TSLA has dropped below its issuance price.
Much in the way the bears were worn out at S&P 1,200-plus, the bulls are being worn out at the 1,025 level. It's all very symmetrical!
The ISM nonmanufacturing release was a bit shy of consensus, but remember, how the market reacts to the number is more important than the number itself.
Larry Summers is engaged in concocting some unconventional approaches to kick-starting jobs and economic growth.
Stay tuned.
In contrast to the complacency that embodied the rally, fear has now been introduced into the market.
The Ranks of Cassandras Grow
For a rough parallel, he said, go all the way back to England and the collapse of the South Sea Bubble in 1720, a crash that deterred people "from buying stocks for 100 years," he said. This time, he said, "If I'm right, it will be such a shock that people will be telling their grandkids many years from now, 'Don't touch stocks.'
-- New York Times interview with Bob Prechter
On cue, the New York Times Jeff Sommer prominently interviewed Bob Prechter in Sunday's Business section. The Elliott Wave devotee is forecasting a DJIA "well below 1,000 in the next five or six years."
Prechter's comments are a classic example of Roubini-like hyperbole. As I have often written, both perma-bulls and perma-bears are attention-getters, not money-makers. Avoid their views like plagues. I do. Those views might make for juicy headlines, but they are not typically substantiated by rigorous in analysis. Importantly, their views rarely prove accurate nor value-added.
It is for these reasons and others that the reputations of Cassandras are not usually long-lived. And some Cassandras, similar the original one in Greek mythology , who was granted the gift of prophecy by Apollo after spending a night in his temple in which snakes licked her ears clean (so that she could hear the future), simply don't even live long. (She was killed by Clytemnestra when she was 21 years old.)
"Already I prophesied to my countrymen all their disasters."
-- Cassandra
The World Grows More Realistic
Two months ago, things were not as good as they appeared, and now things are probably not as bad as they seem.
Two months ago, many strategists/hedge-hoggers were targeting a 1,300 level for the S&P 500, and now, in the face of what should have been an expected slowdown in the rate of growth, some of the same optimists have abruptly reversed their constructive views (e.g., Barton Biggs).
When the market was in an uptrend that seemed never-ending, it was argued that economic expectations were too optimistic and that a zero-interest-rate policy would catalyze growth but would not likely lead to a self-sustaining economic cycle. It's possible jobs growth would be lackluster (as we had entered the era of the temporary worker), housing's recovery would be tepid (despite historically low mortgage rates) -- and that these factors (among others) had produced a limited margin of safety for stock prices. A period of lumpy and inconsistent economic growth lied ahead, I opined -- one that would be difficult for investment and corporate managers to navigate.
As stocks corrected, slowly at first and then with greater tenacity, I have recently expressed the view that the equity market was beginning to take a path of fear rather than traversing the path of fundamentals. Many of my concerns have been now adopted in the consensus, and, in reaction, share prices are now overshooting lows that I had expected to be supported by conservative but elevated and reasonable profit estimates.
Though the market's price momentum (the voting machine) is horrible, valuations (the weighing machine) are compelling, representing the classic conflict between the trader and the investor.
It is important to recognize that, notwithstanding the yearlong rally from March 2009, stocks have been stagnant for years. (The S&P 500 is now back to levels seen in late 2001.) So, as an asset class, stocks were never stretched to the degree of other asset classes -- commodities, private equity, residential and nonresidential real estate were all lifted to multiple-sigma events.
I do try to remain realistic and recognize many of the reasons for the lack of progress in equities in nearly a decade. Some discount from historic ratios seems appropriate given the reality of the current and prospective cycle. Most notably, taxes are rising, fiscal imbalances are large and unprecedented, there is an absence of drivers to replace the prior cycle's strength in residential and nonresidential construction, the tail of the last credit cycle remains long during the current deleveraging environment, and we have remarkably inept and partisan politics.
These factors, now increasingly accepted by many, will serve to cap the upside of equities but not preclude a healthy advance, as, with an 8.8% earnings yield against a 2.95% return on the 10-year U.S. note, the corporate profits/interest rate differential is among the widest in decades. (The same favorable comparison applies to stocks vis-a-vis investment-grade bonds.) In other words, the U.S. stock market's P/E multiple of 11.5 times compares quite favorably with a U.S. bond market's P/E multiple of over 33 times.
Interest rate indicators are mixed in terms of their growth message. Though the absolute level of treasury and investment-grade yields indicate less than 1% real growth, the Fed's own model indicates less than a 5% chance of recession, and the shape of the yield curve points to continued growth.
