Interview: Chief Executive Of Mcmillan Analysis on comments from Greenspan
>> comments from fed chairman alan greenspan driving stocks much of today’s session. let’s get insight from larry mcmillan, chief executive of mcmillan analysis, joining us with a look at indicators he’s watching. starting with the rally today, i know you were surprised it fizzled. does that comment, then, suggest that in fact signs are pointing up for stocks?
>> yeah, we’ve been positive. it is a little bit overbought so any small thing can set off a short-term, very short-term correction. we have a down day or down afternoon, but i think overall we’re still―from what we’ve seen from options indicators, things are still fairly positive.
>> let me jump in to break these down, what are the signs, first off, that perhaps stocks are overbought, therefore set to decline?
>> what i’m saying by they’re overbought, they’re susceptible to a short-term pullback. but the advance-decline ratio is what i’m looking at there and it’s been very strong, which is overall, good, but when it gets too stretched, people are looking to take profits on the tropof drop of a hat.
>> earlier, they had 29 of 30 stocks in the dow trading higher and the broadest rally we have seen in three weeks so early in the day, the signs of the rally were still there.
>> that abates in a day or two so that’s not a sell signal and you revert to more positive sentiment indicators like put-call ratios, which are definitely on a buy signal.
>> could you explain what those are indicating?
>> when we bottomed out in april and may, the last spike downwards,, a lot of people were buying puts, too many people buying puts. so when there are too many people on one side of the equation, it usually goes as a contrary indicator so those gave us buy signals near the may bottom, the last serious decline we’ve had. those are remaining on buy signals right now, the put-call ratio and that’s probably the most bullish sentiment indicator we have. the other is volatility and it’s just hanging around at low levels.
>> before we talk about volatility, in terms of the put-call ratio, what sense are you getting, what extension of this rally do you anticipate seeing?
>> eventually, you expect it to swing the other way where too many people will buy call options and then we have trouble. but that hasn’t happened yet. as we’ve come up, we’re still seeing more on the put side than call side, obviously not as much as before but to me it has a ways to go perfect that ratio would turn bearish.
>> in terms of volatility, it’s interesting to me that you’re looking at the v.i.x. because it seems some people don’t look at it very much anymore given that it’s at historically low levels for months on end so what is the v.i.x. telling you and how seriously do you take that?
>> at this point it’s what it’s not telling us. it gave us a buy signal in april when it spiked to 18 and came down again. that’s how it gives us a buy signal. now we’re floating around the 13 level on v.i.x. and that’s ok, that’s not going to harm the rally. if v.i.x. were to start to put together an uptrend, then we’d be a little worried but like today, for example, it really was only up like 12 cents, nothing. so it’s not worth―even last week when the dow was down 90 that one day, v.i.x. was only up, like, 30 cents so that is not worrisome behavior in the v.i.x.
>> what about ranges? when we were in the middle of the rally today and s&p was up, on track to have a three-month high but closed unchanged, what kind of ranges are you seeing in the s&p?
>> near-term support at 1190 and below that, 1185. as long as those hold, it’s a positive picture. we expect to challenge the yearly highs around 1221 or 1222, in fairly short order. today was a negative reversal day, and that’s not a positive thing, but can be worked off quickly.
>> in terms of the nasdaq, a tremendous rally in may but still the percentage loser year to date.
>> right. it’s sort of―it’s good for nasdaq to lead. when that leads, everybody feels better and rallies have more oomph to them. so it led, actually, on the downside today, indicating the overbought situation. but that can be worked out fairly quickly. i don’t see thats as a major sell signal.
>> larry, thanks so much for joining us. looking at what happened in the stock market today. coming up, u.s. treasuries gained today. we’ve been talking about the comments from fed chairman alan greenspan. he suggested yields may not rise soon, taking a specific look at the treasury market . coming up, su keenan has more on the bond rally as well as the chairman’s comments and comments from the atlanta fed president, that also swaying investors and standing by for the texas instruments update.
在线播报
Listen Market briefing --- Ellen (slow)
Texas Instrument --- Bob (fast)
G.M --- Greg (slow)
NYSE --- Deb (fast)
i’m ellen braitman. wagoner also said g.m. will close additional assembly and parts plants in order to reduce costs. greg miles was at the stockholder meeting in delaware and has a live report coming up. first off, the market picture. stocks ended mixed. all three indexes had been higher much of the day and fell off midday. that came after atlanta fed president jack guynn said labor costs are rising in some sectors and the direction of each inflation measure is “certainly up.” more on the trading action as well as g.m. in a few minutes. first up, our top story. texas instruments released its much-awaited mid quarter update. bob bowden has the details.
