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  1. phil

    Good morning!  

    News was once again terrible this morning, especially out of China and I could have written a whole post on that but thought it was a good time for a macro point about why we should be concerned about the market in any event.  

    I'm getting into a lot of silly conversations with people about value lately and I'm being lectured on how value doesn't matter if the market doesn't agree and we should just follow the "wisdom" of the crowd.  This is exactly the kind of BS we often hear at market tops and I'm not against a little momentum trading BUT, when people do it too often for too long – they tend to get it mixed up with their long-term premise and then they tend to bend their minds around to justify their decisions after the fact.  As Wikipedia notes:  

    There are two self-justification strategies: internal self-justification (IS) and external self-justification (ES).[5]

    Internal self-justification refers to a change in the way people perceive their actions. It may be an attitude change, trivialization of the negative consequences or denial of the negative consequences. Internal self-justification helps make the negative outcomes more tolerable and is usually elicited by hedonistic dissonance. For example, the smoker may tell himself that smoking is not really that bad for his health.

    External self-justification refers to the use of external excuses to justify one's actions. The excuses can be a displacement of personal responsibility, lack of self-control or social pressures. External self-justification aims to diminish one's responsibility for a behavior and is usually elicited by moral dissonance. For example, the smoker might say that he only smokes socially and because other people expect him to.

    That's the crux of the crowd-following arguments.  Everyone is doing it, so how bad can it be?  Well, it can be 2008 bad, is my answer.  And I'm not trying to come across all doom and gloom but I do tend to get more negative when I feel our Members may be getting too  positive (and vice-versa when too gloomy) to try to inject a bit of balance into the conversation.  

    We are in no better shape today than we were when I called for cashing out long positions at the end of last month.  We're using the same bounce levels we set on the 6th, when we first bottomed out and EXPECTED a bounce.  The whole point of the bounce levels is that we're either going to have weak ones, which keep us bearish, or strong ones, which make us neutral until either the 50% lines cross or the weak bounce lines fail to hold up.  

    • Dow 15,108 (weak bounce) and 15,216 (strong bounce)
    • S&P 1,622 and 1,634
    • Nasdaq 3,420 and 3,440
    • NYSE 9,280 and 9,360
    • Russell 975 and 981.40

    As I noted yesterday, when things were looking up, we also have to cross our 50% lines at 15,270, 1,640, 3,460, 9,400 and 985 and, at noon yesterday, only the NYSE and the Dow were red.  Now, it's just the RUT that's green and the S&P is right on the line (so we'll watch 1,640 very closely).  

    Also, as noted in the morning's news reading, 80% of the 107 S&P companies that have provided guidance updates for Q2 have LOWERED their outlook.  That's vs 62% "normally" (as the main reason people do pre-announce is to warn, of course).  Materials (of course), IT and Industrials are hardest hit, which makes the Dow a good short again as it attempts to get back over 15,200.  

    On the other hand, expectations are now so low, they'll be hard to miss with the S&P 500 now averaging 1.1% earnings growth (below the rate of buy-backs!), down from 4.3% on 3/31.  Keep in mind that the overall market is up 4% since 4/1 so there's a pretty big disconnect between the run-up we've had and the reality we're running headlong into!

    Oil hit $98.50 again on the usual 9am pump and, of course, it's a short again.  That's on /CL by the way, which is now /CLQ3 (Aug) in TOS, the old /CLN3 contract (July) also hit $98.50 already and dropped like a rock to $98.15.  

    Copper is melting down at $3.15 as this China thing is SERIOUS (and it's also serious when there's so many bad things to talk about that I don't have time to go over them all in one day!).  Nat gas is $3.90, gasoline is $2.88, gold is $1,378 and silver is $21.70.  

    The Dollar is 81.05, Euro $1.335, Pound $1.558 and 95.50 Yen to the Dollar with the Nikkei flying at 13,400 – that's up 300 since the index closed flat for the day.  

    The VIX i8s at 16.69 and TLT is 112.75 so no one seems very worried – but I still am.  

    Rumors that Bernanke is stepping down are gathering steam.  He wasn't scheduled to go to Jackson Hole since last year (a big deal was made about it then but it's some sort of personal conflict) but that won't stop people from "discovering" it now.  

    Hopefully, the Fed will give us a bit of clarity tomorrow but, even as I write that, I'm laughing…

    At the open: Dow +0.2% to 15211. S&P +0.13% to 1641. Nasdaq +0.21% to 3459.

    Treasurys: 30-year -0.23%. 10-yr -0.15%. 5-yr -0.1%.

    Commodities: Crude +0.39% to $98.41. Gold -0.73% to $1372.95.

