Today is Fat Tuesday and the last
day of both Mardi Gras, and also the last day of meteorological winter.
Preliminary 4th Quarter GDP grew at a 1.6% which was better than
the 1.1% rate that Advance 4th Quarter GDP was seen at last month. Since there
are two more GDP number revisions due before final 4th Quarter GDP is announced
we presume the elves at the Treasury Department will get the number up over 2%.
Inflation is seen at 3.3% at the end of the Fourth Quarter on a year over year basis.
Heinz missed its numbers and is going to be down a point or more on
the opening. There is a hedge fund that has been making break-up or takeover noises
about HNZ and that noise has pushed the share price up $3 in the last week.
We arenít happy with the
performance of Vodaphone over the
last few days. We bought VOD because
T and BLS were moving higher and we thought there would be a natural
migration to VOD. But then there was a downgrade and then another and we should
have exited rather than buy more. Since we bought it for a trade and it
is down 10% from our initial purchase we are taking our lumps and moving on. On
a value basis it is cheaper than all the other wireless companies, but when a
knife begins falling in this market on a multi day basis it is best to avoid it
or sell it. We shouldnít have added the shares yesterday but we were in a master of the universe frame of mind. Given
present market conditions, when two major brokerages downgrade a stock unless
one is resolute and wants really wants to own a stock it is best to avoid it.
That is a lesson we continue to relearn.
The same thing happened (three
downgrades after we purchased) with Intel
but we want to own the stock, for a while at least.
We are switching the Vodaphone we
own in most accounts to Applied
Materials which is down the same amount in the same percent in a little
longer time frame and we are also buying SYMC
in aggressive/large accounts. Symantec
is back at $17 after running to $19.70 on news that Fidelity Magellan was
buying. Also Fidelity Magellan buying may have been the reason it ran to $19
By the by, we bought Hershey with a longer term horizon. The
difference between our view of HSY and VOD is that when we made the initial
purchase of HSY we were ready to buy the HSY at lower prices and to hold for a
longer period of time. With VOD we bought as a trade and didnít plan on buying more
at lower prices and shouldnít have.
Existing home sales in January
were down 2.8%.
Google is tanking as the CFO of GOOG says growth is slowing it will
have to find other ways for external growth. The shares are down $40 and have taken the rest of the market with
Breadth is now 3/1 negative and
the DJIA is down 100 points at .
This news from Google is supposedly old news since it was in the 10K but
neophyte day traders donít read 10Ks. *****
Natural Gas is now at $6.72 after trading at $16 early in the fall
of 2005. So much for futures markets setting reasonable prices. The gouging
that occurred should spur an investigation but wonít.
In our aggressive/large accounts
we sold the DD we bought yesterday for a scratch plus profit to get a bit more cash
in the accounts. We donít know what the fallout from the Google news is going
to be overnight but with Bush going to India
and Pakistan there
are bound to be riots.
The markets canít seem to break
the up one day and down the next pattern that they have established and that
has been symptomatic of an intermediate top over the past year. As always time
will tell but we want to be in comfortable
stocks and a lot of cash if our idea of a rally into the end of March is wrong.
European Bourses were off sharply
today with most down over 1% to 2%.
Markets that are down all day tend to close down.
Ford has come down to $8 where we have bought it before and so we
are buying a bit for our large/aggressive accounts.
Gold closed up $7 at $563 and Oil
ended at $61.69 up 28 pennies.
Treasuries closed better with the two-year at 4.68% and the
ten-year at 4.55%.
At the bell the DJIA was down 104 points at 10992 The S&P 500 lost 14 points to 1280 and
the NAZZ was down 27 points at 2280.
Breadth was better than 2/1 negative, volume was brisk and new
highs contracted sharply to fewer than 250 from more than 500 yesterday.
And tomorrow is midweek and the
first day of March. The Ides are
just around the corner. The casino will be open for business as usual.
27 February 2006 Daily Comment
We are back in the land of milk
and honey after a week-end of basketball enjoyment. The Norse won both their
exciting games and are now preparing for the conference tournament. They need
one win for an NCAA berth in Division II. We arenít counting our chickens but
we have hope.
Overseas markets were to the plus
side with Asia closing higher and Europe
trading higher at mid day. Early on,gold was up $2 to $558oil was higher by 84 pennies to $62.07.
But as the stock markets opened oil has traded lower and slipped to the
stocks opened higher. Apple is
supposed to be introducing new commuters with Intel chips for immediate sale tomorrow and there are also rumors
that Apple is going to buy Disney.
As a result Disney is higher. JMP Securities also raised its opinion on INTC
and the stock is up a few pennies on either that or the Apple news.
Vodaphone is lower on news that they are going to write down
goodwill by $40 billion. Since VOD has $82 billion in goodwill on the books
they have some more writing down in their future. But the write-offs are non cash and free cash flow exceeds $22 billion on a yearly basis and will not
We are buying DuPont in accounts under $40 per share.
We were day trading DD a few weeks ago and lost our focus as the stock got away
from us. Now it has come back in and we are adding in small amounts in our
large/aggressive accounts. We also picked up more shares of VOD under $20 for those accounts.
New home sales were down 5% in
January and the inventory of new homes for sale is now at a ten year high and
represents 5 Ĺ months supply.
Oil is now down $1.76 at $61.16 as Russia
and Iran seem
to have some deal to do the enriching of uranium in Russia.
Gold is down to $555. The DJIA and
other major measures are all up.
Oil ended at $61 and Gold
at $556.30. Treasuries were unchanged with the two-year at 4.72% and the
ten-year at 4.54%.
At the close the DJIA was up 36 points at 11098. The S&P 500 gained5 points to 1294 and the NAZZ
rose 20 points to 2291.
Breadth was almost 2/1 positive but volume was light. New highs
And tomorrow is another day and
the casino will be open as usual.
22 February 2006 Daily Comment
We are going to be
traveling tomorrow and Friday since the basketball season is winding down and
we have to catch a few NKU games. We also have to visit our favorite accountant
and a few clients. So today will be the last post until MondayFebruary 27.
The Consumer Price Index for January was up 0.7%. The Core CPI which
excludes everything folks need to live and get to work it was up 0.2%. Year
over year the CPI was up 4.4% and the core rate was up 2.1%.
closed mixed with Japan
down 0.7% down 113 points and Europe is higher.
In early morning trading Oil was
down 72 pennies at $62.02 and Gold was down $3.40 at $553.
Stocks opened higher and after an
hour of trading the DJIA was up 40 points.
Intel was downgraded again and it looks like it is going to break
$20 on the downside. We are committed to our holding since we think the upgrade
cycle will begin later this year when MSFT
releases its new operating system and that INTC and MSFT will benefit. Till
then we will batten down the hatches and keep a lot of cash on hand. Of course
if the big boys and girls take a liking to either we arenít averse to a short
We added shares of Vodaphone to more accounts and picked
up a few more shares of Smuckers for
our larger/aggressive accounts that didnít own it.