>> thank you. the headline for texas instruments, a new earnings forecast range with the company saying the minimum profit they’ll make in the second quarter is what analysts expect. let’s get to the numbers. t.i. saying profits in the second quarter will be in the range of 27 to 30 cents a share, higher than the previous forecasts of 25 to 29. they raised both the bottom and top ends of the previous forecasts and if you look at analysts’ estimates of 27 cents a share, it is the bottom of the new estimate range so the worst they’ll do is what analysts expect. texas instruments sees second-quarter sales in a range of $throw.12 billion to $3.24 billion, with the midpoint of $3.18, exceeding the average analyst estimates of $3.14 billion. low end of the new range is below the analysts’ figure. checking t.i. shares right now, the reaction is they are up and it’s not a surprise when they boost both the bottom and top ends of their previous range of earnings. t.i. shares up 45 cents since the close of trading, currently $27.73. checking reaction to texas instruments in other stocks, intel shares, since the close of regular trade, up 14 cents. broadcom up 18 cents and xilinx shares up 16 cents. there was not a lot of elaboration in the press release. no quotes giving descriptions of where they see demand. they did break down specifically semiconductor revenue apart from general revenue. it’s on the bloomberg terminal now. that is $2.6 billion to -- $2.65 billion to $2.75 billion, the semiconductor revenue range and that is a raising of the low end of the previous forecast for that and the high end today is the same. in general, it appears to be good news for t.i. and the market is liking it.
>> all the business units coming in at the high end of forecasts. bob, thanks so much for that. the other top story is general motors. bonds and shares gained after the chief executive announced the job cuts. he made the announcement at a shareholder meeting in wilmington, delaware. investors demanded to know what wagoner plans to do to turn the company around. greg miles was at the meeting and is standing by live.
>> investors have been demanding for months that c.e.o. rick wagoner, head of general motors for the past five years, take dramatic steps to try to revive the automaker. he took some of those steps today, announcing he will shut a number of plants in north america. the north american operation, the eyesore of general motors, what caused the $1.1 billion loss in the fiscal first quarter that accounts for 60% of revenues where you have enormously high healthcare costs and pension costs burdening the company. the latest restructuring moves will produce jobs by―reduce jobs by 25,000 and reduce costs, producing savings of $2.5 billion per year between 2005 and 2008. wagoner stressed this is just the beginning, that the company has tried to reduce healthcare costs by going to the federal government, working on the consumer side of healthcare spending, it hasn’t worked. as a last resort, he is going to the united auto workers.
>> it’s clear to us that these efforts are not yielding the progress that we need fast just and that the healthcare crisis is putting our future at stake so we must act now. in recent weeks, we’ve been in intense discussions with the u.a.w. and other unions, focused on a cooperative approach to significantly reduce our healthcare costs disadvantage. we’ve not yet reached agreement at this time and to be honest, i’m not 100% certain that we will. but all parties are working hard on it.
>> wagoner wouldn’t predict when he will be able to make north american operations profitable or when he’ll be able to turn around general motors as a whole. he responded to calls from shareholders at the annual meeting today that he step down. let’s listen to what mr. wagoner had to say.
>> no one’s job security is forever and that applies to me but i’m very confident that we have the right plans, that i have the full support of the board and the full support of the key constituents in the company―whether the employees, dealers or unions.
>> wagoner may get additional pressure from kirk kerkorian, c.e.o. and owner of tracinda corp., the company that owens 3.9% of g.m. shares. the company announced several weeks ago a tender offer to boost their stake another 4.9%. that tender offer ends today and the company could come out, tracinda, and announce at any time. mr. kerkorian says he’s only a passive investor in general motors but the concern is he could be an active investor if the company does not accelerate its restructuring plan.
>> those headlines not out yet so of course, when we have them, we’ll bring them to your attention. in the meantime, president george bush as well as u.k. prime minister tony blair are holding a press conference in the white house, following a meeting where the two officials met to discuss, among other issues, african nations and their debt status as part of a push to sign up leaders of the g-8 industrial nations to double aid to african nations. tony blair is saying africans must commit to democracy as well as to fighting corruption. the press conference currently being held in the white house following the meeting of president george bush and u.k. prime minister tony blair. although the dow closed off the highs of the day, g.m., a big contributor to gains in the dow. let’s get more on how the day settled. deb kostroun filed this report from the big board. >> at the best level, the dow jones industrial average was up 111 points. closing well off that best level of the day. but still, you did see the gainers like real estate. also autos and consumer durables, general motors, one of the biggest gainers in the dow jones industrial average with all the news from the shareholder meeting. looking at the dow gainers, american express, then general motors, altria. the closing arguments with altria going on in a civil racketeering lawsuit in washington against the tobacco industry and altrgating. you notice american express and american international group among the biggest gainers. take a look at financials and how they performed. they ended lower, started out well and you can look at all the different areas of financials like insurance and brokers and this is after federal reserve chairman alan greenspan suggested he doesn’t expect bond yields to increase soon, sparking optimism that borrowing costs will remain low. you did see a mixed market as many financials waned by the close of trading, especially the bank stocks. electric and gas utilities gaining as you talk about falling bond yields, it makes dividend-paying stocks attractive to investors. looking at conagra, second worst performance in the s&p 500 on the day. this is the third largest food company, saying the first-quarter profit was lower than forecast, without releasing a specific figure, because of high costs and inadequate pricing management in packing meats and the company plans to cut jobs and slash expenses. monsanto rallying on the day, the biggest jump in the s&p 500, saying third-quarter profit was $1.05 a share, higher than the company’s april forecast of a dollar a share. i’m deborah kostroun at the new york stock exchange for bloomberg news.
>> and making news after the bell, walt disney president robert iger saying the company is in talks with pixar about distributing films made by the computer animation movie studio. at a deutsche bank conference in new york, iger said, “we’ve opened up talks again with pixar which has produced mega-hits like “incredibles,” similar to comments he made recently. the agreement with pixar and disney ends with the movie “cars” coming out in 2006. we’ll be right back.
