Mortgage Mania
The Dow ended the week down 83 points while the Nasdaq NDX fell 37 points. We are
now more oversold than we were overbought on in May and June. Overall Sector Action
for the week was only plus 256. 5 Sectors were up while 27 were down. Any stock or
Sector which managed a gain last week is worth paying attention to as a buy this week.
The mortgage market is locked up. Few people grasp the extent of the problem and even
fewer are willing to acknowledge it. Bernanke MUST address it in the FOMC meeting
Tuesday! This is a huge wrench in the economic gears and will affect the entire economy.
Wall Street and higher up bankers are hitting the panic button. That said our market
measures are designed to measure risk and emotions. We are at automatic buy
levels and began buying quality stocks last week after being nearly all cash for the
previous month heeding the same indicators which foretold the fall.
Rydex Alerts- Bullish Russell and OTC holding through the daily swings.
Short term Trading indicator- Oversold Buy
INTERMEDIATE TERM TRENDS- Tipped to Down
INTERMEDIATE OSCILLATOR - OverSold Buy reiterated as of Fridays close.
Defense DFI- Number one as the world fell out from under the market Defense spending
is the one thing you can count on. I would not chase these here.
Disk Drive DDX - Showing very strong relative strength. Sandisk SNDK is a strong buy
and was up on Friday as the market cratered.
Technology - Rising to the top these stocks and sectors should lead the bounce. We
own the Ultra Bullish Technology ETF Friday ROM and purchased some individual
stocks like Oracle ORCL.
Oil Patch OSX, XOI, XNG- These sectors topped out a few weeks ago. In general I
believe they are over owned and ripe for profit taking. We have traded the Bearish and
Bullish Oil Service ETFs DIG and DUG a few times but would focus on Bearish
positions and lighten up on Oil stocks.
Housing HGX - Interestingly this sector made it out of the bottom ranks last week. Simply
put the Corporate home builders have been quick to take their medicine and move on.
Local builders and individuals are more stubborn and more likely miss the market as it
drops.
Financials KCE, XBD, KIX, BKX- Lehman LEH is the worst looking and a bellwether for
the mortgage market woes. I bought BBT last week and there are many extremely
oversold buy candidates. Nibble away taking small initial positions.
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