Banks borrow short and lend long. That means banks borrow money at
short term rates and lend out money at long term rates. With the current
inversions where short rates are 15 basis points higher (4.68% on T Bills) than
long rates (4.53% on the ten-year) one (including us) would think that banks
would not be making new highs in the current interest rate environment. Wrong.
We guess we are missing something. *****
Investors Intelligence has 45.3%
bulls last week and 29.5% Bears. On a contrarian basis those numbers suggest a
In our aggressive accounts we traded (bought and sold) Smucker
today for an 80 penny profit and we are adding Hershey to more accounts.
Crude oil closed down $1.72 to $60.95 as traders await the release
of inventory reports on Thursday.† Or
maybe the boys and girls just felt like selling today. Gold ended at $557.
At the bell the DJIA was up 70 points at 11138. The S&P 500 gained 10 points on the day to end at 1292 just
below 1295 resistance. The NAZZ ended at
2283 up 20 points.
Breadth was 2/1 positive all day and volume was moderate. New highs popped over 400.
Treasuries finished better with the two-year at 4.67% and the
ten-year at 4.54%.
The casino will be open for the next two days and we hope all of our
readers can survive two days without our words of wisdom.
We are back on
Monday February 27. *****
21 February 2006 Daily Comment
This is from a NYT article
on Saturday: Having overcome the country's sluggishness in embracing cyberspace
and deregulating discount brokerage firms, day-trading has taken off in Japan,
the world's second-largest financial market, after the United
States. The number of accounts at Japan's
electronic brokerage firms reached 7.9 million last September, up from 296,941
in 1999, when the first such firm opened, according to the Japan Security
Dealers Association. That is an impressive gain, even after considering that
some traders hold more than one account.
In the Monday NYT there was an
article that mentioned that China
owns $829 billion of U.S.
assets most of that in Treasuries. Only Japan
holds more at about $850 billion in Treasuries.
was up 2.9% (see first thought), Hong Kong was up
slightly and Europe is higher as are U.S.
futures. Oil is back above $61 and Gold is up $1.
Retailers are announcing better
than expected earnings this morning with Wal-Mart, Federated and Home
Depot all beating estimates on earnings and revenues.
The FOMC (last Fed) meeting
minutes will be released at
today. Tomorrow the Consumer Price Index will be released.
We sold the INTC shares we
bought on Friday for a 15 pennies loss. We have a good position in the
stock and we were too aggressive in adding the shares on Friday, after the RBC
We are adding shares of VOD to
accounts after JPM downgraded it. We are not doing this for a day trade.
VOD is completely wireless and owns a chunk of Verizon Wireless plus wireless around the world with 135
million subscribers. It has less debt than most of the large Bells and some
kind of buyout is going to occur with its Verizon
holdings. We also like that it is world wide company.
The Index of Leading Economic
Indicators was up 1% in January versus and expected 0.3%.
We sold the SJM we
purchased on the sell off Friday for a small profit. We also sold Hershey except
for some of our larger accounts for a $1 profit.
The FOMC minutes see inflation a
little bit higher than desirable but rates may be near where they need to be
and inflation seems to be contained. Hopefully these are the last Greenspanís
nebulous something for everyone parsing.
And so we are reading Jin
Cramerís latest missive to subscribers to his portfolio action and he says that
he is selling one half of his 5000 share Intel position because he doesnít want
to hit the market with his whole potion at the same time. The implication is
that 5000 shares of Intel is too large a position for the markets to handle
well. Right now INTC is quoted $20.54 to $20.55 with 60,000 shares on each
side. That means Cramer could sell 60,000 shares of Intel on the bid. Cramer
has been around a long time, too long we are beginning to think.
By the way, he is selling Intel
because he says AMD is eating INTCís lunch. Maybe
they are but we have heard that story for years and AMD always manages to screw
This afternoon Oil and Gold have
both pulled back form their early morning highs as stocks have sold off. That
seems counterintuitive but is the way the markets have been acting for a while.
Treasuries are unchanged on the short end and better on the long end.
Oil finished up $1.22 at $61.10. Gold
ended at $556 up $2 and the two-year Treasury went out at 4.70% while the
ten-year was 4.56%.
At the end of the day in many
accounts we bought back Ėat lower prices- the SJM and HSY that we
sold Friday and today.
At the bell the DJIAwas
down 47 points at 11068. The S&P 500 closed down 4 points at
1283 and the NAZZ lost 20 points to close at 2262.
Breadth was 5/4 negative
on the NYSE and 2/1 down on the NAZZ. Volume was moderate and new highs were
The casino is open tomorrow with
only three more days to play this week.
17 February 2006 Daily Comment
was down 300 points overnight as the rest of Asia was
seems especially volatile this year. Europe is higher
and Gold is up $2 and Oil $1.50.
Today is an options expiration
day but also it is also the beginning of a three day week-end so the trading
volume may be lower.
Paint drying would be more interesting
than todayís markets. Trading in Treasuries is closing early and traders are
squaring positions for the holiday. Gold is up $4 and Treasuries are firmer o
the short end. Oil is up but below the dayís highs.
RBC lowered their price target on
Intel from $29 to $21. They are
worried about inroads being made by AMD. To our way of thinking, INTC is on a
low, it remains a tremendously profitable company with a 75% market share and now Apple is using INTCchips for the first time ever. If it
were on its high or midrange we would be worried. But we are not at these
Year over year the Producer Price
Index was 1.5% ex food and energy. With food and energy it was 5.5% but no one
pays attention to that number. We wonder whether Bernanke believes that food
and energy donít matter.
Treasuries closed higher with the two-year at 4.67% and the
ten-year at 4.54%.
Oil closed up $1.42 at $59.88 and Gold ended at $554.80.
We bought more INTC in our large/aggressive accounts down
60 pennies on the day and we also picked up some Smuckers at $37.80. The shares are down $4.75 on the day on an
earnings disappointment. Donít cry for the two Smuckersí boys who run the
company since they each sold about 400,000 shares last June at what looks like
about $50 per share. If itís Smuckers it has to do good for us, we hope.
Carl Icahn called of his takeover
attempt of Time Warner and the
shares are headed back down. We would guess that TWX will buy him out at a
price that pays him for his effort.
At the bell the DJIA was down 10 points at 11111. The S&P 500 lost 3 points to 1286 and
the NAZZ dropped 12 to 2283.
Breadth was 5/4 positive on the NYSE and the reverse on the NAZZ. New highs exceeded 400 and volume was moderate.
The Casino is closed
16 February 2006 Daily Comment
Hewlett Packard had very good
numbers and that has added a positive tone to the stock markets pre-opening. Asia
was higher overnight and so is Europe. And gold is down $2.40
and oil is up 65 pennies this morning.
