MARKET TALK: VIX Could Point To Another Near-Term Top
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
(Call Us: 201 938-5299; All Times Eastern)
MARKET TALK can be found using code N/DJMT
11:24 (Dow Jones) Bernie Schaeffer argues that, in a bear market, spikes
lower in the CBOE Volatility Index are the key characteristic of predictive
value of the indicator. On Wednesday, the VIX fell sharply to the 27 area,
the second time recently it has gone from around 35 to 27. The last time,
Feb. 25, marked what has so far been a near-term top in the S&P 500. "Spikes
lower in the VIX are signs of excessive complaceny and are likely to mark
near-term tops," Schaeffer says. (TG)
11:15 (Dow Jones) Wall Street analysts and Yahoo! Inc.'s (YHOO) management
agree the company's prospects later this year are murky. The portal company
has withdrawn previous full-year guidance, saying visibility was too limited
to make longer-term predictions. And Merrill Lynch's Henry Blodget said
"vastly reduced" visibility into future performance was a primary reason
behind his decision to cut his near-term rating on Yahoo! to neutral from
buy. The stock set a 52-week low of $16.75 Thursday, a far cry from its high
last March of $205.63. (RS)
11:08 (Dow Jones) Merrill Lynch remains high on Viacom (VIA, VIAB) even with
the ad slump addling media companies. "Despite the current (and temporary)
difficult advertising market, we continue to believe that Viacom will excel
relative to its peers in both tough times (i.e. now) and strong (i.e. when
this cycle is over)," analyst Jessica Reif Cohen says. (RJH)
10:52 (Dow Jones) Wed's volume and open interest data shows Eurodollar open
interest rose to 4168964 contracts, surpassing Tues' record of 4166957.
Nasdaq 100 set an open interest record of 63702, beating the former record
of 59607, set Tues. E-Mini S&Ps set an open interest record of 98246, vs the
previous record of 88840 made on Mar 2. (DMC)
10:44 (Dow Jones) Three secondary offerings are holding their own.
RenaissanceRe (RNR) sold 1.6 million shares at $72.20 and the stock recently
traded at $73.40. NRG Energy (NRG) is at $28.11 after selling 16 million
shares at $27. ESpeed (ESPD) sold 7.1 million shares at $20 and recently
changed hands at $20.13. (RJH)
10:37 (Dow Jones) Salomon Smith Barney has cut its ratings and price targets
on computer storage stocks Brocade (BRCD), EMC (EMC), Inrage Tech (INRG),
and Network Appliance (NTAP), on fear that the already beaten-down sector
still has a rough road ahead. "Although we recognize that much of the
downside risk is reflected in current stock prices, we cannot ignore looming
fundamental erosion which has been caused by an economic downturn," analyst
H. Clinton Vaughn says. (RJH)
10:29 (Dow Jones) Waste Management's (WMI) earnings news was enough to
prompt Merrill Lynch to hike its rating on the stock to buy from accumulate.
But the firm does worry about one thing: a broad market recovery. The firm
thinks "the largest risk to the stock" is the "continued Nasdaq rally, as
the stock tends to move inverse to that market." (RJH)
10:22 (Dow Jones) Retailers posting tepid Feb sales gain. BTM index shows
same-store sales up 2.8% from a year ago, versus Jan's 4.8% increase. SSB
index up 2% from a year ago. Data consistent with slim gain in non-auto
retail sales. Spending slowing, but not enough to signal economic
contraction. (BB)
10:16 (Dow Jones) More pain for investors in online brokerage stocks. Keefe,
Bruyette & Woods analyst Russell Keene lowers 1Q estimates on E*Trade Group
Inc. (ET) and CSFBdirect (DIR) and cuts his fiscal 2Q estimate on Ameritrade
Holding Corp. (AMTD), citing the weak stock-trading environment. The three
stocks are down slightly. (GFC)
10:05 (Dow Jones) Don't tell Broadcom (BRCM) holders about how well this
market is digesting bad news. The 16% selloff in the shares Wednesday in the
wake of a weak outlook is being followed by another 2.5% selloff Thursday.
Volume active again. Stock at $39, down from $128 in late January - not to
mention $274 last August. (TG)
9:56 (Dow Jones) Globespan (GSPN) off 7.5%. UBS cuts views in response to
general weakening in communications sector. 2001 estimate goes to 64c from
86c, and '02 view is now 85c, down from $1.05. Keeps buy rating and 12-month
target of $40. (TG)
9:52 (Dow Jones) NY Fed's McDonough says inventory correction should
continue into 2Q and that 1Q GDP should be quite weak. But sounding
optimistic on outlook for later this year. Consistent with expectations for
steady acceleration in growth through the year. (BB)
9:49 (Dow Jones) New shop, same town for restaurant analyst Andy Barish.
He's moving to Banc of America Securities from FirstBoston Robertson
Stephens but staying in San Francisco. Barish was wooed by Stacy Jamar, who
formerly was BofA Securities' restaurant analyst but now is its associate
director of equity research. (RLG)
9:44 (Dow Jones) Stocks mixed early. DJIA gets boost from Intel (again),
Wal-Mart, and American Express. Nasdaq flat, Internet index down 1%, and
Yahoo off 17%. Could be a choppy session as market digests recent gains and
mulls whether or not they can stick in this environment. DJIA up 22 to
10752, Nasdaq down 5 at 2217, and S&P 500 higher by 2 to 1264. (TG)
9:36 (Dow Jones) SBC Communications (SBC) is not likely to pursue a deal
with WorldCom (WCOM), BB&T Capital Markets analyst Rex Mitchell believes.
First, long-distance restrictions on SBC would cause too great a destruction
of value, Mitchell said. Secondly, SBC is doing well in the long-distance
market on its own. Mitchell said the talk of such a dilutive acquisition has
been the driver behind a recent selloff in SBC shares. While WorldCom would
offer SBC Internet backbone facilities and a large division serving
businesses, "WorldCom has so many more assets that SBC would not be
interested in," Mitchell said. (JDB)
9:30 (Dow Jones) Nymex crude futures are expected to open 15-20 cents a
barrel lower on profit-taking. Expectations for OPEC output cut seen
supportive, but April-May contango suggests nearby prices could weaken.
April crude, down 17c at $28.83 in overnight trade on ACCESS, has support at
$27.95; resistance is seen at $29.10. (MXF)
9:24 (Dow Jones) There's a danger that folks are getting too bummed out over
the economy, says Merrill Lynch chief economist Bruce Steinberg. While it's
clear the economy has slowed, there are still positive signs, and therefore
too much worry right now is not a good thing, he says. (MSD)
9:20 (Dow Jones) UBS keeps price target on Yahoo! (YHOO) - unfortunately
it's $14, and maybe $12 (if the stock trades at 20 times cash flow.)
Maintains reduce rating, but notes speculation about a takeover can provide
price support despite recent poison pill. (TG)
9:16 (Dow Jones) Fed's Moskow says "there's every reason to believe that
productivity growth will continue at relatively high levels, even with
slower economic growth." He adds that that consumer and business spending
should pick up in the second half of the year, and that the drop in consumer
confidence "is expected to be temporary." (FL)
9:14 (Dow Jones) Harsh winter weather put a chill on Waste Management (WMI)
operations in 4Q, causing the waste giant to report lower-than-expected
earnings. The good thing is that management feels good enough about its
business to go out on a limb, providing guidance for the first time in over
a year. Waste Management said it expects earnings this year to fall within
the $1.35 to $1.42 a share range published by First Call/Thomson Financial.
(CCW)
(END) DOW JONES NEWS 03-08-01
11:25 AM
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