Tuesday, May 15, 2007


Weak finish to a strong day. The Nasdaq and the Qs in particular look very weak with some heavy downside volume. The S&P also looked weak deperately trying to hold above 1500. The Dow finished at record highs but up only 37 points compared to it being up as high as 115. Infact the Dow was over 100 for a lot of the trading session. Looks like we could have weakness ahead especially with option expiration on Friday. Then again, with 'buythedip' being the current market theme one cannot rule out a 100 point + Dow rally tomorrow. Small caps are the weakest group now with the Russell 2000 losing a percent. Aluminum and chemicals lead the way up while airlines and real estate lagged.

US home prices fell for the 3rd straight quarter. Obviously a housing recovery is not on the horizon despite what the so called experts say. I follow the RE industry very closely and have conversations with realtors all across the nation on a bi weekly basis to get a feel for local markets. Things are ugly and will likely stay that way for quite some time.

Amgen continues its slump with proposed medicare coverage cuts for its anti-anemia drug. I am long AMGN at these levels. I got in under $55 and will continue building a position. I love buying solid businesses at relatively depressed prices.

Limited is selling its Express brand. I think Limited would have more value with its brands( Victoria's Secret, Bath and Body Works, Structure etc) been broken into seperate companies and sold off. GAP is another company that can benefit from a sale of its brands.

Looking over todays market action, I would be inclined to be bearish and possibly take some of the table as far as longs and add some more inverse ETFs. However with the recent trend being up and the bulls taking advantage of any selling to buy more, I am probably going to stay out and possibly add some more long positions. I feel like bearish sentiment spikes at every little opportunity.

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