1280 is strong resistance on the
S&P 500 and was tested twice yesterday as the Index closed just below that
number. With 1275 close as first resistance the trading range band is
narrowing. The S&P 500 needs to break out convincingly above 1280 for the
rally to gain steam. With HPQís
numbers this morning and better talk about Dellís numbers tonight it has a good
chance to do that. But there is a three day week-end upcoming and so how
traders feel about being long or short over the holiday is going to control in
the very short term of two days.
Jobless claims rose 19,000 to 297,000. January Housing Starts and Building Permits
were greater than expected. And both were revised upward for December also. Import prices rose 1.3% which was
greater than the 1.2% expected.
We bought more GE for accounts that didnít own it. If
stocks are going we believe GE has a few points in it and if this rally is going
to fail GE is near its 15 month low.
Tomorrow is an options expiration
day and that may be having some effect on stocks although we donít know what
the effect is since there are so many different strategies. In fact there may
be so many that they cancel each other out.
For our large/aggressive trading
accounts we repurchased Vodaphone
which owns slightly less than half of Verizonís wireless operation. All the
Telephone stocks are moving and this one is lagging the group.
Google gained $21 today.
Gold closed at $548, Oil at
$58.80 and Treasuries were basically
At the bell the DJIA was up 60 points at 11120. The S&P 500
gained 9 points to 1288 and the NAZZ
rose 18 to 2294.
Breadth was 2/1 positive and volume
was moderate. New highs were 370.
And tomorrow is the last casino
day before traders board the charters for Las Vegas.
15 February 2006 Daily Comment
Chairman Ben says a few more rate
hikes may be necessary and that housing prices are not going to collapse. He
sees steady economic growth and maybe some pricing pressures.
was down 200 points and Europe is weak. U.S.
stocks opened lower. Gold is down another $3.50 and oil is a bit higher at the
opening and Treasuries are firm.
With the S&P 500 above the
1275 level and the markets looking for a Bernanke rally we are going to place Intel and Microsoft in accounts. MSFT shares
are down $2 in the last month and we think there is a trade in them. INTC is
down $5 in the last two months.
We had a client who is in the
software business call and suggest MSFT
for the longer term because he feels that companies that use computer equipment
are entering an upgrade cycle. He also likes Cisco but we are inclined to wait a little on it since it is up $2
in the last month.
Finally we are adding Hershey to larger/aggressive accounts. The
share price is down from $68 to $52 in the last year on higher sugar prices.
Sugar is one of the traded commodities like natural gas that are being
maneuvered by the big boys and girls. At this price we think HSY is worth the
risk for a trade.
And we bought GE for more than a day trade in the
large/aggressive accounts with enough room to buy shares at a lower price.
We arenít committed to the longer
term on any stock.
Investors Intelligence has 48%
bulls and 27% bears in its latest survey. The drop in bulls under 50% suggests
to us that and into March rally is possible.
In a wonder of wonders oil
inventories were up in the latest weekly report and oil has dropped under $58
down $1.62. Gold is off $7 to $542.
At the end of the contra hour the
S&P 500 is pushing through resistance at 1280.
Treasuries closed slightly weaker
on the short end with the two-year at 4.70% and the ten-year unchanged at 4.60%.
At the close the DJIA was up 30 points at 11060. The S&P 500 gained 4 points to close at 1280 and the NAZZ was up 12 points at 2275.
Breadth was 3/2 positive on the NYSE and over 2/1 on the NAZZ and volume was moderate. News highs expanded to over 300.
There are only two more casino
days until the three day Presidents Day week-end.
14 February 2006 Daily Comment
We wish a Happy Valentineís day to all our Valentines.
The new Fed Chairman Bernanke
speaks before Congress on Wednesday and traders are positing that knowing the
fellow will help the markets. That is plausible because there is a lot of
negativity towards stocks right now and a new catalyst is needed to get them
moving higher into March when the real test will come after Quarter end.
Early morning market data show
closed up 1.5% overnight, Hong Kong was up .50%. Europe
is mixed and U.S.
futures indicate a higher opening. Gold is up a couple of dollars and oil is
down under $61.
Retail sales were up 2.3%, ex
Brian Belski of Mother Merrill said
this morning in CNBC that there could be a 10% correction but that such a
correction shouldnít be of concern to long term investors. We wonder if that is
a throw away line because we donít know anyone with a $500,000 portfolio who wouldnít
be bothered by s drop of $50,000 in value over the period of a few months. We
know from our experience last year that such an occurrence is quite painful
-and we on dropped 6%- and worth avoiding at all costs, especially if the
upside is less than or only equal to
It looks like stocks arenít going
to wait for Bernankeís testimony as the major measures are moving higher this
morning with only oil stocks and homebuilders as groups which are lower.
Natural Gas is down 54% in price in 63 days in the middle of winter. www.minyanville.com says it best when it
say that this price drop proves that it is not supply and demand for the product
that is determining the price of this and other commodities, but rather
liquidity and speculation (by hedge funds and institutions). And we would add
that oil and gas companies and OPEC are enjoying the ride. *****
Today it looks as if the bullish retail
sales numbers have encouraged the hedgies and hot money to abandon the oil
patch and head for the big caps. Folks have been waiting for this rotation and
it has come today. Volume is good as is breadth and when the hot money moves it
moves without regard to price since momentum is the catalyst.
Movement is the name of the game
in the big casino.
Home builders are lower as
Treasuries are a bit weaker on the bullish retail sales. The rise in the yield
on the ten-year is seen affecting mortgage rates which in turn affects the
ability to pay mortgage interest.
In early afternoon trading as the DJIA topped 11000 up 120 points oil
fell to $59.95.
January trading at Schwab rose 62% from last yearís levels. The
little guy and gal are back in the casino. We wish them well.
The NYT is reporting that the oil
industry is going to get royalty relief to the tune of $9 billion over the next
The inversion in the yield curve flattened
today as the ten-year lost ground on the retail sales number. The Treasury two-year ended at 4.69% and
the ten-year at 4.61%. *****
Oil closed at $59.57 down over $1. Gold finished at $550.
At the DJIA closed up 140 points at 11030. The
S&P 500 jumped 13 points to 1275
and the NAZZ gained 22 points to 2262.
Breadth was 2/1 positive and new highs
expanded 200. Volume was moderate.
The casino gave a nice Valentineís
gift to the bulls.
13 February 2006 Daily Comment
After being down large early on Friday the markets reversed in the last
two hours to close up slightly on the day.