My baseline expectation is that, despite the hyperbolic dire market warnings and the admittedly poor price action in the markets around the world, the domestic economy is simply decelerating from a V-shaped recovery toward moderate expansion.
Though a further drop in stocks will take more of a bite out of consumer confidence and spending, I continue to expect corporate profits to remain high, and, despite the current economic soft patch, I see little to alter my expectations, as companies successfully navigate an environment of relatively slow growth with productivity gains and a tight lid on costs.
I still see S&P earnings approximating $90 a share in 2011, slightly better than 2.0% economic growth (in the second half of 2010 and for all of 2011) and steady jobs creation.
U.S. stocks now sell at only 11.5 times vs. a multi-decade average of 15.3 times and at over 17 times during comparable periods of quiescent inflation and interest rates. By contrast, at 1,020, the S&P appears to be discounting slightly less than $70 a share in 2011 S&P profits, approximately 0.5% economic growth and some job losses.
Stated simply, expectations for the economy and markets are now reduced and are now more reasonable.
A Positive Word for Housing
The recent data on sales activity confirm my concerns regarding housing. This weak housing data has been a clarion call for economic bears, but, again, I am adopting a variant view on housing.
I see latent demand and a number of other pro-growth factors coming to the support of housing in 2011.
Barring a flood of shadow inventory coming out, the residential real estate industry's outlook for next year has improved, reflecting record-low mortgage rates, a multi-decade improvement in affordability, a widening benefit of home ownership vs. renting, dramatically lower home prices compared to 2006-2007 levels and the underproduction of new homes compared to household formations.
It is time for our executive and legislative branches to step it up.
While I recognize this might be hopeful thinking, as we move toward midterm elections in November, the chances of thoughtful, innovative and market-friendly fiscal policy initiatives could brighten the outlook for economic growth in 2011-2012.
Stocks are just as cheap today (if not cheaper) as they were when Warren Buffett penned his editorial in October 2008.
In a New York Times op-ed on Oct. 16, 2008, Warren Buffett said to "Buy American. I Am." At the time of that column, the market looked as broken as it does today -- share prices have fallen seven consecutive days.
Last night, the S&P futures were down by 9.50 -- they were up this morning by a similar amount!
While equities took another leg down as the financial crisis spread, the S&P 500 ultimately rose by over 30% above the level of the Oracle's editorial.
In October 2008, the S&P stood at approximately 940, within 10%, or only 80 points, from last night's close.
I attempt to make the case that we have been traveling the path of fear, not on the path of fundamentals.
From my perch, stocks are just as cheap today (if not cheaper) as they were when Buffett penned his editorial.
Tuesday, July 6, 2010
Just Barely A Bounce
After a decent start this morning, it looked like we finally were going to put together the long-awaited oversold bounce. We had strong action and good closes overseas, it was the beginning of the week, which tends to be strong, and we were oversold enough that we could run a bit before hitting resistance levels.
We did manage to rally for the first 30 minutes of the day, but then we trended down until the final hour of trading, when we had the usual late-day computer games. We ended up with gains in the major indices, but breadth was negative and the small-caps lagged badly.
What was particularly sad about the action today was that it was the best action we have seen since June 15. A year ago, this sort of day would be deemed a negative, but now our standards are so low that even this pathetic bounce qualifies as a positive.
The inability of this market to bounce sooner or better simply enforces the fact that we are in a downtrend. During the uptrend off the March low, we constantly would bounce immediately and go straight up. The character of this market shifted at the end of April, and not only are we not seeing V-shaped bounces, we aren't seeing any decent bounces at all.
Too many market players try to fight this sort of action, and they lose a lot of money in the process. Today was another fine example of how dangerous it can be to try catch a turn in a downtrending market. If you are tempted to play, just make sure you are staying very disciplined and aren't buying into the notion that we have seen the lows. There is nothing at all in this action to indicate that a bottom is being formed. It is possible, but I don't know too many people who make good money fighting a trend.
We did manage to rally for the first 30 minutes of the day, but then we trended down until the final hour of trading, when we had the usual late-day computer games. We ended up with gains in the major indices, but breadth was negative and the small-caps lagged badly.
What was particularly sad about the action today was that it was the best action we have seen since June 15. A year ago, this sort of day would be deemed a negative, but now our standards are so low that even this pathetic bounce qualifies as a positive.
