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Buzz Bits: Dow, Nasdaq Climb to Green

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Lean on me, when you're not strong. And I'll be your friend... - Todd Harrison - 3:41 PM

The Monday moxie continues as the end-of-day supply bides its time on the sidelines. Most traders I've spoken with were anticipating a wave of forced selling into the close (a la Friday) but the path of maximum frustration knows no bounds. Indeed, just as "straight up" seemed least likely, the leaners are now equally flummoxed. Go figure.

This last gasp higher shaped market breadth better (NYSE 2:1) and leadership has emerged in the form of financials It's no wonder, twins, that you can hear a palpable sigh of relief from across the equity spectrum but Boo deserves the benefit of the doubt. I haven't been all that hot in terms of timing but I'll offer that this lift feels a little bit obligatory. Let's call the current range S&P 1460-1490 and take it from there.

I've used this lift to pare any overage that I carried forward through the muck. Not claiming victory (my basis on some of my inventory was higher), just being honest. I wanna be light, tight and nimble as we edge ahead. Most importantly, I wanna be opportunistic.

Keep in mind that American Home Mortgage never reopened today, so that could provide a psychological dinger tomorrow. And remember that while you can trip, the trick is to avoid face-plants (before Friday night). The beauty of this business is that it affords us daily shots at redemption. We just gotta be in a position to claim them.

Fare ye well into the bell.

R.P.

Scrambled Homies - Fil Zucchi - 3:21 PM

Stocks of residential and commercial real estate outfits were gored last week, but the underlying fundies remain quite different. "The other side of the office" has just put my last piece of commercial property on the market, and the mantra I have heard from in-the-know brokers is that commercial real estate funds are locked and loaded with cash for investments through 2008.

Does it mean that the recent blow-outs of Commercial Mortgage Backed Securities (CMBS) spreads are irrelevant to the commercial markets? Of course not. After the funds close on a property they leverage it up, and the higher costs of borrowing will likely impact prices. But as far as deals continuing to get done, the going terms are still "all cash/no financing contingencies", and to the extent that funds have cash to invest, investments will be made.

A whole different story is haunting the residential market, where bonds and/or Credit Default Swaps of homies such as Beazer Homes (BZH) and Hovnanian (HOV) are showing signs of severe distress. I've been repeating for years that what I have seen during the housing bubble will lead to unimaginable consequences as things slide down the backside of that mountain. The slide may have just begun in earnest, and in my opinion is a long way from being over. (I know that using hyperbole to describe markets is a perfect recipe to be humbled, but I'll take my chances on this one).

That said, from a pure trading standpoint, last week's carnage was enough for me to cover a bit of my S&P Homebuilders (XHB) short, looking to press it again in the inevitable relief rally/short squeeze that's to come.

Position in XHB

Financials Overdone? - Kevin Depew - 12:23 PM

It sounds crazy, right? Financials for a trade?

But note there is a potential bullish setup and TD-Sequential buy pattern that may register on the daily chart for Citigroup (C) here. Goldman Sachs (GS) is also working on possibly "perfecting" a TD-Sequential buy setup on the daily chart.

A perfected buy signal is when the low of price bar 9 (today's price bar) is lower than the lows for both price bars 6 and 7 (last Wednesday's and Thursday's lows).

For GS, that means we need to see another push below 189 for buy setup "perfection." For C, a push below 46.50 would trigger "perfection."

Question for the Four Horsemen - Jeffrey Cooper - 11:24 AM

Apple (AAPL) went a few points over its major 145 square. Now, the behavior at its 20 day moving average, and the low of last Thursday's thrust day, will be critical for determining the trend in the stock. And, by proxy, perhaps the market as well, as it has been the four letter, much-loved bell weather.

Like every strategy, relative strength is a conceptually correct strategy, until it's not. The market is dynamic, not static, and different things work at different times.

Is it possible that the "Four Horsemen of the Apocalypse Momo" names: Apple (AAPL), Amazon (AMZN), Garmin (GRMN), Baidu.com (BIDU), Research in Motion (RIMM), Deckers Outdoor (DECK), Crocs (CROX), held on on Thursday, with the DJIA down 400, because a fund or funds is getting a margin call?

So they have to sell out positions like Exxon Mobil (XOM), Citigroup (C), and Goldman Sachs (GS), and cover short positions such as AMZN, BIDU, and CROX?

Just askin'... cause I've never seen such a monolithic shrug off of the broad market.

Position in DECK
No positions in stocks mentioned.

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