Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
MBIA (MBI): $39.65 (-1.84) New OI put play MBI has been left behind in the rally. Salomon Smith Barney defended recent concerns in the stock about exposure to truck school loan defaults, which we talked about in last night's write-up. Apparently investors are still concerned, and after bouncing from $39.14, the stock found sellers at $40. I like the intraday resistance under $40, and I think entries here look safe. The stock filled its gap down to $40.72 and just kept going. I would probably use a lower stop on entry at this point, such as $43, instead of $45 on the original entry.
From optionInvestor.com
>>staying long because 10 & 30 yr bonds selling off again.<<
10 year has seen buying since about 12:30 and the 30 year and 5 since about noon. All are near flat for the day. I don't see much of a bullish signal here.
Joe
AMZN- Max pain on AMZN is 17.50.
http://www.iqauto.com/cgi-bin/pain.pl
Joe
ILA- Their debt service probably falls more in line with what's normal for the industry. I also like CPN. I got a basket full of these guys at very cheap prices.(RRI,ILA, CPN, EP, MIR) RRI is my largest holding of the bunch.
Joe
DELL- reports tomorrow is what I read.
joe
Sears' (S) MasterCard chargeoffs reached 13.9% in the September quarter, up from 4% in the year-ago 4Q, Goldman Sachs says. "As a result of this trend, Sears may have to increase chargeoffs and reserves more than we have modeled in the past." Goldman downgrades the stock to underperform from in-line and cuts its 2002 estimates by 5 cents a share and its 2003 estimates by 65 cents a share. The firm's estimates for Sears are now $4.80 a share for 2002 and 2003. (GS)
AMZN broke through strong resistance and really squeezed the shorts. My bet is the breakout will fail. Going for a position play and will risk a buck on the stock price.
Joe
AMZN- Short at 20.88. What a monster pig!
Joe
GREENSPAN: WE DO HAVE LARGE DEGREE OF UNCERTAINTY
That should have a calming effect on the market! LOL!
Motorola workers told to take leave
More than 5,000 people in Austin could be affected by the cost-cutting move
http://www.austin360.com/statesman/editions/wednesday/business_1.html
ILA-I don't know if it will continue. I think it will get cut but I don't think they will eliminate it. ILA is currntly selling for 20% of book and just 1% of sales. Expected to earn 70 some cents next year. The board meets on the dividend today. I'm looking to add but waiting to see what they do with the dividend. If the dividend is used to pay down debt that could be a good thing. ILA does about $36 bil in revenues. If ILA can net just 1/2% that's a dollar per share. I'm in as a value play.
Joe
ILA- reports tonight. I have a core long position for the dividend and occassional covered call premiums. (bought a bunch at 2.10) I'm not looking for a good report but think it think it may move tomorrow as some uncertainties are lifted. I'm not saying buy it here, although it represents good value, I'm just saying it may be one to look at if it starts moving upwards in the am. The dividend may get cut but they could be a positive for the share price. FWIW
Joe
I got the mortgage headlines from MarketWatch. About 6 months ago I e-mailed them and asked them to post the headline numbers when they come out Wed. mornings. To my surprise they did it.
You can get the press release from here.http://www.mbaa.org/
but the full report is a subscription basis. I find it hard finding any more info other than those headlines. About every other week someone will report on the weekly survey itself but with few details. I track it weekly due to my interest in shorting homebuilders.
Joe
Expedia (EXPE) $72.35 ... Link stock hit lower at $68.70 in pre-market after WSJ reports that the Bush administration today is expected to propose changes that would give airlines more flexibility in choosing how they distribute tickets. Under the administration's approach, the airlines can continue to give Orbitz exclusive access to special Web-only bargain airfares. The article speculates that move would deal a major blow to Orbitz rivals such as Expedia. Computer-reservation system owner Sabre (TSG) Link is also listed as an opponent of this plan.
