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MV Weather Report: A Flurry of Shorts?


Rain or shine, we review the day's biggest stock stories.

It was an up and down day on Wall Street as traders battled for position into the weekend. It looked as if sellers loomed at the open, but once the S&P pulled back to 742-ish -- the 20 DMA -- buyers showed up, and the market rebounded. This should be seen as a positive for the market; dip buyers haven't been seen for quite some time.

With G20 this weekend and Bernanke on 60 Minutes this Sunday, it seems as if traders were happy to take their profits from the week today. To be honest, I'm surprised the market didn't sell off into the close. Bennet Sedacca closed out his long positions today; as he said in Overrun by the Bull:

"My main reason for being long equities was purely a technical/sentiment call. But many of those who were thinking about liquidating their portfolios just 10 days ago turned around and asked me what to buy and how long I thought the rally would last.

"I must confess: My honest-to-goodness answer is/was "I have no idea." But the change in sentiment was what quickly caught my attention.

"Furthermore, TV commentators and others turned bullish awfully quickly. The real reason: Macro trumps technicals.

"I rarely watch financial TV shows, but I tuned in today, and one thing I've noticed today is the extreme bullishness about credit. This is very alarming to me. With credit market debt/GDP about to sail towards 400% -- as of December 31 (and this is before GDP was going to drop and before all of the recent issuance), it was a stunning 370% -- why on earth would anyone buy 30-year subordinated debt of financial companies? I could care less if they yield 8%, to be frank."

Next Monday, watch for initial morning reaction to the G20 and Bernanke's appearance. Then traders will focus their attention on economic data: Net Long-Term TIC flows, Industrial Production, and Capacity Utilization are all due out before the open.

For those looking for some weekend research (I normally am), Dave Dispennette has some very good short stock ideas. Here's his post from today's Buzz.

"I am now constructing on a list of stocks that I will look to short into an extended rally, if it comes. First Solar (FSLR), PNC Financial (PNC), JPMorgan (JPM), Carnival Corp (CCL), Apollo Group (APOL) and ITT Educational Services (ESI) are at the top of that list right now, stay tuned."

What a long week. Great college basketball this weekend.

Have a good one, Minyans!
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No positions in stocks mentioned.

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