And...another one for Friday market Close

Tropic Thunder Tom Cruise Dance - The most amazing videos are a click away



posted by Peter Greene

A little Friday entertainment

posted by Peter Greene

London Madoff could not happen, says prince

London Madoff could not happen, says prince
By Andrew Edgecliffe-Johnson in Davos

Published: January 29 2009 19:33 Last updated: January 29 2009 19:33

Bernard Madoff’s alleged $50bn fraud could not have happened in London, according to Prince Andrew, who argued that the UK’s system of “principles-based” regulation was not broken.
“Madoff couldn’t happen in London. It could never get to that scale,” the Duke of York told the Financial Times at the World Economic Forum in Davos. The fact the UK had avoided the more rules-based US system meant that while fraud could still happen “we would have bowled something like that a lot earlier”.

From FT

Ya, right! Like the limeys could have caught on any faster...Have major doubts

posted by Peter Greene

Higher morning

Early morning higher:

The financials are up overnight and early this morning. If we can get enough people in through the snow, possibly there may be a rally to break out of the S&P 500 trading range. (We will have more on that later today).

The Obama administration has let it leak that in their banking plan they are hoping to start a “bad bank” in hopes of holding more toxic assets and breaking the back of the lending freeze. Citigroup, Bank of America as well other financials are leading the rally, we will be looking at the closing prices as well as advanced/decline volume to see if there will be a follow through.




posted by Peter Greene

Morning comments

Good Morning:

As just as Kevin Lane’s S&P 500 piece mentioned yesterday the market breath indicators are mostly neutral and are not helping much as per giving us a bearish or bullish look on the market over all. This being said the support and resistance levels he spoke about made for an almost perfect trading range yesterday. The SPX move to 850 was met with selling pressure that brought the index right down to (almost) support 827. Until a real move is made out of this range we believe the only market play is to trade around those levels.

The bad news seems to continue with firm after firm announcing layoffs, banks to be nationalized, and everyone and every industry lining up to try to get some government bailout. This does not even bring up the international pressures that the new president and congress are facing. That being said a light of hope was the Pfizer & Wyeth deal may be the beginning of more M&A activity, especially in the drug and healthcare sectors (some of the few who have cash). We would suggest looking at Fusion’s ranking of the names that are moving higher in our scores to possibly see the next targets....see attached PDF for more info...

PS: As we were sending this note out Astellas bid $1 Billion for heart-drug maker CV Therapeutics (CVTX)... CVTX is an example of what we are talking about using the short term signals as wake up calls to changes: A NEW BUY 1/21/09 AND HIGHLY RANKED 81



posted by Peter Greene

Against Nationalizion

(A reply to a post on Big Picture blog by me)



I have to disagree with the nationalizing talk. I may be the only one out there that still believes in capitalism and the need to step back and really think before we throw more money at these banks (and now home builders, schools, realtors, steel factories, car makers, auto sellers, porn industry, etc). I am not some crazy “ let them eat cake” type, but there comes a time when companies that continue to make bad decisions must fail.

I was (and am) in favour of short term government assistance, especially when there could be systematic failure of the banking or investment system. For example the Treasury and Fed needed to assist and sure up the contra-party risk with Bear Stearns, if they did not the freezing of trading could have halted investments world-wide. Possibly the AIG investment was the same (not really convinced of that). However, I believe we should not create a system were the government will ride in on a white horse to save sick industries. It makes a bad precedent and the firms (investors) who ran their companies correctly will not get rewarded.

There is a difference between a safety net and a guarantee you can’t fail. We learn from our failures and make us stronger, not only as companies but as people and a nation...nationalization will not help anyone learn not to make these mistakes again.



posted by Peter Greene

Housing Prices Tuble news from WSJ

__________________________________
NEWS ALERT
from The Wall Street Journal


Jan. 26, 2009

Home buyers took advantage of discounted prices in distressed housing markets in December, leading existing-home sales to rise.

The median home price was $175,400 in December, down 15.3% from $207,000 in December 2007, the National Association of Realtors said Monday. The median price in November this year was $180,300.

