As per the front-page of most/all of today’s financial publications, and as was alluded to in my 12/24/05 posting, the 2-year and 10-year Treasury Notes finally inverted (i.e., the yield on the 2-year notes is higher than the yield on the 10-year notes). This is important because a material inversion (extent and duration) normally means a recession is on the horizon. So will this be a material inversion? Will we still be inverted when liquidity comes back to the bond market in January?? When Alan "Bubbles" Greenspan retires at the end of January??? If still inverted, how inverted???? And what the heck will the dollar be doing?! As you know, I think now is a great time to diversify out of the dollar (before 2006 begins). We’ll leave it at that for now. Cheers!
Yesterday, at 4.37%, the yield on 2-year treasury notes rose above the yield on the 5-year notes (4.36%). Today the inversion increased to 4 bps. The 2’s and the 10-year notes are 3 bps from inverting. If and when that happens the media will roar about a recession in ’06. Cheers!
Today WDC broke out of its base, gapping up 18.6% on 26.3 million shares — 9.8x normal volume. The catalyst was news of Seagate Technology’s (STX) buyout of Maxtor Corp. (MXO) at about a 60% premium. Disk drives are now officially in play. See my post of four days ago (12/17/05), when I introduced WDC. Cheers!
Here we see an 6-month chart of Neoware Systems (NWRE). The chart was pulled at lunch time today, so we won’t know how the day closes for a few hours yet. What we do see is the stock pulling back after yesterday’s 14% gap up on big time volume. The gap and the volume were both the largest since the first day or so of September you see on the chart. To soon to tell if yesterday’s gap will lead to another leg up or prove to be a headfake. Stay tuned. Cheers!
To [some] others being wrong is a source of shame; to me, recognizing my mistakes is a source of pride. Once we realize that imperfect understanding is the human condition, there is no shame in being wrong, only in failing to correct our mistakes.
Here we see a 2-year weekly chart of disk drive maker Western Digital Corp. (WDC). After more than doubling from its 2004 low, the stock is less than 5% below it’s 52-week high and forming the right side of a 6-month base. Besides the current base and prior uptrend, here are two reasons why WDC might be worth a look.
Someone got plugged in today, as small/micro-cap PLUG saw its highest volume since the end of August when the stock tried and failed to break out of a base and then whet into a 3-month decline to a 52-week low below $5.00. I usually stick to certain kinds of stocks that meet certain criteria I like, such as earnings and a prior uptrend on the chart, but technology such as Plug Power’s fuel cells will gain traction for small scale applications… and an apparently good-sized order (for the size of the market) is a positive indicator, so I nibbled on a tiny bit today… tiny, tiny. See below for the news.
The dollar’s more than 2% drop against the yen on Thursday was the largest one-day decline in over four years (the dollar is now down 3% in three days vs. the yen). The drop came after Alan Greenspan and the Fed (U.S. Federal Reserve) raised short-term interest rates by 0.25% and — this is the important part — changed the wording in its policy statement, i.e. sent body English that the interest rate hikes will end soon. Since markets are forward looking…
The other day Bush said over 30,000 Iraqi civilians have been killed since the U.S. occupation began. We also know a few thousand American have sacrificed their lives along with thousands of people from other countries. Now the American taxpayer is learning more about other costs, such as the number of dollars being added to the already massive budget deficit. Here it is, from aol.com: "WASHINGTON (Dec. 14) – The Pentagon is in the early stages of drafting a wartime request for up to $100 billion more for Iraq and Afghanistan, lawmakers say, a figure that would push spending related to the wars toward a staggering half-trillion dollars."
Yesterday marked the launch of the much anticipated .eu TLD (top level domain) and there was a massive land grab, with registrars applying for names at the rate of 60 per second at times. The administrative body, the European Registry of Internet Domains (www.eurid.eu), says 100,000 applications were received the first day. It will be a few months everything shakes out, as the administrator is phasing in registrations in three stages from now through April. I’m not going to rehash it all here, just click the link to read more. Cheers!
Just a quick update on Marchex, a stock I first posted about on a year ago (see "Marchex Inc. Intro" posted 12/26/04). Anyway, as shown in this chart, this domain name and traffic monetization company has had a good run the past couple of months, and now Cramer-Come-Lately, James Cramer, has joined the bandwagon, which may explain the gap up and volume surge. Seems to me like a good place to form a handle on a nice one-year base. See the rest of this post for a view of the 1-year weekly chart and Cramer’s gushing endorsement. Cheers!
Consumer credit fell by $7.2 billion in October, the largest drop on record. I haven’t yet checked to see when the Fed started tracking this, but regardless the point is that we printed a new record monthly change to the downside. The drop follows a $4 billion rise in September (revised from the originally reported $59 million decline). Revolving credit fell by $1.6 billion, or 2.4%, and non-revolving credit, led by a decline in auto loans, fell by $5.6 billion, or 5%. Overall, however, this report gets low priority because it shows so much month-to-month volatility.
Also, today’s Wall Street Journal had a page 1 (Section D) article titled “Investors Retreat From Housing Market.” This ties into my many housing related posts over the past many months, most recently “Dude, What Happen to My Home Equity?” (11/17/05).
Investors set the price on the margin (and on margin) on the way up, and they will set it on the way down. See below for today’s WSJ article. Cheers!
Everyone is ignorant, only on different subjects.
Here we see Logitech’s (LOGI) entire trading history in the U.S. As you know, this is one of my portfolio stocks. Same with EBAY, who owns PayPal, part of Craigslist, and recently bought Skype for around $2.5 billion… the analysts and "mainstream" media wrote their conventional wisdom pieces about EBAY paying too much Skype. Today Skype launched version 2.0 of its software and announced a partnership with Logitech, who will supply Skype-branded product. Also today, in his Wall Street Journal Personal Technology column, Walt Mossberg wrote a 900-word fluffer for Skype, concluding that it was time for "mainstream" consumers to give it a try. As more and more "mainstream" publications jump on the bandwagon you can expect the momentum to build. And if you’re not on Skype yet, you will be soon, probably with a Logitech headset. Cheers!
Here we see six months of DBRN. Yesterday’s gap up was on earnings news. The company beat estimates by 60%, posting accelerating revenue and earnings growth and margin expansion. If you look carefully at the left edge of the chart you see another gap up, exactly six months ago… Wonder what that was… Oh, another earnings report, that time beating by 14%. Humm… Cheers!