The dollar lost a bit of ground earlier in the day and is holding steady tonight - basis March EuroFX back at $1.2994. Gold range bound at just above $640. Crude oil profit taking sent WTI below $54 earlier, now back at $54 tonight. The news that Saudis are comfy with $50 is good for the bears, but bad for the bears. You can darn well bet that if the price pokes much below $50 the OPECers led by the Saudis and Kuwait will fiercely defend that level; tanker data beginning to show that OPEC cuts are getting more serious. Latest COT by the way makes we wary of shorting the liquids for any length of time. 10 yr t note yield nudged up to 4.896.

U.S. Steel (X) managed to nudge higher by a little more than a half dollar after hours. Earnings beat streeet estimates... blew the doors off of estimates, though the company warned earnings this quarter would be below last quarter's barn burner numbers.

Later Afternoon Notes

I haven't done any short term trading today. I was out with the family trying to do some shopping over the weekend and a bit frustrated with the weekend crowds when I realized that I could go out on a quiet weekday at any time, which was what I did this morning with my wife - after a "lumberjack" breakfast at the diner.

That Google note from SBSH that I imparted this morning sent a flood a traffic to the blog today... simply amazing. Whenever I write the words, Google, or Apple the traffic meter goes off the scale. Google was up pre market, but that note from the Citi analyst spoiled things today for the GOOG bulls. Will that analyst be right? We'll know Thursday morning, but those are the notes that I pay attention to - something gutsy and unusual. Analysts in general have not been honking really loudly about Google. Many have targets up in the high 500's on the stock which shows even the overall analyst crowd isn't that excited ahead of this Wednesday evening's earnings report.

The thinksecret website says the Apple iphone may launch SOONER than expected. hmmm. Appleinsider, meantime, says Apple is on pace to outgrow Microsoft:

For whatever reason U.S. Steel (X) is releasing earnings after the bell today instead of tomorrow.

Crude and nat gas have come in for a bit of profit taking and the stock market overall is pushing against the headwinds of rising bond market yields. Gold continues to consolidate above $640.

Morning Market Comment 1/29/2007

First a hearty thanks to JLP over at AllFinancialMatters for the nice words on his very nice blog. We had a nice email exchange over the weekend. I've put his blog on my blog roll because it is an excellent read about all matters financial. He covers the full range of topics such as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance at:

Stock futures are little changed this morning ahead of a big week of economic data (see last night's "state of play" post for the full calendar) that climaxes with the release of the monthly employment data on Friday. Last month the ADP employment index low balled the November non farm payrolls number and it will be interesting to see if ADP was just a month early, though the economists are expecting a 160k rise in the December payrolls. Today the economic calendar is clear.

Markets are also bracing from the two day Fed meeting which starts tomorrow and completes on Wednesday with the 2:15 rate announcement. Of course, no rate move is expected, but what's said in the statement will be closely looked at. Most Fed watchers expect the Fed will continue to harp on the risks that growth could accelerate inflation.

Early earnings scoreboard features better than expected operating earnings from from both Mattel (MAT) and Verizon (VZ), in-line numbers from Schering Plough (SGP).

There's some wheeling and dealing - a little merger Monday action:

-US Airways (LCC) could lift its bid for Delta by another billion dollars.
-Citigroup is buying Egg Banking from Prudential of Britian for $1.13 bln.
-A deal made in the forest: Abitibi and Bowater merging in a $1bln deal.

No deal this morning for Countrywide (CFC). Friday a rumor popped up by way of that CFC might be a target of BAC. That was amusing. This morning there's chatter that a better suitor for CFC might instead be JPMorgan (JPM). Hardy har har once again. CFC is up 4-cents.

Goldman Sachs reiterated a "sell" on CFC saying a BAC buyout of CFC is unlikely.

Ahead of Google's (GOOG) earnings on Wednesday, OPCO has reiterated a "buy" and lifted its price target from $540 to $550.

The analyst covering GOOG at Citi is really sticking his neck out. Citi is telling clients NOT to expect shares of GOOG to trade up on the Q4 numbers. While the firm has a "buy" on the stock based on future growth expectations, it expects earnings of $2.77 which is below the street consensus of $2.90. hmmm. Citi feels Checkout and YouTube will be the wildcards.

Intel and IBM cross the 45nm barrier. Moore's Law is alive and well:

Matrix USA ups ConocoPhillips (COP) to a "strong buy" saying recent weakness in shares is a buying opportunity. Matrix says COP's intrinsic value is $125 a share. COP is down 42-cents to $64.35 as crude moves lower this morning.

Speaking of crude. The Saudi's are indeed trying to keep crude closer to $50 these days. That's the word from the NY Times (Read about Oil here). Crude is hovering right around the $55 mark this morning. As I mentioned a few weeks ago, the Saudis realize, according to the link, that restraining oil prices acts as a leash on the Iranians. If I can figure this out, anyone can.

Dollar holding steady ahead of the data barrage; gold down $3 as the $640 area comes in for more testing; treasuries drifting a touch higher.

Sunday, January 28, 2007

Ante Being Upped for Delta.. reports... "US Airways is willing to lift its hostile offer for Delta by $1 billion, according to people familiar with the matter. The move is part of a last-ditch effort to gain backing for the acquisition, which has failed to win wide support from Delta's creditors' committee. US Air's current $9.8 billion offer is set to expire this week."

Evening State of Play

First a thanks to the Mortgage Lender Implode-O-Meter for the shout out tonight on the note I wrote over the weekend about the growing subprime problem that is spooking the overall bond market, which has in turn sent rate jitters through the stock market. Implode's site is interesting:

Crude oil is up again this evening - a rise of 40-cents in the March contract. A combination of factors are at work: from the new contango play following the SPR announcement, the colder weather, and the heating up of tensions in the Middle East. The Wall Street Journal is reporting that Iran will install 3,000 centrifuges that will be used to enrich uranium. Nat gas is flat.

Gold is catching a modest bid as well. The EuroFX is down 2 points, while stock futures are drifting lower.

There is a barrage of economic data that will be thrown at the wall next week and it will be interesting to see how it will stick. The dollar seems to want to cross the 200 day moving average in the worst way, and perhaps some of these numbers will give it the push it needs. Here's a rundown:

Monday: no major data.

Tuesday: 10 a.m. release of consumer confidence figures from the Conference Board. A reading of 110 is expected. At noon Fed policy makers start their 2-day meeting.

