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Trader Talk with Bob Pisani

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  Thursday, 16 Oct 2014 | 10:17 AM ET

Traders search for the market bottom

Posted By: Bob Pisani

We don't care. Markets shrug at a positive report from Goldman Sachs and good weekly jobless claims. Stock futures dropped after strong weekly jobless claims came out at 8:30 a.m. EDT.

What do they care about? They care about not getting run over. They care about buying on the news and then finding themselves down 2 percent 15 minutes into the open.

They also seem to care about oil. Futures dropped to the lows of the morning just as U.S. oil dropped below $80, about 7:10 a.m. EDT.

Where's the bottom? Unfortunately, it isn't clear. Sure, many sectors are dramatically oversold, but any market watcher will tell you markets can remain overbought or oversold for a long time.

The main worries remain Ebola, geopolitics and concerns over global economic growth. None of them seem near a conclusion.

Read MoreCorrection watch: Here are the official levels

There are some small signs of reversals. For example, the Russell 2000 has outperformed 3 days in a row. The Russell is up 1.8 percent, with the S&P 500 down 2.2 percent.

On the other hand, defensive plays aren't working anymore. Consumer staples are down 2.6 percent this week after outperforming in the earlier part of the month.

Energy still seeing no signs of a bottom.

The earnings commentary wasn't exactly stellar. True, Goldman Sachs had a huge beat. It posted earnings pear share of $4.57 versus consensus estimates of $3.21 and $8.39 billion in revenue compared with expectations of $7.85 billion. The bank had strong fixed income trading revenues—but stock trading revenues were down—and investment banking was also strong.

Delta beat on the top and bottom line. Revenue growth of 6.6 percent year-over-year was respectable, though revenue growth of 0 to 2 percent for the fourth quarter is not exactly robust and will likely cause the stock to trade down.

Jet fuel costs will decline, however, to $2.69 to $2.74, down 8 percent year-over-year. Wouldn't it be great if they passed those lower fuel prices on to the rest of us? Don't bet on it. There was no mention in the release about Ebola concerns, but you can bet that will come up on the conference call.

Oilfield services provider Baker Hughes disappoints, big time. Third quarter earnings per share of $1.02 were well below expectations of $1.13.

The company reported a "sharp reduction in activity" in the Gulf of Mexico due to customer delays. Baker Hughes gets half of their revenues from North America, and the rest from Middle East, Europe, Africa, Russia and a few other spots. Disruptions in Libya and Iraq and a decline in the Russian ruble reduced revenues and margins in Europe, Africa and Russia. There was nothing in the report about lower oil prices or reduced capital expenditure from customers.

»Read more
  Wednesday, 15 Oct 2014 | 3:38 PM ET

Traders try to pick bottoms in down stock market

Posted By: Bob Pisani

Here's what's hurting stocks: no growth in Europe, slower growth in China, deflation concerns (oil), Ebola, ISIS, disappointing U.S. Retail Sales data and what appears to be the demise of major M&A deal between Abbvie and Shire.

That's a lot for the market to deal with. Little wonder that the CBOE Volatility Index is over 30 for the first time since 2011, and the S&P 500 is down 9.8 from its historic intraday high, which it hit September 19th.

The 10-year yield hovering near 2 percent has been a real weight on financials, which are hurt by lower rates. The S&P Financials sector (XLF) is the weakest of the 10 S&P sectors; large U.S. banks were down 2 to 4 percent midday.

Disappointing Retail Sales weighed on retailers, with high-end names like Tiffany (TIF), Coach (COH), Nordstrom (JWN) and Michael Kors (KORS) down 2 to 3 percent.

As an indication that weaker U.S. growth is an issue, look at Transports. Airlines were down 2 to 3 percent on Ebola concerns, but truckers and railroads were down 2 percent as well. That's a sign slower U.S. growth is a factor in the drop.

Ebola concerns are definitely an issue. Healthcare facilities --particularly big hospitals like Universal Health Services, Tenet Healthcare and Lifepoint Hospitals--were all down 4 or 5 percent.