Commodity Research Bureau Index fell 4% last week as Copper and Sugar were
hammered. Many commodities are up so much this year that the drop for long time
holders isnít disastrous. But for the Ďnewbiesí we presume they are learn gin
their lesson about being late to a momentum market. The same goes for some of
the mo-mo stocks like Google and Whole foods where a penny per share earnings
miss, even on much higher earnings can lead to a 10% to 20% drop in the share
market volatility in the former leaders is one reason we are on the sidelines
right now. Some traders are anticipating a switch to laggard big caps with the
hope that GE and Citigroup become market leaders again.
We see those stocks as trades but not leaders.
markets are looking for new leadership. Even the oil stocks took it on the chin
as oil dropped to $61.65 Friday afternoon after trading over $69 just a week
This new gambling vehicle is especially prescient while late given the
week-end snowstorm up the east coast. A lot of trading money wasnít made or
lost. Remember futuresí trading is a zero sum gain. No wealth is created; it
only changes hands with a small portion of each trade going to the house. Thatís
why we say these markets are not one larger casino.
The Chicago Mercantile Exchange said Thursday it will begin trading
snowfall futures and options contracts later this month.
world's largest derivatives exchange said the new product, which will trade
electronically starting Feb. 26, should help cities manage risk associated with
snow accumulation. Insurance companies, retailers and other businesses with a
lot riding on the weather also can use the futures to hedge their risk.
impact of weather can influence regional and local markets, playing a critical
role in the overall economy," said Rick Redding, the exchange's managing
director of products and services. "CME weather futures provide the safety
and soundness investors are seeking to manage their weather-related risk."
futures and options are geared to a snowfall index focusing initially on Boston and New York. The index will change based on official daily snowfall
can buy and sell contracts trading on a monthly basis from October through
April. A trader makes money on a contract when the index rises after it is
purchased and loses money when it falls.
It all may
make little financial sense to a small retail investor, but the Merc is
counting on it succeeding with large companies just as temperature-index or
weather futures have since they were introduced in 1999. More than 889,000
weather contracts were traded last year and the pace is picking up in 2006,
with 108,000 traded last month, the exchange said.
it began trading futures contracts based on the number of frost days in Amsterdam after a major construction project in the Dutch capital was
delayed several times due to a persistent frost, resulting in heavy financial
seeing more and more hedge funds and banks trading the weather contracts,"
said Brian O'Hearne, managing director of the environment and commodities
markets for Swiss Reinsurance Co. and president of the Weather Risk Management
the standpoint of municipalities or companies that are concerned with excessive
snowfall and whether they will have shipment of goods, there's now the
opportunity to hedge your removal costs or transportation delays or other
weather-related exposure," he said.Ē *****
Gold was down $15 on Friday after being up $15 on Thursday after being down $13
on Wednesday. With a price of $560 those are only 1% moves but in dollar terms
they are large and demonstrate the volatility in the markets. *****
U.S. Trade Deficit was $726 billion in 2005. *****
Some things just arenít
military's health care program, TRICARE,
supports some 9.2 million beneficiaries. Veterans from wars
too soon forgotten depend on the program. From military families who have
buried their husbands or wives, to those who dread a call in the middle of the
night about those who currently serve, the program is designed to take care of
those families--our families. First, Bush's plan would eventually cause
retirees to be dropped from the military's healthcare program. Bush's
budget also makes across-the-board
premium increases to TRICARE retirees under the age of 65. Veterans will
see an increase of 41% for single or family coverage within two years; senior
enlisted and officer retirees will see increases of up to 204%. By 2009,
healthcare premiums for our veterans will TRIPLE. (See PDF of TRICARE fee
increases here) *****
Nikkei dropped 2.8% on Monday and is
now below where it began the year.
was a negative story in Barronís on Google and the shares are trading down another $14 this morning. At
some point the bulls are going to make a stand with this stock and that may be
when the rally resumes.
to an article in Barronís by the always perspicacious Jonathan Laing, the trade
publications Inside B&C Lending
states that sub-prime loans amount to about 10% of the 8.4 trillion mortgage
market or $840 billion. The teaser rates on these loans were 7% but as they
come off the teaser rates the interest rate may move closer to 10% which is 50%
higher than the original rate. In the last two years over 1.2 trillion in
sub-prime loans were originated.
interesting quotes in the article are: "I just don't see any coming
collapse in the sub-prime market as long as the U.S. economy and job growth
stays strong and interest-rate increases remain subdued," insists Doug
Duncan, chief economist of the Mortgage Bankers Association in Washington. Echoes Guy Cecala,
publisher of Inside B&C Lending: "People have been crying wolf about
the looming sub-prime reset crisis for two years and nothing has happened.
Lending standards are now being tightened up, so I expect we'll muddle through."
seem to remember the same kind of quote about the stock market and tech stocks
back in 1999. *****
Reuters reports: The U.S. labor market may be facing
supply constraints that could make efforts to boost job growth with easy
monetary policy backfire, Cleveland Federal Reserve Bank President Sandra
Pianalto said on Monday.† Pianalto, who
is among the Fed officials who vote on interest rates this year, told the
Cleveland Association for Business Economists that a decline in the percentage
of working† age Americans participating
in the labor force could reflect a decision by younger workers to seek more
"In that case, attempting
to spur more rapid job growth with an accommodative monetary policy is exactly
the wrong thing to do," she said. "It will not accomplish the goal of
maximum sustainable growth in the long run, and it may threaten our goal of
price stability," she said. *****
Google has not bounced and is on its low for the day. the last hour
will be the tell but we would guess there are a lot of day traders and margin traders
in the stock and that doesnít bode well for the last hour for GOOG or the NAZZ. The DJIA keep
trying to move to the plus side but breadth has been 2/1 negative for the day
and is not improving. *****
Europe closed higher across
the board today. *****
CRB (Commodity)Index is approaching a multi year uptrend line at 320. Gold is
off $11 at $543 and Oil is down 80 pennies at just above $61. *****
is an interesting comment piece by Stephen
Roach of Morgan Stanley. His conclusion that the Trade Deficit is only going to be solved by higher real interest
from the beginning of 2002 the S&P 500 is up 10.4%, the DJIA up 8.9% and
the NAZZ up 15.9%
from the beginning of 2000 the S&P 500 is down 13%, the DJIA is down 5% and
the NAZZ is off 44%.
found the following interesting. Of course we are willing to bet that 75% of
the folks opposed to Naked Shorting think it means folks who sell stocks they
donít own while wearing no clothes. The item is from Reuters:
of four U.S. investors(1) (76%) say someone who naked shorts a stock should face civil (8%) or criminal penalties
(9%) or both (59%).† By the same margin
(76%), investors believe such penalties should be about as (65%) or more (11%)
severe than those for fraud and counterfeiting, according to a recent survey
commissioned by Working Americans for an Open Economy, conducted online by
Harris Interactive(R) among 1,243 investors nationwide. *****
and the DJIA
closed down 30 points at† 10890. The S&P 500 lost 5 points to 1262 and
the NAZZ dropped 22 points to 2240. Google finished near its low at $346
down over $16.
