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You need one more option - to close right at 38.00 (That's the Max Pain number!)
CNBS reporting that traders are rolling over their option positions, a sign that they're "comfortable with them". Another sign of rampant complacency.
Well whattya know. Max Pain on the QQQQ's is 38.00
How do they do that?
http://www.iqauto.com/cgi-bin/pain.pl
LOL! Amen. Sometimes I just have to sit out the Wednesday to Friday sessions of opex week, or I completely lose my nerve!
When program trading accounts for 60 or 70 percent of the volume, you know there's some big battles being fought between some big players.
Just goes to show how smart and brave (or is it foolish? <g>) you gotta be to be an individual trader or investor....
That Cramer sure has a sweet deal working, doesn't he? I watched about 5 minutes of his show the other night, during which he pumped SHLD and AMLN. How convenient that news and upgrades are now making both of these stocks run today.....
Wonder how many other traders would like to have CNBS give them a forum to pump their picks???
The AJC rule - three days after she goes public with another version of her permabull view, the market tanks.
I thought she had to appear on CNBS for the rule to be valid. If not, she spoke on June 14, so the market dumps tomorrow.
Well, I read it somewhere... but be that as it may, do you think that NVLS shutting down for a week at a time when demand is supposedly higher than expected and inventories lower than expected, is a good thing?
I glean from your post that you have an open-minded familiarity with this company... I appreciate your input.
See Shasta; I am referring to a 6 month old Reuters article, and comments made during the recent NVLS mid-Q update regarding the intent to explore cost-cutting options. I found and pasted the article below (see next-to-last paragraph), but I'm still looking for the analyst comment that renewed the cost cutting and layoff connection.
CHIP GEAR INDUSTRY SEEN BRACING FOR LAYOFFS
BY DANIEL SORID
REUTERS
SAN FRANCISCO — The $22-billion industry that supplies production equipment to chip makers appears to be bracing for layoffs as it heads into a long winter of slumping business, according to analysts.
Analysts who have been briefed on cost-cutting preparations say the first round of layoffs could be announced as early as Wednesday, when Novellus Systems (NVLS) reports quarterly results.
"We think they will be under pressure to reduce costs, and headcount reduction will probably be one of those," said Mark FitzGerald, an analyst with Banc of America Securities, speaking of Novellus. "I would bet on that."
Novellus declined to comment on any plans for layoffs.
Merrill Lynch analyst Brett Hodess said hiring freezes were already in effect at major equipment suppliers, although he declined to specify which ones. "There's talk about the potential for layoffs, but not that they've actually been formally decided."
The very notion of layoffs flies in the face of the industry's projections that there is at least one more year left of strong growth in the current up-cycle, which followed the worst downturn on record in 2001 and 2002. In July, the trade group Semiconductor Equipment and Materials International forecast 63% sales growth this year and 24% growth next year.
But now analysts are betting not on the magnitude of growth, but on how far orders for new equipment will fall in the fourth quarter. Novellus, the first major chip equipment supplier to report quarterly earnings, is expected by many analysts to forecast a fall in fourth-quarter orders of as much as 10%.
The prime reason for the change, said Hodess, is a "double whammy" of chip inventories and larger-than-expected production capacity growth. As a result, chip makers' factory utilization rates — a measure of how close chip factories are to capacity — could fall 10% to 12% in the next few quarters.
"When that occurs the semiconductor companies put on the brakes in terms of capital spending" on chip-making tools, Hodess said.
Bill Ong, an analyst with American Technology Research, said his own checks with industry officials suggest that two large suppliers of chip-making tools will announce work force reductions by the end of October, averaging about 10% each. He declined to name the two companies where he expects cuts.
Applied Materials, the world's largest supplier of chip-making gear, has kept its work force flat during the upturn of the last year-and-a-half in an attempt to avoid painful layoffs.
Between 2001 and 2003, the Santa Clara, California-based company slashed 5,000 jobs from its work force of 17,000. Chief Executive Michael Splinter, who is now reorganizing his management team to make more streamlined decision-making, has pledged not to repeat that mistake.
A call to a spokesman for Applied Materials was not immediately returned.
Novellus, on the other hand, has taken a more aggressive stance, pledging in July to slowly grow its staff levels even if it meant layoffs down the road.