Oil threatening to break below $80 for the first time since 2012 again weighed on energy stocks...big exploration and production names like Apache (APA) and Chesapeake (CHK) were down 2 to 4 percent, as were refiners like Valero (VLO) because gasoline prices have been dropping as well.

As for M&A, the apparent demise of the Abbvie-Shire deal is another headache for hedge funds, who were heavily invested in the $54-billion deal.

That has nothing to do with economic data at all: tech and healthcare have been the beneficiaries of these tax inversion deals, so many of the deals built around tax strategies to grow earnings may be going by the wayside.

This whole push-back on tax inversions and sweetheart tax deals is not as much of a sideshow as it might seem. Interestingly, big brewers like Molson Coors (TAP), down 4.8 percent, and Craft Brew Alliance (BREW), down 6 percent, have been part of speculation of big mergers might happen.

Still, the trading action has been encouraging. Several times today, there has been strong volume push to the upside on market bottoms: at 9:44 AM ET and roughly 1:30 PM ET. During these periods, ETFs used by active traders like the PowerShares QQQ Trust (QQQ), iShares Core S&P 500 (IVV) and iShares Russell 2000 (IWM) saw notable volume spikes.

»Read more
  Wednesday, 15 Oct 2014 | 11:52 AM ET

Traders try to pick a bottom in the stock market

Posted By: Bob Pisani
Traders work the floor of the New York Stock Exchange.
Getty Images
Traders work the floor of the New York Stock Exchange.

Wow. What a morning. The Dow Jones Industrial Average, at the bottom at roughly 9:44 a.m. ET, was down 369 points; the S&P 500 was down 40 points.

The futures were weak going into the Retail Sales report at 8:30 a.m. ET, but it wasn't that weak: down about 9 points from yesterday's close.

Then the disappointing Retail Sales hit at 8:30 a.m., and futures dropped another 9 or so points. At that point, we were down about 18 or 19 points.

Read MoreUS data could signal weaker Q3 growth

But within 10 minutes of the open, the S&P was down 40 points.

»Read more
  Wednesday, 15 Oct 2014 | 10:24 AM ET

US data could signal weaker Q3 growth

Posted By: Bob Pisani

Stocks sank after a triple whammy of disappointing U.S. data. How disappointing was it? Even Europe dropped after the numbers came out at 8:30 a.m. EDT.

September retail sales and PPI both came in weaker than expected. October manufacturing activity in New York was poor too, falling short of estimates after posting its strongest pace in nearly five years last month.

Read More US producer prices fall for first time in more than a year

September retail sales were troubling. Electronics had a nice pop, likely due to the release of the new iPhone, but everything else was disappointing. What happened? Isn't declining oil supposed to be a positive for retail sales? It is, but the big drop only occurred in October.

Most likely, there was a reverse wealth effect. Look what stocks did in September. The S&P was down 1.5 percent. There has been a lot of reliance on rising stock market prices as support for consumer spending. There is no wage and salary growth.

»Read more
  Tuesday, 14 Oct 2014 | 3:56 PM ET

Hedge funds feel the pain, particularly in energy

Posted By: Bob Pisani

There is a lot of pain in hedge-fund land. Imagine how these guys feel. First, they have underperformed all year because most funds run a book of long stocks versus a book of short stocks. Because shorts have underperformed most of the year, they have underperformed the market. Again.

Now, they are getting killed because of how they are positioned: 1) long U.S. market, and 2) long growth stocks.

Growth has gotten hit hard: Semis (XSD) down 15 percent this month, Internet (FDN) and Biotech (IBB) down 7 percent.

But a particularly painful example is energy. The Street has been heavily involved in exploration and production stocks, particularly smaller-cap shale plays, which have been dramatically growing earnings.

»Read more
  Tuesday, 14 Oct 2014 | 11:29 AM ET

Bank CEOs see US economy improving

Posted By: Bob Pisani

My inbox is full of talk about the technical damage that has been done to the markets. Less than 30 percent of stocks are above their 200-day moving averages. Only 20 percent are above their 10-day moving averages. It goes on and on.