Wednesday: 7 AM MBA mortgage data release. 8:15 ADP employment index is released. 8:30 4th qtr GDP expected to show 3.1% annualized growth with a 1.5% deflator. Employment Cost Index also due at 8:30 forecast to show 1% gain. 10:00 Construction Spending forecast to show December gain of .5%. Chicago PMI also due at 10 forecast at 52.

2:15 ET Wednesday Fed announces rate decision by FOMC.

Thursday: 8:30 Jobless claims, Personal Income and Spending

Friday: 8:30 Employment data forecast to show 160k rise in non farm payrolls, unemployment of 4.5%. 10:00 Factory Orders expected to rise 1.9% in Deceber.

There will also be a barrage of earnings reports (source: The most notable companies reporting earnings for the week, starting on Monday 1/26: PD, SGP, VZ, CAJ and TSN. Tuesday 1/27: AFL, CL, CME, K, MMM, MRK, PG, SNDK, SNE, UPS, WYE and X. Wednesday 1/19: BA, D, EK, HLT, IR, LLY, GOOG, MO, SBUX and TWX. Thursday 2/1: ADM, AMZN, BUD, BSX, CA, CMCSA, CVS, ERTS, HOT, MNST, RTN and XOM. Friday 2/2: CVX, ITT and WEN. For the latest breaking news, listen to Fly Radio (which I do).

I mentioned Google Friday night. I had toyed with a directional long play, but will stay away. If you can be disciplined enough to play your 10 day moving averages well enough with Google, there are plenty of plays without having to mess around with the stock before earnings.

Who Was King Hubbert?

Was he a merry old soul? King is a pretty cool name. The only other guy who I can think of whose name was King, off the top of my head, was King C Gillette, yep that Gillette. Actually King Hubbert, was really named Marion King Hubbert by his parents but what guy would want to keep the name Marion? Even Pat Robertson dropped his official first name of Marion and so did John Wayne who actually dropped his entire birth name of Marion Morrison. I had a wonderful aunt Marian... and that's the difference between the male version of the name, which has an 'o' as opposed to the feminine with the letter 'a'. But getting back to King Hubbert - he was one interesting guy and if you have the time you should do some reading about him if you're not familiar.

To boil it down, Hubbert, a geophysicist who worked for Shell, is THE guy who predicted that U.S. oil output would peak in the late 1960's or early 1970's. He made the prediction in 1956 and it came true in 1970. Google Hubbert's Curve, or Hubbert's Peak for more information. Oil experts of today like Matt Simmons have built upon Hubbert's work and believe the same thing is happening, or about to happen in many other giant oil fields around the globe including the main fields in Saudi Arabia.

That's where Me-he-co comes into the picture. The Wall Street Journal has an interesting report about a "virtual collapse" at Mexico's Cantarell - which had been the world's 2nd largest oil field in terms of production at the start of last year. Output slumped a half million barrels per day last year, is falling faster than the grimmest of estimates, and is expected to continue falling.
Mexican Oil problem read here (subscription required). Keep an eye on this situation both for how it impacts global oil prices, but for how it impacts the Mexican economy and its currency in the months ahead. The situation with the oil output decline for Mexico is critical and has got to be forcing Calderon to be popping the Ambien pills already.

Saturday, January 27, 2007

Bank of America for Countrywide?

A rumor hit the tape late Friday that Bank of American (BAC) would buy Countrywide (CFC). The Financial Times got the chatter started after it reported "people close to the matter" saying the two held talks about a possible alliance. The paper also stated that the talks were early and might not lead to a deal which would be valued at about $30 bln. Options activity on CFC went through the roof in the last hour of trading on Friday along with implied volatilities.

It looks like the report was a bad one. Analysts at First Boston said BAC denied the CFC rumor, according to a post on's FlyingMachine. Pru also said it didn't believe that BAC would purchase Countrywide.

Funnier still is that the CEO of CFC filed to sell a bunch of shares, as in 23,000 of them, as early as Friday, according to an SEC filing! The Winter blog very cleverly picked up on that aspect of the story. Sure must be nice to be the FT and be able to move a stock big time and be wrong! I would imagine if my blog, not that it would, but if my blog got a firestorm of buying started on a false rumor, some type of legal agency would have a SWAT team here that would have me tasered, spread eagle, body cavity search underway along with my wife, kids and the cat with their hands/paws up high. Insane.

Friday, January 26, 2007

Quick Friday Night Note

I finally felt well enough this evening to take a break and actually had dinner and kept it down for the first night since Tuesday. I will have a full post late Saturday concerning the markets. I still have a ton of W2 and W3 filing work that needs to be done tomorrow for the non profit that I am treasurer for but once I get through that stuff I will post here. As the old side view mirrors used to say, "objects are closer than they ppear." Perhaps that can be modified a bit for the markets to go something like, "danger is closer than it appears." I will elaborate more this weekend.

I am especially intrigued by the coming Google earnings and will discuss that as well. My trading earlier today was limited to a morning short trade in gold futures (though I remain heavily committed to a long GLD position) and a long trade in crude oil futures with both working out well.


It's amazing the things that arrive in my email...

Wow... when I look at that, "I FEEL YOUR PAIN!"

Midday Musings

-Is CA a takeover candidate? stokes the speculative fires. The website names a variety of potential suitors from Texas Pacific Group to Oracle (ORCL), IBM and even Microsoft (MSFT).

-Interesting that Blackstone's latest offer for Equity Office Properties (EOP) was a hefty $54/shr, yet the stock is trading above $55 today.

-A positive write up today from on AppleTv
(Click Here).

-Implied volatilties for Rambus options have gone through the roof - nearing the 90 mark. The heightened sense of risk follows a posting on the U.S. District Court of Northern District of California's website. In the Hynix vs Rambus case the site said, "Motion for new trial on damages is denied without prejudice. The motion cannot be resolved until after the conclusion of Phase III." see:

new Home Sales Surge

The latest gov't figures show a jump of 4.8% vs expected rise of .5%. Do you believe it? Do you really think the housing market is turning? Are those bad homebuilder results just fictional? I've got to go to the doctors, but will have more analysis later.

50 day moving avg on the S&P cash looming large at 1413.

Durable Goods Jump

Orders for the big ticket items rose by more than 3% last month Read here. I'm sure there's more to it beyond what Marketwatch has come up with and I'll more later.