"When you grow, it would be foolish not to hire and not take advantage of growth just because there may be pain in the future," CEO Richard Hill said in July.
We're thinking along the same lines. I'm troubled by the number of companies talking positively about how layoffs are going to improve their earnings.(HPQ, NVLS, to name just two)
I have to look past the short term cost reduction benefit of layoffs, and focus on the economic conditions that bring them about. At the end of an interest rate hike cycle, with such high expectations of tech experiencing renewed demand and lowered inventory, for HPQ and NVLS to talk layoffs is very troubling to me.
The interesting indicator for me is the large short position in the market. Often, the assumption is that a high short position is a contrary indicator and predicts an impending short covering rally.
But, when bullish advisors are over 50%, AND there's a large short position in the market, it tells me that the smart money is short, and it's only the bagholders that are influenced by the lopsided sentiment.
The short covering may not occur for a while...
<<< SMH hitting 3 week lows >>>
(edit: over the last few days,) it gets to mild oversold, but instead of bouncing, it just pauses while the indicators reset, and then it slides down a little further. Wash, rinse, repeat.....
CNBS talking about complacency in the market. No kidding? Bullish advisors at 52.7%, vix at 11, volume weak, oil over $55, more rate hikes coming... What, me worry??
By the way, after a half dozen high profile upgrades and raised targets on GOOG, it's quietly sliding towards the $260's...
That's how the game is played.
The market only knows two emotions - fear and greed. As soon as the economic indicators show a slowing of inflationary pressures (and thus confirming the end of rate hikes), we'll all start worrying about whether the growth has been taken out of the economy, and we'll start hearing the "r" word.
Distribution only works if no one knows it's happening. Painted tape, divergences, odd volume, fakeouts, rapid rotation, failed triggers, broken TA rules, and lots of "don't worry" from CNBS....
If it looks like distribution, acts like distribution, and grinds slowly down like distribution... It's distribution!
Volume says the doldrums are upon us. Nimble dipsters doing ok, but shorts are enjoying the continuing lower highs/lower lows action of the QQQQ's (hourly June chart). That, and the ridiculously low Vix/Vxn puts the sleeper hold on longs. No reason to change prediction of a slow grind down 'til July/August. All IMHO.
edit: I reserve the right to predict impending bounces and/or be dead wrong on the whole call :)
So far, June has been kind to the nimble dipsters and strong handed shorts. But, staying long for more than a few hours, or short for less than a few days, has been costly....
Today on track to be more of the same. Dipsters got their ramp (thanks to Softie?) and now the shorts can enjoy a nice red close... IMHO.
QQQQ - On the hourly chart, pattern of lower highs and lower lows since June 2nd still holding. If Q's don't take out 38.06 today, the rollercoaster continues down.... IMHO
CNBS reporting that Fido has been increasing their stake in GOOG. Some here have been posting that Fido's been dumping GOOG... Anybody got an insight on this "connundrum"?
TIMBER ?? Softie yelled TIMBER ?? NO! I just laid out a big short in HPQ, and I'm already short the QQQQ... Program trading computers all over the world have the "Softechie TIMBER contrary indicator" written into their software, and now the market's gonna ramp like crazy....<g>!
<<< If it inverts, I'm not going to take a chance that it is different this time...>>>
Wise words. I too am tempted by the "it's a disconnect, not an inversion" thesis, but history has shown that the "it's different this time" investing strategy never works.
If the yield curve inverts, I'm bearish until proven otherwise. I'd rather be late and miss some opportunities than be dead wrong.
Can't talk myself out of it.... short HPQ at 23.42
This next quarter is historically HPQ's worst. Last year estimates were .31, they came in at .24 For this year, estimates are dropping, now at .30 , they won't make that number. Their margins are already the lowest in their industry, they're entering a price war with Dell, 65% of their revenues come from outside the U.S. and they're not gonna get the currency boost this quarter, new CEO Hurd's big plans are to cut another 1000 jobs or so and go after EMC in storage - neither of which will do anything to improve HPQ's situation. Revenues/earnings/margins/cash flow/market share... going down.
The same people who buy at the top, sell at the bottom. The trick is to keep them holding the bag until then. Bounces at the usual support levels will give them hope, but will soon fail, turning into slow grinding declines that keep them too frozen to sell. Then, in late July-early August (when Da Boyz want their shares back) they'll panic the market with a scary headfake dump. The bagholders will bail - right at the bottom - and the market will slowly climb a big wall of worry to new highs by end of year. All IMHO
edit: time frame for lows subject to change....