The problem is this has taken everyone's mind off the fundamentals. True, there are many headwinds: greater risk of a slowdown in Europe and China, the end of quantitative easing, and the difficulty of controlling an Ebola epidemic.

But there are tailwinds as well: lower oil prices, a better U.S. economy and very high cash levels at U.S. corporations.

Given the negative sentiments, it's worthwhile to note that two bank executives highlighted the strengths of the U.S. economy in their earnings report Tuesday morning.

Wells Fargo CEO John Stumpf noted, "We continue to see signs of a steadily improving economy."

And JPMorgan Chase CEO Jamie Dimon said, "While challenges remain in the global economic recovery, the U.S. economy is an exception, showing signs of steady improvement."

Speaking of banks, three big names reported, with Citigroup announcing an earnings and sales beat, JPMorgan missing on earnings, and Wells Fargo roughly in line.

»Read more
  Monday, 13 Oct 2014 | 4:00 PM ET

Stock market fails to get an oversold bounce

Posted By: Bob Pisani

Traders have been looking for a bounce in two critical sectors...small caps and energy.

We did get a nice lift in the small-cap Russell 2000 (IWM) early morning, and it's about time: it has been a terrible underperformer for months, particularly in the last 30 days or so, when the Russell 2000 has been down roughly 10 percent versus the roughly 5 percent decline in the S&P 500.

Russell had been positive all day even as the S&P has drifted into negative territory, but now it too has drifted into negative territory.

No bounce at all in one dramatically oversold sector, energy. The main ETF for exploration and production stocks (XOP) is down 23% in the past month.

»Read more
  Monday, 13 Oct 2014 | 9:52 AM ET

Market in the doldrums? Might be time for a bounce

Posted By: Bob Pisani

It's been a rough two weeks for the markets, and pessimistic gauges are in the danger zone. Indexes have been down on several concerns, principally growth fears stemming from Europe and China, and now Ebola. This has been balanced against a number of positive developments:

1) Improving U.S. economy;

2) Low inflation;

3) Accomodative central banks;

4) Valuations mostly not expensive; and

5) Lack of investment alternatives.

Still, sentiment seems extremely negative.The CBOE Volatility Index is up over 80 percent in the last month; market internal indicators have deteriorated dramatically, with an expansion of new lows and much technical damage. CNNMoney's Fear and Greed Index has indicated "extreme fear," up from "neutral" just a month ago.


»Read more
  Friday, 10 Oct 2014 | 4:00 PM ET

Here's why shale oil stocks are tanking

Posted By: Bob Pisani

Why are shale plays getting hit so hard?

The short answer is, because oil is dropping. West Texas Intermediate has gone from $105 to $85 in three months.

But a large part of the problem has to do with the way shale drilling is financed.

»Read more
  Friday, 10 Oct 2014 | 11:45 AM ET

A brief history of high-speed trading in the 1800s

Posted By: Bob Pisani
Traders on the floor of the New York Stock Exchange.
Getty Images
Traders on the floor of the New York Stock Exchange.

For all of you who thought high-speed trading began 10 years ago, think again.

Here's my Brief H\istory of High-speed Trading in the 1800's.

Here's an excerpt:

From the outset there was a deep and abiding suspicion of the broker, who, for a price, was willing to buy or sell your stock, bond or commodity. It was a suspicion that these middlemen knew something that buyers and sellers did not.

True or not, these complaints underscore a larger historical fact: any technology that increased the speed of information flow was immediately adopted by the trading community in both Europe and the United States. Traders have employed every known conveyance to trade faster and cheaper. They were among the earliest adopters of faster boats, faster stagecoaches and private horse expresses. The trading of securities was among the very first uses of the telegraph.

The adoption of these high-speed trading techniques had two characteristics: 1) they greatly reduced the price differences between markets, and 2) those who were slower to adopt bitterly complained that the new technologies offered unfair advantages to the participants.

»Read more

About Trader Talk with Bob Pisani

  • Direct from the floor of the NYSE, Trader Talk with Bob Pisani provides a dynamic look at the reasons for the day’s actions on Wall Street. If you want to go beyond the latest numbers— Bob will tell you why the market does what it does and what it means for the next day’s trading.

 

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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