The market continues to love these oil futures.. And loves GM's bankrupcty...Most odd bull market ever.
Position: none
Bristol-Myers Squibb (BMY) was in talks to buy a minority stake in Irish drugmaker Elan (ELN), according to a WSJ story posted late Friday.
However, an analyst from UBS spoke to BMY, which denies such talks are taking place.
Position: none
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Jim Cramer
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| Personal income/spend |
6/1/2009 8:31 AM EDT
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Personal income up .5% and spend down .1%--nothing here to detail today's expected rally...
Position: none
it is hilarious to watch Dryships go up every time the Baltid Freight goes up.. it is totally one for one.. meanwhile all i hear about is inflation, so a piece coming up will give you the inflation plays...
Position: none
The PowerShares QQQ (QQQQ) is up this morning. It seems to be happy in spite of the GM bankruptcy... Income was up and spending down, and the market did not react... We are in a bull market, and it seems nothing can stop us now... We should get some selling at the open, and it will be worth shorting to see if there are any bears lurking... If the market is going to run today, we will probably only see 10 to 20 cents in selling with the QQQQ, and then buyers will come in and we can pop to $36.50....
Position: NM
Today is the first trading day of June. While this decade has been a forgettable one for stocks, the first trading day of the month has been a pretty good trade.
Through Friday, the S&P 500 is down over 37.5% for the decade (not including dividends). However, if you were in the market for only the first trading day of each month, you'd have a gain of 20%.
Only on Wall Street could there be a job where showing up one day a month probably would have improved your performance.
Position: none
Let's all give a warm round of applause to Cisco (CSCO) as the newest member of the Dow 30. I'm thinking they could make a pretty good car if we gave them $50 billion and a few months...
Position: nm
Citi (C) also finds itself out of the Dow, and Travelers (TRV) is stepping into its place.
Position: short C
Gratz to Doug Kass, who nailed the Cisco (CSCO) last week right here. I like Traveler's (TRV) a lot and it is very deserving of admission to this elite group...
Position: csco
942.75 = 94.75
940 = 94.50
937 = 94.20
934 = 93.90
927 = 93.20
922.50 = 92.70
918 = 92.25
914 = 91.85
911 = 91.55
Position: Short SPY
Regarding Friday's late-day spike, was it manipulation, a Twinkie-eating fat cat stepping on the market buy key, or a trader so bored by Friday's trading action that he fell asleep on the F12 buy key? ... I really don't care. What annoyed me (and apparently others) ... and Tim Collins nailed it ... is that had this move been down rather than up (and had it occurred at any time in early March), we never would have heard the end of it. I will leave the regulatory debate to others.
Whether or not it turns out to be a fake break or not, a close above 927 (today) would have to be seen as bullish. The bulls need to defend strong support at 927 and set their sights on strong resistance at 934. A sustained trade above 934 has only moderate resistance at 937 and 940 before a test of strong resistance at 942.75 (the high from Jan. 6, 2009).
It will take a significant reversal to wipe the bullish grins of the face of traders this morning. The bears need to (take antidepressants) keep this market under 934 and target strong support at 927 if they want to avoid another beating. A sustained trade under 927 sends us back to moderate support at 922.50 and strong support at 918. If traders get tired and are unwilling to support the market at 918, look for a quick drop to moderate support at 914 and 911.
Position: none
Was anyone else as astonished as I was to read the caption under the picture near the top of page A14 in the Wall Street Journal this morning and learn for the first time that there is a paying job in this country with the title "White House director of recovery for auto communities"?
Huh? Who pays the tab for that salary? Detroit real estate brokers? The Kafka estate?
Position: None
ASCO trading: Eh!
Keryx Biopharmaceuticals (KERX) seems like the big winner so far, the only ASCO stock up significantly this morning. Also in the green but not much are PPHM, OXGN, IMMU, ABPIQ.PK. BVTI.PK and CLDX doing a bit better, although I hear the CLDX spike may be on a rumor of a CNBC report coming soon.
On the down side, there's IMGN, OGXI (the hottest pre-ASCO stock), PARD and OSIP.
Position: none
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Tim Melvin
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| No Travel = Revenue Declines for CBRL |
6/1/2009 10:24 AM EDT
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The rise in energy and commodity prices could not have worse timing. Heading into the summer travel season, the fast-rising prices at the pump could hurt the already moribund travel economy.
My main barometer of summer automobile travel came up at almost zero yesterday. Nascar came to Dover yesterday, and the power boat races were in Ocean City, Md. Ordinarily, this would cause a traffic jam on Kent Island approaching the Bay Bridge that stretched for miles. There was none. Not even a traffic slowdown. I went to the race at Dover, and we never even touched the brakes on the way back. In addition to hurting the hotel and other travel-related stocks, it makes me feel pretty good about my bearish position on Cracker Barrel (CBRL). They are heavily dependent on auto travel.
