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Two Ways To Play: More Foreclosures a Foregone Conclusion


Strengthen your portfolio in good times and bad.


Loan Delinquencies Rise

The Wall Street Journal reports delinquencies last month rose at the fastest pace in a year for many loan categories. Data provided by Applied Analytics showed that 6.6% of mortgages were at least 30 days past due at the end of August, up from 5.8% at the end of June and a 4.51% increase from a year earlier.

All loan categories were affected, but the most notable delinquencies were option ARMs, which jumped 1.17% to14.38%. Moody's chief economist Mark Zandi called the trend "disturbing" and said it was likely to get worse. Zandi argues that foreclosures will remain very high well into 2009 and 2010.

From the Bull Pen: Wal-Mart (WMT) should continue to thrive in this environment - and note the behavior at its 100 DMA. Sell stops can be set below that uptrend ($58).

From the Bear Cave: Bears looking for downside housing exposure can consider Sherwin-Williams (SHW). Buy stops can be set above $65.

News Corp Bottom?

Quant funds believe shares of News Corp (NWS) may have reached a bottom, according to a report by Bloomberg. Based on P/E ratio and measures of cash flow and leverage, John Sini of Douglas C. Lane & Associates in New York says the stock may be at its cheapest ever.

The stock was at a 10.3 P/E as of Friday and Sini says it may eventually rise into the high teens. Chris Marangi of New York-based Gamco Investors thinks the stock will recover once investors have a better sense of where the economy is headed. For the year, News Corp stock has dropped -32%, compared with the benchmark S&P 500 decline of 14%.

From the Bull Pen: NWS.A broke an intermediate downtrend but still didn't recover its 50 DMA. Nonetheless, those willing to test the upside can set a near-term sell stop below $13.50.

From the Bear Cave: Bears can consider a downside play in Verizon (VZ). Buy stops can be set above $34 resistance.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed with the Hang Seng +1.58%, Nikkei +1.42%, Sensex -0.34%, Taiwan +2.35% and Shanghai +7.77%.

Quickly glancing towards Europe, we see the CAC +0.07%, DAX +0.06%, FTSE -0.02%

As of 8:40 a.m. EST, S&P Futures are trading -0.6 points to 1245 and Nasdaq futures are up a point to 1740.

A Look At Commodities

Commodities are higher. Crude oil is+2.19 to 106.74. Gold is +24 to 884.90. Silver is +0.150 to 12.575, and copper is +6.5 to 325.00.

The dollar index is -0.324 to 77.341.

No events on the radar today.

Start this week off strong! Good luck!

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No positions in stocks mentioned.

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