1% Rally

by Larry Levin

Right from the opening bell it was "buy, buy, buy" in equity town. Friday's losses were easily recouped as short sellers, who can't hold the market down longer than a few hours on a single day, exited all shorts held over the weekend. The early short-covering during the first 90-minutes of the day was strong indeed, which led to a 1% gain for the indices.

CNBC was reporting today that health care stocks were leading the 1% rally. Health care stocks? Oh yeah, there's a little Senate race in Massachusetts. It looked like "The Scott heard 'round the world" would win, which would make it more difficult to pass president Obama's unpopular Health Care Bill (over 60% of the populace oppose it according to many polls), thus the surge in health care stocks. Will it reverse again tomorrow?

Today's only economic report was from the NAHB - the Housing Market Index report. This survey of home builders tracks present sales, 6-month sales expectations and traffic of prospective buyers (of single family homes). The index ranges from 1 to 100, below 50 suggesting contraction. NAHB reported today that its index slipped to 15 from 16 in December, which is dismal, and means it has not risen since September and is back to where it was in June.

On the heels of the recent horrific pending home sales data...well...I'm not surprised. Tomorrow morning we'll get more home data; housing starts will be released before the open. If the data continues to deteriorate, a double dip in housing prices will certainly be possible.



Previous Day's Trading Room Results:

Trade Date: 1/19/10

E-Mini S&P Trades*
(before fees and commissions):


1) OTF sell @ 10:38am at 1140.75 = +2.75 (1 lot)

2) Algorithm positions (0)

3) "Reading the Tape" positions (8) ...combined Secret's, Algo, & "Reading the Tape" total...+5.75



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