Position: short CBRL
Per the interesting Kafka reference by Will F., I think there are many things about today's world that would be disappointing to Kafka, and also to George Orwell for that matter. The capacity of bureaucrats to create nonsense and of politicians to create lies and propaganda seems to have no limit.
Back to the financial markets, I believe that the inflation trade is very crowded and due for a correction. I have taken positions in Proshares UltraShort Oil (SCO) and ProShares Ultrashort Silver (ZSL) as a way to profit from that correction. Longer term, the inflation bulls will be correct, but I think there is way too much consensus and enthusiasm for the trade right now.
Position: SCO ZSL
Something to watch since the market is all about the reflation trade.
Position: None mentioned
The Dow has now rallied over 34% in 59 days without making a three week low. Since 1920 such a move has happened on two occassion. The rally off the low in 1932 and the rally off the low in 1974. The question I think investors must ask, however, is with stocks now yield 3% are they as cheap now as they were on those occassions.My conclusion is we are seeing a massive devaluation trade like when the U.S. left the gold standard and Bretton Wood Agreement. The rally is about the price of monetary not economic recovery.
Position: None mentioned
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Bob Byrne
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| Airlines and Crude |
6/1/2009 11:11 AM EDT
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On Friday I posted that I was shorting crude and getting long airlines...I am taking off 1/3 of my airline long into today's ramp (AMR, UAUA, LCC). I continue to hold crude short (SCO), but it's more of a hedge against a basket of small energy longs than an actual bearish position on crude itself.
Position: Long AMR UAUA LCC SCO
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Marc Chandler
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| Debt Market Developments Don't Explain the Dollar's Slump |
6/1/2009 11:23 AM EDT
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While the dollar's recent slide is in step with aggressive policy measures, the later does not explain the former. While the euro gained 7% against the greenback in May treasury yield curves steepened. However, US rates are not the only ones rising; bund yields also steepened with the 10-year climbing over 45bp, more than the equivalent US security yield increase of 40 bp. US official are monitoring the rising US interest rates, because it a global development, indicating the world economy is moving away from the abyss to which it once appeared to be headed.
Position: none
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Marc Chandler
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| Market Reads Middle East News as Dollar Negative |
6/1/2009 11:39 AM EDT
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Economic advisor to Qatar's Emir have expressed concern over the dollar and see now as a time to diversity into different currencies. While the market sees this as dollar negative, it is important to note that Qatar is not representative of the region and at $7bln, their reserves are not significant. In recent weeks Saudi Arabia, Bahrain and the UAE have reiterated their commitment to the greenback, in both pegs and reserves and Dollar weakness does not appear to be a function of reserve diversification, as central banks are largely back in reserve accumulation mode.
Position: None.
I may have missed part of the stock rally in recent weeks, but some of my small long-term speculations are more than offsetting the pain. It is no secret that I never believed in this rally and still do not.
The market of course does not give a fig what I think and has staged one of the most impressive rallies in history. I would be more upset if I had not established small options bets early this year shorting treasuries and long oil. They are providing the type of asymmetrical payoff that more than compensates for my relatively light equity position.
These positions just made sense to me when I put them on and wrote about them earlier this year. The Saudi oil minister stated that he thought $75 was a fair price for oil. I think he will get his way by the end of the year and I will hold my U.S. Oil Fund (USO) calls until the January expiration.
In my mind, it is going to be impossible for bond prices to stay high in face of the massive issuance that will be needed this year. I do not think the selloff is done and will likewise hold my iShares Barclays 20+ Treasury Bond (TLT) puts until expiration.
On counter-trend moves in either I will be willing to add a little to the positions.
Position: Long USO calls, long TLT puts.
In total agreement with Fitz on Adobe (ADBE) which is breaking out after years of dormancy. So many stocks are like this one, just ferociously strong....
Position: none
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Alan Farley
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| Credit Cards Missing Out |
6/1/2009 12:31 PM EDT
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Mastercard (MA) and Visa (V) are missing out on the first-of-month rally. The stocks are under pressure, with credit card reform legislation threatening to lower profits. In addition, there had been persistent rumors that one or both of these issues would be added to the Dow 30. That didn't happen, with Travelers (TRV) and Cisco (CSCO) getting the nod instead.
However, both issues have been fairly resilient, despite adverse news, so there's still a chance they'll move higher. Visa is the stronger play, filling out a broad triangle pattern, with resistance near 68. A breakout over that level could trigger a rally up to 77.