The inability of this market to bounce sooner or better simply enforces the fact that we are in a downtrend. During the uptrend off the March low, we constantly would bounce immediately and go straight up. The character of this market shifted at the end of April, and not only are we not seeing V-shaped bounces, we aren't seeing any decent bounces at all.
Too many market players try to fight this sort of action, and they lose a lot of money in the process. Today was another fine example of how dangerous it can be to try catch a turn in a downtrending market. If you are tempted to play, just make sure you are staying very disciplined and aren't buying into the notion that we have seen the lows. There is nothing at all in this action to indicate that a bottom is being formed. It is possible, but I don't know too many people who make good money fighting a trend.
Friday, July 2, 2010
Thoughts
Nasdaq down for 10 straight days; I believe that is the first time in history that this has happened.
More Than Meets the Eye to Factory Orders
Capital goods orders/shipments (excluding aircraft and defense) were revised higher.
This indicates that no double-dip or significant drops in economic activity are imminent.
There has been negative chatter surrounding the factory orders drop of 1.4% (compared to the expectation of a more modest 0.5% decline).
In the case of factory orders, however, there was more than met the eye, as the entire weakness was in the aircraft segment.
Importantly, capital goods orders/shipments (excluding aircraft and defense) were revised higher, indicating that capital spending growth in the quarter ended June 30, 2010, will accelerate from first quarter 2010 and that no double-dip or significant drops in economic activity are imminent.
Doug Kass is a very smart investor; I read that he has continued to expand his net long exposure this morning - makes me ever more confident.
The jobs report, while weak, seems to negate the doomsday double-dip scenario that has been incorporated in equities.
I believe that the year's lows might be in place. I expect a relief rally in the days ahead.
Historically, the 'Death Cross' has been a poor indicator of stock market weakness.
Hyperbole and emotion have ruled these past few weeks. Which brings me to the incessant references to the S&P 500's "Death Cross" -- a technical condition that occurs when the S&P's 50-day moving average declines below its 200-day moving average.
The "Death Cross" has been a poor indicator of stock market weakness over time. According to Weeden's Steve Goldman, there have been a total of 20 "Death Cross" signals since 1950 -- the S&P 500 was lower 55% of the time and, on average, slipped by only 0.5% one month later. Three months later, the S&P was, on average, 1.75% higher and lower less than 40% of those 20 data points.
In fact, on only one occasion (October 1987 crash) after the dreaded "Death Cross" did the index swoon by over 15%.
According to Goldman:
In the six signals that occurred after the S&P had declined by more than 10%, the S&P declined by 2% one month later and was lower 50% of the time. But three months after the signal went into effect, the S&P advanced by 2% three months later and by 4.5% six months later. One year later, the S&P had advanced by an average of 9% and was higher 83% of the time.
In other words, while the "Death Cross" has been in place in every bear market, "it does not mean that every time this happens a bear market occurs."
I have little to add to the litany of commentary on this morning's jobs report......other than to write that most outcomes, except a better number, seem to be now baked in to stock prices.
More Than Meets the Eye to Factory Orders
Capital goods orders/shipments (excluding aircraft and defense) were revised higher.
This indicates that no double-dip or significant drops in economic activity are imminent.
There has been negative chatter surrounding the factory orders drop of 1.4% (compared to the expectation of a more modest 0.5% decline).
In the case of factory orders, however, there was more than met the eye, as the entire weakness was in the aircraft segment.
Importantly, capital goods orders/shipments (excluding aircraft and defense) were revised higher, indicating that capital spending growth in the quarter ended June 30, 2010, will accelerate from first quarter 2010 and that no double-dip or significant drops in economic activity are imminent.
Doug Kass is a very smart investor; I read that he has continued to expand his net long exposure this morning - makes me ever more confident.
The jobs report, while weak, seems to negate the doomsday double-dip scenario that has been incorporated in equities.
I believe that the year's lows might be in place. I expect a relief rally in the days ahead.
Historically, the 'Death Cross' has been a poor indicator of stock market weakness.
Hyperbole and emotion have ruled these past few weeks. Which brings me to the incessant references to the S&P 500's "Death Cross" -- a technical condition that occurs when the S&P's 50-day moving average declines below its 200-day moving average.
The "Death Cross" has been a poor indicator of stock market weakness over time. According to Weeden's Steve Goldman, there have been a total of 20 "Death Cross" signals since 1950 -- the S&P 500 was lower 55% of the time and, on average, slipped by only 0.5% one month later. Three months later, the S&P was, on average, 1.75% higher and lower less than 40% of those 20 data points.