MORTGAGE BANKERS WEEKLY PURCHASE INDEX OFF 9.8%
MORTGAGE BANKERS WEEKLY REFINANCE INDEX OFF 1%
Mlsoft. MBI- Option Investor.com added MBI as a new put play. They already have ABK in play so the industry must look vulnerable to them. Here is the write up:http://www.optioninvestor.com/index.asp
MBI - MBIA Inc. - $41.49 -0.88 (-1.31 for the week)
Company Summary:
MBIA Inc., through its subsidiaries, is the world's preeminent
financial guarantor and a leading provider of specialized
financial services. MBIA provides innovative and cost-effective
products and services that meet the credit enhancement, financial
and investment needs of its public and private sector clients,
domestically and internationally. MBIA Inc.'s principal operating
subsidiary, MBIA Insurance Corporation, has a financial strength
rating of Triple-A from Moody's Investors Service, Standard &
Poor's Ratings Services, Fitch Ratings, and Rating and Investment
Information, Inc
Why We Like It:
MBIA recently released decent earnings but issued cautious
statements about its future. It was able to raise premiums
enough to offset lower investment earnings, but warned that, "The
combination of economic slowdown and capital markets volatility
continues to make short-term insurance volume forecasts
difficult." The company has expanded its business from insuring
municipal bonds to the higher risk area of insuring finance deals
involving corporate debt. In the current business environment,
financing corporate debt can lead to huge losses, as has been
shown by a number of large and regional banks, which have taken
large losses from loans to troubled industries. The stock has
been struggling recently, since topping out just over $45 on
November 4. It has rolled over, following its descending 50-dma
lower, and now appears to have given in below recent lows with
today's drop under $41.50. The stock closed on its low of the
day, indicating that there were still sellers unable to get out
of long positions. Possible exposure to student loan defaults
involving Student Finance Corp., whose bonds are insured by MBIA,
may have been behind the sell-off.
Each time the stock has bounced since July, it has reached a
lower high on the point and figure chart. It has recently rolled
over from the high of $45 on that chart, as well, and has
established a three-box reversal into a column of "O." The next
level of PnF support is down at $35 and that will be our target.
The bearish vertical count is all the way down at $24, but that
is unlikely on this move, without a reversal back up at some
point. The stock has opened just under the 50-dma, currently
$42.44, the last two days and another open just below that level
may give us additional profit potential for the short play.
Momentum traders can look for another PnF box at $41.00, however,
we will enter at the current level. Place stops at $45, which
would indicate renewed strength and an ability to finally get
through resistance.
BUY PUT DEC-45 MBI-XI OI= 415 at $5.40 SL=2.70
BUY PUT DEC-40 MBI-XH OI= 774 at $2.85 SL=1.50
George, What JB funds do you like? TIA, Joe
>>>This is all so so stupid IMO.<< I agree. eom
Joe
5 year treasury falling (yields)
Joe
>>particularly on the Repo matter<<
Maybe this will help.
>>The staff of the New York Fed's Trading Desk continuously
monitors global financial conditions and the state of banking
reserves each day. After extensive deliberation beginning early
each morning and a conference call with all of the regional feds,
it determines whether or not it will add to, drain from, or leave
unchanged the level of banking reserves. This is carried out on
a daily basis. A plan of action is established for the day, and
the Fed executes it by moving huge amounts of money through its
network of 22 primary dealers, which are banks and securities
brokerages that deal in US government securities. To give you an
idea of the money flows being executed, these 22 dealers averaged
$375B per day in trading volume of US government securities in
March, 2002, according to the New York Fed website.
The most frequent transactions are called "repurchase agreements"
or repos (RP) for short, which are described as short term
transactions whereby the Fed purchases securities from the
dealers, who agree to repurchase them from the Fed by a specified
date at the specified price. When the repos mature, the added
reserves are automatically drained. The Fed pays for the
securities and takes delivery thereof simultaneously. When they
mature, often the next day as we've seen in the Market Monitor
(known as "overnight repos"), the securities are returned and the
funds reimbursed by the dealers to the Fed.
The reverse of a repo is called a matched sale-purchase
transactions (MSP's), whereby securities are sold to the dealers
for cash, and then repurchased from the dealers upon maturity.
Both Repos (RP's) and matched sale-purchase transactions (MSP's)
are temporary open market operations. Sometimes the Fed will
sell securities to or purchase securities from the dealers
outright, which affects the dealers' reserves on a permanent
basis.