Annotated chart here.
Position: nm
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Doug Kass
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| Memo to Dr. Alan Farley |
6/1/2009 12:40 PM EDT
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The financials, in general, are petering out here -- likely just a pause after a good run.
Position: None
I'm marginally more positive about the banks this week, than last week, because some relative strength indicators are turning the corner, after a 3-week BKX pullback.
I like MS over GS, almost none of the P&C carriers, but a few of the life insurance carriers (MFC, PL,TMK).
Position: long JPM, PL, and Dec 2008 lottery ticket on C in a long term account
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Tim Melvin
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| Discover Downgrade |
6/1/2009 1:35 PM EDT
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Discover Financial Service (DFS) has been on a rocket ride in recent weeks. The stock is up from the $8 area last week and is up more than 7% today alone. An analyst upgrade to buy last week set the target price at 11 and the shares are almost there. Interestingly as the stock gets stronger, Moody's downgrade the holding company debt to top layer Junk
The ratings agency cited declining credit quality and limited if access to a key funding source as the reasons for the downgrade. Discover had long depended on securitization markets as a source of funds and for all intents and purposes that market no longer exists. They will now have to turn to the very competitive brokered deposits funding source. Stricter credit cards and the new federal legislation were also a concern. The stock is climbing while the bonds have declined slightly and are now yielding 10.2%.
Given that credit cards are going to be a difficult business going forward I would probably jump off this train. I looked for a put spread to establish a short but I could not get the right risk reward ratio in the longer options. Ill keep monitoring the spreads in Discover puts.
Position: na
Should our buying frenzy continue look for strong resistance at the 950-951 area (95.50/95.60 on SPY). Everyone will be watching this general area...so it should be fun.
Position: Short SPY
The current media chatter and trader euphoria about oil prices reminds of how Treasuries were bullet proof just a couple of months ago. I think the only rule in today's investing environment is that media and consensus view at any particular time seems to be almost always wrong. I am increasing my trade against oil prices here because I think the very short term and purely momentum money driving prices up is going to take profits soon, which will cause a very severe and sharp correction of at least 10%.
Position: SCO
Someone on air saying we are like France are Argentina. First, these countries are now paragons of what should be done. Second,i dont think anyone will realize for some time how we almost failed as a nation, with an economy that could have just stopped and thrown 15-20% of the people out of work. These second-guessing scum suckers drive me crazy, they act as if President Obama WANTS to do any of this stuff. He may not be going about it in the way you want him to, but he had to do a lot of things that he is doing so unemployment doesn't skyrocket overnight.
Position: none
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Gary Morrow
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| Powerful Breakout for Colgate |
6/1/2009 2:20 PM EDT
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Colgate-Palmolive (CL) is building on Friday's strong move with a 4% ramp. The stock finished off last week with a high-volume 3% surge that pushed the stock above its 200-day moving average for the first time since the October collapse.
Colgate is now trading just shy of its 2009 high of $69.70. I expect the stock to be at new highs this week.
| CL Daily (NYSE)
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TradeStation |
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Colgate has been on quite a run since bottoming in early March. The stock successfully tested its October lows of $54.35 back on March 9 before turning higher and with today's $2.75 gain, has recovered over half of the heavy loses suffered during the fall of last year.
The bulk of the gains have come during the last four weeks as extremely heavy upside volume returned. This leg of the run has left behind strong support in its wake. While I expect Colgate to easily take out its current 2009 highs, a healthy pullback would strengthen the trend.
I am not in the stock at this point but would be a buyer on a low-volume pullback. First layer of support is the double weekly highs left behind in late January and early February just below $67. Last week's high of $66 is also an area of support.
Position: None
So weird that these two are going up as it is, in some places, totally zero sum as CL is kicking PG's butt. But a weak dollar conquers all except what Obama's gunning for, the drug companies..
Position: none
Long dated US Govt Bonds currently in the largest drawdown since 1900. (Granted they had a big run up year end 2008...). Probably the most contrarian play out there.
Position: None.
To answer all the questions I'm getting regarding the put/call ratio, the equity ratio is currently low at 53% but the index ratio is "nowhere" at about 120%.
Call it a draw.
What I think is fascinating is the reversal in dollar/yen today -- and no one is talking about it.
Position: none
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Tim Melvin
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| Templeton Revisited |
6/1/2009 2:41 PM EDT
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Last October I wrote an article suggesting that it was time to put on what I called the Templeton trade. Mirroring Sir John Templeton's strategy of buying all the cheap stocks on the NYSE, I simply screened for all the stock on the Big Board trading for less than $3. At the time there were 145 stocks that fit the bill.