In fact, on only one occasion (October 1987 crash) after the dreaded "Death Cross" did the index swoon by over 15%.
According to Goldman:
In the six signals that occurred after the S&P had declined by more than 10%, the S&P declined by 2% one month later and was lower 50% of the time. But three months after the signal went into effect, the S&P advanced by 2% three months later and by 4.5% six months later. One year later, the S&P had advanced by an average of 9% and was higher 83% of the time.
In other words, while the "Death Cross" has been in place in every bear market, "it does not mean that every time this happens a bear market occurs."
I have little to add to the litany of commentary on this morning's jobs report......other than to write that most outcomes, except a better number, seem to be now baked in to stock prices.
Another Shit Day Off The Shit Jobs Report; Although The Bad Jobs Number Was Expected.....
I'm going to go out on a limb here and predict that next week, we will finally see some positive action. We are quite overdue for some sort of relief.
Don't get too hung up on trying to catch these counter-trend moves. In this sort of market environment, it is far more important to focus on capital preservation than on Wall Street's obsession with constantly trying to predict market turns. This past week has provided a particularly good illustration of how much money you can lose when you keep trying to catch a market turn.
AAPL's ultra cheap right here; I'm all in.
long AAPL
Don't get too hung up on trying to catch these counter-trend moves. In this sort of market environment, it is far more important to focus on capital preservation than on Wall Street's obsession with constantly trying to predict market turns. This past week has provided a particularly good illustration of how much money you can lose when you keep trying to catch a market turn.
AAPL's ultra cheap right here; I'm all in.
long AAPL
Thursday, July 1, 2010
More Thoughts
I do think a hard market turn is coming - but from what level?
This seems kind of astounding to write, but this market may be more manipulated than I think we saw in 2008.
We have literally fallen 300-350 Naz points on essentially neutral news at worst. We need an uptick rule now and we need one badly; or we risk losing the whole global financial system again like we did in 2008.
I'm still shocked and amazed that the powers that be are willing to throw so much money into the system and let it get vaporized by a set of market rules that are anti-everything related to positive capital formation.
Will someone get on the "uptick rule, CDS, futures limits" horse again?
I would describe trading conditions as dire, as we are literally killing capital formation, economic growth, sentiment, as well as any global political goodwill that our Fed had engendered.
And by the way - Euroland isn't helping much by letting the CDS market rule their fate. That is just idiotic.
This seems kind of astounding to write, but this market may be more manipulated than I think we saw in 2008.
We have literally fallen 300-350 Naz points on essentially neutral news at worst. We need an uptick rule now and we need one badly; or we risk losing the whole global financial system again like we did in 2008.
I'm still shocked and amazed that the powers that be are willing to throw so much money into the system and let it get vaporized by a set of market rules that are anti-everything related to positive capital formation.
Will someone get on the "uptick rule, CDS, futures limits" horse again?
I would describe trading conditions as dire, as we are literally killing capital formation, economic growth, sentiment, as well as any global political goodwill that our Fed had engendered.
And by the way - Euroland isn't helping much by letting the CDS market rule their fate. That is just idiotic.
Thoughts
Today was a moral victory for the bulls.
The "Death Cross" Is Applesauce.
Just plain voodoo and no correlation to bear markets.
The scary Death Cross that is being publicized all over Wall Street is a B.S. indicator.
Just plain voodoo and no correlation to bear markets.
With the market's vicious downturn over the past two months, a number of individual equities have very favorable risk/reward ratios.
For example, here are four stocks that have the potential to double in the next 12 twelve months: ETFC, MTG, PMI and RDN.
I view the crash in gold as equity-positive.
My guess is that this morning we have seen a tradable low for some time to come.
A 56 ISM reading is well above the long-term trendline of 52 and is indicative of economic growth, not a double-dip.
Jim Cramer is right. Estimates of economic indicators are unrealistic.
But let's get down to reality.
The reality is that a 56 ISM reading is well above the long-term trendline of 52 and is indicative of economic growth, not a double-dip.
Unfortunately, the damage in the U.S. equity market over the past two months is very real. Our political leaders must step up and reconsider some of their actions for the sake of Main Street and Wall Street. It is not too late for some positive action on the jobs and tax front.
Emotion continued to take over in Wednesday's trading and into the evening's trading in S&P futures.
