BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mixed as the advance/decline line is modestly higher, sector performance is mixed and volume is above-average. Mohawk Industries (MHK), a well-known short play on housing, surged 10% today on the largest volume since 2002. This explosive move comes after the company lowered forward guidance meaningfully. The stock is now less than $2 from an all-time high. This is amazing considering what has transpired over the last year in housing. About 10% of the float is still short. This has to be very disturbing to the many "U.S. housing collapse will lead to a market collapse" bears. Recent action in the dollar, bond market, cyclicals and housing-related stocks suggests that investors continue to overestimate the negative impact of housing on the broad U.S. economy. I continue to believe that no major market moving sub-prime blow-up will occur and that the Fed will remain on hold. The latest 13F filing by Tudor Investment Corp. shows the hedge fund firm bought a $363 million stake in Apple (AAPL) during the fourth quarter, making the stock the firm's second-largest long equity position. Tudor also purchased a $253 million stake in shares of Novellus Systems (NVLS), making it their sixth largest position. They also added shares of Yahoo! (YHOO) and Google (GOOG). Moreover, six of their ten largest buys during the quarter were tech stocks. I continue to believe that today's short-sited day-trading pessimistic environment is providing excellent entry points on the long side in both Google and Apple. I still expect both to trade substantially higher from current levels by year-end. I expect US stocks to trade modestly higher into the close from current levels on declining long-term rates and short-covering.
Friday, February 16, 2007
Stocks Mixed into Final Hour as Mild Profit-taking Offsets Short-Covering
Posted by Gary .....at 3:08 PM