Breadth was over 2/1 negative at the close and new highs contracted to 140.
closed firmer with the two-year at 4.67% and the ten-year at 4.58%.
tomorrow is another day at the casino. Maybe the bulls will have recovered from
the snow storm by then. *****
We werenít very busy today and so we had fun surfing for
comments on Cheneyís hunting mishap. By the by, in
hunting when a hunter shoots a person and not the prey it is always the hunters
fault. Period. As always ignore the
following if you think Cheney is the next George Washington. *****
Cheney steps up war on lawyers
Vice-President accidentally shoots hunting buddy
Dick Cheney's top 10 excuses for shooting fellow hunter Harry
Author unknown ...
emailed to me without attribution:
10. Sick and tired of Whittington's "Hey, I'm having a
heart attack" jokes 9. Pushed over edge by Dixie Chicks and Streisand blasting on
pick-up truck stereo 8. Ongoing dispute over whether it's acceptable to torture
quail before shooting them 7. Thought he saw Scooter Libby on other side of tree line 6. Bombed out of his gourd on Wild Turkey and Lone Star
Beer 5. Companion's ill-advised decision to wear Moveon.org
sweatshirt 4. Was trying to impress Jodie Foster 3. Whittington's repeated ribbing that Bush is actually the
"real president" 2. Targeting scope on rifle made by Halliburton
And the number one excuse given by Dick Cheney for almost
blowing away hunting companion Harry Whittington...
Due to an editing error, a February 13 item on how Dick
Cheney totally shot a guy in the face mistakenly referred to Mr. Cheney as
ďBest Vice President Ever.Ē In fact, Aaron Burr was way cooler, due to his
actually killing a cabinet member. Then he attempted to take over the country
with the head of the Army, who was a Spanish agent. Thatís awesome. We regret
There will be no
post tomorrow Friday February 10 since our computer manager brother is taking
the week-end off. Next post will be Monday night February 13. We wonít be doing
any trading tomorrow or soon so you wonít miss anything. *****
higher overnight with Japan
up 1% and Europe is higher with France
both up 1% following on yesterdayís strong U.S.
close. Oil is back up to $63 and gold is up $6 to $559.
The first thirtyĖyear Treasury auction
for years will occur today.
Jobless claims remain firmly
under 300,000 at 277,000 up 4.000 since last week.
The 200 day moving average on the
S&P 500 is 1225. With\t the S&P 500 over 1260 next resistance is the 20
day moving average at 1269 and then it is one to 1275.
According to Tony Crezenzi at www.realmoney.com the bond markets are trading
on the assumption- with the odds at 92% -that the Fed Funds
rate will be raised to 4.75% at the March FOMC meeting. The odds were 90%
yesterday. There are instruments that can be traded that bet on a change in the
odds. As we have said, the casino has every type of action for the risk taker. The
Treasury Market is priced for 100% odds that the funds rate will be 4.75% by
the May 10 meeting, and 56% odds that it will be raised to 5% at that meeting.
and if the rate doesnít go to 5% at that meeting then the odds rise to 82% that
a 5% rate will occur at the June 29 FOMC meeting. About a week ago the odds
were at 24%. Lord Greenspan and the inflation hawks are working their magic. *****
For Greenspan to give a paid for
talk during a Treasury refunding right after leaving the Fed is in keeping with
the letís get ours philosophy.
The new Treasury 30 year came at
4.53% while the old Treasury 30 year is trading at 4.65%. The explanation of
the 12 basis point difference is too complicated for us.
We would bet that 95% of the fund
and institutional managers making the decision to rush into 30 year securities
at 4.50% werenít around in the late 1960s or early 1980s. In the late 1960s
everyone had to own the AT&T 6% bonds due in 1998. Those bonds traded at less than $500 per $1000 bond
in 1982. We are also sure that 95% of the talking heads were not around for
either of those occurrences.
Gold closed up $15 at $569. Oil
ended at $62.46 down 9 pennies.
Treasuries ended unchanged on the short end with the two-year at
4.65% and the ten-year at 4.54%.
In the last hour the momentum stocks
had no oomph. Apple closed down $3.50
per share and Google was down almost $10. And Whole Foods which is a market
darling lost $7 per share on a penny per share miss in their earnings.
and the DJIA gained 25 points to finish at 10884.
The S&P 500 was down 2 points to
1263 and the NAZZ lost 11 points to
Breadth deteriorated in the last hour but was still 5/4 positive on
the NAZZ but the reverse o the NYSE and new
highs expanded to over 300 all before .
The last hour saw the rally of
yesterday and this morning collapse and sets up an interesting Friday.
One more day at the casino and
then the Winter Olympics begin. We are going to have a little snow tonight to
8 February 2006 Daily Comment
Gold is down $4 this morning at
$549 and oil is up 16 pennies. Japan
was down over 2% with Hong Kong losing almost 1% and Europe
is trading lower. U.S.
futures suggest an up opening. One reason is that traders like the Cisco earnings number and forecast
going forward to the tune of pushing the share price up 10%. Most of the gurus
were suggesting that old tech is no growth tech and so some folks must have
been caught with their shorts unattended.
Investors Intelligence had 51% bulls and 25% bears with both number
down about 1% for last week.
The number of houses and
condominiums up for sale is about 2.8 million nationwide which represents a 26%
jump from last year.
Bob Marcin at www.realmoney.com points out today that if
a commodity has an active futures market that commodity has been making new
highs. And if the commodity does not have an active market it is not. Examples
are the spot price of aluminum spiking higher/ the price of steel is not. The
spot price of Oil is spiking higher/ the price of coal is not. Marcin suggests
with we would guess tongue in cheek that
maybe the hedge funds are responsible. To this we say ďOh really?Ē
We used the morning rally to sell
our PPH and NCC positions. That leaves us with Schering Plough at a loss. With
the announcement today that Pfizer
is thinking of selling their consumer business
we presume that analysts will be talking of the spin off values of other drug companiesí
consumer operations and that we think that has given a slight lift to SGP shares. We are taking the
opportunity to reduce the size of our holdings in our larger accounts.
Our trading spurs are hanging in
the barn and we are just watching the actions.
The weekly Oil inventory numbers
were just releases at and crude supplies were down a tad more than
expected while gasoline inventories were up 2.3 million barrels more that expected
and heating oil was a few hundred thousand barrels less than expected.
Darling Google is down $12 today and Intel has just turned negative at .
Gasoline is $2.50 per gallon, so is water.
www.realmoney.com is reporting that there
is talk in the markets that Greenspan gave a speech to select group sponsored
by a US
securities house. Greenspan reportedly was upbeat on the economy, negative on
housing and seemed to warn of the risk of more Fed tightening than the market
We wonder how much he was paid.
The Greenspan green making machine
begins to spin.
