Friday was fairly flat – nothing but more waiting it seemed. The market remained strong above those resistance levels, or are they support areas – I think it is still debatable – let’s call them pivot points for now. The big run was a push from the banks – but it seemed that the legs were seriously over stretched since the Wells Fargo news – as more banks report stellar earnings, the stocks are now beginning to see sell pressure (“buy the rumor, sell the news?”). This morning is the latest – Bank of America and yeah it seriously beat as well.
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Bank of America - same old story...
A bank that had bought Countrywide and took on all their debt and added Merrill Lynch as well (with 20/20 hindsight of more debt), has reported an increase in consumer loan default, and expects more write downs. Of course nothing seems to be wrong and in only a couple of short months, taking billions of tax payer bailout money and a little new accounting standard trickery – they have a WHOPPING profit. Seems like another bank that really didn’t need any money and just a new mark-to-myth accounting standard – or is there something more?
It would seem a double edge sword, you take public money because you need help but then you report a massive gain? Kind of a slap in the face of the tax payer. Of course the reality is just a little more “tom foolery” as we pointed out last week with Citigroup earnings as they moved non-profitable sectors off the balance sheet and into the new Citi Holdings company, posting billions in gains from accounting rule changes, shifting “distressed securities” to a long-term held to maturity method. Great – government blessed book cooking. Sorry to be so bold – but I think even the investing community (and now public) is seeing through this joke – if proof of these banks now (after reporting) are starting to see sell pressure.
You would think after this news that Bank of America would be up 5%, 10%, 20% or more. I mean when was the last time you heard of a company beating the most optimistic estimates by 300% and the stock NOT rallying to match those crazy results? Maybe after we have seen this game played over and over by the banks that have reported before them.
In all seriousness – there is nothing to see here – move along.
Bank of America is down 5% in the pre-market.
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Sun and Oracle to marry...
It was only a week or so ago that Sun Micro and IBM were courting – then IBM pulled the plug. Sun traded lower and it seemed that it was pretty much over. However, this morning the marriage is back on – but this time it is not IBM, but Oracle. When I was trading the on the floor it seemed that every couple of years Sun and Oracle would be rumored to be in some kind of talk – of course nothing ever came out of it. The synergy was always there – Oracle runs a majority of their software on Sun’s operating system and they had several partnerships.
Truth be told I was more surprised at the previous IBM courting then I was this morning with Oracle. I had that feeling – you know- when you have two friends that you know like each other but never got together. The first thing that came out of my mouth was “About Time!”
The deal is for $9.50 a share ($7.5 billion). Sun (JAVA) is up in the pre-market and Oracle is giving up a little.
Arb traders – wake up – that deal you have been waiting for over 15 years - it's now happening!
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Futures Pre-market
Futures are getting a good smack down in the pre-market. Spreads are in – expect pressure on the cash at the opening as ARB traders unwind their long futures.
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Support / Resistance
INDU 8000! (Are we to test 8000 again – that seemed the game last week – below / above/ below / above. Will it hold this time?)
NDX 1300 / 1350 (We are seeing a visit half way down based on futures – is 1300 in the cards?)
SPX 825-835 / 850+ (The 850+ range is a resistance band – do we crack below it?)
RUT 450 / 500 (Nice neck stretcher – but not 500 yet- is 450 in the cards?)
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Gold 850+ (we haven’t seen 850, but have come down into the 860 range. It looks like support .)
Silver 12+ (Silver is up above the 12 market this morning.)
Oil 35-40 / 50+ (We broke down below 50 again – big move down to 47. Do we get back to the 35-40 accumulation range?)
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Conclusion
The bank beating estimate story is getting old – people were fooled on the Wells and subsequent ones, but after a while – people caught on. To quote Bush (because I love how he f’d it up), “Fool me once, shame on, shame on you. If fooled, you can’t get fooled again.” Whatever – I think there are still several longs in those banks stocks that want a little bit more fooling.
It also seems some of the tech stocks got a little stretched in the recent rally as well – if we are to listen to INTC earning news (since they are the biggest) it wasn’t a pretty picture going forward at all (Down 55% in profit) and computer sales facing huge short falls as the only market that does pick up is the sub-$500 ultra portables (where margins are razor thin anyway).
Hang on – I think we might be in for a bumpy ride back down.
1 comment:
I wish FASB had the guts to say, ok, you want mark to myth, fine. But it will not take effect for 2 or 3 quarters. I mean what other accounting change once it got phased in(everyone knew it was coming)and then got phased out as quickly as this one did?
rotag
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