Home resales rose to a 4.74 million annual rate, a 6.5% increase from November's revised 4.45 million annual pace. Of all sales in December, about 45% were distress sales at discounted prices.

For more information, please see: http://online.wsj.com/article/SB123298209359015631.html?mod=djemalertNEWS


The article link above is also mobile friendly. Mobile users, click the link to see this story now.



posted by Peter Greene

S&P 500 Levels

We wish there was more insight gained from our variety of S&P 500 market breadth indicators at present, however right now most of them remain in neutral status not yielding much information. That said the most useful look at the S&P 500 right now comes in the form of analyzing the various levels of support and resistance. As seen in the 31-day chart above since breaking near-term support levels at the 850 – 845 levels (double red lines) the index has moved lower.

Presently the S&P 500 is forming an every tightening triangular consolidation pattern between two converging trend lines (blue lines). A shorter-term trading direction will only be re-established once one of these levels (840 on the upside and 825 on the downside) is violated. A break above 840 then 850 would suggest that the recent test of the lows was a successful test and maybe a tradable low is forming, however a break below 825 would suggest the market is likely to leg down again and break the November lows.

Until one of these events above occurs the best thing to do is observe and wait for a good entry point



FROM FUSIONIQ S&P 500 REVIEW 1/26/09





posted by Peter Greene

More Bad news

We had sell signals yesterday on COF & WMT ( to name a few) and COF did not disappoint our new signal by reporting massive earning losses after the close last night...This morning GE had awful earnings, as expected. They tried to stem the bad news by sticking with the dividend...it almost worked as the stock was trading higher until about 8:30 in the premarket...

Tranports look bad, S&P may break 800 this am and bank nationalization is on everyone's mind...so, whats next?

.....


posted by Peter Greene

Lewis cuts Thain to save his own .....

Former Merrill CEO to leave Bank of America immediately-CNBCCNBC's Charlie Gasparino reports that John Thain, former Merrill Lynch CEO, will leave Bank of America (BAC) immediately following a meeting with Bank of America CEO Ken Lewis. Gasparino reports that capital markets head Tom Montag will leave Bank of America as well.



posted by Peter Greene

Chrysler looks to Fiat

Headlines today that Fiat will take a 35% stake in Chrysler, with an option to buy up to 55%. So Fiat will have the hand in the future of Chrysler. So is this a takeover good for American auto industry? Yes, it is a takeover by a foreign company.

Many early reports say that this will help both firms since Chrysler is has little or no foreign markets and Fiat has the same in the US. But, there is no money...is Chrysler so worthless that they will give a min of 35% ownership for zero cash?

If that's the case, why is the US taxpayers giving 4 BILLION to Chrysler??? And if Chrysler is now just a part of an Italian auto firm, why should we be helping them???




posted by Peter Greene

Funny Headline

Citigroup - Bank of America-BAC shares being defended at CitigroupCitigroup does not believe the government will force Bank of America to raise common. Shares are Buy rated


posted by Peter Greene

BAC & C Recap from Fusion...

This morning Bank of America hit a new 52 week low, and trading at the lowest point since 1991…Fusion IQ’s Timing Signals put a new sell on BAC after the close on Tuesday. Since it is also such a low rank in Fusion IQ we would have not suggested be long for a while, however these “heads-ups” signals can sometimes be your last chance to get out.

Citigroup has been on a Sell signal since the 12th of November 2008 and looks like it will be testing the low from November.

posted by Peter Greene

Fusion in WSJ

THE WALL STREET JOURNAL

January 14, 2009, 3:16 pm
Scheduling Earnings Surprises
Posted by David Gaffen

It is said that investors don’t like uncertainty, but more than that, they don’t enjoy surprises – part of the reason the last half of 2008 was so exhausting.While the recent turmoil involving the financial-services industry does not rival October and November, this week brings two surprise earnings reports that were otherwise scheduled for next week: J.P. Morgan Chase & Co., due out Thursday, and Citigroup Inc., due out Friday.