There was big call buying on CAT yesterday and this morning the company missed estimates but guided higher for fiscal 2007. Shares are up about 3%.

Amgen missed and that stock is down by 3%. Overall, stock futures a creeping higher and the stage is set for a rebound attempt at the open. 10 a.m. new homes sales data still lurks and close attention needs to be paid to the bond market.

Morning Market Comment 1/26/2007

I've been actively trading already this morning. Up at 5 a.m. for more activity in gold this time on the short side this morning down to just under $642. We will retest $650 again soon enough and stay above that level. One of my largest holdings remains GLD.

Crude was able to bounce off its 5 day moving average yesterday and is nominally higher this morning by 24-cents. This could be a shorting opportunity if it breaks yesterday low, conversely a long opportunity especially if the bulls can make a run back to $55. I am personally long this morning. Don't underestimate the contango play.

Overseas stock markets were weak overnight, while U.S. stock futures are mixed. Microsoft is up 54-cents at $30.99. More after the durable goods orders data comes in at 8:30.

Thursday, January 25, 2007

Some After Hours Comments

Sorry folks, this will be brief... have just been plagued this month with not feeling well. My wife and I have often talked about moving to a warmer climate to avoid my winter health woes and maybe this time we will seriously look at that option in 2007; it's just been too much this winter, which hasn't been much of a winter to begin with. Property taxes here of almost $25k a year are also a pain in the neck too, but that's NY for you and this is a nice neighborhood.

First let's talk about Mr. Softee.

It's been a great run for the stock, and that's part of the problem. Even with the 3c/shr beat tonight at 26c and revenue $500 mln above expectations, the company will be in show me mode for the rest of the year. Q4 is mostly old, though factors in a pretty healthy business adoption of Vista, but by 'show me', I mean that with Vista consumer and sales of companion Office software going live, why shouldn't the street want to wait for further numbers in the quarters ahead after the run in the stock? Anyway, MSFT only down a 10 or 11 cents.

The stock market got hammered back. As noted yesterday, I acknowledged the rally yesterday, but also said that I wasn't planning on doing anything in the stock market short term (eg buying SPY calls, lighting up a big fat Romeo and Julieta Churchill, taking out a HELOC to buy a basket of internet stocks). If you've read my blog for a while, you know that I don't like what's going on in the world (dangerous place) and that with the bull market as old as it is (long term secular and even the bounce from 2002 lows) these all time high levels just make me uncomfortable. So tonight we're back in the miserable range with the S&P cash at 1423. The bulls can count their blessings that Mr. Softee beat by enough to keep it and the market for going into a Friday freefall. But who knows what other news lurks between now and 9:30 Friday morning. The bears have been prepping the wrecking ball for sometime just waiting for a reason to drive it out.

One thing that I've kept a wary eye is bond market yields. Lately the treasury market has been doing some work for the Fed. Last night when I looked at 10 yr yields and hadn't thought we'd move above the 200 day moving avg today... well we did:

IF this keeps up, this will surely put extra pressure on the stock market. Bonds actually fell after the NAR report showed a decline in inventories of homes for sale and a stabilization in prices. Treasurys also were being pressured by unusually large corporate supply and fund repositioning. Whatever the reason, it's a negative for stocks.

The bond yield rise has only lent a minor degree of support to the dollar, with EuroFX at just under $1.30 and the dollar index at 85.12 still far enough from its 200 dma given the rate increase talk in Japan and stronger eco data in Euroland.

My trading in gold was sloppy. I was up early enough to catch the rise from just under $646 right up to $654 and should have booked profits up in that range. But this ongoing malaise prompted me to put it on auto pilot and sure enough, I ended up being stopped out at $649 profiting on only about $3 of the gain and then shorting too late in the day after an extended nap to grab only $1.10 of the decline. Still profitable, but on a $10 trading range again today catching only 40% of the action shows that putting it on auto pilot is not the way to go.

More on energy later or in the morning.

A few Quick Notes

Slo stoh late this morning was showing gold overbought, so i reset my stops this morning and went back to b ed got bounced at at 649 after a very early morning entry at 645, but seeing the price as high as 654. I had been in nap land for hours today due to on going health problems, but upon waking shorted a little while ago. We'll see if it retests $640 again, or if $645 holds this time.... gotta love the volatility.

I had also made the passing comment about nat gas being poised the fall (mostly because of the weather in the next few weeks being cold but about normal)... and indeed it has pulled back by quiet a bit today, but no trades for me there today.

Gas au Naturale

The EIA.. (old McDonald had a nat gas well, Ei,Ei,A) says 179 bln cubic feet of nat gas was pulled from underground storage... a little higher than the expected 173 bcf. Nat gas is about where it was before the report, down 3%. The next few weeks will likely show some even bigger deliveries because of the cold weather, but there's some much more of it than usual in storage this year, that it's no sweat from a supply standpoint. I am fully pre occupied with metals, but I'd probably take a hard look at shorting NG for a ride down to $7... maybe.

Existing Home Sales Dip

Existing-home sales fell 8 tenths of a percent in December from November to an annual rate of 6.22 mln.

Sales for all of 2006 dropped by 8.4% to 6.48 million for the largest drop in 24 years.

What's really amazing is the truly horrible spinmeister they have at the National Association of Realtors - David Lereah, the chief economist of the NAR. With today release he says, "Despite all the doom and gloom stories and dire predictions over the last year, 2006 was the third strongest year on record for existing home sales." That guy is a bum. 3rd strongest year? Tell that to the millions who tried selling a home last year - it was generally an ordeal. Third strongest year? Tell that to the millions who ensnared themselves in ARMs that will soon reset and send them into foreclosure. Third strongest year? Use that to comfort the CEO of Beazer Homes (BZH) which reported a loss this morning. Beazer's CEO reports no indication of a meaningful housing recovery.

Here's a Way to Get Crude to Fall $10 in a Day and Gold to Slump $50 in a Day...

