Does The Freddie Mac Story Have Wider Implications?

However, the news from Freddie Mac (FRE) may actually be more far reaching and damaging than to just its own stock. The implication that there has been some serious oversights, potential derivative issues, potential earnings re-statement, and the fact that the top three executives have resigned  casts doubt on the already frothy housing sector.  What will happen if lending standards need to be tightened?  Naturally this is pure speculation, only time will tell.  As most readers know, I am not bullish in the least on our market going forward, naturally when I see potential developments that MAY prove to be the catalyst to bursting the bullish case, I take notice.  Did I position accordingly?  Nope, trying to short into an intermediate term trend is foolish.  I did however dip my toe in the water with shorts in MAT and DRIV, which I mentioned in yesterday's column.  Both finished modestly in the money at the close and remain open.  These are meant to take advantage of any intermediate term move, so for now, stay short.

HVT? Well, I wish I could offer some stunning insights, unfortunately, price action after the first hour continues to be very quiet.  Actually regardless of your time frame, the afternoon session yesterday offered little edge.  So what do we do?  Nothing, if that is what price action dictates.  Bear in mind, I have been able to find at least five trades each day put up positive numbers consistently.  So, yes, there are trades, you just need to be selective and patient, bumping your time frame out slightly also helps.

As always, feel free to send me your comments and questions.

Dave