The companies haven’t been terribly enlightening in terms of their reasons — J.P. Morgan said it had to do with getting the news out ahead of the presidential inauguration, and Citigroup said little — but it left analysts wondering, ensuring that the reports would garner even more attention. “When you think about it, the only way moving it makes sense is if the news is going to be better than people are expecting,” says Denise Shull, president of Trader Psyches, a consultant to hedge funds.

That may be true in the case of J.P. Morgan, which has emerged as one of the winners of the 2007-2008 meltdown of the sector. Citigroup is another matter, however, and their move comes amid the firm’s decision to sell a stake in its Smith Barney brokerage unit and another sharp decline in shares as investors question the company’s earnings prowess for coming quarters.

“Given all the chatter it seems like they’re trying to get ahead of a story that’s running away from them,” says Barry Ritholtz, director of equity research at Fusion IQ. “As you get this story that Citi is spinning apart, being devolved, the sense is that, ‘We want to have as much control over this as we can … let’s get the news out so we can control the narrative a little bit better.’”

That’s not to say Citi is expected to report good news. The Wall Street Journal reported that company is looking at the potential for a $10 billion operating loss for the fourth quarter, citing people familiar with the matter, and could face several more rough quarters as it tries to reorganize. Still, markets have had a way of running roughshod over the efforts by a company to assure investors that all is well, which is what happened to Bear Stearns and Lehman Brothers Holdings.

In those instances, assurances that liquidity concerns were being addressed and the company’s capital position was sound were not enough to assuage panicked investors, and with banking stocks enduring a rough week, it behooves Citi and others to address investors as quickly as possible.

“The key goes back to what Bear Stearns and Lehman Brothers seem to have forgotten,” says Mr. Ritholtz. “When your business model has some ephemera at its core and you are so reliant on other people’s good wishes and beliefs, you have to leave a big margin for error … you have to have the confidence of investors, clients and counterparties.”


http://blogs.wsj.com/marketbeat/2009/01/14/scheduling-earnings-surprises/



posted by Peter Greene

Retail sales 2x lower than forecast.

Retail sales tumbled by 2.7% in December, marking the sixth consecutive decline, the Commerce Department said. The deep, broad drop indicates worried consumers were adding to savings instead of spending at the height of the holiday season.

Futures are at the morning lows

For more information, please see: http://online.wsj.com/article/SB123193939615181071.html?mod=djemalertNEWS


posted by Peter Greene

Our own Barry in CNNMoney

Bernanke: More bank bailouts needed

Fed chairman endorses economic stimulus, but also says more help for banks is needed to fix the economy.
By Chris Isidore, CNNMoney.com senior writer
Last Updated: January 13, 2009: 2:27 PM ET

NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke said Tuesday that President-elect Barack Obama's proposed fiscal stimulus package could help the economy, but he added that additional bailouts of financial institutions may also be needed to bring about a sustained economic recovery.

Bernanke, speaking in London, said in his prepared remarks that the nearly $800 billion plan being discussed by the incoming Obama administration and the newly elected Congress "could provide a significant boost to economic activity." He did not comment on or endorse any specifics of the nearly $800 billion.

But Bernanke cautioned that the plan is "unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system."
Bernanke suggested that more banks and financial firms are likely to need additional capital injections from the government, and that further guarantees of their debt could be necessary, in return for the federal government receiving further equity in the firms.

The Fed chairman also said that "removing troubled assets from institutions' balance sheets, as was initially proposed for the U.S. financial rescue plan," might also be needed to supplement any further investments in banks.

One critic of the bank bailout agreed that more help might be needed for financial firms and that Bernanke was correct to suggest that the government look at all options for helping banks.

"Everything he's saying is right; we have a lot of tools and we have to use them wisely," said Barry Ritholtz, CEO and director of equity research for research firm Fusion IQ. But Ritholtz added that the bailout has already been mismanaged by the Treasury Department.

"The problem is that the time for that kind of thinking was five months ago," Ritholtz added.
What the Fed has done so far

Still, in addition to the actions taken by the Treasury to help banks, the Fed has made many moves to try and stimulate the economy. It has lowered interest rates to near zero, and has also pumped more than $1 trillion into the economy through various lending programs.