Get the White House - no, the President himself, to categorically deny this kind of stuff (as in, "read my lips, Mahmud's my little buddy...").,,1990498,00.html

Morning Market Comment 1/25/07

I had wondered last night whether the swarm of earnings this morning would change yesterday's exhuberant Wall Street picture this morning, and it has to a degree. Stock futures are indicating a mixed open. Following eBay's better than expected numbers and rally that has the stock up over 12% this morning, Ford (F) posted a loss for all of last year totaling $12.7 bln. $5.8 bln of the loss was racked up in the 4th quarter for heavy duty restructuring of its North American operations. Ford shares are down 1%. Company's like Lockheed (LMT) and Nokia (NOK) beat the street and are higher. Peabody (BTU) also beat, but is lower on a lowered 2007 forecast.

This email alert from the Journal: "Blackstone raised its offer for Equity Office to $54 a share in cash, 11% higher than its previous bid. The deal, regarded as the largest leveraged buyout in history, is now valued at about $38.3 billion, including debt. Blackstone previously offered to pay $48.50 a share for the office-property landlord." EOP up another 3%.

Zen continues to have an excellent handle on the market picture:

At 10 this morning existing home sales are due. Economists are estimating an annual pace of 6.25 mln for December. I wonder if the numbers will be skewed by the recent warm weather? Jobless claims jumped in the latest reporting week from 290k to a higher than expected 325k.

March EuroFX is up 10 points. The yen also rallied against the dollar after a BOJ board member said an interest rate increase shouldn't be delayed.

Crude holding on to a gain of 13 cents following more OPEC comments yesterday that no special meetings will be held. Kuwait's minister even said a $55 basket price is fine with them. Nat gas down another 2% on sell the fact that coldest day of the season in the northeast arrives Friday.

Gold on the rise again, trading as high as $654.80... really a test of the $650 level... how long it can stay above $650 and whether it can close above $650.

Wednesday, January 24, 2007

Evening State of Play

Nasdaq futures are up about 6 points tonight following the better than expected earnings from eBay. So the stage is set tonight for more positive momo tomorrow, but there will be more earnings that you can shake a stick at tomorrow. A.M. highlights: AT&T, Kimberly Clark, NCR, Ford, Rockwell Collins, Northrop Grummin, Occidental Petroleum, Amgen and Lockheed Martin. We'll see if the morning batch of earnings changes the mood on the street

The big after the bell report on Thursday will be none other than Microsoft, complete with conference call featuring FrankenSteve Balmer among other key execs.

Sun and Yahoo! grabbed the headline credits for pushing the Nasdaq higher in the mainstream media, but closer examination shows the disk drive makers (Amex Disk Drive Group DDX) provided the strongest jolt to tech with a near 3% gain today as Seagate and Western roared higher. Earlier in the day I noted the Xs or Spiders and how some of them were lagging during the morning and that more power was needed. As the day wore on some of the Spiders came on with a vengeance with XLF (Financials) and XLB (Materials) hitting lifetime highs in turn pushing the NYSE Composite to a lifetime high as well.

Last night I wondered about Google and how it would respond to Yahoo's earnings. Answer: 5% rally, or a $21 surge.

I also wondered whether we'd get to $57 crude this week. That may be a bit too far too fast, but it's pretty amazing the turn of events this week. Don't fight the tape applies to all markets. For the folks who cockily made the crude put bets last week and ignored the "tape"... debacle. Of course, the market can still reverse course and fall, and I'll be ready if that happens too!

This has been one of my best trading weeks this year. The volatility has been great. Gold moved $10 from the low of the day today and I had a lot of fun with that. I am out tonight for a breather, but will be rising early with the Europeans to jump back into the frey tomorrow morning.

All of that action in gold even as the dollar is unable to do anything meaningful against the Euro... EuroFX tonight up 1 point basis the March contract.

The Wall Street Journal reports times are a changin' on the floor of the Big Board - the floor brokers are disappearing as automation takes over (Click Here). I worked for a number of years on Wall Street covering markets for FNN and CNBC Radio back in the late 1980's and early 90's; the folks on the floor were always an intense, but pretty pleasant bunch. At some point, CNBC and the coming FOX TV Biz Channel will find broadcast hits from the Big Board floor a less exciting live element, unless for PR purposes the NYSE keeps enough folks around.


Posts 31c vs consensus of 28c. They've also thrown in an expanded stock buyback of up to $2 bln worth over the next 2 yrs. Shares are racing past $32 and could aid a further rise in the stock market tomorrow.

Pay Attention Time With Gold

Big recovery today from trading as low as $639. Without directly addressing gold, the link to the right is a must read and gives a greater understanding of why gold has managed to run back to these levels in recent weeks even as the dollar as drifted in the $1.30 area vs the Euro.

As noted earlier in the week... it was just too obvious that crude was supposed to tumble below $50 to enrich the crude future put holders. It's trading this afternoon above $55.

As further noted this morning, energy stocks (XLE) were seen by me as an important ingredient needed to give the rally legs today in the stock market since names like Yahoo and SUNW were weaker names that needed some help in the leadership area, and that's what we're seeing this afternoon. It looks as if the S&P is finally breaking out of the recent range to the upside and perhaps this opens the door for a run up to the 1450 area. But watch out, especially if gold can make that break above $650 and then to $680. I've almost completely transitioned away from short term stock market trading (but will continue to keep a close eye on things), holding mostly long term core stock positions, in favor of commodities futures and forex; and that's where I'll be concentrating my efforts, both long and short in the coming weeks.

Been Hobbled Again Today

will have some postings this evening.... January has been a bad month with every illness taking advantage of the compromised immune system from the anti rejection meds.

Quick DOE Data

Crude inventories rose by just 789K barrels vs. consensus estimate of 1.3 mln. Gasoline inventories rose by over 4.01 mln vs. consensus estimate of 1.5 mln. Distillates were up 750,000 vs. consensus estimate of a drop of 250K.

No doubt, these numbers give the bears something to work with, even with the smaller than expected rise in crude inventory number.

Quick Mid Morning Comment

As suspected, YHOO and SUNW did give a lift to the tech Nasdaq, but the mirth has only nominally spread into the broader market. YHOO and SUNW are pretty much 49th string players... almost like a pro football team calling the temp agency for relief players. But the bulls will take what they can get and the overall market is holding on to gains. XLY, XLE, XLI are lagging today; only XLK is up more than 1%, and XLP, XLB and XLU are each up less than a half percent.. not much power at all.

