From Davio -- redrock@peternavarro.com

Nice trend day in effect for the markets as we close em at the highs. They ran em all day hard. As we approach 1220 on the SPX we shall see how the market reacts. I sure don't think we can go from 1170 to 1250 and expect to blow through the old highs, so remember that as we proceed. The 5% easy money on the upside has been made and maybe a rest in this area back to a successful test of 1200-1195 is what is in order before we attack the 1250 levels. Time will tell. Volatility was off nearly 10% again today as we just grinded up again. Full complacency in this market as buyers both real and false (short covering) drove this market in one line up today. Enjoy the rest of the week, I am off unitl next monday for a little R&R.

From Davio -- redrock@peternavarro.com

The shorts covering rally is in full effect, all the beaten down sectors of October including Housing, OIL, and Airlines as the key leaders are driving the markets. Even Chip stocks which have had nothing but bad news are up significantly today. Real buyers or Leveraged Shorts trying to garnish their slim profits now? I lean towards false buyers and shorts covering . .the game continues and until it changes sell rallies, buy the dips . . . Fast money moving the market exclusively today.

European Markets are down nearly 1% as we fire up the US premarkets. Futures are gapped down with no real bang em up news. Let's see if they can hold 1200 on the SP's today if so we may be heading up higher. 1210 must be taken out on the close to see 1220 and 1220 would be bullish for the market.

Mortgage Applications

The weekly MBA mortgage applications index dropped -4.8% last week to the lowest level since April 2005, with purchasing applications dropping -6.2%, and refinancing falling -2.8%. The fixed 30-yr mortgage rate rose 15 basis points to 6.21% while the 15-yr rose 18 bps to 5.75%. The 1-yr adjustable rate mortgage bumped up to 5.39%.

post from davio redrock@navarro.com



Another non event fed day, I wish they would just make these announcements as the market opens, its just a wasted day of activity due to everyone sitting on their hands waiting for the all powerful oz to post their decisions. Fade the initial move after the announcement. The market went up post decision then sold off. Let's see what tomorrow brings.

From Davio -- redrock@peternavarro.com

Masco (MAS) has lowered guidance this morning. Another sign that the housing structure is in trouble. I contend that housing put its top in July, until proven otherwise.

From Davio -- redrock@peternavarro.com

As a daily market player, there are days that evoke total boredom for me. Fed Meeting days, options expiration, and days before market holidays are guarantees for good reading and research days. We all wait for the "predicted" event to be over so we can get back to some movement in the markets. Yawn, get that reading list cooking. Fortune's Formula by William Poundstone a fantastic recent read. Pick it up.

And there you have it, the market took out the stops of the hedgies around 1210-1214 and wooosh, once the shorts are squeezed out of the game Dell comes with downside guidance. Dell cuts guidance, will take $450 mln charge, look to streamline business

Co issues downside guidance for Q3 (Oct), sees non-GAAP EPS of $0.39 vs. $0.40 Reuters Estimates consensus; sees Q3 (Oct) revs of approx $13.9 bln vs. 14.3 bln consensus. Co comments "shortfall in revenue versus previous guidance was driven in part by the company's U.S. consumer and U.K. businesses, which fell short of expectations.
In addition, TTWO takes a hit with a missed number, so it all ain't so pretty out there in Tech land. And the spooos short was the right trade, felt croweded on the long side and the crowded trade is usually the wrong one!!

Love this article, in my little world, that's all I Have seen over the past few months is the little guy getting all frothy about Land/Lots speculation, crazy times indeed. My question is, will all these folks become farmers when they are left holding the dirt?

http://www.financialsense.com/fsu/editorials/2005/1031.html

Davio -- redrock@peternavarro.com

Market gapped open, and stuck all day as volatility again dwindled lower. Are the shorts sufficiently squeezed? I see no reason to buy this market in here, but I respect the move we have had today. I will be legging into my short premise on the SPX into the close and add to it up to Greenspeak tomorrow. I think a nice 40 pt move in SPX is a good spot to start, I respect a close over 1220 and will sell up to there. We are at 1208 currently on the cash and 1212 on the futures.

From Davio -- redrock@peternavarro.com

I saw alot of articles this weekend about Real Estate slowdowns. We should start to see the public picking up on this reality. How far it slows down will the interesting portion of the story. Wages clearly are the issue with real estate growth ultimately and we have not had an increase in wages over the past 5 years in relation to the explosion of real estate prices, it has been driving by liquidity easing and the loose lending practices the government created with the loose credit. I think mortgage brokers will be the next area to get slammed by legal bunnies who chase the business wrong doers, these guys are loosely regulated and have made a fiasco out of borrowing money due to fed opening the liquidity tap the past 5 years. It won't end pretty for those fast money types!

From Davio -- redrock@peternavarro.com

We get new Bush Supreme Court nominee this am, a nice smokescreen for the scooter take down, futures gapping up as is typical of bear market mondays! Most importantly, let's see where they can close the markets today, its all in the close.