This has created some concerns about the Fed's balance sheet, and whether or not it can continue to fund more rescue efforts without causing long-term damage to the economy, such as sparking inflation.

Bernanke dismissed this risk, however, saying that inflation appears well-contained in the near term. And he said despite the fact the Fed is taking on much riskier assets than normal as collateral, he does not believe there is a major risk of having those loans go bad.

"The Federal Reserve has never suffered any losses in the course of its normal lending to banks" and Wall Street firms, he said.

Bernanke said that some of the steps taken by the Fed so far to pump money into banks will be unwound quickly once markets start to return to normal.

But he added that the Fed expects that in order to address problems in the credit markets, it will have to hold onto mortgage-backed securities it is in the process of currently buying for a long time.

Bernanke also reiterated that the Fed will probably need to leave its key interest rate near zero for an extended period of time. Still, even with rates near zero, he argued that the central bank still has many tools at its disposal to address the economic crisis.

He added that the Fed is in far better position to address economic problems than the Bank of Japan was when it left rates near zero for several years earlier this decade.
Regulation changes and more global cooperation needed

Bernanke also stressed the need for cooperation by central banks around the globe. He said that what the Fed, Congress, and other nations do in response to the worldwide economic crisis is crucial to determining how quickly a recovery takes place, but he conceded that the "timing and strength of the recovery are highly uncertain."

The chairman said it is also clear there will need to be changes in the regulation of financial institutions, both in the United States and in coordination with governments around the world.
But he added that he is a strong believer in free markets and the benefits they bring, despite the crisis in the global financial markets.

"What we've learned in this case is not necessarily that we need a lot more regulation," he said in response to a question following his speech. "We need to think what went wrong...We need to think very hard about how to fix it."

He concluded that while better regulation is necessary and will have to be addressed soon, it is not the most pressing need at this moment.

"It's good advice in general if there's a fire burning, you try to put it out first, and then think about the fire code," he said.


First Published: January 13, 2009: 8:01 AM ET





posted by Peter Greene

The Knot Inc. Announces Acquisition of Breastfeeding.com

Almost too funny...Guess natural progression


posted by Peter Greene

Ted Spread Narrows...from Bloomberg

By Gavin Finch and Matthew Brown
Jan. 13 (Bloomberg) -- The premium that banks pay to borrow money compared with the U.S. Treasury narrowed to the least in five months, signaling the freeze in credit markets that began 18 months ago is starting to thaw.

The difference between the London interbank offered rate, or Libor, that banks say they charge each other for three-month loans in dollars and the yield on the three-month Treasury bill fell 12 basis points to 98 basis points today. The so-called TED spread last closed below 100 basis points Aug. 15. Dollar Libor dropped to 1.09 percent today, the lowest level since June 2003.

“It’s slowly but surely improving,” said Padhraic Garvey, head of investment-grade debt strategy at ING Groep NV in Amsterdam. “We’re going through a good period now with regards to Libors.”

Central banks around the world sought to combat the seizure in credit markets by cutting interest rates and lending record amounts of cash directly to banks. President-elect Barack Obama said Jan. 12 he wants the second half of a $700 billion financial- bailout fund available to him as “ammunition” in the event of an economic emergency and promised to direct more of the money to small businesses and homeowners.

The falling cost of borrowing for banks is luring some companies back to the credit markets. Bad Homburg, Germany-based Fresenius SE, the owner of the world’s largest kidney dialysis provider, is seeking to become the first sub-investment-grade company to sell bonds for 18 months, people familiar with the matter said yesterday.

‘Crisis Territory’

The three-month dollar Libor is still 84 basis points above the Federal Reserve’s target, compared with an average of 12 basis points in the year before the crisis began. The spread was 332 basis points on Oct. 10, less than a month after the collapse of Lehman Brothers Holdings Inc.

Libors “are still very elevated,” ING’s Garvey said. “In absolute terms, they are still in crisis territory.”

In a further sign that banks remain wary of lending to each other, overnight deposits placed with the European Central Bank by financial institutions held at more than 300 billion euros ($397 billion) for second day yesterday. The daily average in the first eight months of last year was 427 million euros.