Even in the deal-o-rama world, word that Goldman and Morgan and circling for some of the energy assets of Dominion (D) is enough to get the stock higher by only about 2%. By the way there are some funny conspiracy theories already making the rounds about how it smacks of desperation that Goldman and Morgan, rivals extraordinare, are working together to cobble this combo to support the energy market. LOL! The market has already spoken with an almost non reax in D shares and what ever happened to the idea of companies wanting to shelter their risk and having to pay for that ability? I'm a suspicious guy by nature, so the conspiracy theory is too easy. Plus, a $16 bln deal is needed to support the energy market? I'd say history is on the side of the energy bulls, or has it become unfashionable to remember facts such as when gasoline, really not that long ago, was 20-cents a gallon?

Morning Market Comment 1/24/07

It looks as if there may be some further tech leadership today. Nasdaq futures continue to show the strongest of the futures gains with a rise of a half percent.

Imagine that Yahoo! is going to be one of the leaders today. It's up about 5% after earnings last night. Google's up in sympathy by more than 1 percent. Even long, long time laggard Sun Microsystems (SUNW) is rising after posting its first profit in six quarters along with news KKR has invested $700 mln.

A quick round up of some other earnings...
Corning (GLW) posted Q4 earnings earnings 3c above estimates w/stronger than expected revenue. but sees Q1 at 24-27c vs consensus estimates of 27c,but stock still up 4%.
Hershey (HSY) missed at 67c, vs estimates of 71c.
Amerisource Bergen (ABC) beat with earnings of 65c vs ests of 56c.
Unisys (UIS) earnings at 6c, below 9c est.

AMD - down another 6% after posting the full set of numbers. Let's face it, AMD and Intel are engaged in a Monty Python like battle... where right now AMD is the knight and has lost a number of limbs, but is still saying to Intel... "C'mon coward, only a flesh wound... let's keep fighting.." AMD has no choice, it's the nature of the business, and perhaps the company's will reverse roles again. Intel is up 4-cents this morning.

54-cent breather for crude oil as the SPR news is assessed... complicated stuff that doesn't resolve issues with all the papers barrels and the March contract in the near term, but does seem to change market dynamics in a big way overall over time. Nat gas after a huge 2 day run down 1.2%. Gold also taking a breather in the $643 area this morning w/little upward dollar push from State of the Union. March Euro dollar FX holding at above $1.30.

But the message remains clear... a close above 1432 on the S&P is needed to show the bulls mean some real business, or a break below the 20 day moving average on the S&P to show some bearish seriousness... otherwise it remains a game of 1970's Atari pong. Yahoo! and SUNW as the tech leaders don't give me the greatest of confidence, but let's see what they can do. Deals can also spur bullish feelings and this Dominion package that Goldman and Morgan are putting together can also work to get some speculative juices flowing in the market. more later.

Apple's Jobs Quesitoned By U.S. Authorities

Hmmm.. Reuters breaking the news early this morning.. (for Jobs click here)

also here:

This appears to be fresh news about fresh questioning.. not rehashed from earlier this month.

Tuesday, January 23, 2007

Evening State of Play

Let's start with energy.

Natural gas led the way again, getting past $7.60 per decatherm late this afternoon (chaaa-ching!). The latest from the Climate Prediction Center late this afternoon was the clincher for the bulls:

"Valid Friday, January 26, 2007 - Tuesday, February 06, 2007

Summary of Forecasts & Hazards

For Monday January 29 - Friday February 02: A massive Arctic air mass, one of the most extensive seen in recent years, is expected to overspread much of the eastern two-thirds of the Nation during the first half of this period, with at least one reinforcing cold outbreak in the latter part of this period."

That's a pretty frisky longer range outlook from CPC.

Some are calling this a "suckers rally" in nat gas, but that's a big mistake and shows great inexperience. As Jim Sinclair notes on his site, it really is as simple as traders in NY and Chicago feeling that it's cold outside and that it's time to bid nat gas higher. And as Stephen Schork of the Schork Report has wisely pointed out in his newsletter, imagine what the price of NG would be if we had a real winter this year!! Now of course, we won't get carried away, much above $8 would be getting carried away, but since it did get cold, and nat gas is a winter fuel, even with all the extra supply, no great surprise that it would rise.

But the story for crude goes even further than just WX. The president announced a goal of doubling the size of the Strategic Petroleum Reserve over the long term. The gov't will begin modest crude purchases of 100k bpd this spring (SPR read here), which enables the long term contango to live on. This news broke via Sam Bodman late Tuesday afternoon. Could we end up seeing $57 crude this week... an amazing turnaround in dynamics. I warned earlier in the week about jumping to foregone conclusions about crude falling below $50 right away. It may not be completely game over for the bears, but in the world of futures, you must be constantly prepared for changing dynamics and often a big clue of a coming change is when prices swing for what seems to be no good reason. Now we get a better understanding of why we saw the turn higher in the crude market late last week.

The president also called for a 20% reduction in gasoline consumption in 10 years, but details were lacking. wonders how it will happen too: (Read Here via Subscription). So it will be interesting to see how the ethanol names fair tomorrow after the big run of the last few sessions. I had noted a couple of names on Monday, and I took some money off the table late today to lock in some gains and may exit completely tomorrow. Like ODA25 ( this blog is not set up to record real time trades, which would be darn near impossible with the futures trading that I'm doing these days.

By the way, did anyone notice that the sleepy coal stocks were on the rise today? That's a stock group to examine again tomorrow along with energy stocks in general tomorrow. This is a big reason why I spend much time on energy. It is a vitally important group in the stock market and a rebound in energy stocks, provided the rise in energy doesn't get out of control, could actually go a long way in helping the market to overcome tough resistance levels.

Gold... (chaaaaaa-ching!! again). remains the place to go for full gold analysis, and if you are interested in gold, it's not a bad idea to check out the community at the Comet Gold boards at: Given recent gains, a breather wouldn't be a surprise.. we'll see, though.

EuroFX drifting higher by 5 points after scooting past $1.30 earlier today. My prediction for a full blown correction earlier this year way down to $1.27 sure was dumb wasn't it? I must have taken too much Nyquil that night. LMAO. It just proves that you can go overboard with charts. I love charts and TA, but technical analysis by itself? As I've said before I think it needs to work hand in hand with what's going on out there in the Twilight Zone.

