Börsipäev 9.-10. august - tähelepanu FEDil

Investeerimine
1

Peale eelmise nädala lõpu laastavat langust turgudel leiame täna indeksid futuuride põhjal ennustades avanemas kerges plussis: Dow Jones +0,14%, S&P500 +0,16%, Nasdaq +0,34%.

Rev Shark:

"For those who believe, no proof is necessary. For those who don't believe, no proof is possible."

-- Unknown

On Friday all the major indices closed at their lowest point of the year. There is little technical support and high oil prices and poor economic data offer substantial obstacles. Despite those negatives, there is likely to be a vocal group of bulls who believe that prices can't possibly fall much further and that a major rally is close at hand.

Our job now is not to hope and be blindly optimistic but to wait for proof that conditions are changing. The pressure to buy a downtrending market is often extremely high. We hear over and over again that we should take advantage of "bargain" prices because they are unlikely to last for long. We are urged to hurry and deploy our capital so we don't miss the big rally that is sure to come.

Ignore the cheerleaders and the hopeful optimist and wait for proof that a meaningful bottom has arrived. That means that you treat every bounce as suspect until the bulls prove that they have some lasting resolve. When the market is downtrending as dramatically as this one has been, the likelihood of bounces are high but there is also a very high probability that they will fail and the downtrend will continue.

In downtrending markets, strength is used by traders to sell and/or short. The bulls are already insecure and they have a very difficult time withstanding any selling pressure. Failed bounces are the fuel that keep a downtrend going. Every time buyers jump in with the hope that this bounce is the one that lasts they become fodder for the next leg down when they are disappointed and panic-sell.

A real bottom doesn't come until there is follow-through. The time to be aggressive on the long side is when a second bounce exceeds the first one. When there is a series of higher highs and lows then we can be confident that the trend is shifting and have a higher level of trust. You may not end up buying the absolute lows but you will be much safer and have higher odds of success.

If you are a longer-term investor don't fall for the blandishments to hurry and take advantage of bargain prices. They will be plenty of time to put your cash to work when the market shows some real signs of a bottom. A bounce on a Monday morning is not something that should trust.

We have a slight bounce shaping up this morning, which isn't a big surprise after the nasty selling last week. Overseas markets were weak. Crude oil is down just slightly and that will continue to be a major focal point for the market.

The big news this week will be the FOMC interest rate decision at 2:15 p.m. EDT on Tuesday. Even after the weak employment report on Friday it is still widely anticipated that rates will be increased a quarter-point but it is the accompanying statement that is likely to drive the market.

Don't be too quick to embrace this bounce at the open. Assume it is nothing more than a reflex reaction to last week's selling and has little real meaning.

G. B. Smith:

2
Gapping Up/Down

Gapping Up: LOUD +30.6% (NOK pact), DDS +15% (to sell credit card ops to GE for $850 mln), NITE +8.5% (selling Derivative Markets biz to Citigroup), GTW +7.5% (Barron's article), DFIB +7.4% (receives $3.7 mln order), PCLN +4% (CSFB upgrade), IVAN +4% (continues to find momentum interest), MXIM +2% (raises guidance slightly above consensus on Friday's conference call), SNDK +1.6% (positive comments by Goldman)... Gapping Down: IDCC -6.3% (posts disappointing results), CHTR -2.9% (reports quarterly results), PRSF -2.7% (lowers guidance).
3
Valmistume ostma natuke NVDA-t. Tundub, et esimene negatiivsuse foon on möödumas, valuatsioon tuleb mängu tagasi. Toetus/stop $930 kandis (vt 1-2 aasta graafikut).

Täna Needhami upgrade to Buy frm Hold, $15 tgt.

just a trade. few pts upside, one down. FWIW,

sB
4

NVDA tundub mõistlik, sellistelt tasemetelt hakkavad value-playerid juba ostma.

Üks veidi pikem, kuid väga hea kommentaar FEDi kohta (Brian Reynolds):

Yesterday was a nothing day in financial markets (stocks flattish, Treasury yields up a touch, and corporate spreads a little narrower) as investors waited to see what the Fed would do (and more importantly, say) today. A few weeks ago, this FOMC meeting was to be a non-event, just another 25 basis point way station on the path toward a funds rate of well over 2%. Now, investor expectations have radically changed, and today's meeting has more significance than was originally thought because of the change in those expectations.