The Libor-OIS spread, a measure of money-market stress favored by former Fed Chairman Alan Greenspan, narrowed to 93 basis points today after yesterday dropping below 100 basis points for the first time since the September failure of Lehman.

The Libor-OIS spread, which peaked at 364 basis points on Oct. 10, averaged nine basis points in the year before the credit freeze started. Greenspan said in June that the spread should serve as a measure for determining when markets have returned to normal.
A narrowing to 25 basis points in the Libor-OIS spread would be viewed as a positive, according to Greenspan. Forward markets signal the spread will have narrowed to 32 basis points by September 2010.

Libor, the benchmark for $360 trillion of financial products worldwide is set by a panel of banks in a survey by the British Bankers’ Association typically before noon each day in London.


posted by Peter Greene

http://www.bloomberg.com/apps/news?pid=20601087&sid=awoHiH6w1BDQ&refer=home

Fed says Stimulus May Be Inadequate

Fed chair Bernanke said that the government needs to buy troubled assets from banks, give them more guarantees in order to save growth.

What? The printing press going 24/7 will not help anymore. I can understand the need for stability in the days of failing counterparty risk (Bear Stearns, Lehman) when the Fed and US Treasury loaned and guaranteed pending trades. Both Bear and Lehman are now memories...Even the Government help finding suitors to assist bad firms (Merrill shotgun marriage to B of A). But, there is a difference with helping keep orderly markets (all done) and nationalizing all the bad investments on companies balance sheets.

GM and Chrylsler should have been assisted to the altar, not have good money thrown in after bad. The government did that with Wachovia, Washington Mutual.

The President-elect has already let it be known that he wants MASSIVE government spending and government control of more firms via the TARP and sons of TARP that will be coming. This along with the increases in taxes that the congress and executive branch will push will lead to inflation 70's style...may take 2 years before it hits full force.

In my opinion short term help to keep stable markets, even a short term loan is fine, I'm not a blind kill or be killed capitalist. There sometimes are many ripples and lots of workers that will need help. Just shutting firms and cutting all credit lines can lead to a deeper recession. However, we can not guarantee every company or industry, I'm sure in the past the loss of the blacksmith industry was a big blow too.





posted by Peter Greene

Citi and Morgan Stanley will equal....

merging parts of Citigroup and Morgan Stanley will be called Citi-Morg


posted by Peter Greene

CELG intraday ...

Celgene Corporation Reviews 2008 Achievements and Announces 2009 Financial Outlook

posted by Peter Greene

SP 500 Review by our firm this am

S&P 500 Chart

As seen on the chart above, the S&P 500 Index is seeing weekly MACD momentum turn up for the first
time since the whole collapse started. Additionally downside momentum as measured by the RSI
diminished as the index hit its’ low suggesting that selling pressure has waned some. Also of note volume
flows have dried up of late after surging in September and October.
As seen above the recent snap back rally ran the S&P 500 back right into a resistance zone (red lines)
between the 950 to 1,000 level. We would imagine the market is going to slosh in and around these levels until
some clarity is produced by Washington lawmakers on the economic stimulus package.
We do believe the market has priced in a ton of bad news and there is definitely a lot of liquidity on the
sidelines, however getting that liquidity into the market takes incentive and investors still aren’t convinced
it is safe to go back into the water yet as witnessed by the light volume flows.

posted by Peter Greene

Joke line on desks this am

ABT buys lasik to see JNJ's MNT better..



posted by Peter Greene

Did you own SAY

If you owned SAY, last trade of $1.15, you could have used our research..for our institutions we had sell signal, and lower ranks on this name since OCTOBER!!!

posted by Peter Greene

C & MS To merge Brokerage units????

Citigroup, Morgan Stanley deep in talks to merge brokerage units...per CNBC


posted by Peter Greene

Rubin resigns...

Robert Rubin, the former Treasury secretary who has been sharply criticized over his role in the financial turmoil at Citigroup Inc., plans to leave the bank and has submitted a letter of resignation, according to a person familiar with the situation.