If you're all still awake, or haven't yet dashed off to apply for
jobs with the Fed, here's the kicker. The effect of these OMO's
on the 22 dealers' reserves has a direct influence on the level
of liquidity in the markets, just as we saw in Livermore's 1907
example. When the dealers have excess reserves, they are free to
play with those funds until such time as the funds must be
returned. This liquidity finds its way into the markets,
purchasing securities. On days when reserves are drained, the
liquidity finds its way out of the market. During the past
months, there has been a tendency to see market strength on days
when large repos of 5-10B have been announced. When these repos
expire, if they are not replaced with new repos, we often see
market weakness. This year, because we are in the grip of a bear
market, the tendency has been to see repos. I have only seen one
instance of an MSP this year, although I've only been following
the Fed for the past few months.
The trouble for traders is in knowing which markets will be
affected by each Open Market Operation, and within each market,
which securities. Repo money can go into equities or fixed income
securities, currencies, or whatever else the dealers wish on that
day. I have read arguments to the effect that companies such as
MSFT are prime targets for Fed money because they are listed on
multiple indices, and so buying or selling in MSFT gives the
Fed's dealers the greatest bang for their buck. Remember that
the Fed's goal is to encourage the stability of financial
markets. When these markets are in jeopardy, smart traders watch
for the Fed's morning announcement and consider which markets
need it most. When the SPX broke 775 this month, an overnight
repo of $4.5B was announced, which is at the upper end of
modestly sized for repos this year, and equities bounced off
their lows, which then triggered a selloff in the extremely toppy
bond market, more money flowed into equities, and the rest we
know well. During the summer, I watched large orders that would
show up like a battalion at critical support levels on QQQ –
30,000 to 50,000 share bids that would line up 5 deep all at
once, and the subsequent matches would protect the support level
that had been in jeopardy. So what? We'd also see more such
bids that would line up just below key resistance levels after an
extended runup and the orders would power the index above them.
I'd always thought that the goal of traders seeking a profit is
to buy low and sell high, though perhaps buying high to sell a
little higher works as well. In any event, none of us would
think of using our own money to put on bullish positions just
below key resistance levels after significant runups. This is
the action of participants manipulating the markets using OPM
(other people's money) in the interest of protecting those
markets from what are deemed to be critical breakdowns.
Tracking the Fed's Open Market Operations gives the trader a
window on how much money will be available to the markets that
day relative to past days. Experience will permit you to assess
the impact of different sums- is a $1B drain substantial? Might
the markets tank or just drift? Generally, all that one can know
is how the Fed's daily activity will bias the markets, and so it
is far from a magic indicator. Many traders I know and respect
will not put on bearish positions on a day in which the Fed has
announced a repo for more than a few billion dollars. Follow us
in the Market Monitor each day and start to get a feel for the
impact of the Fed's Open Market Operations. Like most other
indicators, it will eventually help to fill in your overall
market picture in its own particular way.
I have been posting the Fed's daily Open Market Operations in the
Market Monitor and will continue to do so. To follow along
yourself, bookmark the following link:
http://app.ny.frb.org/dmm/mkt.cfm
From OptionInvestor.com
>>Europe and Japan flat this morning. Looks like we may bounce some today.<<
Maybe. The treasuries are being bought this am so I'm not so sure we don't continue the decline sometime after 10:00. I'll also be watching the fed too to see what they do. I'll look to short the blip.
Joe
Another thing I like about Schwab. I short a lot in the last three years. Schwab seems to have shares available more often than the other houses I traded at. That's worth something to me.
Joe
MYG- Not a bad short pick. Debt to equity ratio of 5.8. Also has a negative "tangible" book value. That said, I hestitate to put them in the same league to short as the semi's because MYG makes money no matter what the charts say.
Just noticed that MYG's cash position looks tight and has been falling the last 3 Q's. With all the current debt they have and credit tight, this could be a problem.
