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Gapping Up and Down This Morning

Gapping up

NEOP +4%, RBS +4%, DB +3.8%, PAY +4.6%, CS +1.8%, SFD +2.9%, BCS +2.3%, UBS +1.8%, ING +1.3%, NOK +0.9%,

Gapping down 

TIE -9.4%, SEAC -6%, GIII -13.5%,  RPTP -5.7%, GNC -5.3%, CLMT -4.3%,DG -2.9%, MW -1.9%, BHP -1.3%,

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Mainstream Media Is Already Expecting and Titling a Fed Move at the End of the Month

The key to this article is ”

Though officials aren’t certain to take new steps this month, they are looking at alternatives to that controversial bond-buying, known as “quantitative easing.” One step getting considerable attention inside and outside the Fed would shift the central bank’s portfolio of government bonds so that it holds more long-term securities and fewer short-term securities.

The move—known to some in markets as “Operation Twist” and to some inside the Fed as “maturity extension”—is meant to further push down long-term interest rates and thus encourage economic activity. The program draws its name from a similar 1960s effort by the U.S. Treasury and the Fed, in which they tried to “twist” interest rates so that long-term rates were lower relative to short-term rates.

Anticipation of the move—along with grim economic news and the Fed’s public plan to keep short-term interest rates near zero through 2013—has helped push yields on 10-year Treasury notes, above 3% in late July, to around 2%.

Although some consumers and businesses are unable or unwilling to borrow more at any interest rate, several Fed officials believe pushing rates still lower can help on the margin.

“There are still some businesses that at a lower cost of funds are going to make investment decisions and hiring decisions based on an ability to lock in those funds at a lower rate,” Eric Rosengren, president of the Federal Reserve Bank of Boston, said in an interview.”

Full article

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Technical Chart Question

With the news from the German high court, expectations China is done raising rates, and some better comments out of Trichet world markets rallied with gusto from a technically oversold point, good evaluation, and total exhaustion from sellers.

Albeit volume in the U.S. was extremely light, but we probably can ignore this given the volume overall for this bull cyclical rally that started in 2009.

A recent failure occurred at the 30 day moving average on the S&P last Thursday. Last Thursday the 30 day was 1220 S&P. Today’s rally took us right to the 30 day now at 1198-1200.

So the question is will we fail here at the 30 day moving average ?

Looking at the chart above some technical indicators suggest we still have room to rally. It seems we have some room up to the 50 day MA of 1248, but we will find resistance at 1206 & 1220 which were previous supports turning into resistance.

Also take note how one days rally has put us near overbot conditions.

Hopefully, tomorrow’s continuing claims will be a good number to give us follow through.

For some reason i had trouble loading  a P&F chart. Hopefully, this link will work. The count on the P&F chart gives us 7 counts and today we made 4. Depending on what theory you follow 3 more counts takes us between 1206 and 1220 S&P.

All in all, a strong argument can be made for a triple bottom and the transports may have four to five bottoms.

Essentially, a total risk on is only in place with a strong rally through the 1248 for at least three closing prices. Until then expect a lot of flip flopping on the movng averages as we do not know three key elements.

1) Although the German court ruled in favor of Merkel continuing to support EU bailouts with  Parliament approvals; there is one more vote coming up on the 29th of September.

2) We are not sure wether the clam will announce the “twist and turn” or buying of long term treasuries and other paper.

3) Will the EU have the collective power to halt the current crisis. With comments like this  and this; it is hard to determine what the fate of the Euro and the union really is.

It is wise to consider putting some hedges on if we get some more upside over the next few days of trade. Technically, we are broken and the banking sector remains a huge question mark both at home and abroad.

Also keep in mind that most analysts have not ratcheted down earnings for the S&P. A lot of analysts are still in the $100-$105 camp. The last Q showed us that there could be a 15-30% haircut in store for earnings….and that is in every sector across the board.

Today’s rally was nice and we’ll take it, but i think we would have seen a more substantial rally if we had substantial news to confirm problems are getting fixed for real.

Markets need more than just cocaine to act insane to the upside…..



[youtube:http://www.youtube.com/watch?v=ZiQoVv0FSKQ 450 300]

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Upgrades and Downgrades This Morning


UBS – UBS AG upgraded to Buy from Hold at Collins Stewart

COF – Capital One upgraded to Outperform at Oppenheimer

WSM – Williams-Sonoma upgraded to Outperform from Neutral at Cowen

DKS – Dick’s Sporting Goods initiated with a Buy at Canaccord Genuity

SWKS – Skyworks reinstated with a Buy at BofA/Merrill

SAPE – Sapient upgraded to Outperform from Market Perform at BMO Capital

CJES – C&J Energy initiated with Overweight at JP Morgan

RFMD – RF Micro Device reinstated with an Underperform at BofA/Merrill

GM – General Motors Added to Top Picks Live list at Citigroup

TWX – Time Warner upgraded to Overweight from Equal Weight at Barclays

CVX – Chevron upgraded to Buy from Outperform at Credit Agricole

IRDM – Iridium Communications initiated with an Outperform at William Blair

LVS – Las Vegas Sands upgraded to Buy from Neutral at Goldman

L – Loews Corp initiated with a Buy at BGB Securities



DRI – Darden Restaurants downgraded to Outperform from Strong Buy at Raymond James

LMT – Lockheed Martin initiated with a Neutral at Lazard

CPNO – Copano Energy downgraded to Equal Weight from Overweight at Morgan Stanley

ORBK – Orbotech initiated with a Neutral at JP Morgan

VDSI – VASCO Data Security downgraded to Hold at Wunderlich

DOV – Dover downgraded to Underweight from Neutral at JP Morgan

SONC – Sonic downgraded to Market Perform from Outperform at William Blair

BUD – Anheuser-Busch InBev downgraded to Neutral from Buy at Goldman

FRAN –  Francesca’s initiated with a Neutral at JP Morgan

ALR – Alere downgraded to Market Perform from Outperform at Leerink Swann

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