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Linkfest: Week in Review

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Mo' money. Mo' volatility.

That was the story this wild week, when pretty much everything went up -- except (of course) the dollar, which slid half a percent.

Mo' money: The Federal Reserve Thursday added a total of $31 billion of temporary reserves to the banking system via repurchase agreements, its biggest daily open market injection in two weeks. The late Wednesday rally anticipating Thursday's Fed repo action is starting to become predictable.

Mo' volatility:  Following the previous week's harrowing Friday free fall of 366 Dow points, Monday opened ugly, with a triple-digit loss. Markets needed a break, which they got thanks to a reversal by day's end. That broke a five-day losing streak. Strong earnings from a few bellwethers, including Apple (AAPL - Get Report) and American Express (AXP), carried the positive action further on Tuesday for a triple-digit gain. Wednesday saw even mo' volatility, with intraday swings of more than 200 points. Microsoft's (MSFT) strong earnings helped the tech sector to finish on an upbeat note Friday.

By the numbers, the big winner was crude oil -- up 5.6% for the week and 51.2% for the past 52 weeks. Emerging markets gained 3.8% over the past five days and are up an astonishing 61% for the past year. The Nasdaq saw a 2.9% gain, while the Russell 2000 and REITs each added 2.8%.  Gold rose 2.6%, edging out the S&P 500 (up 2.3%) and the Dow industrials (up 2.1%). Gold is up 31% over the past year.  Global stocks added 2%, and European stocks gained 0.8%.

Barron's "The Trader" column had this to say:
A few yellow flags from Friday's advance: With the highflying Nasdaq a hair away from a new recovery high, the breadth of its advance was less than convincing, with two stocks retreating for every three that rallied.

Early Friday afternoon, roughly 97 Nasdaq stocks had made new highs as 105 made new lows. 'Generals marching and troops retreating -- not a healthy battlefield position,' says Elliot Spar, Stifel Nicolaus' market strategist. Negative divergences such as these tend to be 'resolved with the market heading lower, not the divergences getting better,' Spar notes.

More on that narrowness below.

Where shall we start? That's easy this week: technology! Get clickin':


¿ Tech Gets Its Groove Back:  "It's taken six years, but the dot-com crash is receding in most investors' rear-view mirrors. And the road ahead for the technology business, despite a few bumps, looks wide open and inviting." ( Barron's)  See also: Are we in the midst of 'Bubble 2.0?' 

¿ Simultaneous bull and bear markets: Our man with the tan, Doug Kass, tells Barron's Alan Abelson just how narrow the Nasdaq 100 advance has been this year. (If no Barron's, go here.)

¿ Jim Rogers Shifts Assets Out of Dollar to Buy Yuan: "'I'm in the process of -- I hope in the next few months -- getting all of my assets out of U.S. dollars,' said Rogers, 65, who correctly predicted the commodities rally in 1999.  'I'm that pessimistic about what's happening in the U.S.''' ( Bloomberg)

¿ 1980s Parallels? Merrill Lynch's (MER) two top strategists, David Rosenberg Richard and Bernstein, concur that the current backdrop is highly reminiscent of the late-1980s cycle. While no two cycles are ever the same, some very similar patterns have emerged.

¿ Bullish bargain hunting from the inside: "Despite some predictions to the contrary over this past weekend, Friday's sharp market drop was not followed by more weakness on Monday or Tuesday." ( MarketWatch)

¿ China pushes deeper into Africa: "China has served notice it is accelerating its investment drive in Africa towards full throttle with the planned $5.4-billion cash purchase of a major stake in Standard Bank by Beijing's biggest lender."  ( Reuters)

¿ Should Merrill Lynch CEO Stanley O'Neal lose his job? ( Slate)

¿ Skepticism Scarce in Countrywide's (CFC) Rally: "In a touching display of faith-based investing, Countrywide Financial's debt and equity securities soared Friday despite dramatic evidence of mortgage- credit deterioration severe enough to induce the Federal Reserve to cut short-term interest rates again." ( Barron's)


The wall of worry continues to build:

¿ Where was the Bubble: Houses, Rates or Credit?  "A bubble is a 'trade in high volumes at prices that are considerably at variance from intrinsic values.' By that definition, I'm not so sure housing was a true bubble -- the run up in prices, a doubling over the course of about seven years, was actually a rational market response to interest rates being dropped to generational (46 year) lows."

¿ TAX EVASION: The great lie of supply-side economics: ( The New Yorker)  


¿ Mortgage Resets? Try Chapter 13 Bankruptcy! It turns out that Chapter 13 filings (as opposed to Chapter 7) are gaining in popularity. It seems that more and more debtors are using the bankruptcy laws to keep their homes. Why? Because Chapter 13 halts foreclosure proceedings.

¿ Did New Homes Sales actually rise? (Not Exactly)  So did new-homes sales actually rise, as was reported? Based on the data, we know for sure that year-over-year sales decreased; However, month to month sales may -- or may not have -- increased. According to the Commerce Department, we really just don't know.

¿ Home sales crater on credit squeeze:  Sales of single-family homes at 10-year low; inventories highest in 20 years. ( MarketWatch)


¿ Rangel Proposes Cuts in Tax Overhaul: "The broad attempt to revamp the tax code introduced yesterday by the House's top tax writer could hurt oil and technology companies, manufacturing firms and others in order to fund an across-the-board cut in tax rates long sought by many corporations. The effort by Rep. Charles Rangel (D., N.Y.), chairman of the House tax committee, is a pairing of pain and relief for companies. Retailers could benefit under the plan, as could other firms now paying high effective tax rates." (free in The Wall Street Journal)

¿ Should newspaper Web sites really be free? ( Slate)   


¿ NASA's Predator UAV and Google( GOOG - Get Report ) Earth Join Forces to Fight Fires in California and NASA's satellite photos of Southern California's fires.

¿ Apple's AT&T Bounty: $432 Per iPhone? ( Silicon Alley Insider)

¿ Google's plan to host ALL our applications. (Cringely)


¿ Weekend Swamp-Rock: John Fogerty: If you are a fan at all of Creedence Clearwater Revival and/or John Fogerty, then check out some of the tunes on Fogerty's new disc, Revival.

¿ Geeky Jack-o'-Lanterns.   

That's all from a very rainy weekend here in the Northeast, where we have been perusing a short list of charities that are helping out in the wake of Southern California's wildfires.

Got a comment, suggestion, link idea? Or do you just have something on your mind? The Linkfest loves to get email!  If you've got something to say, then by all means, please do.

At the time of publication, Ritholtz had no positions in stocks mentioned, although holdings can change at any time. Barry Ritholtz is the chief market strategist for Ritholtz Research, an independent institutional research firm, specializing in the analysis of macroeconomic trends and the capital markets. The firm's variant perspectives are applied to the fixed income, equity and commodity markets, both domestically and internationally. Other areas of research coverage also include consumer, real estate, geopolitics, technology and digital media. Ritholtz is also president of Ritholtz Capital Partners (RCP), a New York based hedge fund. RCP is driven by the analysis performed by Ritholtz Research. Ritholtz appreciates your feedback; click here to send him an email.

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