Joe
>> MBI is one of my core shorts, with the idea that defaults and other implosions are going to hurt it badly over the next year.<<
I agree. May want to look at ABK. Short that I'm building a position in. MTG is another but have no current position. TOL, HOV and CTX are my current shorts in homebuilders. Small position in each. Could not get any more HOV shares to short last time I tried.
NOland had this to say about MBI last weekend:
>>>Credit insurer MBIA reported earnings this week. The company saw “Net Premiums Written” jump 26% y-o-y (up 6% sequentially). Of the total $41.2 billion of gross “Par Value Insured” (new insurance written), $23.6 billion, or 57%, was insuring “Global Structured Finance.” MBIA saw “Net Debt Service Outstanding” (gross insurance written less risk ceded) increase $22 billion during the third quarter (12% annualized) to $764 billion. This compares to the second quarter’s $14.8 billion and last year’s third quarter growth of $1.4 billion. Interestingly, it was the company’s strongest growth since the (infamous) fourth quarter of 1998. When the financial markets falter and risk aversion escalates, it helps tremendously that MBIA and the Credit insures can step up to the plate and transform risky debt into palatable securities. This mechanism has, over time, developed into a key mechanism (along with GSE Credit creation and guarantees) to sustain Credit excess. The day these mechanisms don’t work…
It is simply difficult to fathom that MBIA’s “Net Debt Service Outstanding” is up more than 10-fold since 1987. It is also worth mentioning that MBIA saw total assets increase by $1.8 billion during the quarter, an annualized growth rate of 44%. Assets grew at a 26% rate during the second quarter and are up 16% y-o-y. Peddle to the metal, as if one drives fast enough they can outrun the storm. The company repurchased 1.7 million shares of stock during the quarter, increasing year-to-date purchases to 3.4 million shares.
Well, we no longer ponder how CDO issuance could remain so strong despite heightened Credit quality issues: MBIA (along with Ambac) is aggressively insuring CDO structures (turning water into wine). Year to date, MBIA has written insurance on $28.9 billion of CDO exposure. This compares to $13.6 billion last year, almost doubling total CDO exposure to $65.9 billion (MBIA ended 1999 with total CDO exposure of $2.3 billion). MBIA concluded the quarter with a “Global Structured Finance” “Insured Portfolio” of $167 billion. In addition to the CDO exposure, the company has insured about $35 billion of asset-backs (mostly Credit card and auto loan-backed), $21 billion of home equity loans, about $20 billion of other mortgage-backed, almost $20 billion “Pooled Corp. Obligations & Other, and $5 billion of other “Financial Risk.”
MBIA also provides a list of its “Insured Portfolio – 50 largest Structured Finance Credits.” Leading the list is Providian Gateway Master Trust at $2.8 billion, with Metris Master Trust number two at $2.5 billion. Included in its list of the “Top 25 Structured Finance Servicer Exposures” are the likes of Providian Financial Corp, Capital One Financial Corp., Union Acceptance Corp., AmeriCredit Corp., Household International, and Ocwen Financial Corp. The Credit insurers have developed into key players in the increasingly fragile Consumer Debt Bubble and, regrettably, critical business partners in subprime lending. The “financial guarantor” business has changed a great deal since the days of insuring municipal bonds. The risk profile of these companies – with the nature of Credits insured and recognizing we live at the very late stage of the Credit boom cycle – is not even recognizable compared to years past.<<<
Joe
>>I haven't noticed anyone mention PLAB tonight.<<
I mentioned PLAB last week along with AEIS and MKSI as shorts ops last week. All ran up more than 50% in October. All have questionable balance sheets with some goodwill reductions looking to be written off. I don't think any of the three are making money, and all have been going through cash fairly fast.
I shorted two out of three. Of course as luck would have it I left PLAB for others. The other two still have good downside in my opinion. Maybe you can add BRKS to that list but I was happy with three.
Joe
Bamboo, I trade at Schwab on Street Smart pro. I have looked into Cybertrader but the comissions are about the same. Schwab is 14.95 if you do enough trades. Cybertrader is 9.95 but you have to add ECN fees of about $5 so it's about the same. I started out at Datek and hated them. I then went to E-Trade and they were much better but they had reliability issues and I then tried Schwab. Schwab's trading platform is basically the same as Cybertrader's best as Cybertrader is owned by Schwab and Cybertrader designed it.