In the final hour of trading
stocks are moving higher. This is the move we expected yesterday but as traders
say, ďtiming is everything.Ē We are happily in cash and we do know that anecdotal phone call and stock action
suggests that at some point this year we will be very happy with our cash/T
and as the Ďold stockbrokerí used to say ďbuyíem now boys fore they go lowerĒ.
The DJIA closed up 108 points at 10858. The S&P 500regained the
ground above 1260 closing at 1265 up 10 points. And the NAZZrose 22 points to 2066. Were the hedgies selling Google to buy Cisco?
We doubt it. Rather we think the CSCO move was short covering and there is the
suggestion that the Google selling was insider unloading. Google managed to
close higher on the day on the last hour rally.
Breadth was 5/4 positive on the day which is not nor exciting on a
1% up day; and new highs contracted to
185 which is also not a good sign.
Treasuries closed weaker after a so-so Treasury ten-year auction
and gold was off pennies as was oil at
We received a call from a fellow
who thought we were buying gold and wanted our opinion. We realize that our
daily mention of the price of gold is placing us at the top of some website
search lists. Live and learn.
And there are two more casino
days left this week and with no Super Bowl left we suggest that Mrs. Gretzky look
7 February 2006 Daily Comment
GM halved its dividend and is also cutting executive compensation
and health benefits for salaried workers as a prelude to asking union workers
to join the cause. The CEOís salary is going to be cut in half and the next two
fellows will be down 30%. But we are sure there are plenty of bonus sweeteners
in the deal for them. And 30% and 50% down are still 20 times what any union
John Snow, the Treasury Secretary,
says that President Bush will do the hard
thing and not raise taxes. Yes.
In the new speak raising taxes is the
easy thing to do and cutting taxes is
the hard political choice. We all now how higher taxes make constituents happy
and lower taxes make them angry and inclined to vote for opponents.
American countries are pushing
the Bush folks hard to allow the building of nuclear generators in India
by American countries. The problem is that there is this little law that says
that countries that develop nuclear weapons on the sly like India
has done are not entitled to U.S.
assistance in building nuclear reactors. The law makes sense to us but makes no cents
for American companies so the Bushies are going to ignore the law.
Disneyís earnings beat estimates and the share price is $25.75. We
do think the company is going to turn the corner this year and are hoping for a
sell off into the low $20s at some point this year to establish a longer term position.
Sock it toíem, Gold is down $12
Toll Brothers, the large home builders said first quarter signed
contracts were down 21%.
Itís and the 1260
support level for the S&P 500
was pierced on the downside a few minutes ago. The close is more important than
the intra-day but traders are taking note. New support which must hold or it is
the end of the world -at least for a
while- is 1240-1245.
We have been intra-day trading GE for a few very large/aggressive
accounts. We close our position at the end of the day and have lost a few
pennies trading. GE is now right above support at $32.50 and we think it will
hold. We expect a rally in the next few days since the markets have been
negative for the past week.
We are adding PPH, which is the Drug Holders Trust that owns PFE,
ABT, MRK and many other drug stocks, to a few larger/aggressive accounts. We
are using this as a proxy for drug stocks. The high for the last twelve months
is $ 76 and the low is $66 and we are buying under $70. We own some shares over
$71 that we bought in aggressive accounts. Those shares are entitled to a 55
We are also trading GLD which is the Gold Holders Trust in these same very aggressive accounts.
Capital Research sold its Time Warner stake. Time Warner said it will be buying back $1.5 billion in stock for
each of the next three months. Our guess is that if TWX can get the share price
above $19 Icahn sells his stake.
At Oil is
off $1.46 at $63.50. With oil and gold (now down $15) both lower and the
S&P 500 teasing around support /resistance 1260 we continue to believe in a
rally today or tomorrow.
Morgan Stanley has upped its forecast for 1st Quarter
GDP to plus 5.5%. If that is the case then why are stocks meandering?
Spot gold is down $19 which is the largest one day fall in dollar
terms since 1993. Of course the price is 60% higher.
The auction of Treasury
three-year notes was weak and has helped the sell off in all maturities of
Energy shares are down today in
sympathy with Oil.
We closed out our gold trade with a 60 pennies loss and also sold the
GE for a loss. *****
Cisco is the important earnings report of the evening.
and the DJIA closed down 50 points at 10750. The
S&P 500 lost 10 points to 1254
and ending below support at 1260 and the NAZZ
dropped 15 points to finish at 2245. Breadth
was 2/1 negative and new highs were under 200 while new lows were 75.
It isnít the end of the world but
we were trading around support levels and when they didnít hold we had to close
Treasuries finished unchanged on
the short end to up a bit in yield on the long end.
And tomorrow is another day at the
great internet casino.
6 February 2006 Daily Comment
In the Say What department:
DJ news wires reported today that President Bush proposed Monday cutting federal health spending, including Medicare, youth
programs, and the Centers for Disease
Control and Prevention, by $4 billion for fiscal 2007.
In budget documents submitted Monday
morning to Congress, the White House estimated that about $2.3 billion of those savings would be needed to fund
future emergency preparations for a possible pandemic flu. *****
The end-zone call that took the
touchdown away from Seattle and the
holding call that took the pass to the one yard line away were bummers and
changed the game. Finally the tackle by Quarterback Hasselbeck that was called
a block below the waist was ridiculous although by then the gameís outcome had
already been determined. Obviously we were for the Bengals who the Steelers beat by injuring their quarterback.
We get e-emails:
Hi Bud ††††††††††††† I was being kind with the
maturity date. What I donít understand is what is the big difference if you are
getting 3.4% or 4.6%... no risk at 3.4%, able to use funds when something
arises... now youíre back into a fox hole trying to climb outÖ
anyway the weather is sunny and 75 in Arizona. Just got back from watching a
calf roping event... Have a good weekend
difference between what cash and T Bills earn in larger accounts
†is the fee you pay usand we were trying to earn it foryou. We didnít plan on using that money
till next fall anyway. But I do agree it is a lot of work for very little-or so
But the 1% plus additional yield on $32
million is $208,000 for clients for six months. Our only mistake was doing
the Treasury two-year instead of the T Bills to start because when rates rise
and you lengthen then you can buy more yield for the same price.
But we thought
the language of the January Fed Meeting would suggest they were finished. It
was a contrarian play. We were wrong. Now weíll hold the T Bills until August unless
rates move significantly higher. Owning the T Bills makes it acts as a check on
us trading those funds before August. That is a positive.
finished higher overnight and Europe is also higher.
Gold is up $2 to $574 and oil is up 60 pennies to $66.03. Today should be an up
day according the three day after the Fed rule and the year should be an up
year because an old NFL team won the Super Bowl. We havenít heard anyone talk
about that theory so maybe it is now inoperative.
Talbotís is buying J Jill
for $517 million. We have owned both but have no immediate interest in TLB at
the present $28.