Buy the dip, squeeze the shorts has been a bulletproof strategy for almost 2 months. Makes traders mighty complacent (vix/vxn!!). Mosis better step in here and buy the dip pretty soon, or this market's gonna start making bagholders outta the bulls...
Speaking of "mosis", it's been almost a thousand posts since we last heard from Zeev...
You see the NSM ramp on their report? Sales down, guidance flat to down, margins flat to down, but hey, a one time tax benefit let them beat estimates. Remember NVLS's report? They're gonna hit their number through layoffs and shutdowns... and the stock takes off. UFB.
Whatever INTC says, it's gonna be spun as positive. It's just a matter of how long they can hold it up before the "sell the news" reality sets in. I'm looking for a headfake spike to give me a short opportunity in the SMH.
I too see distribution. Weak volume holding up selected techs makes it look like the whole market is strong. A telling bit of news for me was data showing that much of the buying going on right now is foreign money. They're falling for the bull hype on stocks (50% plus bullish advisors!?!) and thinking its a better play than sub 4% on treasuries...
You know what it means when foreign money starts piling in to an already appreciated asset class, right? How do you say, "I bought at the top and now I'm a bagholder" in Chinese? <g>
<<< Now the whole market is traded like one market maker is running the whole thing.>>>
Coordinated moves in disimilar sectors and issues are highly unlikely if they're responding solely to their respective order flow. "They" want us to believe it's program trading recognizing identical overbought/oversold indicators at the exact same moment, but they can't fool me.. I know it's the birth of the "Borg"! <g,ng>
Remember, we have to factor in the possibility of a 3:55 "edit" to his remarks if the market tanks too hard.
Wonder how long it'll take the market to figure out that Greenspan just said that nothing about the economy, the consumer, oil, labor costs, the 10 year treasury, housing, or the mortgage markets is wobbly enough to keep me from raising short term rates to where they need to be..
Translation: fed NOT done... That oughta be good for a dump!
400+ posts since the last word from Zeev... Are we orphans?
They're talking about their advertising rates, not the market! <g>
<<< Anyone got a timeframe for INTC tagging 24? >>>
July 22 - options expiry Friday, a few weeks after the market has digested the "OK" earnings report of July 5th, and has since gotten skittish over Q3 guidance. Then, it'll test support at around 22 on August 17th - the Wednesday before August options expiry, as Da Boyz max out the fear in the market with a headfake dump, before starting the big bull run into the end of the year. Obviously, all IMHO
All eyes now on the INTC mid-Q. The way to play it is, "buy the leak, sell the news".<g>
I thought we might bounce around for a day or two as Da Boyz use the semi mid-q's as an opportunity to distribute, and then on to Naz 2000.
I'm not covering my QQQQ short until 36.60 ish, and we might make some headway in that direction later today.
In the meantime, my CSCO long is holding up.... sweeeeeet.
Hey JimQuinceH, if you're out there.... IWOV up nicely today on good volume while FILE is down big on double volume - looks like our IWOV may have stolen another customer....
Nice call on that NTAP short. I almost pulled the ss trigger on HPQ at the same time, but chickened out. You got a decent "cover" signal now, you gonna cash out or hold it?
It's those darn permabulls again!
Somebody up there likes me today. My big CSCO long and my small QQQQ short hedge are both running. How'd that happen? :)
Greenspan is no dummy. His concern is that some market sectors and some market participants are engaging in excessive speculation. The best way to quell the boldness of speculators is to inject uncertainty into the market. How could anything scream uncertainty more than the fed chairman saying, "I don't have a clue"?
Hard to see how this is bullish for the stock market. All IMHO
I've been expecting some kind of blowoff top, but it's looking more and more like stealth distribution into some shaky "good news" (fed done and INTC/semis rockin'). Sometime this week a short term top is coming - good for at least a pullback to Naz 2000 and/or QQQQ's 36.50 ish. I'll take advantage of any headfake spike ups (the INTC mid-Q?) to add to short positions. All IMHO.
<<< it's all about price and volume >>>
2 hours to go and QQQQ volume is just crossing the 1/3 normal volume level, worst in a while. Whatya think of that?