Investor expectations:

Last week, we noted that one of the major debates in economics was whether June's economic softness was a blip or the start of a trend, and that investors were likely to make up their minds as a result of the payroll number. The drops in stock prices and bond yields in response to the soft payroll number indicated that investors voted emphatically that they feel that economic weakness lies ahead.

So now investor expectations have come full circle. Two months of sub-100k payrolls have convinced many investors that economic weakness lies ahead (we think it is more like economic moderation, as production will slow to come into line with consumption, but our personal views are not relevant to markets), just as two months of 300+k payrolls convinced people that the economy was booming and that we faced the prospect of hundreds of basis points worth of tightening.

For the last few months, we've noted how bearish hedge funds had priced in unrealistic expectations via the Fed Funds futures (which anyone can speculate in) of more than 75 basis points over the next year than the underlying cash string (which only banks can invest in) had priced in.

Now, that gap has narrowed and expectations have come down, but there is still enough of a split that today's meeting could have an impact on markets. Nearly two months ago, in the midst of the frenzy that had people saying that we should expect nothing but higher bond yields, we noted that we thought that investors were beginning to put on the carry trade again , as bond yields had risen so much against the implied funds rate as it was becoming attractive to own them on a leveraged basis. Those investors who put the carry trade on have made a killing. Today's meeting will have an impact on whether they take it off or put it on more heavily.

Possible Outcomes:

Fed Chairman Greenspan has indicated in prior testimony that he felt that June's softness was an aberration. It is now clearly something more than that. But, while investors have jumped to a conclusion after just two months of data (after having reached the opposite conclusion after just two months of data in the opposite direction), the Fed (and most economists) don't react so quickly to such a limited amount of data. The questions are: to what extent the Fed acknowledges the slowing, and how that might impact the future course of tightenings.

If the Fed tightens today, and then 3-4 times more over the next year, a case could be made for the continuation of the carry trade in limited amounts and in certain sectors. Both Fed Funds futures and cash are expecting a tightening today of 25 basis points. If there is no tightening, then the economics of the carry trade become stronger, and we would likely see another strong rally in Treasuries. Given that the Fed probably sees this weakness as transitory, that is an outcome they would like to avoid, so they will probably tighten today.

The key will be the statement. They are likely to continue to use the word measured, and likely to point to the rise in oil prices as a de facto tightening, meaning the Fed has less to do in the future than they originally thought. Such a statement would probably not move the markets too much.

A strong indication by the Fed that they would, if the data allowed, move at an even slower than "measured" pace, then the carry trade would probably gain a few more adherents, and bond yields would likely move modestly lower. An indication that the Fed believes this is just a momentary blip of economic softness, and that they plan to continue gradually tightening as they had planned a month ago would likely result in traders taking gains on the carry trade, with bond yields rising as a result.

Keep in mind that the first market move following a Fed meeting, on both the bond and the stock side, is often a head fake; the above scenarios are likely to play out over the course of a few days. With so little time since the payroll data, and with the data coming as such a shock, that traders haven't had time to hedge themselves the way they normally would for a Fed meeting. This meeting also comes in the midst of a Treasury refunding (3-year Treasuries were auctioned yesterday, 5-years tomorrow, and 10-years on Thursday). The reaction to the payroll data makes this auction much less important than it would have been a week ago, but it can still add to the post-Fed volatility.

5
Second opinion:

Bettie: got a feel for NVDA?
tradr1: don't really have a feel for NVDA... would think people would want to get very short into today's uptick, only question is if momentum players trying to squeeze shorts more on the stock... whole world was short the earnings release, so a lot of covering to be done
tradr1: think you will be seeing a lot of people reshorting the gap up this morning
Bettie: thanks. long a bit here
Bettie: will give it 1 pt room to wiggle

fwiw

sB
6
Gapping Up

NVDA +6% (announces $300 mln stock repurchase program; Needham upgrade), TASR +10% (announces orders), ALKS +13% (announces Eli Lilly decision to proceed with Inhaled Insulin program), ACF +11% (Piper upgrade after strong JunQ), SNDA +11% (beats by $0.09), VCLK +8% (completes acquisition of Pricerunner, raises rev guidance), CTIC +7% (started with a Buy at WR Hambrecht; tgt $16), ROXI +7% (announces deal to sell unit to SNIC/earnings report), VION +6% (reports JunQ), DISH +3.5% (reports, authorizes $1 bln stock buy back).... Under $3: BVSN +28% (agrees to pay to break four long-term leases, reducing quarterly cash burn rate by more than $2.7 mln), TMTA +10% (Schwab upgrade).