As noted a few days back, Yahoo call options were unusually heavy and it turns out that with its Panama project on track there was enough happiness to push the stock up 4% in after hours trading this evening. This likely means that Terry Semel keeps his job for at least another quarter, or two. Can you imagine the hell hole it must be at Yahoo! hq these days, with all the small people (that's everyone below 'Terry') worrying about how 'Terry' feels... and wondering if 'Terry' is going to blow his stack, was Terry's mocha latte just right, did 'Terry' drop the F-bomb again when someone accidentally said Google in his presence, and 'Terry' this and 'Terry' that. Oy. As for GOOG, if YHOO is able to turn chicken you-know-what into chicken salad, perhaps GOOG can further reverse its share decline tomorrow. It was up over $5 after hours.

Even with today's rebound in the stock market, we remain locked in the ongoing range. It does look like we may move higher tomorrow, with stock futures in decent shape and Asian markets on the rise. 1430 cash on the S&P still remains a level that many technicians continue to talk about, and I still want to see a real close above 1432. I want to see the market close ABOVE resistance.

The whores and pimps of the lending industry - pretty much anyone and everyone in my book that lured mostly completely dumb and unknowing people into ARMs and negative-AM mortgages - have apparently gotten religion. Bank of America, Citi, among others are reaching out to these borrowers before the borrowers take the lenders over the cliff. (Read here) subscription required.

By the way, what was up with Jim Webb... doesn't he know how to blink? And, Hillary, did they take her through the cosmetology center that was featured in the Wizard of Oz that cleaned up the Lion and Tin Man, or is that just soft focus lens technology they're using these days?

Limited Late Afternoon Post

I will pick up with a detailed "State of Play" post after the State of the Union tonight. I've been pre-occupied today with preping for a cub scouts activity tonight on "Staying Safe and Staying Happy". Tonight I will be lecturing the tiger den on keeping the stops fairly tight as a way of staying both safe and happy! Of, course, I am kidding about the stops tonight, but will be talking to the den about a few simple rules for them to stay safe and happy because safe and happy is what it's all about when you're six!

In between prep and all the other stuff that goes on around here, I have been maintaining a long position in gold futures; so it has been a happy day. I did take a good amount off thet table in the ethanol space, but left some there... it has been last year deja vu all over again. Bio-diesel... another nice word and I think it has been overlooked. More later.

Dollar Dippage

The Eur-USD swung up through $1.30 today on stronger than expected economic data. This included a jump in French consumer spending that was 4x above estimates. Euro zone Industrial Orders also came in better than expected. Stronger eco data in Euro land raises the chances for another rate increases by the ECB,

Forex traders may have the $10 bln in OPEC dollar selling in the back of their minds.. but $10 bln in forex is a rounding error.. it's the message that the 4th largest holder of dollars is sending that may eventually have more of an impact along with China's statements this week that it wants to put its foreign reserves to better use.

And forgive me for being an unconvinced Washington watcher, but what umph does our President have and what difference will the State of the Union message make on dollar sentiment tonight, or much of any thing else tonight in the lives of the average person? Worse yet, the democratic response will show equal buffoonery on the other side of the aisle. There's no real plan within the beltway except for whatever gets them re elected. That is the common denominator that unifies the Presidential hopefuls from Hillary to McCain. Any one of them as winner in 2008 will be concerned most with how he/she gets re elected in 2012. Hillary's sound bite, "I'm in it, and I'm in it to win" had an awful lot of "I'm" in it and not much to inspire the voters. Which brings me back to the dollar.... long term bullish dollar sentiment given geopolitical events (namely the Middle East) and our own domestic problems doesn't seem wise.

Morning Market Comment 1/23/07

Stock futures have come off the lows of the morning.

Better than expected earnings from companies like Bank of America (BAC) and relief that things weren't worse at Texas Instruments (TXN) may be having a preliminary positive impact in getting futures off their earlier lows. S&P futures down just a half, and Dow futures down 9... Nasdaq futures are UNchanged.

Profit rose more than 13 percent at JNJ; EMC's numbers were also better than expected. The bad boy of the day if Alcatel-Lucent where sales at the world's largest telecommunications company fell in the 4th quarter and the company lost money. ALU is down 10%. Ok, so you add a little Oui, Oui to the picture, but you still have about half the picture being the McGinn legacy of Looo-looo-(Art Carney)Lucent and what do you get? Pure non performance as usual.

More important than the stock market... dollar falling today.. EuroFX is up 74 points; gold is taking off, up nearly $10/oz. More in a seperate post.

Energy also up again. It's winter, it's cold - natural gas is leading the way higher with a gain of 4%. But crude for good measure is up 1.6%. Yesterday we fully discussed COT, over the weekend the situation with strong gasoline demand, etc so nothing out there that says we need something to blow up in the Middle East to get the price to move higher.

By the way, the password of the day continues to be (in my best whispering voice): Ethanol.

TXN - Texas Instruments

So it does look as if last night's rise for was real, though there can even be big differences between morning pre market and what actually happen when the real trading begins at 9:30.

But TI (TXN) bulls can take comfort in knowing that Merrill Lynch upgrade TI to "buy" from "neutra" with a price target for $35. JP Morgan reiterated an overweight saying the TI call last night had "several signs of a bottom". STFL maintained a "hold", while Jeffries maintained a "buy" with a $36 target. AG Edwards says TI's weak outlook for the March quarter is not a suprise and maintains a "buy".

Shares of TI are up 3% pre market, but again - especially with stock futures lower overall, we'll have to see if those gains stick and make any difference for overall tech. Perhaps a case of too little, too late.

Monday, January 22, 2007

Evening State of Play

Natural gas and crude are taking a breather this evening after a very volatile day. Howard has teased me in the past, and it's all taken in great fun, about being an old guy, but I am still pretty fast with a minute chart and a mouse and today's volatility resulted in a variety of long and short plays (all nicely profitable) in the futures market which I won't bore you with. WRT natural gas, DT is expecting 3 real arctic cold fronts to swing through the northeast over the next 10 days so there will at least be some support for nat gas at these levels even with underground storage brimming at well above normal levels.

March EuroFX down 11 points tonight.. still pinned near $1.30.
Gold holding near $634.

S&P futures up 3/4's, Nasdaq futures up 1-3/4's.

TI (TXN) posted earnings and guidance that were above the worst case scenarios of a number of analysts and the stock rallied in heavy after hours trading by over 3%. We'll see what happens after analysts weigh in with reax tomorrow morning.