Minyanville.com reports that
Prudential strategist Ed Keown cut his Model equity exposure to 55% from
100% and raised bond exposure to 35%. He must be reading our stuff.
Bloomberg reports that GM may cut its dividend by $1.2 billion
per year to give it more leverage with the unions. That makes sense to us
although we donít own GM.
Toshiba is going to buy Westinghouse Electric so that it can build
nuclear reactors in China.
Now that is a real Ďmy how times have changedí event. It also says much about
the long term meaningless of war.
CNBC is reporting that Cat Doctor
Frist, the Senate Majority Leader, is saying the U.S.
must be ready for action against Iran.
It must be an election year.
With the Senate Leader suggesting
the U.S. might
invade Iran we
are now getting as nervous as other traders.
Ciscoís earnings come tomorrow
night and our guess is that with the markets reaction to other tech earnings that
Cisco is going to be a bummer. With that in mind we are going to take a small
30 pennies loss in out tech holding Symantec
at $16.64 to clear the air.
All the major tech stocks have
been acting poorly and we thing discretion suggests the sidelines for now.
Motorola has been giving ground
for the past few weeks and so we are going to sell Nokia at $17.98 for a small 20 pennies loss with the hopes of
getting back in under $15.
We sold our remaining ASD at $38.29 for a $1.15 gain. We hope
to trade out of the NCC this week.
We will hold the Schering Plough since that is more a takeover/value
There is a three-year maturity Treasury
auction on Wednesday, a ten-year auction on Thursday and a new thirty-year auction
on Friday. The when issued
thirty-year which is trading on guesses as to what the new thirty-year auction
will bring on Friday is trading at 4.45% which is 16 basis points below the
two-year which is at 4.61%. that is not as great as inversions can get but is
still a large inversion.
Treasuries closed higher in yield
on the short end with the two-year at 4.61% and the ten-year at 4.54%. Gold was
higher and oil was lower.
At the bell the DJIA closed up 5 points at 10798. The S&P 500 gained 1 point to end at
1265 and the NAZZ was down 4 points
Energy and metals stocks were
higher while drug, retail and home building stocks were lower.
Today was dull for both bulls and
bears. Maybe there was a Super Bowl hangover.
The casino is open for business
as usual tomorrow.
3 February 2006 Daily Comment
lower overnight with Hong Kong down over 1%. Europe
is higher as are U.S.
The employment report released at
showed an increase of 193,000
jobs in January and average hourly earnings increased 0.4% employment gains were
revised up 80,000 for last two months of 2005.
Stock futures seem to like the
news while bonds donít.
With the benign employment
numbers plus the newness of the new Fed Chief we have rejoined the ďthere will
be more rate increasesĒ camps. We thought there might be a chance that
Greenspan would go out saying his job was finished on raising interest rates.
We were wrong and we were too early buying the two year Treasury.
For our larger accounts that have
large amounts of money in cash we wanted to obtain a better rate than the money
market rate. But we are not yet ready to assume much risk to principal. We
should have followed our own advice in the About Lemley section of our website
where we discuss bond trading http://www.lemleyletter.com/lemley_about.html
. In a rising interest rate environment we should buy the shortest maturity
first and then roll out to longer maturities as interest rate rise. We didnít
do that. But it isnít too late to correct the problem.
To correct our misadventure we sold the two-year Treasuries we bought
on Monday for a $2 per bond loss and bought 6 month Treasury bills with the
money. We sold the bonds at a 4.61% yield and bought the Treasury Bills on a
bond equivalent 4.61% yield. The net yield (factoring in the $2 per bond loss
that will be regained) for the six months is going to be 4.20% which is well
above the present 3.40% money market rate cash is earning in our accounts and
will be above that rate through August even if Fed Funds go to 5%. This action
is making lemonade from our lemon trade.
We will take a look at our
options to extend maturities when rates move higher. Our thinking on Monday was
contra the perceived wisdom in that we wanted to be in two-year treasuries in case
the Fed decided to stop tightening but with the consensus suggesting further
tightening we think the switch is prudent.
of Michigan Confidence Index was
91.2 for January versus a final 91.5 for December and an expected by the
guessers 93.5. This is one of the strangest data points off which the big boys
and girls trade.
Both the stock and bond markets
decided they didnít like the jobs report and sold off in early trading. The DJIA has dropped 70 points and the
bears seem to be in control.
Tiger Woods was paid $5 million to
play in a golf tournament in Dubai
in the United Arab Emirates.
The total purse for the golf tournament for all players is $2.5 million. It is
nice to know that at least one American is getting back some of the oil
We have tried to buy relatively
small amounts of 40,000 shares of DuPont
and National Cityand Schering Plough at 5 pennies over the last sale. We havenít bought more
than 10,000 shares of each. We tried to sell 5000 shares of ASD down 5 cents from the last sale and
didnít get any sold. Those attempted trades show the thinness of the markets
Technically IBM has broken a triple bottom on a short term trading basis as it
trades down through $80.
We added some SGP and NCC to our large/aggressive
After stabilizing yesterday
afternoon at $400 Google is now down
$14 per share on a as analysts suggest that only half of GOOGís earnings miss
was due to a higher tax rate. †Amazon is also down 15% or over $4 per
share on disappointing to traders earnings.
Oil ended at $65.35 up 65 pennies. Gold was $565. Treasuries
closed unchanged on the short end with the two-year at 4.59% and the
ten-year up in price at 4.54%.
The major measures were up and
down today, but mostly down although the DJIA rallied to positive territory for
a few minutes about an hour and one half before the close. But in the last hour
stocks sold off.
The DJIA closed down 60 points at 10793. The S&P 500 lost 7 points to 1263 and the NAZZ dropped 20 points to 2262. Breadth for the day was 5/4
negative and new highs contracted to
200 while new lows were 70.
And the casino is closed till Monday
but they are still taking bets on the Super Bowl for those who need the action.
2 February 2006 Daily Comment
Security analysts are warning computer users about a new and
potentially destructive Internet worm that can obliterate important documents.
The worm, called Kama Sutra, is making the rounds now, but is scheduled to execute its first
massive attack on February 3.
was up another 1% overnight but the rest of Asia and Europe
are mixed to negative. U.S.
stock futures are negative. Jobless claims dropped another 11,000 to 273,000.
Fourth Quarter Productivity was
down 0.6%. We really donít know what the number means, or rather where they get
it. It is one of those throw away numbers.
Stocks look to open lower this
morning which should be a positive for the close.
Same store sales for retailers
were better than expected. But the question always is whether were sales gained
at the expense of profit margins.
This stuff about Iran
and nuclear weapons is election year garbage. We really donít care about the
politics but is annoying to listen and read market pundits speculate about the
rise in oil and gold and all that stuff related to Iran.
