All day and every day, some of the stock market's best and
brightest traders and money managers share their ideas, insights,
and analysis in real-time on Minyanville's
Buzz & Banter
Here is a small sampling of this week's activity in the Buzz.
Earnings Season -- How We Doing?
just updated earnings season stats for the
(INDEXSP:.INX), which again point to the idea of earnings needing
to catch up to stocks.
Here are the highlights:
-446 of 500 companies have reported.
-73% have beaten on earnings vs. 4-year average of 52%.
-Companies are beating by 1.8% on average vs. 4-year average of
-52% have beaten on revenues vs. 4-year average of 59%.
-Earnings growth rate for Q3 is 3.4%.
-Revenue growth rate for Q3 is 2.9%.
-Strongest sectors are consumer discretionary, materials and
-Weakest sectors are energy and financials.
-For Q4, 85 companies have issued earnings guidance, with 73 (or
86%!) being negative. 5-year average is 63% negative.
-For Q4, analysts are forecasting earnings growth of 7.3%, down
from 9.7% on September 30.
So we have weak revenues, small earnings beats, and terrible
It's actually pretty reminiscent of last quarter! Oh well,
eventually this stuff's gonna matter... right?
Upside for Twitter
Daily Market Report
showed the following 10-minute
TWTR pionocchioed the bottom of its little channel and stabbed back
above it in the first hour, so it may be viable on the long side
for a trade.
Click to enlarge
All News Is Good News
Bullish Sentiment in US equities hit extreme levels last week, as
reported by Investors Intelligence.
The spread between Bulls and Bears moved up to 39.6%, the highest
level since April of 2011, which preceded a 20% correction in
stocks. Looking at the reaction to Friday's payroll report, it is
easy to understand why investors are so excited here.
While equities initially sold off on the news that payrolls beat
expectations (presumably because this increases the odds of a
taper), they quickly reversed higher and are now trading up close
to 1%. In the last payroll report on October 22, when payrolls came
in below expectations, equities also rallied higher.
For the time being, all news seems to be good news for US equities.
Tesla May Be About to Move
Quick FYI --
) Elon Musk's interview at the NY Times Dealbook conference will be
broadcast on CNBC very soon.
The stock is down 5% on rumors of a Model S recall. I would not be
surprised to see this rumor denied by Musk, which would presumably
cause a pop on the stock. (it's already ticked off the lows).
is already citing a source saying there will be no recall, but
there will be much more weight if it comes straight from Lord Musk.
Position Update -- Organovo Holdings
Back on September 5, Duncan Parker
posted a buzz
). It piqued my interest. On September 9, Duncan asked me about the
fundamentals, and I bought it. I have buzzed about it a couple of
times. Boy has it been a good run! Sometimes you have to take
profits just for the sake of taking profits.
I am selling one-half here above 10.00 for a 70% gain in three
months. This is what I always loved about the buzz; guys that are
smarter than me sharing ideas that I can evaluate on my own and see
if they are a fit. I love this stock for the long-term (hence a
one-half position sales here), but I also believe in trading around
I like getting lighter into parabolic moves and buying against
quality moving averages. I will look to buy against the 50-day
moving average the next time I see it.
Click to enlarge
Hello Minyans -- nothing really new in the world of corporate
credit other than it continues to be white-hot. Of course, if an
asset class is successful, you can count on Wall Street engineers
to repackage it, add some steroids, and resell it; and that's what
is happening with Collateralized Debt Obligations (CDOs) i.e.
sausages of various debt instruments, which after lagging badly
behind its Asset Backed Securities brethren for the last several
years, are coming on strong once again.
SIFMA reports that through October, $68B of CDOs were sold vs. $45B
in 2012, $11B in 2011, and $3B in 2010. Bubble you say? Maybe not.
ABS issuance is clocking at about $180B for 2013, a far cry from
the 2007 peak of $290B. (Thanks Prof. Atwater for flagging the site
- very handy)
The bottom line is that if you think that demand for corporate
credit must be exhausting itself, it just may be the opposite.
What's holding it back (if such a description applies) is a LACK OF
SUPPLY and of high enough yields. And so buyers are once again
flocking to structured products to find both.
Yes, it will end horribly badly once again, worse than '07-'08
(much much worse if you ask me) but, by all evidence, not now, not
next month, not next quarter, and probably not for the next few
The banks still matter as a predictive tell, as they encapsulate
many of the macro issues in the marketplace. And high-beta remains
a proxy for performance anxiety,
as discussed yesterday
. I am watching them in tandem.
