Does The Freddie Mac Story Have Wider Implications?
Perhaps it was the news, Motorola and Freddie Mac, or perhaps it was the
negative technical close from Friday. Whatever it was, the market is showing
signs that it may be ready to give up some of the recent gains. As always, it
appears to be happening just at the time when the last of the “hold-outs”
finally throw in the towel on joining the rally. Nonetheless, we cannot ignore
that the intermediate trend is up and that has NOT changed.Â
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.Â
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 color=#0000ff>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.
| Support/Resistance Numbers for S&P and Nasdaq Futures | |
| S&Ps | Nasdaq |
| 998* | 1236-1239 |
| 993 | 1219 |
| 986 | 1216 |
| 983 | 1209 |
| 980 | 1196-1200 |
| 976 | 1192 |
| 973 | 1181 |
| 965* | size=2>1173-1175 |
As always, feel free to send me your
comments and questions.
Dave