This past week saw a great deal of action in the markets, and our four bloggers on RealMoney covered all of it. Once again this weekend, we'd like to share the "Best of the Blogs" with TheStreet.com readers. These posts best captured the intent of these blogs, which is to provide intelligent discussion on the issues each writer sees as most pressing that day.
This week, take a look at
on one way to win with an inverted curve,
on the continuing big-cap conundrum,
on a big trade marking Friday¿s low; and
on the role indirect bidders are playing in auctions on the longer end of the curve.
here for information on
, where you can see all the blogs -- and reader's comments -- in real time.
Cramer's Blog: Buybacks Good in Inversion
Originally published 02/10/2006 12:48 PM
We always laugh about stupid buybacks. They seem to be such a waste of money, particularly when it comes to companies that are doing well.
But when it comes to inversions, when the natural instinct of the market is to go down, the ballgame changes. We want to buy stocks that are liquid with buybacks. We don't want to be trapped. If you want to know what it is like to be trapped in an inversion or a potential one for that matter, take a look at what happened with me and the bank stocks in 1998. I was desperate and literally demanded my stock be bought back by two banks. Saved my year.
I know that it is difficult to perceive the tough situation I am envisioning. But look at
(WFC:NYSE), the only bank stock I own other than
(CBH:NYSE), which is a retailer masquerading as a bank.
I am confident that if WFC didn't have one of the best buybacks in the world, that this stock would be appreciably lower than it is. I also know if I change my mind -- or more importantly, if a large institution changed its mind, there would be "a place to go."
Procter & Gamble
(PG:NYSE) have similar buybacks in place. They know how to do it.
I know that these rules for inversion seem like quite a switch for me. But I have tried to wait until I saw the whites of the inversion's eyes before pulling the trigger. Doesn't mean there still isn't a bull market somewhere. Does mean it is much harder to find.
Rev Shark¿s Blog: Big-Cap Conundrum Continues
02/09/2006 5:11 PM
A very promising start gave way to some intense selling to end the day. How poor things were depended on what you were looking at. If you owned big-caps like
(YHOO:Nasdaq), it looked very bad. But if you looked at breadth and the new highs, things appeared to be much better.
Breadth slipped to 3,050 gainers to 3,250 decliners at the close, which isn't that bad. But it is disappointing given the nearly 2 to 1 positive levels earlier. We had 298 new 12-month highs and only 55 new lows, so there obviously are quite a few stocks acting better than some of the higher-profile issues.
The conundrum for this market remains the big-cap technology stocks. They have been acting poorly for weeks now and even a nasty breakdown in oil and metals isn't fueling a rotation into the group. Buyers are obviously skittish about trying to catch big-caps that are acting like falling safes, and the more they get burned with action like we saw today, the more hesitant they are going to be about fishing for a bottom.
The question I'm struggling with is whether things like Apple are indicative of general market sickness or is there just some specific issues affecting big-caps that will eventually abate. I'm wondering if the market is just going to do its best to frustrate everyone with some whipsaws that give false hope to both bulls and bears.
All I know for certain is that trying to make a market call at this point is extremely tough so I'm not going to worry too much about it. Days like this can be quite exhausting. I hope you hung in there. I'll see you tomorrow.
Steve Smith's Blog: QQQQ Trade Marked the Low
Originally published 02/10/2006 2:35 PM
Possibly contributing to this morning's sell-off was a large trade in the
Nasdaq 100 Trust
(QQQQ:Nasdaq), which saw someone buy 100,000 of the Feb. $40 calls in conjunction with shorting shares of the QQQQs and the NDX futures. The trade occurred around 10:45 and the time of that trade matches up with this morning's intra-day low.
The strike has now traded over 150,000 contracts while prior open interest in the strike was just 50,000 contracts. Seems like someone is getting long some gamma on expectations for some nice price swings and increased volatility heading into next week's expiration.
We have now seen a nice rally and price stabilization as initial sell programs get worked off. Breadth is still nearly 2:1 negative, but it should show a better improvement if this bounce will hold heading into the last hour.
Tony Crescenzi's Blog: Watching the Indirect Bidders
02/09/2006 11:45 AM
In a possible sign of relatively decent demand for today's 30-year bond auction, it is notable that the indirect bidder tally for the 10-year note was much more than for that of the three-year, in fact nearly double at about 41%.
The strong demand for 10s could well reflect the fact that many fixed-income portfolio managers are acting in anticipation of the expected extension of the Lehman index, as well as other major bond indexes.
These indexes will see their average duration levels (average maturities) extend because of the inclusion of the new 30-year bonds.
Moreover, there is expected to be continued gradual movement toward improving the matching of assets and liabilities of pension fund assets, particularly ahead of legislation that could well be delivered by early next year.
All that said, major uncertainties surround the bidding for today's auction and history cautions that anything goes on the date of 30-year auctions. Counterintuitive price action can occur at anytime on auction day, before prices simmer down the next day (the market tends to be flattish the next day and higher a week after the end of refundings).
George Moriarty is managing editor of RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback;
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