    Currencies: Euro -0.06% vs. dollar. Yen +1.13%. Pound +0.91%.

    Market preview: U.S. stock futures and European shares are flat-to-higher after U.S. CPI comes in slightly below expectations and as the FOMC meets on the first day of a two-day policy meeting. The S&P Mini is flat. "Today should be quiet, as people are only asking about tomorrow," says economic strategist Andrew Wilkinson. Sony is +4.25% after Dan Loeb ups the ante over a spin-off for the company's entertainment division. Ongoing: Paris Air Show 

    "The biggest contrarian play in the market today is assets linked to China (FXICAF)," says Michael Hartnett, summarizing BAML's latest Fund Manager Survey, which shows money flowing out of commodities (DBC) and emerging markets (EEMDEMVWO). Where's the money going? The eurozone and the U.S. Where it's not going is fixed-income (AGGBND) – 50% of managers say they're now underweight bonds as opposed to 38% last month.

    May Housing Starts: 914K vs. 950K forecast, 856K previous (revised from 853K).

    More on Housing Starts: Total starts were up 6.8% from April, up 28.6% from a year ago. Single family starts in were about flat M/M. Total building permits of 974K fell 3.1% M/M, and gained 20.8% Y/Y. Single family permits rise 1.3% M/M. (full report) 

    May Consumer Price Index: +0.1%;vs. +0.2% expected, -0.4% prior. Core CPI +0.2%; in-line with expectations, +0.1% prior.

    The FOMC will be able to chew on inflation data for May when it meets today, with the reading due out this morning.Economists expect that CPI rose 0.2% on month after sliding 0.4% in April, driven up by slightly higher food and gasoline costs. "Inflation is low in the U.S. at the moment, giving the Fed more room to wait for improvement in employment before it starts tapering," say analysts at Danske Daily.

    ICSC Retail Store Sales: +0.3% W/W, vs. -2.7% last week.+2.5% Y/Y vs. +2.2% last week. 

    More on ICSC Retail Sales: The retail sector put in a mixed week with department stores, electronics store chains ([[RSH[[, BBY), and drug stores (CVSWAG, RAD]]) strong for the period, but sales at dollar stores (DGDLTRFIVEFDO) and wholesale clubs (COST,PSMT) notably weak. After last week's drop in sales cut into forward progress, the year-over-year gain in retail chain store sales stands 2.5% higher after threatening a 3% pace earlier in the year. 

    Redbook Chain Store Sales: +2.9% Y/Y vs. +2.8% last week. 

    MSCI's reclassification of Greece to emerging market is a yawner as far as ETFs go, writes Dennis Hudachek, as the country's presence in the EFA is less than 0.10%. With Coca-Cola Hellenic (CCHBF.PK) no longer part of the MSCI Greek Index, the country's addition to the EEM will be of minimal effect. 

    China's determination to reign in the rapid growth of credit is being tested by a short-term credit squeeze at banks, with rates in the interbank funding market soaring and foreign-capital inflows slowing. The banks want the People's Bank of China to inject liquidity by cutting the reserve-requirement ratio, but so far the PBOC is holding firm and maintaining the tight conditions. 

    nasty bout of late-session selling sends Thai shares (THD-3.4%) plunging nearly 3%, bucking a generally positive regional trend. Philippine stocks (EPHE +2.3%) rise 2.83% in Manila while shares in Indonesia (IDX +1%) and Singapore (EWS +0.9%) post solid gains.

    FU Oppenheimer!  Oppenheimer lifts its price target on SodaStream (SODA) to $85 following the company's intriguing deal with Whirlpool to jointly develop a home carbonation system. SODA +1.5% premarket to $72.05. 

    The rumored iWatch will be more "hobby" than major product line for Apple (AAPL), says Jefferies' Peter Misek. Likely not having a cellular chip, the iWatch would need to be paired with an iPhone for full functionality. Starting with some pricing assumptions and then slapping a 5% penetration on the installed iPhone base of 250M would move the EPS needle by only about 1%. 





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Zero Hedge

Gold Slammed To Fresh 10-Week Lows Below Key Technical Level

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

What else should you do as Russian and Ukraine forces begin a serious un-de-escalation... sell precious metals with both hands and feet of course. The strength in stocks (whether channel-stuffed or not) is enough to make investors believe that we don't need no stinking Fed and that economy must be doing great all on its own. Gold is back below $1275, which SocGen warns could lead to $1233.

 

 

A close below 1275 will mean the extension of the correction to 1263/60 and possibly even 1233.

...



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Insider Scoop

Zogenix Announces Sale of SUMAVEL DosePro Migraine Therapy to Endo International for $85M, Up to $20M Milestone Payments

Courtesy of Benzinga.