Gapping Down

CEPH -6% (cut to Peer Perform at Thomas Weisel), TECH -6% (reports JunQ), ADRX -4% (reports Q2 results; light on revs), SYMC -1.5% (discovers and corrects error in non-U.S. consumer rev)... Under $3: DJT -46% (to file Ch11 in refinance plan - WSJ), DCEL -37% (reports Q2, guides).
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Rev Shark:

"The trouble with most people is that they think with their hopes or fears or wishes, rather than their minds."

-- William J. Durant

Your most difficult task in the current market environment is staying mentally tough. In a market as weak as this one has been recently, it is particularly easy to let your hopes and fears dominate your thinking. We want things to change, but rather than patiently waiting for conditions to develop that will support change, we wear ourselves out mentally and emotionally with worry, hope and fear.

There are very few things of great certainty in the stock market, but one of them is that things will change. When we have descended into a dreary abyss like the one we currently are in, it seems like it will never end. Our patience quickly wears thin and we wear ourselves out worrying about whether we will ever have a more hospitable trading environment again.

The key to dealing with a market like this one is to actively cultivate an even higher level of objectivity than you normally employ. It is very important to keep hope and fear at bay. If you let those emotions take hold, they tend to make you impatient and lead to poor decision-making.

Stay mentally tough and recognize that in a market like this, where you are not doing a whole lot, you need to combat your emotions more than usual. Try to keep the big picture in mind. Things will change in the months ahead and we can't wear ourselves out struggling with a market that is as difficult as this one.

The focus today is first on the FOMC interest rate decision and then on Cisco (CSCO:Nasdaq) earnings, which are due out after the close. The Fed is widely expected to increase rates a quarter point but it's the accompanying policy statement that is the key. Will they acknowledge the recent economic weakness and indicate that further rate hikes are on hold or will they call it a temporary "soft patch" and express confidence that things continue to flourish.

Unfortunately, the FOMC is in a tough position here. If they acknowledge that things are weak, that may be taken as a lack of confidence in the market, but if they ignore it, they will be viewed as lacking responsiveness. The policy statement is likely to be artfully crafted to deal with these concerns, but this market needs something other than platitudes to right itself.

Cisco's earnings report tonight probably has a greater chance of being a positive for this market. We have seen some good reports in the networking sector and expectations for a solid quarter are fairly high. Cisco tends to be fairly promotional in its quarter reports and that may provide some comfort for market participants after the recent pain.

We have a slightly upbeat open shaping up, although crude oil continues to levitate and is hitting the $45 level. Lehman Brothers has issued a very helpful downgrade of the semiconductor group. (I expect they will also warn us about Japanese plans to bomb Pearl Harbor in the near future.)

We should have a bit more action today after a very slow Monday. Stay tough. This is a tough market and you can't let it wear you down.

G. B. Smith:

8


Pooljuhid peaks väikese põrke tegema. INTC ja AMAT on viimasel ajal tugevust näidanud.
9

Allpool on huvitav sait, kus on näidatud FEDi futuuride tõenäosus 25 bp intressitõusuks viimaste päevade lõikes.

http://www.cbot.com/cbot/pub/cont_detail/0,3206,991+20357,00.html

10
aezs saab tuge lhv artiklist?
11
PKS on üks ütlemata pauer aktsia. I'm glad i don't own any.
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muide aezs pole isegi kaubeldavate nimekirjas
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AEZS nüüd lisatud ....
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Suffiks,
PKS-i praegu ostes pole see toenaoliselt nii paha diil uhtegi. Ise pisut juba ostsin.
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Täitsa nõus. Mulle lihtsalt meenub, et mingi hetk olin pikk $6.50 -> $8. Kunagi sügisest kevadeni vist.
16
T-1 tund ehk täpselt tunni pärast esineb Greenspan oma bändiga.
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Kas keegi oskab öelda midagi PKS-i 2mld võla kohta midagi.Kui see tõsi siis ei ostaks ma seda ka 1$ eest..
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14:16 Inflation is viewed as transitory



14:15 Fed raises Fed Fund target 0.25% to 1.5%
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Bettie poolt mainitud NVDA positsioon sai täna suletud lõplikult 10.90 pealt.
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PKS-ga oleks saanud päris hästi teenida viimasel ajal