Specifically, though well above the 50 reading that implies healthy expansion and a soft landing, the U.S. futures responded last night by trading down by eight handles on a weaker-than-expected China PMI.
Importantly, what was even more surprising to me in terms of the market's immediate adverse reaction, was that the China PMI was in line with the whisper but down only slightly from consensus.
Unfortunately, the damage in the U.S. equity market over the past two months (and on the back of the 2008 investment shock) is very real, and as former Federal Reserve Chairman Alan Greenspan mentioned on CNBC's "Squawk Box" earlier this morning, the poor state of the stock market is likely to be a (self-fulfilling) force that will, at the margin, add to weakening economic conditions (especially of a consumer kind) and to the current soft patch.
In other words, Mr. President, what is good for Wall Street (and our stock market) is good for Main Street.
Yesterday, in "Something Good Is About to Happen," Jim "El Capitan" Cramer made these prescient points, which I paid attention to but few others did:
It's not so bad, it is just bad enough that maybe something good will happen. That's my feeling about the U.S. economy right now.
It's not so bad because we have ever-so-slightly falling job claims, we have better balance sheets for companies and lots of profitability with some companies doing extremely well. But it is bad enough because we are not creating jobs and not seeing any loan demand that I think Washington will do something.
We saw the beginning of that Tuesday, totally obscured by the selling of stocks. We saw a bank tax that went away, we saw the rumblings of cap-and-trade being put on hold and we saw the makings of a breakthrough in extending unemployment claims money.
You know what these moves smell like to me? Self-preservation. Self-preservation on the part of the Democrats to get some jobs created, maybe even to stop the uncertainty about taxes and make statements that we will keep tax increases on hold. Why not?
When we began 2010, I wrote that corporate profits growth would surprise to the upside in the first half of the year but that the U.S. stock market would be unresponsive and could trade lower. Among other issues, I highlighted populist policies that would ultimately dampen economic growth (higher taxes, more burdensome and costly regulation, etc.) and that would be seen as (equity) valuation-threatening.
This has been the case.
Now, as Jim Cramer writes, in order for "something good" to happen, our (P/E-multiple-deflating) political leaders must step up and reconsider some of their actions for the sake of Main Street and Wall Street.
It is not too late for some positive action on the jobs and tax front from our legislators and particularly from the Obama administration.
If nothing else, as the economic data soften in the months ahead, survival and self-preservation could be an emotion taking over our politicians as the November elections loom.
The "Death Cross" Is Applesauce.
Just plain voodoo and no correlation to bear markets.
The scary Death Cross that is being publicized all over Wall Street is a B.S. indicator.
Just plain voodoo and no correlation to bear markets.
With the market's vicious downturn over the past two months, a number of individual equities have very favorable risk/reward ratios.
For example, here are four stocks that have the potential to double in the next 12 twelve months: ETFC, MTG, PMI and RDN.
I view the crash in gold as equity-positive.
My guess is that this morning we have seen a tradable low for some time to come.
A 56 ISM reading is well above the long-term trendline of 52 and is indicative of economic growth, not a double-dip.
Jim Cramer is right. Estimates of economic indicators are unrealistic.
But let's get down to reality.
The reality is that a 56 ISM reading is well above the long-term trendline of 52 and is indicative of economic growth, not a double-dip.
Unfortunately, the damage in the U.S. equity market over the past two months is very real. Our political leaders must step up and reconsider some of their actions for the sake of Main Street and Wall Street. It is not too late for some positive action on the jobs and tax front.
Emotion continued to take over in Wednesday's trading and into the evening's trading in S&P futures.
Specifically, though well above the 50 reading that implies healthy expansion and a soft landing, the U.S. futures responded last night by trading down by eight handles on a weaker-than-expected China PMI.
Importantly, what was even more surprising to me in terms of the market's immediate adverse reaction, was that the China PMI was in line with the whisper but down only slightly from consensus.
Unfortunately, the damage in the U.S. equity market over the past two months (and on the back of the 2008 investment shock) is very real, and as former Federal Reserve Chairman Alan Greenspan mentioned on CNBC's "Squawk Box" earlier this morning, the poor state of the stock market is likely to be a (self-fulfilling) force that will, at the margin, add to weakening economic conditions (especially of a consumer kind) and to the current soft patch.
In other words, Mr. President, what is good for Wall Street (and our stock market) is good for Main Street.
Yesterday, in "Something Good Is About to Happen," Jim "El Capitan" Cramer made these prescient points, which I paid attention to but few others did:
It's not so bad, it is just bad enough that maybe something good will happen. That's my feeling about the U.S. economy right now.