What I like about Schwab that I have not been able to get elsewhere:
1. I can usually get a live person on the phone in seconds.
2. Very little down time.
3. I trade 8 different various accounts. I can trade them all from the one platform.
4. I have had no problem getting on Schwab when everyone is trying to get into the market.
5. Quick confirmations.
6. Trading platform that is the best with real time charting capability.
7. better chance of getting the fill I want in a fast market.
8. I pay nothing extra for the bells and whistles.
I do more than 4,000 trades a year so you can imagine my comissions are high. However, all of the above makes it worth while for me to trade from Schwab over some of the cheaper brokerages. E-mail me if you want to talk to me about Schwab.
Joe
>>In long 100,000 shares of Agere at 1.05<<
Now we know who has the brass ones! 10% or 10 cent move either way is $10,000. What kind of commission do you pay on that? Think that is the biggest buy (number of shares) I have ever seen on these boards Good luck.
Joe
Amazing! I got the top NYSE %loser (MIR) in my account. And, the top NYSE gainer (TE) in my account and they are both in the same industry.
Joe
RRI- Actually they got one Friday from what I understand. WMB, MIR, and DUK also received them. I still feel good about RRI and have a long term position that I will continue to hold. IMO RRI represents the best value play of the bunch. If it was over $5 I would add but it really messes with my margin availablity having too many under $5 stocks which I don't like to hold anyways.
>> NEW YORK (Dow Jones)--Mirant Corp. (MIR) has received a subpoena from the U.S. Attorney's office in San Francisco, company spokesman James Peters said Monday.
He declined to discuss the nature of the information sought by the investigators, but said Mirant is cooperating with the request.
As reported, Duke Energy Corp. (DUK) and Williams Companies (WMB) said Friday they had received subpoenas from the same U.S. Attorney's office related to their participation in California's energy markets.
Reliant Resources Inc. (RRI) said this weekend it also received a subpoena Friday from the U.S. Attorney in northern California.
All four companies own or operate generation in California and have traded energy in the West.
Joe
OMG- $5 always lends itself to good psychological support. I would be very wary if it goes below and gets comfortable sub $5. The longer we don't get a bounce here the more it shows that there isn't much interest. JMO
Joe
TE- Just sold the Dec 12.50 calls on my long position for 1.15.
Bought the stock last week at 10.50. Holding this one longer term for the income.
Joe
TE- Up now 15%. Looking very strong. eom
Joe
OMG- The long side of this issue has really been ugly. Don't see the risk/reward favoring a long position (nor a short).Hovering around the $5 range is dangerous especially when the market is moving against it too. Just my opinion. This post will probably help it bounce now. LOL!
Joe
>>> I thought MSFT had been given the green light.<<<
Don't see anything ahead to move it higher now. The uncertainty has been removed but that was predicted.
CSCO- Green? What a crock! short. eom
TE- getting a nice bounce off of last weeks new low and today's press release implying that they have their finances well under control. Nice dividend.
Joe
MLsoft, Nice trades. Was expecting a little more action from the bulls. I'm hanging on to my shorts until I see more signs of buying. So far it's been ugly.
Joe
QLGC- This shows what I mentioned last week. These analyst are much more willing to come out and downgrade on valuation concerns than they were in the past. I think that could put a cap on many of these companies. IMO it's a good change to see more of this oversight on valuations.
Joe
J2 GLOBAL COMMUNICATIONS INC. (JCOM) The company's shares have soared to $27 from $5 in 2002, a 40% rise. The trade isn't a bargain at its recent trading price, as there are questions about whether the company can keep costs so low while maintaining growth. The company also faces a shrinking segment, as "fax traffic has gone down dramatically," said Maury Kauffman, a fax industry analyst.
http://stockcharts.com/def/servlet/SC.web?c=JCOM,uu[l,a]daclyyay[dd][pc20!c50][vc60][iLb14!La12,26,9....
http://biz.yahoo.com/rf/021110/tech_j2global_barrons_1.html