I spent a few days in Cuba at the end of last week; it was like
stepping in a time-warp back to 1957. When the embargo is
lifted--and I think that happens within the next five years --
there are going to be a ton of opportunities there. Unfortunately,
many of those seeds have already been planted and cultivated by
If and when Twitter retraces, I plan to buy it for my long-term
account, much the way I bought
) at $19 (which I unfortunately treated as a short-term trade).
Maybe the trade is to buy Twitter (market cap of $23B) and short
Facebook (market cap $114B) on a pairs trade?
As year-end edges closer, emotion will jimmy higher; remember to
stick to your knitting regardless of what's going on around us.
Sniffing around the street, I continue to sense that 'flat' is the
new 'short.' Prolly for good reason (the bears have been burned
every time they've gained a semblance of confidence this year) but
worth noting nonetheless.
The Ruby Peck
Foundation for Children's Education
will be donating 100% of net proceeds raised through the rest of
2013 to the Typhoon Haiyan Disaster Relief Fund. Every little bit
helps so thanks kindly for your consideration.
May peace be with you.
Searching for Resolution
The market appears to be falling from a two-day consolidation off
of Friday's key reversal. I would pay less attention to the broader
indexes and focus on single issues. We are seeing tech momo
generals cool off as money is rotating into the original tech
(INTC), along with another round of buying the nifty 50. This is
likely institutional players putting money to work as the perpetual
rotation out of the long end of the curve continues.
I have held a bullish bias on the market for the entire year.
Though the tape that has traded in a straight direction, you
certainly wouldn't say it has been stress-free. The target laid out
in the spring was 1780-1820. After the reversal witnessed Friday, I
willingly suggest that we saw the high for the year on Thursday.
Every move needs confirmation. Bears have not received it all year.
Maybe this time is different, and it's the bulls that fail to
The keys remain the same. Semis look like they want higher. Banks
were poised to break out and provide continuation. With
(MS) at a 52-week high, I wouldn't be shorting the stock. The
market tends to find a bottom near Thanksgiving and trade flat to
higher into year end. Let the market sort out what it wants to do
here. If you are having a profitable year, protect your gains, be
opportunistic, and pick spots. Don't press here. My gut has been
saying we see rates tick up, metals weaken, and the market
begrudgingly move towards a bull market top in the spring. You can
have an opinion and a plan, but if the winds change, so must the
Thursday, November 14
As if out of nowhere, the phrase "income inequality" now seems to
Below is a chart I showed clients last week that highlights how
"income inequality" correlates to economic confidence.
Not since the weak economic confidence days of Occupy Wall Street
have we seen such a strong surge in "income inequality." As someone
who studies the correlations of human behavior with confidence, the
connection is not at all surprising. As confidence falls, perceived
inequities of all kinds come the surface.
I would be careful to assume, though, that this is just a passing
phase. Given that it has been an additional two years of weak
confidence since we last saw this phenomenon, we could easily see a
movement far more significant than Occupy Wall Street, particularly
if mood falls sharply.
While I don't wish for it, given the clear breakdown in correlation
between investor confidence and American economic confidence,
something akin to Occupy Capitalism would not be at all surprising
to me at this point.
Click to enlarge
APA Accelerates From a Big-Base Formation
I entered a 100%-long position in
(APA) this morning at 91.33 into strength in the aftermath of
yesterday's key-upside reversal day, 88.84-90.89, which triggered
new-buy signals in my intermediate-term pattern work.
You can see on the daily chart that APA is starting to accelerate
to the upside from a near 2-year base formation, which projects
next to 94.00 and to 98.00, thereafter, possibly on the way to
105-110 several months from now.
Only a sudden-downside reversal that breaks and closes beneath
88.85 will compromise my currently constructive outlook.
Click to enlarge
Friday, November 15, 2013
Italy has finally burned off its overbought nature from the
rocketship move it had. The dollar had its fun in the sun on that
recent spike and is now drifting lower. This allows hot overseas
markets to refresh and gain some internal power to move higher on
both a dollar basis and a pure basis.
I am adding the
iShares MSCI Italy Index ETF
(NYSEARCA:EWI) today to bring the portfolio back up to 80% long.
Italy is coming into its 50-day moving average on a beautifully
controlled pullback. This type of move usually sets the stage for
another leg higher.
Click to enlarge
(10-year future) retraced 50% of its pit session move from the FOMC
high and stalls at 126'290. The bull case is not made until we
close above. Today's move to 126'290 lines up with the daily chart,
which so far is just bear flagging.
Click to enlarge