I have tracked a portfolio of 100 shares, and for most of the year it has been a loser showing losses of around 20%. That has changed dramatically in recent weeks. As the market has climbed, the beaten-up stocks gained momentum, and the portfolio as a whole is now up over 50%.
.
I ran the same screen today and was surprised by the results. I would have expected there to be far fewer candidates. To my surprise, I had a list of 139 names. As the market gyrated, other companies fell out of favor and kept the list about the same. There are lots of REITs and newspapers in the group. This might suggest those groups are getting washed out and it is now time to look for survivors. Interestingly, there were also several battered closed-end funds that might be worth further investigation.
Position: na
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Geoff Johnson
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| Checking In After a Long Research Marathon |
6/1/2009 2:54 PM EDT
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I haven't posted since mid/late-March. It took me until end of March to get myself reasonably invested and to accept that I should do so with little or no hedging. Honestly, I felt I had to duck out of sight and focus, focus, focus on research and rebuilding my long portfolio after not having one for so long. Subsequently, I have had bouts of selling too soon or cutting back exposure when I need not have, but mostly I kept buying.
In one of my last posts in March, I noted
that I was seeing consumer stabilization and that I was focusing my buys on consumer discretionary and emerging markets, especially CEE and Russia. Heck, even after being highly critical of the "bailout nation" approach to solving our problems (I still don't like it), I even found my inner Keynesian and expressed my support for Geithner/Bernanke and crew. If this is the path we are on, there is no reason not to want it to succeed. Also, accepting that this was the path we were on and that it does have some benefits (at least for now) helped in terms of getting behind my stocks.
Since my first buys and initial stumble to get reinvested, I've sold most, but not all, of my consumer discretionary; I've added to my emerging market exposure; added to my financials via additions to insurers and limited exposure to banks and some financial-like business development companies; and I bought in energy/mining/gold. In energy and mining I tend to get involved in the junior space, and I wish I had taken/would like to have more exposure here, especially if we get a pullback.
I hope to get back to posting more often. (For new subscribers, I've been a contributing writer since 2003.)
Position: None mentioned.
Geoff, good to have you back! That last post would be a terrific piece to run so that it stays up for awhile for all to read!
Position: none
First Solar (FSLR) is weak on a breaking story by the Los Angeles Times that a Department of the Interior inspector general is investigating First Solar's acquisition of OptiSolar.
This is, of course, in addition to my recent video with Tim Sykes on TSC, "Why I Hate Solar Stocks" from last Thursday.
Position: No positions
We have a monster close. I know Alan had some negative things to say about Visa (V), but I think that unless you know of a downgrade coming, it seems like a decent level.
Position: v
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Dan Fitzpatrick
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| 'Fast Money' and the Ultimate Long-Term Indicator |
6/1/2009 4:05 PM EDT
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I'll be on "Fast Money" tonight to explain the meaning of the Coppock Curve.
I won't give it away... but think battleship vs. Somalian pirate ship. (When you confront a battleship, you're likely to lose your head.)
Position: Pretty darned long these days
Dan, you are so so good when you go on "Fast Money" and you have had a very hot hand. Congratulations -- you are doing a fabulous job!
Position: none
Jim, you are way too kind.
Thank you. I always enjoy doing that show -- it's fast, it's about what's working...and they let me be "me" (for the most part anyway.)
Position: Pretty long...and riding with Isaac the Bartender on a northbound Love Boat.
For those who are interested in the dark science, I've recorded a short video explaining the Coppock Curve -- a long-range technical indicator that just turned positive. Some may find this boring, but I don't trade for excitement. I trade to make money. If there was value in watching ants crawl up the side of my house, I'd grab a lawn chair and a beer and start staring at the stucco.
According to Jason Goepfert at SentimenTrader.com, the track record for this little-followed indicator is quite good.
Since 1928, we've had 23 buy signals. One year later, the S&P was positive 75% of the time, with an average return of 13.7%.
Three years later, the S&P was positive 87% of the time (remember...the market was in a secular bull market in many of those decades, do don't read too much into this), with an average return of 29%. Not bad!
The bottom line is this: When a long-range indicator reaches an extreme oversold condition and then turns around and heads northward, you've got to respect the persistent buying pressure that was powerful enough to halt the downward momentum of this big supertanker, turn it around, and then start pushing it northward with increasing momentum. That's what the Coppock Curve is reflecting now.
As most folks know, I do not blindly follow charts. But I do find indicators like this quite valuable when I'm asking myself this common question, "Should I really believe what I see?"
Position: none mentioned
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