Gap (GPS) ousted Paul Pressler as CEO after 2 yrs of weak sales. Bob Fischer, the son of the founder will serve as interim CEO. Gap shares rose 2% after hours. The company will likely be sold. Pressler will get at least $14 mln in severance... so he's a mere pauper compared to the likes of Lee Raymond and Hank McKinnell, etc.

IF Texas Instruments were to have some positive impact on tech-land, it would be handy one two punch for the bulls IF some big banks could help the market as well. On deck tomorrow morning with earnings, Bank of America and Wachovia.

Our President delivers the State of the Union message tomorrow night. Remember on the Little Rascals how Miss Crabtree would rebuke the children by saying if they didn't behave they wouldn't grow up to be president? From the last few that we've had, a 21st century Ms Crabtree would probably warn the children that if they didn't behave they wouldn't grow up to part of far nobler professions like Shyster, Snake Oil Salesman, or Telemarketer (ok, that telemarket one was a really low blow). The Wall Street Journal reports, "President Bush has lost the nation's ear, leaving him with little leeway to pursue major policy initiatives, especially on Iraq. His approval rating is just 35%.A new Wall Street Journal/NBC News poll on the eve of Mr. Bush's State of the Union address underscores the extent to which he has lost the nation's ear. Just 22% of Americans say they want the president to set policy for the country, while 57% want Congress to do so. Two-thirds say his performance in office is unlikely to get better in his last two years as president." (Click Here - subscription required).

Got a note tonight from a reliable source on Wall Street. Morgan Stanley has sent a research note out tonight. They are going "neutral" on equities in their U.S. portfolio strategy and will be raising some cash. More on this tomorrow morning once this gets broader distribution. It would look odd if this blog spills the full beans tonight.

Citigroup DEMOTES Krawcheck

That's how the headlines should read regarding the reshuffling of the deck chairs at Citigroup (C) (details here) that features the removal of Sallie Krawcheck from the highest ranks of Citigroup management as CFO, back to the job she held two years prior, head of the company's brokerage and private-banking unit.

Chuck Prince, the CEO of Citi whose own employment outlook is in doubt is quoted as saying, "From an operating standpoint, it's clearly a substantial step up from what she had before.... Anyone who thinks this is not a promotion is missing the boat." Whoa, what a disgrace. Prince is just another celeb type with no shame, who lives in his 7 or 8 figure reality and thinks he can justify anything and fool anyone. Truly sad.

This isn't at all a dig at Krawcheck who actually has an enormous amount of respect and admiration at Citi. Prince is not honest enough to admit a few very important things: That he didn't let and develop Krawcheck shine even more as his CFO, and that he allowed Krawcheck's successor at Smith Barney to screw things up. Krawcheck, by all accounts, seems happy to go back to Smith Barney and the employees there are happy to have her back, but it's Prince who can't admit that he needs to remove star power from the highest ranks and effectively demote her to fix a big problem.

It's striking how in the space of a few generations integrity is gone. Sure, you can argue that Walter Wriston's era 30 years before was simpler and quite different compared to today, but it sure didn't seem that way when it was actually happening and Prince wouldn't be collecting his big pay package were it not for what guys like Wriston built. Wriston and his ilk were men of power and distinction - distinction for having at least a shed of decency and integrity.

Yahoo! (YHOO)

Yahoo! (YHOO) is an easy target to assail.. just look at this chart, which shows utter misery over the past year, but beyond that, shows utter non performance vs the price performance of Google (top of chart). reports this bit of intelligence:
"YHOO is expected to report EPS of .13 cents on 1/23. AMTR say's "conservative Guidance is expected; we still like YHOO in 2007." YHOO call option volume of 74,440 contracts compares to put volume of 48,653 contracts. YHOO February option implied volatility of 47 is above its 26-week average of 35 according to Track Data, suggesting increasing risk."

Pre Close Note

As noted over the weekend, TI (TXN) posts earnings tonight.

Options volume has been very heavy in the Feb30s today... 28k contracts vs open interest of 25k. At m ore than $1 out of the money, this is going to be an interesting wager for some who have bought large blocks of these options today. But as Lauriston commented earlier, 2nd week of earnigns, guidance has not been so hot.. when will the message sink in... excellent point. We;ll know soon enough.

Mid Afternoon Update

Well the rise in crude was short lived. As mentioned in my comments section, indeed the large specs did remove themselves from 90% of their short positions last week. This is information that is readily available from the CFTC web site, though the person who really crunches these numbers and who makes it makes sense is Stephen Schork of the Schork Report. Total open interest, or even knowing total short interest isn't enough, it's also a game of understanding who's short, who was short, who has gone short, etc. I ended up shorting twice since the highs of the day, not wanting to let a good opportunity get away from me with my last fill was at $52.25. 1 profitable long trade this morning and 2 profitable short trades in one day is enough for me to call it day!

Stock market... still flirting with the lows du jour... interesting though that a variety of big banking names are higher ahead of earnings.. hmmm.

Mid Morning Comment

Crude oil continues to rise along with natural gas.. but the nat gas rise is only part of the equation. The latest COT data is the real reason why crude is going higher. Wow is all I can say to the latest COT data and some of the expert analysis I've seen. Let me put it this way, if you don't know what you're doing, you're liable to make the wrong conclusion that with open interest as high as it is that crude should be headed for a total implosion. There's much more to it than that. It may be too early to call a bottom in the crude market, but things sure are getting interesting.

Stock market at lows of the day. Boeing downgrade is getting some of the blame. Wachovia had downgraded to Market Perform from Outperform saying commercial aircraft order cycle has peaked and that the company's 787 program could experience delays. Pfizer rose pre market, then the real players came in to bid it down by less than 1 percent, but PFE's dip does get the recently strong pharma stock group off to a bad footing this week. By the way, good analysis by the guy who commented in my weekend thread about there not being much bullish conviction about PFE.

50 dma melts today for QQQQ and for stocks like AAPL. It would have been better if I had lapsed into a 3 week coma and just woke up today to be back here at this point again for the market, plus I would have missed this miserable cold/sore throat/stomach virus/screwed up liver enzymes condition. But back to the market, I am now looking for a close below 1414 on S&P cash to spell greater opportunity for the bears. So 99 off the Dow today still keeps us in the range bound neck of the woods. VIX up above 11 today... but let's face it, until VIX can break above its 200 day of 12.95 this is also remains part of the range bound script.

