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June 27, 2005

Hung Jury

The jury is out after today’s action. We saw some impressive selling in many tech stocks such as Research in Motion (down 2.2%), Texas Instruments (down 2.1%), F5 Networks (down 2.8%), and AMD (down 3%). However, speculation bellwethers held ground, with Google tacking on almost $7 to close above $300 per share for the first time. Yahoo followed in Google’s wake, closing down only 1% after being down 2% most of the day. As I stated in the last blog entry, I will feel much more comfortable with my bearish stance once I see Google starting to fail.

Likewise, the homeys failed to fail, with the likes of Centex and KB Homes both tacking on greater than 2%. Perhaps its just a bounce from last week’s weakness or perhaps last week’s signals were false. Or perhaps traders are trying to be cute with the upcoming Fed meeting. Some people view the upcoming Fed meeting as bullish for home builders. After all, the previous rate hikes have only managed to drive down the 10-year Treasury yield, and people may think more of the same is in store. Perhaps the surprise this time around will be rising long yields along with the Feds efforts to jack up short rates. If this turns out to be the case, it could signal the end of the party for homeys and perhaps the end of the rate hike cycle for the Fed.

I have used my “perhaps” quota for the day. Until next time….

Disclosure: Short RIMM, FFIV, CTX. Long TXN, YHOO Puts


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