It's not so bad because we have ever-so-slightly falling job claims, we have better balance sheets for companies and lots of profitability with some companies doing extremely well. But it is bad enough because we are not creating jobs and not seeing any loan demand that I think Washington will do something.
We saw the beginning of that Tuesday, totally obscured by the selling of stocks. We saw a bank tax that went away, we saw the rumblings of cap-and-trade being put on hold and we saw the makings of a breakthrough in extending unemployment claims money.
You know what these moves smell like to me? Self-preservation. Self-preservation on the part of the Democrats to get some jobs created, maybe even to stop the uncertainty about taxes and make statements that we will keep tax increases on hold. Why not?
When we began 2010, I wrote that corporate profits growth would surprise to the upside in the first half of the year but that the U.S. stock market would be unresponsive and could trade lower. Among other issues, I highlighted populist policies that would ultimately dampen economic growth (higher taxes, more burdensome and costly regulation, etc.) and that would be seen as (equity) valuation-threatening.
This has been the case.
Now, as Jim Cramer writes, in order for "something good" to happen, our (P/E-multiple-deflating) political leaders must step up and reconsider some of their actions for the sake of Main Street and Wall Street.
It is not too late for some positive action on the jobs and tax front from our legislators and particularly from the Obama administration.
If nothing else, as the economic data soften in the months ahead, survival and self-preservation could be an emotion taking over our politicians as the November elections loom.
At Least We Have Low Expectations For Tomorrow's Unemployment Statistics.....
Is anyone optimistic about tomorrow's jobs report? You are more likely to find someone who believes that the Washington Generals are going to beat the Harlem Globetrotters the next time they hit the hard wood. The lower the expectations, the better, at this point. That doesn't mean tomorrow is an automatic up day regardless of the number, but the combination of today's action along with low expectation may soften the blow. I won't even talk about the concept on the numbers being stronger than expectations. At the moment, we call that Fantasy Land.
I've been looking at small biotechs lately, and they have just been absolutely smashed lately. Many names, such as DCTH and POZN, are trading as if they had no product to sell. Delcath is the more controversial of the two, but Pozen seems downright oversold. Even Wall Street's most pessimistic analyst has a $10 price target on the stock. We still view Pozen as a takeover candidate. Delcath is off by 63% since the beginning of June. Short interest is almost 15%, and current buying interest is zero. Analysts disagree with the price action, but that matters little right now.
Small biotechs have almost all been caught in the wave of selling over the last two months. High-beta names get hit harder, and these have been hit the hardest. We continue to pick up shares but have been marrying them with puts until the overall mood of the market changes.
I've put CME and ICE back on my radar. ICE looks to be the stronger of the two, as it is sitting right on support with an uptrend in place. CME is sitting on the downside support of a longer downtrend currently in place, but both should look to move higher from these levels, if for nothing more than a bounce. I prefer the strength in ICE, but CME is one of those names that can pick up $20 in the blink of an eye. I've done nothing with either yet, but I have my eye on them.
I anticipate Asian markets to build a bit off today's recovery from the lows. If Asia breaks down tonight, then I will be more concerned heading into the jobs numbers tomorrow....
I've been looking at small biotechs lately, and they have just been absolutely smashed lately. Many names, such as DCTH and POZN, are trading as if they had no product to sell. Delcath is the more controversial of the two, but Pozen seems downright oversold. Even Wall Street's most pessimistic analyst has a $10 price target on the stock. We still view Pozen as a takeover candidate. Delcath is off by 63% since the beginning of June. Short interest is almost 15%, and current buying interest is zero. Analysts disagree with the price action, but that matters little right now.
Small biotechs have almost all been caught in the wave of selling over the last two months. High-beta names get hit harder, and these have been hit the hardest. We continue to pick up shares but have been marrying them with puts until the overall mood of the market changes.
I've put CME and ICE back on my radar. ICE looks to be the stronger of the two, as it is sitting right on support with an uptrend in place. CME is sitting on the downside support of a longer downtrend currently in place, but both should look to move higher from these levels, if for nothing more than a bounce. I prefer the strength in ICE, but CME is one of those names that can pick up $20 in the blink of an eye. I've done nothing with either yet, but I have my eye on them.
I anticipate Asian markets to build a bit off today's recovery from the lows. If Asia breaks down tonight, then I will be more concerned heading into the jobs numbers tomorrow....
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