I'm not a day trader....looks like Legg Mason LM took quite a tumble down more than 12% after it has guided lower. I'm still early (re: wrong) on my bank investment thesis. But I see this move as some confirmation.

FWIW, LM has extensive holdings in the home builders (e.g., it is the largest holder of CTX).

I've been seeing reports about how some HBs are bargains (Morningstar, for example) and, of course, yesterday's JP Morgan upgrade on three builders. I still don't buy one ounce of the bull case.

I've been away from the market for the past week due to travelling, and I return amazed at the resiliance of this market. Nothing seems to shake the faith of the bulls.

We'll see if AA's disappointment changes that.

#2son...I'm with you on the homebuilders. It feels a bit like the titanic..and I think what has been keeping the homebuilding ship afloat is the reliance on the price to book value. From what I've read, and it seems reasonable, though I don't pretend to have a knowledgeable opinion about it, is that this reliance may be misplaced--that the asset writedowns have not begun to occur. If it doesn't occur, then perhaps this is the bottom. If it does, it strikes me that this is just a pause. Seeing ripples in my area...mftr of about 100 ee's is closing due to NoVA housing woes.

I wrote an article yesterday about telecom and cable companies competition for tv customers due to some recent news here in California. May be interesting to check it out. (specific companies discussed - Comcast, ATT).

Link:

http://soulek.blogspot.com/2006/10/revisiting-old-topic-once-again.html

Best regards,

BG

Bill:

You've been writing about banks lately, what about ScotiaMocatta, Scotiabank's bullion division. They just acquired BAC's PM loan book worth $900million.

This is one strange market...
Money just being randomly thrown here and there...

Today its semis and utilities and silver?

It's like there's just this wad of money being 'sat on' - and whenever the market starts to dip a bit - a little of that money is sprinkled here... a little there... with little regard to where it goes (as long as it does not go into commodities - as its 'been there, done that'

And of course we had the mandatory "Driving of the Tick" prior to Presidents Bush's speech at 11.am.

and I guess more of the same with the Fed minutes at 2PM

XLE bearish cross? 50dma = 200dma @ 54.94, hasn't happened in a *long* time, in fact not at all on my 1000 day chart. 50/200 day EMA crossover imminent as well ... look out below?

Expecting XLE lower before (much) higher.

t4k

Believe we have a new Cara 100 Accumulation candidate - YHOO.

Trading around $24 - lowest price in over 2 years.

RSI's look like (7 day - Daily/Weekly/Monthly) - 23.5/28.7/26.8

Bill/all - is this a broken company, or just a broken stock?

Learn2Invest

Yes, Bush and his camp must really be in trouble - he looked pretty hopeless at that press conference this morning.

Energy must be taken out back and shot.
Everything else is mandated to go up.

The big play now will be options week next week and Intel. Positions have been staked yesterday it seems - as a lot of options volume on INTC.
Unless its part of a hedged play.

If Intel doesn't dissapoint - maybe even NASDAQ breaks out? Otherwise its party over.

And Google? Why did those YouTube guys take stock instead of cash? I can't imagine its because they want to own Google at $500.

Anyone follow Google and have an informed opinion? Share it with us...

I guess its "Buy the Dip" until the last dip?

Disclaimer: Still Short TSX
Also wondering if I should have left energy shorts open?
Still daytrading/overnight trading techs and banks.

P.S I wish this market would come back to a real market - with trending, momentum, real pullbacks and real market corrections etc.. where one could apply methods such as Bill's

I'm getting tired of this irrational short term trading environment.

good luck

LOVE the gold chart now. (Just kidding.) Nice whipsaw. Not good.

I'd like Bill's opinion on YHOO. I don't like it here personally. Take in premiums (gulp) but I'm guessing we get it cheaper. Bill?

MarkM,

Fed speak suggests future rate increase (getting us used to the idea), so this may be Bill's gold 540 test.

The last days in the market there was no real movement, the obvious reason is, anybody waiting for earnings data.

I have a feeling (yeah i trust my feelings :)) that only blow out numbers would bring buyers out. So i think, we will not see enough blow out numbers/companys to move the entire market higher and then we will get a pullback. But under the surface the economy seems to be much stronger so far than most market participants expect, and maybe we will get no recession in the US at all (inverted yield curve maybe based on wrong employment data? see BLS revisions!).

So the pullback could be a nice buying oppotunity for those not so much involved in the stock market as they wish.

My strategy would be to build a little cash here, mostly on selling the more speculative, high beta stocks. Also if not done already sell covered calls on the core stocks of the portfolio.

Jansing-

I was surprised by the hawkish tone of the Fed Minutes. The Bulls certainly didn't get their wish of hint at early rate cut. They got the exact opposite.

Good earnings are already baked into the cake here as is Goldilocks. The only surprises are negative at this point. All the possible good news is priced in.

Bill-
Great post. I do not know what else to say.

Tradesman-

How long has it been since we even saw a 1% correction? Unreal. Once this upchannel breaks it will be interesting. To those who say the pessimism means any pulllback will be short, don't let a contrary indicator get in the way of the bigger picture.

MarkM,

maybe the FED see/expect a stronger economy than the market? To anyones surprise i think the folks there are quite smart, so i listen if the FED speaks.

I will watch retail sales for September (out on Friday this week) and expect a surprise to the upside.

And from a european standpoint, Germany is in a boom, stronger than the 1999/2000-period and so is much of the eurozone. Asia seems to be strong as ever in the last five years (China growth double digits!) so a slowdown of the US-Economy from 3% growth to 1% growth for one or two quarters will for sure dampen corporate profits a bit, but also the valuations are not that you have to be sooooo afraid of this (likely short term) slowdown.

Also i would ask, how the scenario of now stable and later rising commodity prices will fit into a bleak scenario for economic growth? In the opposite, it fits very well into a scenario of a short term bump on the road in a long term globalisation and technology driven BIG economic growth story?

MarkM is correct..

We have not had a 1% decline in the S&P 500 for 63 days!

This is about the 2nd longest on record. Maybe a new record soon.

We have not had a 2% decline in a very very long time as far as I know.

This leads me to confirm my view that the markets are being mechanically traded.
Humans just don't trade the way the market has been trading the last few months.

Have you seen how the A/D is walking such a fine line? Have you seen how the Tick diverages with the A/D to bring it back 'in line' on every tiny dip?

Have you seen how so many traditional technical signals are failing?

Is this the new 'quants' Bill was pointing out to us?

Is it the new software that has replaced the specialists at the NYSE?

Maybe it has a bug in it???

The bond sell-off of the last 4 days, the Fed jawboning and now Fed Minutes hawk-talk have stopped the bull in its tracks.

http://quotes.ino.com/chart/?s=CBOT_US.Z06

I still don't see the soft landing. I DEFINITELY never saw Goldilocks. To all who took advantage of this insanity and clipped a few percent off I say "Kudos"! No buyers the last three days. No sellers either. A little shove here and the whole thing comes tumbling down. Will we get it?