With energy higher today, energy stocks in general are going higher. Ahead of the President's state of the union message Tuesday night, ethanol stocks are lighting up. The Preisdent is likely to call for more use of cleaner burning fuels. What we really need is an energy Manhattan Project to come up with a real alternative to fossil fuels, but we sure won't be getting that from Mr. Big Oil President and never mind that it still takes about 2x the amount of energy to produce corn based ethanol vs the energy the ethanol yields - that's what I mean by a scam. And be that as it may, the ethanol scammers, err.. the ethanol company shares are on the rise today... names like ADM, PEIX, AVR. What's good for ethanol is also good for grains too. But I'll be honest, I'm long in this space (always smart to chase the scammers who are getting our tax dollars), for now and perhaps longer if the government pours more money into CELLULOSIC ethanol research.

Morning Market Comment 1/22/07

Stock futures are pointing a bit higher this morning. Pfizer (PFE), part of one of the strong drug stock group of late, posted EPS a penny better than expected and revenue that was a tad stronger than expected. The Pfizer earnigns comes ahead of news from the company on restructuring plans which could include over 10 thousand job cuts and plant closings. Pfizer shares are up only 8-cents pre market, but at least it was able to beat street estimates and perhaps the news bodes well from other big name drug companies like J and J (JNJ) and BMS (BMY) which will be posting earnings later in the week.

With the Nasdaq/QQQQ able to withstand a test of the 50 dma on Friday and with the SPX bouncing back to 1430 again and with the VIX well below 11 and the VXO in free fall on Friday, it's back to the range bound fun and games once again featuring an attempt by the bulls to push the market higher at least this morning. A close above 1432 is still what I'm looking for to bring on some bullish feelings. As noted yesterday, Texas Instruments posts tonight. We already know top and bottom line will be at the low end from their December guidance, but their outlook will certainly give additional sense of demand in the world o' tech.

Natural gas is still up about 4-1/2 percent as weather conditions are similar to what we once called 'winter'. Sure, supplies of nat gas are 33% above normal for this time of year, but traders feel the cold, look at the forecasts, etc and it's only natural that the price gets pushed up. DT over at WXRISK.COM is even talking SECS again (for the definition of SECS go to DT's blog). In sympathy, crude oil got to as high as $54 basis March, but has pulled back to being unchanged. There's certainly crude over supply as well, but these markets are subject to the psychological effects of weather forecasts which is what makes trading them so much fun; it's also why I prefer to remain nimble with crude oil futures as opposed to the use of options on energy futures (I like to sleep at night).

Gold and silver showing weakness to the tune of a quarter percent. I sold my long gold futures position last night to lock in a profit of about $5/oz from Friday's rally.

EuroFX down 29 points, but pretty much stuck right near $1.3000.

Sunday, January 21, 2007

Evening State of Play

There's little change in the dollar tonight, though China again is saying that it won't be allowing it's more than 1 trillion dollars worth of foreign reserves sit idle (Click Here). The March EuroFX is up 7 points.

Energy is getting a firmer bid with Natural gas up over 4% and March crude sporting a small rise of a half percent.

Gold is lower by 50-cents.

Stock futures drifting just slightly higher.

I have transitioned from a sore throat/cold to a wicked stomach virus, so probably no more posts until tomorrow morning

Even the Middle Eastern Press Has Something To Say about Jobs

As in Apple's Steve Jobs... even putting a number on how shares would react if he suddenly left Read This Gulf Times Write Up.

Saturday, January 20, 2007

Random Weekend Musings Part 2

A couple of key earnings reports are front and center on Monday:

During the course of the weekend employees of Pfizer, the maker of Viagra and Lipitor among many other drugs, get to wait for their company's CEO Jeffrey Kindler to unveil a massive cost cutting plan on Monday morning that is expected to mean the elimination of more than 10,000 jobs. (Read more about it here). Of course, those employees will get the standard severance.. nothing like what former ceo Hank McKinnell received for being forced out - the 200 mln severance package.

Options players have been making bullish bets ahead of the Pfizer news. On Friday more than 10,000 Pfizer Feb 27-1/2 calls traded on open interest of over 27,000 contracts, vs put volume of 5,281 on open interest of just over 37-hundred. The company is also due to post earnings Monday morning. As I noted on Friday, drug/pharma stock groups have been strong in recent weeks.

The stock is looking a bit overbought, but as they say, "we shall see what we shall see".

Texas Instruments earnigns will be out after the bell on Monday. TI gave shabby guidance in December, so shabby numbers are expected. The surprise element for Monday evening might be in the area of margins weakness. 38c is the expected bottom line number, $3.43 bln the forecast top line consensus number. On the options side, open interest on the Feb 30 calls out numbers the puts by a 4 to 1 margin with volume on the call side about double the put side on Friday.

Clearly the TI chart has been a range bound mess for the last couple of years, but that may offer an explanation as to why the call activity has been as heavy as it has been in the Feb30's. Support has at least been decent at just above the $28 level. I sure wouldn't touch them with a 10 ft pool, but to each his own.

Economic calendar on Monday features the Conference Board Index of Leading Economic Indicators.

Through the rest of the week, there's a slew of quarterly results which I will highlight day by day. I started off with PFE and TXN because those two sets of earnings could set the tone for the market in general this week.

For the real you-know-whats and giggles, President Bush delivers his State of the Union address in front a Democrat led Congress on Tuesday night. I would imagine that if the Treasury Department has any input, the speech will be as market neutral, or positive as possible; and in general the goal at 1600 will be to keep that Joint-session clap-0-meter going. It is amusing, however, when the President throws in something tailored just for his party and one side of the aisle is cheering wildly as if they're the studio audience for the Price Is Right, while the other side of the aisle sits motionless with icey stares - Clinton and Bush have both done this well. But in the end, with Bush trying to out rank Franklin Pierce on the list of Best/Worst Presidents, I would imagine they will try to keep all political contestants happy on Tuesday night. Gosh, will Bush give Nancy a big, big, long hug and massage on the way up to the podium?

Wednesday will be a quiet one on the economic calendar.

Thursday, the National Association of Realtors will report December existing home sales... can't wait for the NAR spin on how good things really are in the real estate market if you just keep an oooopen mind!

Going into the week, the percent of Big Board listed stocks on point and figure buy signals remains above 70%, a signal the market is overbought. More on this and some other thoughts on the markets later Sunday.