The shares dropped several percent in the span of 5 minutes following the announcement that Rubin will resign from the company. Support levels to watch as potential downside objectives are at $6.73, $6.63, $6.50, $6.38, $6.28, $6.16, $6.06, $5.97, $5.88, $5.79, $5.69, $5.59, $5.50. Resistance is at $6.80.

Joke rumour on the street is that he was pissed at his bonus.


posted by Peter Greene

So everyone wants a short idea

After the dismal NFP numbers this am, everyone I talk to asking what are we shorting? Is this a sign of smart people or the mob mentality?


There are more than just a few names out there. We are at the support level we talked about early in the week; would rather short if we break that


posted by Peter Greene

Unemployment Data

So the story for the lower volume and yo-yo market has been the street is waiting for the jobs data to be released...

what is expected

Change in Nonfarm Payroll -525k
Unemployment Rate 7%
Change in Manufac. Payrolls -100k

What we got:
Change in Nonfarm Payroll -524
Unemplyment Rate 7.2
Change in Manufac. Payroll -149k

Let's see if there is any follow through in the trading after intital movement ...


posted by Peter Greene

our sentiment piece showing the American Association of Individual Investors (AAII) Asset Allocation and Bullish Sentiment surveys. As the attached chart shows investors are under allocated to stocks presently just as they were at the 1987, 1990 and 2002 lows.

AAII Asset Allocation Survey

As seen below investor
allocation to stocks is 18.00 %
below its’ 21-yr. mean level of
60.00 % suggesting there is an
enormous amount of selling
pressure removed from the
market as well as an aggressive
buildup of sideline cash.

posted by Peter Greene

Unreal this Ponzi guy

from The Wall Street Journal


Jan. 8, 2009

Federal prosecutors said Thursday that investigators who searched Bernard Madoff's office desk after the money manager's arrest on Dec. 11 found about 100 signed checks totaling more than $173 million. The revelation came as part of a motion by the U.S. attorney's office in Manhattan to revoke Mr. Madoff's bail.

As previously disclosed, Madoff had allegedly told his sons that he wanted to transfer what funds were left at his firm, $200 million to $300 million, to certain employees, relatives and friends.


posted by Peter Greene

NDX "levels" from fly on wall

13:49:46
NDX
[theflyonthewall] Nasdaq 100 Index-NDX: Bearish "Island" Triangle in ProgressOn the 5-minute chart there is a bearish "island" triangle in progress. We are calling it an "island" because of the gap down today which leaves the triangle isolated on the chart. The downside potential for the pattern is to the 1215 area which would bring it close to where Friday's session began. It would take a move back above 1247 to break the pattern for today. A move above 1255 would void it completely.


posted by Peter Greene

Our morning comments

Good morning and welcome the yo-yo trading of January 2009. As we have been saying over the past two months we believe the market has put in a near term bottom. The only question now is, do we just back and fill until the whole street pulls its hair out? Possibly, but at Fusion Analytics we attempt to take some of the emotion out of the market and stock direction questions.

As you saw with the research piece we sent out yesterday, FusionIQ Statistical Review, we have been seeing positive movements in a few metrics (these charts are also show on the last page of the morning notes). This supports our thesis that a solid tradable rally may be in the offing. We continue to look for names that have held up strong in this market as well as ones that may have a few catalysts to help them along.

On a side note, our published research ended the year 2008 with an average return of +8% vs. the S&P 500 down almost 40%. These reports as well as short term trades can help you increase alpha. We shall be sending out that review today or tomorrow.

Just a few names we have liked recently (some are on our recommended list, others are shorter term trades...also some or all may be held by private managed accounts):
AVAV; RGLD; HTS; EMS

If you have any questions on any of these or other names, or would like some sector specific screening done for you, please let us know.




posted by Peter Greene

Isuzu to cease passenger vehicle sales at month's end

posted by Peter Greene

Auto sales....with them giving them away

General Motors-GM reports December US sales down 31.4% to 221,983
General Motors-GM reports December car sales down 24.9%, truck sales down 35%

Toyota's US sales down 37 percent in December

Ford U.S. December sales down 32.4%

Honda US Sales down 35%



posted by Peter Greene