One Iraq is
enough. By the way did the Terror Alerts
go the way of the Manned Mission to Mars?
Our down early thesis is playing
out as the DJIA is off 80 points at and breadth is 2/1 negative. There are profits to be taken and folks
seem to be doing that.
We are buying American Standard back under $37 in
large/aggressive accounts. We traded it in the last quarter on and earnings
miss between $35 and $37 and then the stock ran to $42. Two days ago it
disappointed again and went to $35 but we missed it. We think it is a good play
on eventually lower interest rates and its Trane
subsidiary should be doing big business in Mississippi
and Alabama and Texas.
Itís an anchovy.
The S&P 500 is now down
though the important 1275 support level. We have seen a 1260 support level
mentioned but our trading guru is sticking with the 1275 number as the Holy
Grail above which the S&P 500 must close.
We just read on the www.realmoney.ocm website that one of the
reasons for the drop this morning is that there
are rumors that the Government may raise the dreaded Terror Alertlevel.
And what were we just saying? It surely is an early election season. We think
the folks in Washington are the
only ones paying attention.
Homeland Security at denied that it was going to raise the Terror Alert. We have recalled the dogs from
preliminary perimeter patrol. *****
The DJIA has been down 200, up 100, and down 100 on a daily basis all
in the last two weeks. And that doesnít include the intraday swings. Japan has also been extremely volatile since the
beginning of the year. Volatility and churning usually increase at turning
points. The only problem is in knowing which way the turn is going to go. *****
The Terror Alert rumor did
stabilize Treasuries which may have been the whole purpose of the rumor.
In the contra hour oil is down $2
to $64.90 and gold is up $2 to 576. Why oil is going up and down like a yo-yo
is a question for the hedge funds to answer.
Markets that are down all day
without a bounce tend to close lower. Also this market is acting a lot like the
one of a few weeks ago which closed down 212 points on Friday January 20. Weíll
know more in half an hour when we reach the final hour of trading. Two weeks
ago we expected a bounce and didnít get it. Now we donít expect a bounce soÖ
The Fed theory we talked of
yesterday said the markets should be higher than the close on the day of the
Fed meeting if the market close lower that day. With todayís down day the
action between now and Monday will be interesting.
Moreover, with the Super Bowl on Sunday
the Super Bowl Theory will be in play. That theory says that if and old NFL
team (the Steelers) wins the market goes higher for the year and the converse
if an AFL team wins.
Finally today is Groundhog Day
and the groundhog would have seen his shadow if we hadnít shot him last fall.
But since we havenít had any winter since December six more weeks of winter
will be welcome.
Well, the stock market didnít
bounce but it didnít sell off in the final hour either. It just sort of
slithered into the close. At the bell the DJIAwas down 103 points at 10853. The S&P 500 lost 12 points to end at
1270 which is below our magic number but above the 1260 support level that most
technicians are watching. The NAZZ dropped
30 points to 2306.
Breadth was 2.5/1 negative and new
highs contracted to a bit over 300 while new lows expanded to 80.
Treasuries closed unchanged with the two-year at 4.58% and the
ten-year at 4.57%. Gold was $575 and
The big item
tomorrow is the monthly employment report at .
There is one more trading day before the casino closes for Super Bowl
Blowout Sunday where more money will be made or lost than we care to think
1 February 2006 Daily Comment
31, 2006 we decided to skip the play by play (the market is up the market is down stuff) during the day since it
is dated information by the time it is read and just provide our observations
on occurrences during the trading day. Many readers have said they skip
that part and since we have had many pearls of wisdom interspersed in those
comments we are making the change so all readers can garner the pearls.
If the statistics we quoted
yesterday about market action after Fed meetings hold true the stock markets
should be higher at Fridayís close. As always time will tell.
Google disappointed the Googlites and other traders last night when
their earnings were less than expected and the shares are trading $50 per share
lower this morning. OOPS!
Time Warner earnings rose but the shares are trading lower in price
by 20 pennies in pre opening trading because better earnings means less of a case of
lousy management for Carl Icahn in his glorious quest of Time Warner. And
if Icahn doesnítí get control nobody else seems to care about the stock.
lower fractionally over night while Europe is on the
plus side. Investors Intelligence had bulls at 52.6% versus last week 53.7% and
bears at 25.8% ursus 25.3% last week.
The trading number for today is
the oil inventory report this morning.
Inventories should be higher because of the warm weather. The question is how
high the inventories will be. Oil is off pennies ahead of the report.
Symantecís profits were down and the shares are trading at $17.50.
As with Google and American Standard yesterday and DuPont two weeks ago it ahs paid to be
out of individual stocks before earnings are reported this month.
Crude inventories rise was
greater than expected and the gasoline inventory rise was three times greater
than expected but oil hasnít budged.
Now Time Warner is trading higher
so we guess there are some folks who care about earnings.
We bought Symantec at $16.82 down $1.60 from yesterdayís close. Mother
Merrill dropped its price target to $25 and Piper Jaffrey cut theirs to $27 either
of which would be a nice pop from the price we are paying.
$10 billion worth of Google shares have changed hands today.
sales were up 2% and GMís were up 6%
in January. Forecasts had been for lower sales for both. Fordís Truck (SUV)
sales were down 6% and GMís were down less than 1%.
Oil is up $1 initially after the inventory numbers. Now it is lower
which makes more sense. Maybe it is the hot money in Google both short and long
that is fueling the volatility in oil and the drop is the price of gold. Losses
in Google have to be covered or mitigated in other areas.
Breadth was positive until
and then began turning negative.
Boeing is up $3.40 and that is 23
points of the so far 30 point increase in the DJIA. There were folks who have
been pushing to have Google included
in the S&P 500 and the DJIA. Todayís $50 drop in the share price of Google would have caused the DJIA
to be down over 350 points.
All day yesterday CNBC had an
artist on its television set who paints only pictures of Alan Greenspanís head.
During the day she was putting the finishing touches on a painting. †In the afternoon we mused with a friend about
who would be inclined to buy a painting like that, what they would pay, and where
they would hang it.† Today CNBC showed
that there is a bidder on EBay willing to pay $40,000 for that Greenspan
painting. We are happy for the artist but wonder greatly about the sanity of
the bidder, unless it is Andrea Mitchell and even then...
Treasuries closed lower in price
higher in yield with the two-year at 4.58% and the ten-year at 4.56%. Inversion
(the shorter maturity bond has a higher
yield than the longer maturity bond) suggests recession but with higher
auto sales and Wal-Mart sales at the high end of expectations in January recession
seems a way off.
And the DJIA closed up 90points
at 10952. The S&P 500 gained 3
points to 1282, and the NAZZ was up
2 points to 2308. Breadth was positive
at the close and volume was
moderate. New highs climbed back
Gold and oil both finished
lower on the day.
There are only two more trading
days for the casino this week.
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