Related ZGNX Zogenix Responds to Governor's Action Singling Out Zohydro ER in Massachusetts Zogenix Shares Soar on Massachusetts Developments - Analyst Blog

Zogenix, Inc. (Nasdaq: ZGNX), a pharmaceutical company developing and commercializing products for the treatment of pain-related and central nervous system (CNS) disorders, announced today that it has entered a definitive agreement to sell its SUMAVEL® DoseP...



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Phil's Favorites

Groupthink Or Black Swan Rising? Not A Single 'Economist' Expects An Economic Downturn

Courtesy of Pater Tenebrarum of Acting-Man

A 100% Consensus

This doesn't happen very often. Marketwatch reports that Jim Bianco points out in a recent market comment that the 67 economists taking part in a regular Bloomberg survey have a unanimous forecast regarding treasury bond yields: they will be higher 6 months from now. This is a truly striking result, and given the well-known propensity of mainstream economists to guess wrong (their forecasts largely consist of extrapolating the most recent short term trend), it may provide us with a few insights.

In fact, considering that there have been only a handful of instances since 2009 when a majority of the economists surveyed predicted a decline in yields, we can already state that their forecasts regarding tre...



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Chart School

STTG Market Recap April 23, 2014

Courtesy of Blain.

Indexes took a little rest today, which as we said yesterday was probably needed.   There was actually some bad economic news in housing and the market didn't react much at all which is something bulls will like.  After the close was a surprise stock split by Apple (AAPL) which will help the indexes tomorrow as the stock is up strongly in after hours.  The S&p 500 fell 0.22% and the NASDAQ 0.83%.  The Commerce Department reported new home sales fell 14.5 percent in March, the worst sales month since July.  Again it is not the news that matters to markets, but the reaction to the news and the market didn't really care.

Here are longer term charts of the two indexes. The S&P 500 hit the top trendline which connected the lows of summer 2012 yesterday and fell back after a furious week long rally.

...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Market Shadows

Soy Numero Uno

Soy Numero Uno

By Paul Price of Market Shadows

Bunge Limited (BG) is the world’s largest processor of soybeans. It is also a major producer of vegetable oils, fertilizer, sugar and bioenergy.

When commodities got hot in 2007-08, Bunge’s EPS shot up and the stock followed, rising 185% in 19 months.

The Great Recession took its toll on operations, dropping EPS to a low of $2.22 in 2009.  Since then profits have recovered.  They ranged from $4.62 - $5.90 in the latest three years. 2014 appears poised for a large increase. Consensus views from multiple sources see BG earning $7.04 - $7.10 this year and then $7.83 - $7.94 in 2015.

...



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Option Review

Casino Stocks LVS, WYNN On The Run Ahead of Earnings

Shares in Las Vegas Sands Corp. (Ticker: LVS) are up sharply today, gaining as much as 5.7% to touch $80.12 and the highest level since April 4th, mirroring gains in shares of resort casino operator Wynn Resorts Ltd. (Ticker: WYNN). The move in Wynn shares appears, at least in part, to follow a big increase in target price from analysts at CLSA who upped their target on the ‘buy’ rated stock to $350 from $250 a share. CLSA also has a ‘buy’ rating on Las Vegas Sands with a $100 price target according to a note from reporter, Janet Freund, on Bloomberg. Both companies are scheduled to report first-quarter earnings after the closing bell on Thursday.

...

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Sabrient

What the Market Wants: Market Poised to Head Higher: 3 Stocks to Consider

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of David Brown, Sabrient Systems and Gradient Analytics

Yesterday, the market continued its winning ways for the fifth consecutive day.  The S&P 500 closed within 1% of its all-time high, and the DJI was even closer to its all-time high.  Healthcare, Energy and Technology led the sectors while Financials, Telecom, and Utilities finished slightly in the red.  All three sectors in the red are typically flight-to-safety stocks, so despite lower than average volume, the market appears poised to make new highs.

Mid-cap Growth led the style/caps last week, up 2.87%, and Small-cap Growth trailed, up 2.22%. This week will bring well over 100 S&P 500 stocks reporting their March quarter earn...



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OpTrader

Swing trading portfolio - Week of April 21st, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly. Click here and sign in with your PSW user name and password, or sign up for a free trial.

...

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Digital Currencies

Facebook Takes Life Seriously and Moves To Create Its Own Virtual Currency, Increases UltraCoin Valuation Significantly

Courtesy of ZeroHedge. View original post here.

Submitted by Reggie Middleton.

The Financial Times reports:

[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process. 

The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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Pharmboy

Here We Go Again - Pharma & Biotechs 2014

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.

And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference.  Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014?  The Biotech ETF beat the S&P by better than 3 points.

As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...



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