Solid Up Monday, Low Volume

Market Action:
As the market opened for the week, the buyers were pushing up prices with a 90 point pop in the Dow in the first few minutes after the opening bell.  This move put the index right at the 12,200 mark and then it moved back down as if to say it was going down from there.  But, the decline was contained and the Dow moved up to the 120 point advance range and traded around that level most of the rest of the day.  

The big news was the ABN AMRO deal in which it would be acquired by Barclays for about $80 billion.  This acquisition would be Europe’s largest banking deal.  This acquisition also made for a big move on Wall Street at the opening.  The only major index that wasn’t invited to the party was Semi-Conductors.  

Real Estate News:
We felt compelled to mention the housing sector this evening since you have been reading so much about it recently.  The news seems to leave some of the key thinking processes out of the story.  We figure that the media doesn’t really know what to think of this giant drag on the economy that we have been forecasting for nearly two years.  And, of course, the world is waiting for the Fed to bail them out.

The one news item on Monday happened to be the US home builders’ confidence index.  This index has been under 50 (the balance between poor and good sales) for 11 months now and this past month the index fell for the first time in six months.  Remember that this is now spring and probably a good time for new home sales.  

We get more news on Tuesday in the form of February housing starts and Friday’s report on February existing home sales.  These should be interesting reports.

FOMC:
Don’t forget about the FOMC meeting this week with the interest rate announcement on Wednesday afternoon.  Their statement should prove entertaining at least.

Opinion/Analysis:
With the Dow moving to a price above 12,200 we think the time to become a little more aggressive is here.  Corrective moves can be a little hard to read but any upside from here should be limited to a couple hundred points.  We think that Monday’s actions could very well be the last move up but you never know for sure until the market heads down and breaks through some of the price levels of the last few weeks down around 12,000.

We didn’t get a chance to get into those QQQRR puts due to work getting in the way but with some more upside in the next few days there may be some other opportunities.  We would like to have the Fed’s decision behind us to commit new funds at this time but if we get a good opportunity we will take it.  The Fed news on Wednesday will only serve to confuse the masses.  

One highlight for Monday was the low volume we saw on the NYSE.  This is the lowest volume in almost a month and the market rallies 115 points.  In case you might be wondering, this is not bullish.  The market is going down, make no mistake about it.

Dow Industrials:  12,226.17  +115.76
VIX: 14.59
HUI:  330.76
QQQQ:  43.27
QQQRR: 1.66 bid  (getting interesting)
RYVNX:   17.38
RYAIX:  21.80
RYCWX:  37.15
TLT:  89.66
BEGBX:  13.92